The simplest way to pay for college is to raise a brainy child who also can drill a football through the open window of a moving car many yards away.
That isn’t always practical, of course.
More of us have to figure out some way to raise what seems like enough cash to mulch the ivy on campuses to which we would like to send our children.
We also have more choices for saving than ever before.
Some are widely known, such as scholarships and aid packages that colleges offer, or a variety of trust accounts or savings plans that financial advisers can help set up.
Others are less familiar. Education IRAs first became available to savers in 1998. State-sponsored college savings plans, which are less restrictive than those education IRAs, are only now drawing wide interest in many states.
Even the most familiar college savings plans contain an element of uncertainty, said Jann Daniels Selle, a certified financial planner and training programs development executive at Waddell & Reed Financial Services in Overland Park, Kan.
Parents often need to start saving for college long before they can be sure their children will go to one, Selle said.
Plans and trusts that place too many restrictions on how specific savings are used can tie up funds that may be needed elsewhere. It has been estimated that U.S. families, on average, go through some sort of economic upheaval at least once every seven years.
“I think your best choice is to simply save as much as possible on your own until it starts causing you tax problems,” Selle said.
That is not the only choice, however.
Craig Blessing of Kansas City, who is putting himself through the University of Missouri-Kansas City, turned to traditional sources to find money he needs for college.
The 25-year-old Texas native is using scholarships and a work-study program to cover about three-fourths of his expenses. He is borrowing the rest.
He’s mindful of some risk involved. It’s not difficult for students today to graduate with debt loads equal to the price of a small car.
But there also are rewards. “When I graduate, I will know this degree is mine,” he said.
Bill and Virginia Bateman of Maryville, Mo., don’t want their son Blair to be forced to make a similar choice. So for several years they’ve been putting aside $100 to $200 a month to fund his education after he graduates from high school this year.
The Batemans put the money in a Uniform Transfer to Minors Act custodial account in Blair’s name.
“We hated to think he would have to get started in life with a big debt,” Virginia Bateman said.
Back in Kansas City, Kevin and Colleen Effertz have begun a similar effort, but by opening an education IRA instead of a custodial account for their son Keegan after he was born in May.
Education IRAs provide different tax advantages than custodial accounts, and contributions to them are limited to $500 a year, or far less than custodial accounts.
And while the couple aren’t sure that $500 a year will provide all the college money Keegan will need someday, they can start putting additional savings elsewhere if current restrictions aren’t eased, Colleen Effertz said.
Sharon Hom, a federal employee, is considering an even newer savings tool, a Section 529 qualified college savings plan.
Hom has no children, but she would like to establish college savings accounts for several children in her extended family.
The plans, named after the section of the tax code that allows them to be established, potentially seem a promising way to do that, she said.
There are few practical limits on contributions, and earnings on contributions aren’t taxed at the federal level until the beneficiary withdraws money for school. Some states exempt those withdrawals from state income taxes. Many of the plans allow withdrawals for use at virtually any college or post-high school educational institution in the United States and many schools overseas.
Blessing said his parents also saved money to send him to college when he was growing up in Texas. But Blessing said he wasn’t ready to head to campus right after high school, and he landed a job as a restaurant manager and training executive instead.
During that time, however, Blessing said he also realized that having a college degree would significantly increase career opportunities for him. But by then his parents had used the former college money for other family needs.
So he turned to traditional college aid sources when he enrolled at UMKC.
Authorities estimate that about 1.3 million high school students plan to become college freshmen in the fall of 2000 and that a significant number of them will seek the same type of aid Blessing sought.
Free Application for Federal Student Aid forms are available at high school guidance counselors offices, public libraries or at www.fafsa.ed.gov federal Web site, said Steve Stocks, financial aid services director at Sallie Mae, a national provider of federally guaranteed student loans.
