TheState.com
July 26, 2004

Many people put off saving for their child’s college education because they think having less to contribute will entitle their son or daughter for more financial aid.

It’s a mistake that will cost you twice — once when your child is choosing a college and again after he or she has graduated, according to David Braverman, a vice president at Standard & Poor’s and author of the new book, “Saving and Investing for College.”

The lack of savings hits first by limiting where you can afford to send your child after he or she has been accepted. Although you may indeed qualify for more aid, “most of the initial layer is in the form of loans that you’ll have to pay back,” Braverman said. The less you have saved, the more your child may have to borrow.

Those loans will then hold back your child financially after graduation. Graduates with immense loans often hold off on major life events — getting married or buying a car or a home — until they pay off their loans, Braverman said.

Whether your child is almost ready to attend college or still younger, consider a state-sponsored 529 savings plan. You (and any other relatives who want to help) can contribute up to $55,000 a year. The money is invested in mutual funds and grows tax-free until it is withdrawn. However, be aware the legislation for tax-free withdrawals will expire in 2010.

• Choosing the right financial planner

The Securities and Exchange Commission recommends you ask the following questions when interviewing a financial planner:

• What experience do you have, especially with people in my circumstances?

• Where did you go to school? What is your recent employment history?

• What licenses do you hold?

• What financial products and services do you offer? What will you be able to recommend?

• How are you paid for your services? What is your usual hourly rate, flat fee or commission?

• Have you ever been disciplined by any government regulator for unethical or improper conduct or been sued by a client?

To find a financial planner near you, call the Financial Planning Association at 1-800-282-PLAN or the National Association of Personal Financial Advisors at 1-888-FEE-ONLY.

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