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Let’s Talk about the Money: Planning for College

By Cynthia R. Haddad, CFP ®, Affinia Financial Group


College students heading to class

Part 1- Setting Up for Success at College


For many families, building flexibility into their college savings plan is a key move. 


Young adults now attend college at all ages and the traditional timeline of completing high school at age 18 and attending college from ages 18-22 may not be an accurate or appropriate timeframe for which to plan. An important first step is to map out points in your own financial situation while your child is in school in order to understand the timing of your cash flow obligations. You may have a mortgage or other loan become fulfilled, freeing up cash flow for your child beginning or in college.


Planning for college is a major commitment and many times parents struggle to make the right personal choices for both their child and for their family. For families of college-bound children with atypical learning styles or complex needs, it may be helpful to evaluate the decision through the lens of our Five Factors of Special Needs Planning.


Emotional Factors

We recognize the where, when and whether to go to college decisions are complicated and may present significant challenges for parents and students to work through.

Perhaps a good place to start may be to ask the “why” question: what is the goal for the student going to college? Many times there is more than one objective; to graduate with a diploma, to gain skills to enter the job market, to maintain their self-esteem, to fulfill parental expectations are a few examples.  You may find the resources at Think College to be helpful.


Government Benefits Factors

While many students who have an IEP and will require a personalized education plan for college will not meet the criteria for disability benefits, it is good to know some of the resources that are available.


There are critical inflection points in the planning process beginning for your child at age 14 when the transition period to adult services begin. At age 18, your child becomes eligible for their federal government benefits, including SSI (Social Security Income) and Section 8 housing vouchers. Then at age 22, your child leaves the protection of the public education system. For individuals with work experience, there is SSDI (Social Security Disability Benefits).


In Massachusetts, there is a program called The Massachusetts Inclusive Concurrent Enrollment Initiative (MAICEI)  which offers grants to college-school partnerships to support eligible public high school students with intellectual disabilities, ages 18–22, to increase their academic and career success by being included in a college or university community of learners.


Family and Support Factors

Before identifying the resources you will need to fund the college experience, you should gain an understanding of your child’s interests and aspirations and the life skills they have developed. These elements will have a major influence on making choices that will help them have a successful experience.


For example:

  • Where do they want to go to school: near home or away?
  • Would they want to live on campus in a dormitory?
  • Would they be comfortable taking public transportation to classes?


Legal Factors

It is important to know that at age 18, a parent is no longer the guardian for their child. Guardianship is determined by the courts and a parent will have to petition the court in order to gain guardianship of their child. Please see 10 FAQs About Guardianship to learn more.


Financial Factors

It is important to recognize that once your child is out of school, they may require financial support and assistance, perhaps for their lifetime.  Once you have thought about and discussed these factors and the implications for your family, you can then take a look at the different costs of a college education.


There are so many variables: A two-year or four-year program, community college, public or private college or university?


College can be a very expensive proposition, and the cost of a college education may vary by tens and even hundreds of thousands of dollars. The sources of funds may be personal cash flow and savings, public resources and scholarships and borrowing.


The key is to lay out the cash flow you will need to pay for college and choose your investments to have the funds available to meet that need each year.


Part 2- Traditional Educational Savings Vehicles


529 Savings Plans – There are enormous potential benefits to saving in a 529 plan as the earnings on the money invested grows tax-free and is not taxed when withdrawn as long as used for approved purposes of the account. Prior to investing in a 529 Plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.


ABLE or 529A Account – ABLE Accounts, or 529A accounts are tax-advantaged savings accounts for individuals with disabilities. The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed provided the funds are used for qualified expenses. Find out more about the qualified expenses (educational expenses are amongst qualified expenses but tuition itself should be checked to be sure it is a qualified expense)  and uses of the ABLE account here.

Before investing in an ABLE Plan, consider whether your state offers an ABLE program that provides residents with favorable state tax benefits. ABLE accounts may be protected from creditors if you invest in your own state’s program, depending on the state.


Parent’s Own Savings and Investment Accounts – While there are no tax benefits, having no limitation on the amount of money you can put in and the flexibility to control your investments and cash flow makes a parent’s own investment account a strong component in saving for a child’s education.


Roth IRA – If you meet the income restriction qualifications and will be over age 59 ½ while your child is in college, you should consider a Roth IRA. If your child works and earns taxable income, they are able to contribute up to $6000/year to a Roth IRA in their own name. Roth IRAs are funded with after-tax dollars and earnings on the account grow tax- free. There are no restrictions on distributions from the account and the money does not need to be used for educational purposes.


The Roth IRA offers tax deferral on any earnings in the account.  Withdrawals from the account may be tax-free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 and a half or prior to the account being opened for five years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

Additional sources of personal resources: Series EE and I bonds, UGMA accounts, Coverdell Education Savings accounts.


Borrowing Options

There are basically two options to borrow money: looking for outside financing and leveraging your own assets. Borrowing from others can include Federal Stafford or Perkins loans, Federal PLUS loans and private college loans. Please reference our blog, Applying for Financial Aid-3 Financial Aid Facts for Families of People with Disabilities.


Borrowing from Yourself – an option that compromises your own financial security – can involve taking a home equity loan, a cash value life insurance policy or tapping into your retirement accounts. Please access the resources on our website, Special Needs Financial Planning to help plan for both your child’s future and your own financial independence.


Cynthia R. Haddad, CFP® is a cofounder and partner of Special Needs Financial Planning, LLC. She is co-author of “The Special Needs Planning Guide: How to Prepare for Every Stage of Your Child’s Life.”

Investment advice offered through Affinia Financial Group,LLC, a registered investment advisor.  Securities offered through LPL Financial, Member FINRA/SIPC. Special Needs Financial Planning, Affinia Financial Group and LP Financial are separate entities.


Government bonds and Treasury bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.