1. Pay private student loans first. Financial advisor Tara Falcone shares some tips for managing student loan debt during the pandemic. investinyou (In partnership with acorns.)
For millennials saddled with college debt who are starting families, long-term financial planning is key. Despite their challenges, they have to find a way to save for their children's future. The last thing they want is the next generation to have the same financial burden they have.
No one knows if college will be more expensive in 20 years, especially now that higher education may be changed forever. Parents hoping to ease the burden on their children have a few options, but they first need to decide how much they want to fund, says Falcone. "Will it be half of tuition and the other half the student pays for? Will it be all of school? Parents need to decide and set a savings goal."A 529 savings plan is the most popular option.
"When shopping for a 529, look at the general account fees, expense ratios within the account and the type of fund that best suits your needs," says Falcone. "You want to do your homework to find a plan with low fees and high returns." It's also important to have peace of mind with a 529 plan. If market fluctuations keep you up at night, it might be better to look at other options.College Savings Plan NetworkThere are other options that can be used as savings vehicles for college costs. For parents with high incomes, a backdoor Roth IRA may be a good option, says Falcone. A backdoor Roth IRA takes advantage of a loophole that allows people to convert money in a traditional IRA into a Roth IRA.
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