The outstanding federal student loan balance has reached a staggering $1.62 trillion, with over 91% of this sum comprising student loan debt, according to the Education Data Initiative. However, there may be tax-advantaged strategies for individuals to finance their college education. To shed light on these options Jere Doyle, BNY wealth tax and estate planning strategist, joins Wealth!
Doyle notes that college tuition planning should begin well before enrollment. He recommends opening a 529 account, which allows for tax-free distributions when used for qualified educational expenses.
Additionally, Doyle highlights a lesser-known strategy for those with affluent relatives. He explains that if you have "a relative that has a substantial amount of wealth," that individual can make direct payments to the university or educational institution to cover tuition. Importantly, these payments are considered a "tax-free gift."
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