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Copy of book.gif (2209 bytes)  Chapter 2 - Why You Should Be Interested in a QSTP

The QSTP is, simply stated, probably the best place to save significant amounts of money when you have school-age children or grandchildren.

As everyone knows, children "grow up too fast". Yet, at the same time, too few parents really make an attempt to figure out how much it will cost to send those children to college, or consider available options in planning for those costs. Take your kid out to the high school football field, tee up the football on the fifty-yard line, and have him or her kick the ball toward the goal line. If the football sails through the goal posts on nine out of ten attempts, you may not need to worry about paying for college. A full athletic scholarship is waiting somewhere for that child. If the footballs do not go through, you are one of the millions of families that will probably need to face the prospect of somehow coming up with the resources to fund that child’s education.

…. QSTPs are designed with many features and tax incentives to overcome the reluctance on the part of families to save for future college expenses. No matter what circumstances a family may be in – large or small, low-income or high-income, decided on a particular college or undecided, transient or settled – there are programs available to accommodate your college saving desires in simple, flexible, and tax-efficient ways. In fact, you can use the tax advantages of a QSTP even if you have have no school-age children or grandchildren. Who’s to say that you won’t want to return to school at some point in the future?

…. Misconceptions about QSTPs abound. Ask most people about what they know, and you will hear some of the following responses:

Don’t these programs require that you commit to sending your kid to an in-state school?

The answer is no. Every state’s QSTP allows your investment to be used at colleges and universities located anywhere in the United States. Some programs provide better benefits for in-state schools but none lock you into a specific institution or state public education system.

I’ve heard about the program in my state and it doesn’t really excite me. That leaves me out, right?

Not quite. You should consider other states’ programs. Many of the best QSTPs are operated by states that impose no residency restrictions. They are open to all.

I have already set up an account in my state. So I guess I’m all set.

Guess again. Have you selected the program that provides you with the best benefits? If not, you may be better off switching to a different state’s QSTP. If switching is not a viable option (because of the restrictions and penalties imposed by some QSTPs), you can leave your current account where it is and open a second account (or third account, etc.) with another state’s program that provides better benefits to you.

My financial planner tells me I am better off using his recommended mutual funds to save for college costs.

Maybe so, but probably not. The rest of this book will provide some insight on this issue. Some financial planners will feel threatened by the concept of a QSTP, particularly when they know that commissions cannot be earned from a QSTP. As these programs become better known, however, the more astute planner will learn to work with them, not against them, and find ways to effectively incorporate QSTP accounts into the long-term financial plans of their clients.


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