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
. 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. Whos to say that you
wont 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:
Dont these programs require that you commit to sending your
kid to an in-state school?
The answer is no. Every states 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.
Ive heard about the program in my state and it doesnt
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
I have already set up an account in my state. So I guess Im
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 states
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 states 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.