SERENITY WEALTH MANAGEMENT

With a 529 college saving plan, assets grow tax-free. The big financial firms love tax-free growth because it leads to bigger account balances and corresponding higher management fees. The longer-term nature of 529 plan also causes more fees for financial firms. But savings within 529 plans can actually make college much more expensive, thus nullifying any benefit of such tax-free growth savings... Assuming a two-parent income of $110,000, parents' savings and investments of $200,000, and one child entering college with $100,000 in a 529 plan, the EFC is calculated at $47,927... However, if we had zero in a 529 plan and instead an additional $100,000 in the parents' name (now totaling $300,000) the EFC would have dropped to $33,567. That's a 14,360 reduction per year in college cost. Totaling over 5 years to a $71,800 difference in college cost.