One lucky artist will win a $20,000 Gerber Life College Scholarship

As your child heads back to school or maybe starts school for the first time, you probably wonder what he or she may be when they grow up. It’s fun to imagine the possibilities: athlete, writer, photographer, engineer, dentist. Now’s the time for your child to grab some crayons or colored pencils and draw a picture of what they want to be when they grow up, and enter for a chance to win a $20,000 Gerber Life College Plan. Entering the Gerber Life College Scholarship Art Contest is as easy as 1, 2, 3:

News flash: A college education is expensive. Have you heard that before? While this is probably old news, tuitions rose again during the last school year, 2010 to 2011. There seems to be no end in sight and, as a result, college savings plans have never been more critical.

Highest Attendance Costs Continued to Increase
Sarah Lawrence College in Yonkers, NY, continued to hold the top spot in annual tuition, fees, room, and board with a 2.9 percent increase to $57,384 per school year. Landmark College (Putney, Vt.), Columbia, Wesleyan, Johns Hopkins, and Georgetown followed with annual costs in excess of $53,500 to attend. In many cases, the most expensive universities had one-year cost increases of more than 4 percent.

As with all other savings accounts, the savings rates between college savings accounts can vary, but, with the ever-rising cost of college tuition, you’ll need to find a college savings account that yields significantly above the rate of inflation if you want your “today’s” dollars to grow enough to afford tomorrow’s education. Figuring out which accounts have the best savings rates obviously makes financial sense, but where do you start?

College investments and endowment funds are important components of school tuition costs. When these funds perform well, institutions better control school tuition costs and designate significant portions of earnings to university-sponsored scholarships.

Since the recent recession, many endowment funds have declined. Most investments have yet to recover to pre-2006 levels. University investment problems require that your college savings plans become more conservative and rewarding.

A qualified education savings account usually offers federal tax advantages to participants. The key factors are “how much” and “how they work” for investors. While you can use any savings or investment account to plan for college, qualified college investment funds offer tax advantages that standard accounts do not.

For example, a Coverdell Education Savings Account (ESA) offers tax-free earnings increases, if the parent qualifies. If the parent (or child) has “modified adjusted gross income” less than $110,000 (or $220,000 for joint tax returns), and your child is under 18, you qualify for these college savings accounts. If you only withdraw funds for your child’s education expenses each year, these withdrawals are also tax-free.