The cost of higher education is increasing relentlessly year by year with increases running well ahead of inflation. Even with only one child, costs can be prohibitive. Experts have concluded that a family needs to look ahead and prepare for the financial burden. It is essential that they start putting money aside as early as possible. There are a number of ways to do this, and the method that is best will depend on the age of the child and the family's resources and cash needs, as well as a number of other considerations.
Taxes are another important concern.
If money can be invested and earn interest, dividends or other income that is not taxed until needed for college expenses, the college fund will accumulate much faster than if taxes take a large bite out of it. If a child is very young, perhaps even an infant, there are legal techniques for putting money and property into a child's name. While some of the tax advantages were cut back by recent tax law changes, the technique is still worth considering. Since it is generally not advisable for minors to own property, or even bank accounts in their own names, gifts to minor children are usually made either to a custodian or trust. The easiest way to make a gift to a child is to give the property to a custodian to hold for the child's benefit.