Each year, an estimated 2,000,000 students enroll in higher education alone in the U.S. The reason for this is simple: Those who have a 4-year university degree earn on average $20,000 more per year than high school graduates. Whether you are living in the U.S. or anywhere in the world as an expat, it makes sense to get a university degree.
But with attending university comes a cost. The all-in cost of attending a 4-year university can range from 5 to 6 figures. With this in mind, it is important to have a plan for funding college education whether the degree is for you or for a loved one. In addition to saving for college, expats should keep in mind specific rules which may affect their eligibility for certain tuition levels. The following article goes over the 3 saving plans expats can use to fund college and some country specific examples.
The 529 Savings Plan is perhaps the most sought, after investment strategy for funding college. It is appealing because contributions grow tax free and any distributions used to fund higher education are tax free as well. Although the 529 plan is offered on a state level, it is not required to have residence in any state in order to open– making expats eligible patrons to use one. The 529 savings plan can be used to fund any domestic U.S. university as well as over 451 qualified education institutions. You can use this list (scroll to the bottom) to see if your university is recognized as a qualified education institution. In addition to the standard savings program, the 529 plan offers a pre-paid tuition option– which allows parents, grandparents, or any party to purchase tuition for university at today’s rate. The 529 savings plan is a relatively straightforward method to fund college university. However, as an expat, there could be ways to further optimize the plan. Speak with your financial advisor today on how to get the most out of your 529 savings plan at your university of choice.
Coverdell Education Savings Account
The Coverdell education savings account is another excellent strategy for investing in college tuition. Unlike the 529 savings plan, however, the Coverdell education savings account limits yearly contributions to $2,000. The benefit, though, with using a Coverdell education savings account is self-directed investments. In addition to this, Coverdell savings accounts allow use for K-12 expenses (while 529 savings plans only allow for K-12 tuition). This makes sense for those funding private schooling where expenses such as room and board or uniforms could incur. Like the 529 savings plan, in order to use disbursements tax free under the Coverdell savings account, universities must be on the qualified education institutions list (linked in previous section). Because there are benefits to the Coverdell savings account and the 529 plan, the best way may be both. Ask how the Coverdell ESA can benefit you in your next financial advisor visit.
Using a Traditional IRA for College Funding
If you have a traditional IRA, it may make sense to use it to disperse payments for college tuition. Money can be distributed from a traditional IRA at any time to pay college costs without the 10% penalty. And overall, traditional IRAs can be used to cover any gaps the 529 or Coverdell plans do not account for. Speak with your financial advisor today on how to best utilize your IRA for college funding.
Bonus: Tuition Costs in the Netherlands
Getting a college education in a European country can be even more valuable than the degree itself due to diversification of culture. And the fact the European institutions, including the Netherlands tend to run less than American ones is icing on the cake. In the Netherlands, college tuitions are separated by whether the student is an EU citizen and whether the school is public or private. Tuition costs in the Netherlands are as follows:
- Bachelor Programs:
- EU/EEA students pay between 700 and 1,950 EUR/year on average
- non-EU/EEA students pay between 6,000 and 12,000 EUR/year on average
- The maximum cost for a Bachelor degree in the Netherlands is 17,000 EUR/year
- Master Programs:
- EU/EEA students pay between 2,000 and 5,000 EUR/year on average
- non-EU/EEA students pay between 8,000 and 20,000 EUR/year on average
- The maximum cost for a Master degree in the Netherlands is 30,000 EUR/year
The Netherlands provides student financing to Dutch and non-Dutch. Take this step-by-step guide to find out if you qualify for student financing.
Written by Chris Gitre