Four Savings Ideas for Parents with Study Abroad Students
Just saving for college isn't easy, but when you want your kids to be able to travel and get an education as well, you're also saving to send them abroad. It's an important part of any college student's growth, according to people like John Gugle, a certified financial planner who spent his sophomore year studying abroad at Sophia University in Tokyo. He said that the opportunity to live and study out of the US enabled him to broaden his understanding of the world and provide more career opportunities for himself to work with global companies. In today's job market, having a global job search is one of the perks if you have studied abroad. So can parents help? Here's some tips for making finances come together when your student desperately wants to go overseas.
1. Using 529 Distributions
Students can withdraw financial aid from a 529 plan without paying the tax penalty if they go to a post-secondary institution that has an "eligible to participate in a student aid program administered by the U.S. Department of Education," according to IRS spokesperson Eric Smith. In addition, for those students who want to go to college outside of the US, there are also schools in other countries that are eligible for withdrawing from 529 plans, such as the University of Toronto or the University of London. You can always ask about the eligibility for a particular school by calling 1-800-4-FEDAID.
2. Look at Currency Exchange Rates.
The American dollar isn't what it used to be. Based on calculations by the OANDA historical exchange rates calculator, students exchanging money during the first week of May 2012 were paying 5 percent more for British pounds than if they had waited until the week of June 2012. That's a big difference. So that you don't take gambles on these exchange rates, you need to lock in an exchange rate at the current price through a bank and avoid risking the ability to pay a higher tuition check because of the U.S. dollar dropping.
3. Saving for Travel Expenses
Parents also need to save for travel costs between US and the other country, as well as visiting while in the other country. In some cases, you can pull more from a 529 plan, but you should also budget and estimate costs beforehand, saving what you can on your own. In addition, local transportation, types of activities and housing will play a factor in how much you'll need to spend, so ensure that your student is choosing safe, yet reliable housing that doesn't cost a fortune and sticks to a budget for spending on activities and traveling while abroad.
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