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College costs can seem staggering. For the 2008-09 school year, the average annual total cost was $37,390 for a four-year private university and $18,326 for a four-year public university, up 5.6% and 5.7%, respectively, from the prior year (Source: Trends in College Pricing, 2008). Over the past decade, average tuition costs have increased 4.2% annually after inflation at public colleges and 2.4% at private colleges (Source: Trends in College Pricing, 2008).
Over $162 billion of financial aid was distributed during the 2007-08 school year, with an average award of $8,896 per full-time student. Of that total, approximately 65% was in the form of loans and 32% in grants (Source: Trends in Student Aid, 2008). With so much money at stake, you should understand the financial aid process to maximize your share of financial aid.
If you're looking for a tax-advantaged way to save for your child's college education, consider Coverdell Education Savings Accounts (ESAs). The basic features of ESAs include:
Continue reading "Coverdell Education Savings Accounts (ESAs)" »
A great deal more people would attend college to earn a degree if only they had the funding to do so. Not everyone has well-to-do parents who can finance their entire education, or parents who have saved sizeable nest eggs specifically to pay college tuition. Also, there has been an increase in non-traditional students, those who are married, working full-time and have children. It is often even more difficult for these individuals to pay for college because they have to maintain their households simultaneously. If you are serious about obtaining a college education yet are short on funds, don't lose hope. There are many funding options available for you if you plan on bettering yourself.
Continue reading "How to Successfully Fund your College Education" »
With limited resources for saving, which is the more important financial goal — saving for your retirement or saving for your child’s college education? While many parents want to pay the entire cost of their childrens' college educations, the reality is that there are a variety of ways to pay for that education — personal savings, financial aid, and loans. Unfortunately, there are not similar options for your retirement. No one is likely to loan you money if you have not saved enough for retirement. You may want to maximize your retirement savings, realizing that there are ways to use those savings to help with education costs. How can that strategy help when it comes time to send your child to college?
While section 529 plans always had significant tax benefits, there was concern because many of those benefits were scheduled to expire after 2010. However, the Pension Protection Act of 2006 made many section 529 plan provisions permanent. Thus, if you are looking for a way to fund your child’s college education, you should definitely take a look at section 529 plans. Consider these basic facts about section 529 plans:
When planning for college costs, a common assumption is that your child will obtain a bachelor’s degree in four years. But how realistic is that assumption?
Continue reading "How Long Does It Take to Complete a College Degree" »
The basic premise of financial aid is that it is need based. Families fill out the government’s aid form, the Free Application for Federal Student Aid, so mathematical formulas can determine a family’s eligibility for federal financial aid. Colleges can use a different, though similar, methodology to make financial aid awards. However, the same student can obtain very different financial aid packages from colleges with similar costs. If the financial aid process is truly need based, how could that happen?
To meet your goal for funding a child’s college education, you typically need to develop an investment plan. One of the more important factors is your child’s age:
Continue reading "How to Develop an Investment Plan for College Expenses" »
Everyone who has children is aware of the high cost of college. Over the last few decades costs have risen substantially faster than inflation. In-state tuition and fees over four years at the University of Tennessee (Knoxville)runs $22,488; for Belmont University $73,680; and for Vanderbilt - $133,760. This doesn’t include room and board. Is it any wonder parents get a knot in their stomachs when they think of college?
Continue reading "Strategies to Help Business Owners Survive the Cost of College" »
529 plans have many benefits, ranging from the fact that the owner, not the beneficiary controls the assets to the fact that earnings grow tax free from federal taxes and withdrawals for qualified education expenses are free from federal taxes through 2010. However, one reason many investors have not more readily utilized 529 plans is due to the extreme difficulty in understanding, calculating and comparing total plan expenses. Many of these plans’ expenses and cost structures are not very transparent. Furthermore, for those plans whose expenses and total costs are not transparent, there is usually a reason! Although the various expenses involved in 529 plans can get confusing, we’ll attempt to lift the veil of secrecy. We will not, however, attempt to also analyze the potential tax benefits some states offer residents who invest in their own state’s plan (although this is not an issue in Texas due to the fact that we do not have a state income tax), as this is a further complicating issue.
Paying for a college education is no small task, with the average annual cost of a four-year public college at $15,566 and of a four-year private college at $31,916 for the 2005-06 school year (Source: Trends in College Pricing, 2005). You may not want to count on financial aid, especially since approximately 47% of all financial aid awards are loans (Source: Trends in Student Aid, 2005). Even if you have been diligent about saving and qualify for some financial aid, you may need student loans to get through college. In fact, the typical college student who borrows to finance a bachelor's degree from a public college graduates with $15,500 of student loans (Source: Trends in Student Aid, 2005).
Many students will first handle money without parental supervision during college. To help keep costs down and avoid conflicts, you may want to develop a budget to guide your child’s spending. As you go through the process, consider the following:
Graduating from college is often viewed as the start of your adult life. The financial decisions you make as you start this new stage of life can significantly impact your finances for your entire life. Habits formed early are often difficult to change. To make sure you develop good financial habits, consider these tips:
Almost $122 billion of financial aid was distributed during the 2003-04 school year, with an average award of $10,472 per full-time student. Of that total, approximately 56% was loans and 38% was grants (Source: Trends in Student Aid, 2004). With so much money at stake, you should understand the financial aid process.
Once your child starts college, you’ll want to use funds set aside for college to maximize tax advantages as well as your financial aid awards. Which investments should you withdraw first — money from personal savings, Section 529 plan assets, or funds from Coverdell education savings accounts (ESAs)? How will those withdrawals affect education deductions and credits for tax purposes? And then, what impact will all of this have on your financial aid award?
No one disputes the fact that the cost of a college education is high. For the 2004-05 school year, the average annual cost of a four-year public university is $14,640 and for a four-year private university is $30,295 (Source: Trends in College Pricing, 2004). While those prices are sure to increase in the future, that doesn’t mean you should just give up and ignore the entire subject. There are a number of strategies to help you fund that college education:
On July 1, 2004, interest rates on federal student loans dropped to record lows. From July 1, 2004 to June 30, 2005, the interest rate for PLUS loans is 4.17% and for Stafford loans is 2.77% for students paying while in school and 3.37% for recent graduates. These rates are rounded up to the nearest one-eighth of a percent when loans are consolidated. Now may be a good time to consolidate student loans to lock in these low rates.
Continue reading "Locking in Low Student Loan Rates - PLUS Loans & Stafford Loans" »
Continue reading "The Increasing Importance of Merit Financial Aid" »
Continue reading "Get To Know Section 529 College Savings Plans" »
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