You owe it to yourself and your future by investing early and taking the time to plan for college. It is never too early to start and the first step is to seek the specialized advice you will need to navigate yourself through the higher education system from the professionals who know the ins and outs of the industry. Take advantage and sign up for a free workshop here.
Posts in category College Tuition
8 Key College Planning Investmet Strategies for All Families
Earlier this week, I published a post about how 529 Plans are not necessarily the best way to save and invest in college. Today, I’d like to share with you 8 key insider investment strategies that will help you make the right decision in addition to consulting with a certified college planner.
The 8 key insider tips on exactly how you can prepare to start saving strategically:
1. U.S. Series EE bonds are tax-deferred or tax-free (when used to pay qualified education expenses), low-risk investments that can be used as part of the long-term college financial aid plan.
2. Zero coupon bonds are currently taxed investments that lock in the current rate of interest and a specific amount on maturity. They can be used as part of the long-term college financial plan.
3. Municipal bonds are tax-free, low-risk investments that lock in the interest rate. They can be used as part of the long-term college financial plan.
4. Mutual funds are growth orientated long-term investments that allow for the switching of investments without incurring sales charges. They can be used part of the long-term college financial plan.
5. QTPs are tax-deferred, and possibly tax-free, accounts that are used to pay for tuition, fees, and room and board at the colleges specified in the investment contract. The gifts to these accounts can be spread over five years, which allows for large one-time gifts to these programs. Since the owner of the account can switch beneficiaries, the owner can maintain some control over the funds.
6. A Roth IRA is a long-term investment that grows tax-deferred. The withdrawals made from these accounts after age 59½ are tax and penalty-free. The non-deductible original contributions may be withdrawn tax-free for any use. In addition, there will be no 10% early withdrawal penalty on withdrawals made before age 59½ that are used to pay qualified college expenses.
7. Traditional IRAs may be tax-deferred long-term investments. They can be withdrawn penalty-free (10% penalty for withdrawal before age 59½) to pay qualified college expenses. The contributions to these accounts are tax deductible.
8. Real estate is a long-term growth-oriented investment whose appreciation in value grows tax-deferred and will be taxed at the favorable capital gains rate when sold. If the real estate is rented, it may generate significant tax losses (through depreciation).
These investment vehicles all have pros and cons and I must add that it is extremely important that families work with a certified college planning specialist and not just a financial planner as the higher education rules need to be considered in order to get financial aid. For example, certain assets/investments disqualify families in financial aid and every family is unique. Most financial advisors use a cookie cutter approach to saving for college versus understanding the student’s college dreams, how the colleges view their assets, and how much the family can truly afford for college.
College Planning Expert Brian Safdari is a strategist and America’s leading authority when it comes to maximizing college acceptances, reducing out-of-pocket costs as well as assisting you and your family to successfully navigate through the higher education system. His own story has compelled him to help others in maximizing their education and minimizing the cost. For more on Brian and how The College Planning Experts can help you: sign-up for a FREE workshop nearest you or contact us.
The Myths Behind 529 Plans
As a college planning expert, my number one advice to parents is: start early. I’m talking about the best way to begin to invest in your student’s future begins as early as thinking about it while they are in elementary school . It’s also important to reconsider some of the myths behind College Savings and State Prepaid Tuition Programs, also known as 529 Plans.
The family should always consider the student’s financial aid opportunity, prior to investing in one of the College Savings or State Prepaid Tuition Programs (529 plans). 529 plans are assessed against the family as an asset of the parent’s for financial aid purposes. Furthermore, if a student decides to attend certain private colleges, the amount accumulated in the student’s siblings’ 529 account are also assessed against the student as an asset of the parent. While distributions from 529s for federal aid have no impact, certain colleges may treat the distributions unfavorably. Inquire at potential schools as to how distributions during college years may be treated.
Let me give you an example: The student is a beneficiary of a $50,000 College Savings Account (529 plan) that is owned by the parents, of which $25,000 represents the original contribution and $25,000 represents the accumulation in the account. In Year 1 the student applies for financial aid, which will be reduced by $2,800 ($50,000 x 5.6% asset rate) due to his 529 account balance. Under the current financial aid rules, a distribution would have no impact on financial aid.
In the past ten years, 529 Plans have actually done poorly and have in turn continued to lose value in the market. In the end, there are better alternatives to the 529 Plans and other ways to invest in your student’s future that will not count against you when applying for federal aid.
College Planning Expert Brian Safdari is a strategist when it comes to maximizing college acceptances, reducing out-of-pocket costs as well as assisting you and your family to successfully navigate through the higher education system. His own story has compelled him to help others in maximizing their education and minimizing the cost. For more on Brian and how The College Planning Experts can help you: sign-up for a FREE workshop nearest you or contact us.
Deadline for Cal Grant Looms
Is your student about to miss out on up to $38,832 of free money for college? The deadline is looming For the Cal Grant. Many parents will lose out on thousands because they will not know how to take these two simple steps. Don’t miss this MARCH 2nd, 2011 DEADLINE.
Since 1955, the State of California has had the leading program in the nation to help students afford college, but most parents don’t even know it exists, so every year, tens of thousands of families miss out on a grant worth up to $9,708 of free money… a year.
For me, It’s really sad to hear about how many parents miss out on getting all the money that’s available for their kids. Right now, California is 40th in the nation for getting our students educated past high school, and many students aren’t going for financial reasons. Yet, this program can pay ALL of their tuition if they qualify, and most people will miss out because they don’t apply or they miss a deadline.
In fact, in 2005, over 75% of the graduating seniors did NOT complete a simple application for this grant.
I personally think that what is really sad is that our rate of college admission is plummeting as a state, with 14.5% less students going to college now than were going ten years ago. At that rate, our income level will fall below the U.S. average by the year 2020. Enough is enough already! We need to get our children educated!
College Planning Expert Brian Safdari is a strategist when it comes to maximizing college acceptances, reducing out-of-pocket costs as well as assisting you and your family to successfully navigate through the higher education system. His own story has compelled him to help others in maximizing their education and minimizing the cost. For more on Brian and how The College Planning Experts can help you: sign-up for a FREE workshop nearest you or contact us.