College

How To Choose 529 Investments

by
529 college savings investment options

If you don’t already have a 529 plan opened, you should start with the instructions for opening a 529 plan before worrying about which investments you use. Trust me, when I tell you, as a former financial planner, that the biggest drag on saving money for college isn’t choosing the wrong investments, it’s taking too long to get started. No amount of tax advantages will make that up. Most parents overestimate the amount of merit-based scholarships their child can get, and underestimate how much financial aid they may need in the form of loans. Whether you are using education savings accounts, a Coverdell IRA, or a 529 plan, you want to cover as many qualified higher education expenses as you can without loans. The amount you need will be more influenced by need than merit, which means if you have a higher income and higher assets, you are going to pay more. That is just the way the world works right now. The only thing you can really do is deduct all the qualified educational expenses you can from your taxes and pay the rest with tax-free money from 529 accounts and the like. At least then your qualified education …

Read More

Smart to Use Roth IRA for College

by
roth ira for college

Should I use my Roth IRA for college? As a former financial planner, I would often get these questions from clients who read something somewhere. Much like patients asking doctors about drugs they heard about on TV, such questions rarely ended up being a good idea. When it comes to using a Roth IRA to save for college, it actually is a good idea. Can You Use Roth IRA to Pay for College First, you probably know that a Roth IRA is designed for retirement savings. The corresponding vehicle for parents saving for college is a 529 college savings plan. In general, the best way to save for college is in a 529 plan versus a Roth IRA. However, if you are planning to seek need-based financial aid, a Roth IRA might be the better solution for your family. Can I Use Roth IRA to Pay for College? Let’s start with CAN you use a Roth IRA to pay for college. We’ll look at SHOULD you use a Roth IRA for college next. As you may know, a Roth IRA offers tax-advantaged growth for investments within the account. This creates two kinds of money inside of a Roth IRA. The first …

Read More

Using Roth IRA to Lower Assets for Financial Aid

by
college financial aid

You have probably heard, but college is very expensive. Make that very, very, expensive. College is so expensive that even if you do pretty well with earnings and income, it can be hard to afford. In fact, having a higher income might actually make college harder to afford. Financial Aid for Higher Income Parents I’m going to make some assumptions here so that you know whether this is the right article for you. I’m going to assume that your child does well in school, has good SAT scores or ACT scores, and is applying to some higher tier universities. I’m also going to assume that your family income is in the six figures. There are two main types of financial aid. The first type is merit based financial aid. Often called scholarships, this kind of aid is offered to students based upon some factor other than need. The second type of financial aid is need based financial aid. This is financial aid that is based upon how much money you and your parents have. More specifically, need based financial aid is based on how low your income and assets are. Need Based Financial Aid with Higher Incomes Here is where …

Read More

FAFSA Scam on FAFSA.com

by
fafsa real website

A FAFSA scam is a bad way to start off your hunt for financial aid. If you, or someone you know, is going to college, or starting at a university, then chances are you need to apply for financial aid. Even if you don’t think you’ll qualify, there are often partial grants, federal loans, and various work-study programs that can help pay for college. Remember: the legit FAFSA website is FAFSA.gov. To apply for any federal financial aid, you’ll need to fill out a form called the FAFSA, the Free Application for Federal Student Aid. This form requires you to submit detailed financial information, which is verified against IRS records, and requires you to sign that all information is true under penalty of perjury. This is better than anyone else can really do as far as verifying your financial status, so many other financial aid grantors, including the universities themselves, rely on your submitted FAFSA. You have to fill out a FAFSA every year you are in college to continue to qualify for need-based financial aid. This is not one of those programs where you fill something out once. The easiest way to submit your FAFSA is online at fafsa.gov …

Read More

CollegeInvest 529 Plan Fees Reduced

by
college invest university

It’s always nice to get good news. CollegeInvest 529 Reduces Feeds for Direct Portfolio According to a recent release from CollegeInvest CEO Angela Baier, the administrative fee for the CollegeInvest Direct Portfolio was reduced from 0.32% to 0.31% on August 1, 2021. That means more of those college savings dollars stay in your 529 account, and less go to expenses. Remember, this only applies to the Direct Portfolio at CollegeInvest and not the CollegeInvest Scholars Choice, Smart Choice, or Stable Value Plus plans. A word about the Direct Portfolio at CollegeInvest Either the folks who started up CollegeInvest didn’t consult anyone with any knowledge about investing and marketing, or they DID consult someone, and that someone was working for the investment industry more than they were for the people of Colorado. Either way, the resulting Colorado 529 plan system ended up being a bit of a confusing mess for Coloradoans looking to invest money for college. So, CollegeInvest is the overall umbrella for all Colorado 529 plans. Colorado has four 529 plans. So, to access your 529 account online you go through a CollegeInvest login at collegeinveset.com. Once you get to CollegeInvest online there are FOUR different Colorado 529 plan …

Read More

How To Get Student Loan Forgiveness

by
student loan forgiveness

Student loans have gotten huge for some graduates. It’s no wonder that there is increasing interest in how to get student loan forgiveness. Unfortunately, there are very few circumstances in which you can get the government to pay off your loans or otherwise cancel your student loan debt. Student Loan Forgiveness Program There is a small subset of jobs that qualify for student loan forgiveness, and believe it or not, being in the military is not one of them. (Theoretically, you are supposed to qualify for help paying for college by serving before you go to college, so the idea is that you wouldn’t need help with student loans.) The most commonly used student loan forgiveness program involves either working in “public service,” or as a teacher. For the regular direct type of student loans, the teacher student loan forgiveness program requires you to teach for five complete AND consecutive at a school that serves primarily low-income students. The exact schools that qualify are ones that:  are in a school district that qualifies for Title I funds have been selected by the U.S. Department of Education based on being more than 30 percent students that qualify for Title I services is …

Read More

Using 529 Plans for Estate Planning

by
estate taxes 529 plans

Estate planning is one of those topics that seems to be widely misunderstood. First, there are different kinds of estate planning. The most necessary kind for everyone is simply having a will of some sort. It really doesn’t have to be anything fancy, especially if you don’t have a lot of assets. There are a lot of forms out there you can fill in. While that is definitely NOT the way to go if you have anything complicated or fancy, or if you have a lot of assets, they are pretty much fine for the average person. The second type of estate planning is financial estate planning, that is trying to avoid paying estate taxes. This actually applies only to a small percentage of people. Will I Have to Pay Estate Taxes? Nope. That was easy, huh? It’s a trick of semantics. Estate taxes are the only taxes that you will never have to pay. That’s because your heirs, or more specifically, your estate, actually pay estate taxes after you are dead, so you don’t pay them. Even if you inherit something, you don’t pay the taxes, the estate does, before the assets become yours, so technically, no person ever …

Read More

ITT Tech Shuts Down

by
itt tech shuts down options

ITT Technical Institutes is one of those colleges that you seem to see more on TV commercials than anywhere else. It announced that it is shutting down immediately, blaming the government. Unfortunately, the reality is that this was a long time coming. For years, many of the so-called, “for profit” colleges have been accused to providing their students little more than a big balance of student loans and degrees that weren’t worth the paper they were printed on. Somewhere along the line, enough powerful politicians switched from protecting these colleges to protecting their students, and the die was cast. As soon as ITT’s accrediting agency raised questions, the Feds acted. How ITT Shut Down Despite what you may read, the government did not shut down ITT. That would be an overstep over government power. Instead, it did the one thing it is allowed to do. It removed the eligibility of students to use federally backed student loans, which, are most student loans, at ITT schools. Lower income students make up a lot of the student body at schools like ITT Technical Institute. Without loans they wouldn’t be able to pay tuition, and without federal backing, they aren’t going to qualify …

Read More

Saving Money Into 529 Plan

by

OK, if you have already opened a 529 plan, and you have chosen which investments to use in your 529 plan, then the next step is to actually start getting money into your college savings account. And, it is here where the most important thing about saving money for college comes into play. The most important thing, more important than choosing the right college savings plan, more important than choosing which investments to use in your college savings plan, and more important that updating your higher education financial plan, is consistently automatically investing money in your college savings accounts. Let me go into a little more detail, it’s that important. We get caught up in the notion that what matters when saving or investing money are things like investment returns, taxes, using the right account, or getting the right financial advice. None of those things matters nearly as much as consistently investing more money. When I was a financial advisor some of the biggest 401k accounts, or 457 plans, I ever saw were from people who didn’t know a thing about them. These people opened the account when they were hired, set some sort of amount to contribute, picked an investment, or …

Read More

Types of College Savings Accounts

by

When it comes to saving money for college, there are a lot of options. A parents saving money for children’s college fund there are different ways to title those accounts, jointly or otherwise. Believe it or not, saving up money so your kid can go to college is a lot more about actually doing it, than how you do it. Most parents let a sizable amount of time pass in between college investments and that is a much bigger deal than exactly which kind of college savings account is right for you. Ways to Save Money for College Assuming you don’t want to stick money into a mattress, you are going to need some kind of bank account or other financial account to store up that money you need to save and invest. Here are the options. 529 College Savings Plans If the 529 plan came first, there wouldn’t be so many other ways to save for college. It is, quite simply, the best possible way to invest for college for most people. A 529 college account works a lot like a Roth IRA plan for college. You don’t get a federal income tax deduction for your contributions, but the …

Read More