Category: Urban Ed Written by The Grio
Last Updated on Tuesday, 25 September 2012 10:24
Category: Urban Ed Written by HBCU Digest
Last Updated on Monday, 10 September 2012 12:01
Category: Urban Ed Written by CBSNEWS
(MoneyWatch) College tuition costs have risen five to eight percent annually over the past ten years, far faster than the average wage growth for American workers. As a result, parents and students have continued to accumulate more college debt, while their means for repaying it have waned.
Along with factoring in the soaring cost of higher education, people need to gauge the impact of inflation on their college savings. That puts a premium on saving and investing now in order to grow your school savings at a rate that meets or exceeds the spiraling cost of college.
One of the more effective places to start saving and investing for future college costs is a 529 education savings plan (named after the applicable section of the IRS code). These plans are popular and widely used. Every state offers at least one 529 savings plan, and a total of more than $135 billion is invested in roughly 7 million such plans.
The CollegeAmerica 529 plan, sponsored by the Commonwealth of Virginia, has the most assets -- about $29 billion in its advisor-sold plan, which contains low-cost investment options offered by American Funds.
The next largest 529 plan by assets is the NY 529 College Savings Plan, with about $11 billion. It offers low-cost investment funds managed by Vanguard.
A 529 savings plan is a simple way to save and invest money for your child's future education. Its key benefits:
Money invested grows tax-deferred, as with an IRA
Parents own the account, so the child can't control or access it
If a child doesn't go to college, parents can roll the account over to another family member
Anyone can contribute
There are no income limitations to setting up a 529 plan
Most states have no age limit for when the money has to be used
529 savings plans are state-sponsored savings and investment programs. That is, the state sets up the plan with an asset management company of its choice. Individuals open a 529 account with that asset management company according to the state's predetermined plan features.
You are the owner of the account, and the child for whom the account is set up is the beneficiary. Typically you don't deal directly with the state, but rather with the asset management or investment company.
Generally, there are two types of 529s:
Prepaid tuition plans let you prepay tuition at a qualified educational institution at today's tuition rates.
Savings plans let you save and invest money in a tax-deferred account, which can be used to pay for education expenses at any college at a future date.
Despite these differences, the fundamental idea with both plans is that the amount saved today should grow at least as fast, or faster, than the rate of inflation of future education costs.
One concern with 529 plans is what can happen if the money isn't used for college. Funds withdrawn from 529 plans that are not used for education are taxed as income and also incur a 10 percent penalty tax.
But there is an important exception: If you do not use the money in a 529 plan because your child gets a scholarship, then the remainder of the 529 account can be rolled over to another sibling (or relative), or it can be cashed out by the beneficiary with no penalty other than the tax paid (at your rate) on the earnings. The same rule applies in the event of the child's death or disability.
Another concern is how a 529 plan account where your child is a beneficiary will affect her chances of qualifying for financial aid. But since 529 plan accounts are treated as assets of the parent, the assets in these accounts have a lesser impact on the family's expected contribution toward college costs before financial aid is awarded.
Last Updated on Tuesday, 04 September 2012 14:02
Category: Urban Ed Written by Classesandcareers.com
Last Updated on Monday, 10 September 2012 11:13
Category: Urban Ed Written by Kiplinger.com
The sticker shock when you first see the bill for tuition, room and board, and all those nebulous fees is bad enough. With the excitement and stress that accompanies the move to college, it's easy to let down your guard and pony up the plastic for a whole lot of other expenses. Sure, you want what’s best for your child, but you don't have to say yes to every item on his or her wish list.
Of course, not all students' needs are the same -- students in engineering and medical studies, for example, may require new textbooks they’ll keep or a more powerful computer. But, generally speaking, here are 12 expenses campus life doesn't really require:
New textbooks. More and more universities are offering textbook rental programs to help students avoid paying unfathomable new-book prices. Check to see whether your university offers a rental program, which is most often available for the school's core-curriculum and prerequisite classes.
Save even more by comparison-shopping online for new and used textbooks for sale and for rent. You can even save some trees by licensing e-textbooks that you can access from your computer or mobile devices. Learn more in How to Cut Your Textbook Costs in Half – or More.
A high-end laptop or desktop computer. An inexpensive laptop or desktop should do the trick. Netbooks are cheap, but their small keyboards and still-slow processing speed won't make the grade for a student's first year in college. The updated Dell Inspiron 15R Intel Core i3 laptop is still our favorite powerful, portable and affordable laptop. It has a 15.6-inch screen, weighs 6.1 pounds, and has 6.5 gigabytes of memory and a 750GB hard drive. The Dell is available at Best Buy for $520 (a more powerful version with 8 gigabytes of memory and a 1TB hard drive sells for $620).
A printer. If you skip this, you'll save about $50 for a printer, $30 a pop for replacement ink and $9 per pack of paper. For less than $10, your teen could buy a flash drive instead, save his 20-page term paper on it and print the paper in the campus computer lab, which you may already be paying for. (Some schools include a technology fee in room-and-board costs -- $100 per semester in some cases.) Students may also have the option of sending files directly from their dorm room to a computer-lab printer. But make sure you ask about page limits and any printing fees.
A pricey smart-phone plan. Students may think that a smart phone -- especially an iPhone or a Droid -- is de rigueur to deal with the rigors of campus life, but contracts with data plans can run higher than $200 a month.
Fortunately, there are less-expensive, no-contract alternatives. Consider WalMart’s Straight Talk plan, which offers unlimited voice, texting and data for $45 per month and a variety of smart phones. If your kid texts more than talks, you might want to try Virgin Mobile’s Beyond Talk plans, which use Sprint's Nationwide Network. These plans come with unlimited messaging and data; 300 voice minutes per month is $35, while 1,200 minutes per month is $45. Unlimited minutes will cost $55 per month. Boost Mobile, which also runs on Sprint’s network, starts with a $55-per-month plan for an Android phone with unlimited talking, texting and data (make on-time payments for 18 months and the monthly price drops to $40).
Of course, if you have a family plan, you should consider if it’s worth keeping your child on it versus getting him a prepaid plan. To learn more, read Smart Ways to Save on Smart-Phone Plans.
Cable TV. Cut this additional expense by accessing a wide variety of current entertainment and news online. You can stream programs from your computer or a Web-enabled device, such as an Xbox 360 gaming console, a Playstation 3, a Wii or a TiVo:
--TV Shows. XfinityTV.com and Hulu.com, for example, let you stream TV shows free. You can also catch recent episodes of your favorite shows at the networks’ own sites. Hulu.com now offers Hulu Plus, which for $8 a month gives you access to seasons of more than 1,000 current and classic TV shows, thousands of movies (including films from the Criterion Collection) and limited commercial introduction in 720p high definition. College students can get a two-week free trial if they sign up with their .edu e-mail address.
--Movies. Netflix offers for $8 a month unlimited TV episodes and movies streaming online through a Web-enabled device.
--Sports. WatchESPN (formerly ESPN3.com) streams live broadcasts of professional sports, such as professional baseball, basketball, golf, soccer and tennis, and of course college basketball and football. You can stream WatchESPN content to an Xbox 360, but you must have an Xbox Live Gold membership, which starts at $5 a month, or $60 a year (same goes for streaming Netflix content with the Xbox 360).
A car. In a nine-month academic year, according to AAA, the average small sedan would rack up about $3,200 in expenses, including costs for gas, standard maintenance and insurance. Parking permits and any tickets or breakdowns would add even more to the bill. Keeping the car parked at home could lower insurance premiums, too (see VIDEO: Kids, Cars and College).
A credit card. The average freshman who has a credit card has nearly $755 in card debt, according to a recent study by Sallie Mae. To curb the frivolity of first-year credit card spending, Uncle Sam is now enforcing stricter credit card rules. Anyone younger than 21 is required to prove his or her ability to repay any debts or have a parent (or someone else 21 or older) co-sign the card application.
Help your student stay in the black by withholding your signature until he has a long track record of fiscal responsibility. A debit card is a good way to get started. For tips on how to discuss personal finance, see What College Students Need to Know About Money and How to Get Kids Motivated About Money Management.
High bank fees. Open an account for your child at a bank that is close to campus and has nationwide coverage. If your child uses an account with the hometown bank, she could spend up to $5 when she withdraws money from an out-of-network ATM. If she withdraws money, say, once a week, she could spend up to $260 a year on fees. Or consider opening an online checking account with a bank that doesn't charge ATM fees or that refunds ATM surcharges by other banks. Be sure to read the fine print: Some of these banks do not refund ATM fees beyond a certain amount, and some require the account holder to maintain a minimum account balance every month.
When choosing a bank, also find out how much it costs, if anything, to transfer funds online from your account to your student's. This will save you from having to mail checks. Another option is to open an account with a credit union that belongs to a surcharge-free network. Click here to locate one.
Overdraft protection. You now have the option when you open an account to opt out of overdraft protection. That means the bank either will not permit you to withdraw funds if your balance is too low or will ask whether you want to pay a $35 fee and proceed with the withdrawal. This is not a one-time decision; you can switch your preference if you decide you want the bank to cover overdrafts. Checks and recurring payments that cause you to overdraw the account are not covered even if you opt out, so you can still incur hefty overdraft fees.
A big meal plan. You’ve heard of the Freshman 15, so avoid loading up your child's meal account with enough money to feed the football team. Often, the money you spend on a meal plan does not roll over from year to year -- if you don’t use the money, you lose it. Best to start low and see how much your student eats. Many colleges give you the opportunity to replenish meal-plan funds midyear. You could also supplement your kid’s meal plan with gift cards to the local grocery (or pizza joint). Or you can buy gift cards at GiftCertificates.com.
Campus health insurance. If you have family health coverage, your child may still be covered under that plan when she goes to college. If your plan does not cover out-of-network costs, a campus health-insurance plan may be a more cost-effective option. Be careful, though: Some college policies have low coverage maximums, which could leave you with thousands of dollars in uninsured expenses. See Kids, College and Insurance for other options.
Private loans. The hefty price tag on higher education makes it hard to avoid student loans, but if at all possible, steer clear of private student loans. They usually carry variable rates (as opposed to the fixed rates of federal loans), have fewer repayment options and allow students to rack up high balances. (See Be Wary of Private Student Loans.)
You still have time to apply for federal student loans to cover the bills this school year. And look for scholarships -- they’re easier to get than you might think.
Last Updated on Tuesday, 04 September 2012 13:39
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