EAGLE COLLEGE PLANNING

When it comes to paying for college, finding an extra $10,000 – $20,000 (or more) per year, per child can be a daunting prospect. For too many parents, it means paying for college with money that should go to finance their retirement.

It’s a choice no parent should have to make:

  • Will you rob your retirement account, and risk that someday you’ll end up depending on your children to pay for your care?
  • Or will you let your kids go forward on their own, knowing they’ll be saddled with student loans they may need decades to pay off?

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How to Use Bank On Yourself to Pay for College Without Going Broke

“I’m from the government, and I’m here to help”

Over the years, the government has come up with scads of ways to pay for college – but beware, because all government plans have strings attached.

Government “help” comes in three main flavors:

  1. 529 Plans are named after a section of the tax code. Once you put money in a 529 account, it grows tax-free. When the money is withdrawn for college, it’s not taxed at the federal level, and most states don’t tax withdrawals either. But every dollar in a 529 account reduces your child’s potential grant of federal student aid. (And there are six other issues that can hurt you when it comes to 529 plans.)
  2. UGMAs and UTMAs let you contribute to an account in a minor’s name without setting up a trust. You can buy and sell securities in the child’s name, and any growth is taxed at the child’s rate— which is undoubtedly lower than yours. But all that liquid cash in Junior’s name again means your child may be eligible for less federal student aid. And because the money legally belongs to your child, they can spend it however they want when they turn 18. In addition, there are five other traps to be aware of.
  3. Loans, such as Parent PLUS Loans and Federal Stafford Loans, charge interest rates as high as nearly 7%, plus an origination fee that may exceed 4% of the amount you’re borrowing. And too many borrowers end up like Diana Jackson, who had no student debt when she got her bachelor’s degree in 1982. But when her daughter graduated some 30 years later, Diana was stuck with $33,000 in parent loans. “I’ll be in my mid-seventies before I get that paid off,” says the part-time college professor. That kind of predicament, plus six other pitfalls, make traditional loans something to avoid.

This chart lists seven vitally important questions you should ask when considering how to pay for college:

7 College Questions Graphic

Where to Get the Answers and Help You Need

We can help you get all your questions answered and find out what type of plan makes sense for your college-bound kids.

Bank On Yourself can be a great option when it comes to paying for college, but we also offer a full suite of college planning services – from student coaching and college prep tests, to proper financial planning and budgeting to help cover the cost of college for your family.

Our certified College Planning Specialists can help you:

      • Find the best schools for your child based on his/her interests and your budget
      • Help you get the largest financial aid package available to you
      • Guide you through the college and financial aid application process
      • Provide you with a college planning checklist and timeline for completion of necessary steps
      • Show you how to pay for any out-of-pocket portion of your child’s college costs in the most efficient and tax-favored manner possible

Click here to request a FREE, no-obligation College Funding Analysis, or, to learn more about our College Planning services, or to register for one of our FREE informational workshops, please visit www.eaglecollegeplanning.com.