Saturday, June 29, 2013

Guaranteed Education Tuition for College

It is Not Too soon to Save for College!

After children sign up for kindergarten, the count-down starts. The years remaining before graduation are clearly numbered and parents start to question, “Do we need to start saving for College Education Tuition?”
And the correct answer is yes.

In the last 10 years, educational costs at Washington colleges has grown an average of 8% annually, with family earnings and investments dropping behind. Families who aspire to see their children graduate from college with out assuming huge debt are placing money apart now to reduce those future costs. If trends keep on, one year’s tuition and state-mandated fees costing $7600 today will add up to over $36,000 annually when today’s newborn is going to campus. Education Tuition will usually increase, but Washington’s Guaranteed Education Tuition (GET) program was founded by the Legislature in 1998 to support families save for that predictable costs.

How does Guaranteed Education Tuition work ?
GET works on one system, where 100 Guaranteed Education Tuition units purchased at today’s cost are sure to be equivalent for the future the price of a year’s resident, undergraduate tuition and state-mandated fees at Washington’s most high-priced public university, either UW or WSU. This parity is true as soon as your child is ready for college, even though college tuition doubles or triples during that time period.

Allow me to share answers for some common questions about Guaranteed Education Tuition:

What happens if my child wishes to go to college elsewhere?
Guaranteed Education Tuition or GET accounts can be utilized anywhere in the United States to pay for tuition at colleges, universities or vocational schools, whether public or private. The importance of GET units is founded on tuition at Washington’s highest priced public university, you could use that value anywhere. In case your chosen school is more expensive, you pay the difference. If it costs less, you may use extra units towards room and board, books, etc.

Let's say my child gets a scholarship, or if our plans change?
It is possible to transfer GET units to other members of the family, put them on hold, or request a refund.

What’s the exact difference between Guaranteed Education Tuition and various savings programs?
Compared with regular mutual finances or cost savings accounts, GET accounts offer you tax free growth as well as withdrawal. And also unlike other tax-advantaged 529 savings plans, Guaranteed Education Tuition accounts are not subject to the actual ups and downs of the stock market. Instead, GET ensures a steady and secure rate of return. College tuition is only part of the general image, so you may need these types of additional savings programs to help with room, board and books. Guaranteed Education Tuition is a foundation for your college savings strategy simply because it's increase in value is assured.

Could I afford to pay for this right now?
Using flexible savings options, families can afford to start saving for their kids future. You can sign up for a monthly payment plan, or even choose to contribute amounts in lump sum whenever money is available. Or you can save with a combination of both. Friends and relatives can also contribute, which makes a great gift idea for special occasions.

Luckily, and particularly in case your children are younger, time is actually in your favor. It is in no way too soon in order to save with regard to college. In case you do not prepare, you will become having to pay much more later on. Households who else begin preserving earlier find conserve probably the most and also to understand the best obtain off their Assured Schooling College tuition accounts. OBTAIN models have to become kept for 2 many years prior to utilize, and can not really display improved worth till kept with regard to 4 - 5 many years. OBTAIN is really a extensive strategy that is assisting a large number of Buenos aires households conserve with regard to university. More than 109, 000 trading accounts have been opened up, and also sixteen, 000 college students have previously utilized their own trading accounts to go to university. Why is this program distinctive is the fact that it is versatile, it is safe as well as your children may use this anyplace.

Thursday, June 28, 2012

Usefull tips to Survive The Rise In College Tuition

Survive The Rise In College Tuition With These Tips
College tuition has made another sharp increase in cost this fall -- causing more families to rely on government aid to make their dream of higher education possible, reports the AP.

On average, in-state tuition for public schools rose a total of 7.9 percent according to the College Board's "Trends in College Pricing." Private non-profit colleges, which can cost $ 35,000 or more a year, are now asking for an additional 4.5 percent this year.

Massive government subsidies and aid can help families afford higher tuitions, but even that aid can only go so far. Some families opt to take out private loans, but those tend to have high interest rates.

"Just when Americans need college the most, many are finding it increasingly difficult to afford," said Molly Corbett Broad, president of the American Council on Education.

What can students and families do to help themselves afford higher education? The Survivors Club spoke with Susan Fischer, Director of the University of Wisconsin-Madison Office of Student Financial Services about cost-saving tuition tips. Her 23 years of experience working with student services at the University maker her a financial aid expert -- check out her advice on how to make paying for college a reality instead of a dream.
Access All Federal Aid Possible

"We are proponents of accessing all the federal aid that you can. Maximize all your federal loans before you start going down to private loans. The federal loan programs are really good," Fischer comments.

Federal Stafford loans are a fixed-rate loan for students of higher education attending school at least half-time. Some of these student loans are subsidized which means the government pays the accrued interest while you are in school. These are the most common and one of the least expensive ways to pay for college.

The Federal Pell Grant program offers need-based aid to low income undergraduate and some graduate students and their families. Unlike a loan, these grants do not have to be paid back.

You can apply for Federal Student aid by completing the FAFSA.
For families who don't qualify for the Pell Grant, Fischer advises they look into the available tax credits: "There's a number of tax credits for people who are paying tuition for their kids or kids paying for themselves especially for middle class families who are not getting need-based grants. "Don't over look the tax credits."

Find information on tax credits from the College Board.
Take Basic Requirements at a Two Year School
"What some students might not realize they can do is attend a community college or technical school for two years and get their basic educational requirements like math and English at the lower cost and then transfer into the higher cost institution."

Students who decide to take this less-traditional route need to make sure that the credits will transfer to the school they wish to get their degree from. They will also save money if they live at home for those two years.

Fischer emphasizes that this strategy will not detract from educational prestige: "People don't care where you start; they want to know where you finish! The big deal is where you graduated from."

Start Saving . . . Now!

Tuition prices are probably going to continue to increase in the years to come and your family might not be able to rely on government aid to pay the whole price of tuition.
Ideally the parent started saving when the kid was born.
If you want to save and not get into so much debt, you live tight, you have simple needs and wants.
Save, don't buy what you absolutely don't need."
The important thing is to start taking action to save as early as you can.
The worst thing a family can do is do nothing," Fischer emphasizes. "Whether you save $ 100 every month and put it in a CD, anything. Not every family has the opportunity to save the same amount in the same way."
For students, saving might be applied through good practical budgeting techniques. "If you think of yourself as borrowing money every time your eat at a hamburger place and you multiply that out times your college career. That's a lot of money. Packing a sandwich can be very powerful."

A Student Needs a Part Time Job
"Students should be working 15 or 20 hours a week while in school. No more than that."
The Federal Work Study Program provides funds that are earned through part-time employment to assist students in financing the costs of post-secondary education.
"Unfortunately not everybody who wants work study can get work study it's based on financial need," Fischer said. "Beyond that it's based on the individual school to allocate out."
If you are unable to get work study, a traditional part-time job is a great way to supplement the rising cost of tuition.
"The average student can work 15 hours a week without hurting their grades, and it helps with time management."

Get the Student Involved in the Process
"I think the student has an obligation [to help]. When the student starts earning money have them put some of it away towards college.
"I think it is very reasonable for them to have 'skin in the game.' It's not just up to Mom and Dad."
When the student reaches high school, parents should sit down with their children and talk to them about what the student can expect for support.
"A lot of parents promise their kids they can go anywhere they want no matter what the cost.
"If you come to UW-Madison for undergrad, it is going to cost you about $ 37,000 a year for everything. That's a lot of money. We don't have $ 37,000 in financial aid to give you. I can tell you that. So you are taking an awful lot of loans or borrowing from relatives.
"It is important for parents to be honest with kids about the expense. Have them do some of the research. Be clear with your student on what they can expect for you to contribute."

Tips for High School Students
"Take as many AP classes as you can. A lot of those, when you get admitted and if you do well on your AP exams, will count as actual college classes so you can get through faster.
"The name of the game is get in and get through fast. Don't dawdle. Because dawdling is expensive."
When the student is a junior in high school, they "should be looking to see what kind of scholarships are out there on free search engines," Fischer recommends. "The deadlines are often in September or October of your senior year in high school. If you wait until you're admitted to college in January, you're not going to get them."

Wednesday, June 27, 2012

Saving for College - 529 Tuition plans

What is a 529 plan? 529 plans are investment vehicles designed to help families pay for future expenses associated with college or other qualified post-secondary training. Though contributions to a 529 plan are not deductible, these plans offer other tax advantages. All 50 states and the District of Columbia sponsor at least one type of 529 plan.

Note: Congress created 529 plans in 1996. They're named after Section 529 of the Internal Revenue Code. The legal name for 529 plans in the tax code is "qualified tuition programs."

Why use a 529 plan?
There are several advantages of 529 plans and one may be applicable to your family's needs. Earnings are not subject to federal tax when used for eligible college expenses. Earnings are often not subject to state tax. States may offer other incentives to in-state participants. There are no income restrictions on individual contributors. Contributions are only limited by the qualified education expenses of the beneficiary. You can change the beneficiary of a plan if the new beneficiary is in the same family. You can open a plan benefiting anyone: a relative, a friend, or even yourself. The plan owner or custodian controls the funds until withdrawal, not the beneficiary.

How 529 plans are structured.
There are two basic types of 529 plans - prepaid tuition plans and savings plans. A prepaid tuition plan enables a family to pay for future tuition now in current dollars and prices. A savings plan enables a family to accumulate funds in a tax-advantaged way for future tuition costs. A 529 plan can be established and maintained by a state, a state agency, or an eligible educational institution. Each 529 plan is somewhat unique. Some state-sponsored plans offer incentives to in-state participants, such as state-income-tax deductions or credits. Each 529 plan has one custodian and one beneficiary. A student or future student can be the beneficiary of more than one 529 plan.

Contribution limitations.
Contributions cannot exceed the amount necessary to provide for the qualified education expenses of the beneficiary. Contributors should be aware of potential gift tax issues if the amount contributed by any one contributor during a year to a given beneficiary, together with other gifts to that beneficiary, is greater than $ 13,000.

Use with other aid.
A family using a 529 tuition plan to pay for some of a child's college expenses may still be eligible to claim either the American opportunity credit or the lifetime learning credit.

A 529 plan is definitely not a complete college funding strategy. In fact, for many families, a 529 plan is not even the best college savings option. 529 plans can be expensive and inflexible. They do not generate federal tax deductions and, if you are not careful, the anticipated tax-free withdrawals may not materialize. This video describes what might be the perfect alternative to a 529 plan.

Tuesday, June 26, 2012

Learn about 529 Plans and Foreign Securities

Investing in a 529 plan can be a great way to save money for your childs college expenses.
About 32% of parents savings for childrens college expenses put money into 529 plans during 2009, up from 30% for 2008. Every state except Wyoming offers at least one plan; many states offer more than one plan. Investors are not required to invest in their home states plan. However, by sticking to a plan offered by ones state of residency, the investor may be entitled to an upfront state tax deduction. For example, you can live in California, invest in a 529 plan for Vermont, and end up using it for New York.

The most common investments for 529 plans are those tailored to a childs expected date of matriculation or the familys appetite for risk. Under IRS rules, 59 plan investors could only make one change per year; in December of 2008, the IRS stated plan holders could now make two changes per year.

You can set up an annuity to invest in your 529 plan. A good way to be sure that the interest rate for your payments remains the same is to have an annuity certificate. An annuity certificate ensures that your interest rate will be the same no matter how long the investment lasts.

529 Plans and Foreign Securities

Another lucrative investment can be found in foreign securities. Foreign securities are any security in foreign currency in stocks, bonds, debentures, shares and other forms. Annuity education can inform you and show you how to invest in a foreign security successfully. Its important to understand how it works and how to invest directly on a foreign exchange. An annuity education can help with this sometimes complicated information. For example, you may want to know first why its even a good idea to own a foreign security.

Investing directly on a foreign exchange 529 Plans is not the only way to gain exposure to international shares. Take American depositary receipts (ADRs), which are certificates corresponding to a certain number of shares of a foreign company. ADRs trade on U.S. exchanges providing investors with timely dividend payments and widespread information, but sticking to ADRs limits your universe to the large, multinational firms that tend to issue the securities (about 3,200 foreign firms currently list in the U.S.). ADRs are priced in U.S. dollars, so they mute the effects of exchange-rate fluctuationsone of the arguments for investing in international stocks.

The U.S. share of exchange-based global market capitalization has been falling, from 52% at the end of 2001 to 35.2% as of September 2007. As of January 2009, roughly 40,000 stocks traded in foreign exchangescompared with about 6,000 on the NYSE and NASDAQ.

At one time, sticking to the domestic market ensured the world's greatest quality of management, accounting standards, and transparency. But much of the world has caught up: Today more than 1,500 of the world's largest 2,000 companies are domiciled outside America's borders, including industry leaders such as Nestl, Toyota, HSBC, Royal Dutch Shell, and Samsung.

While foreign markets have some unique investing riskssome regions are more volatile and can have the potential for faster gains or lossesthey have also been home to some of the largest returns over specific periods of time.

International markets historically have been much more likely to produce outsized returns than U.S. stocksor other assets, for that matter. Of the 50 top-performing stocks in the MSCI All Country World Index through March 31, 2009, 40 were foreign. Foreign countries have a much more favorable macroeconomic outlook than the U.S.which could provide the backdrop for greater stock returns. U.S. GDP is expected to grow 1.5% during 2010, compared with 3.1% for the overall world economy.

As you can see, there is a lot of research and information to understand before investing in any plans or securities. To make the best decisions, you should attempt to simplify the information and understand what works best for you and your financial situation in the end.

Monday, June 25, 2012

The Best College Savings 529 Plans for 2012

The Best College Savings 529 Plans

One of the smartest ways to save for college is through a 529 Plan. 529 Plans are college savings plans that are funded with after tax dollars (net pay) which grow tax-deferred and allow tax-free withdrawals for the express purpose of paying qualified education expenses (tuition, room & board, required computers & required fees) for secondary education purposes (i.e. post-high school education) such as college, graduate school, trade schools or vocational schools.

Anyone can establish a 529 plan for anyone else, however, typically a parent or grandparent will establish a 529 Plan for a child or grandchild, through a financial advisor, with a small lump sum contribution followed by automated monthly contributions. You can even direct your employer to make the monthly contributions from your net pay.

Every state has a 529 Plan and some states have more than one plan.

Anyone can contribute to a given 529 Plan, as contributions are not restricted to the account owner. Contributions are considered gifts and are subject to the Gift Tax rules. These rules currently limit contributions to $ 13,000 per year per recipient. There is an exception that permits contributors a 5-year front-loading election for 529 Plan contributions, increasing this gift amount to $ 65,000.

Most plans allow anyone from any state to open a 529 Plan, so you generally don't need to be a resident of a particular state to open one. Some plans are sold by financial advisors and some or sold directly to the consumer. The direct-sold plans mean that you will have to complete and submit the application paperwork yourself and decide which investment choices are appropriate. With the financial advisor-sold plans the financial advisor completes and submits the application paperwork and determines which investment options are appropriate given your level of risk tolerance.

So which 529 Plans are the best plans?

Some of the better plans around are the University of Alaska College Savings Plan, the Ohio College Advantage Plan and the Rhode Island CollegeBoundFund Plan. The Alaska and Ohio plans are direct plans, while the Rhode Island plan is sold through financial advisors. Each plan is rated 4.5 out of 5 for non-residents (i.e. New Jersey residents) according to saving for college's web site.

The University of Alaska College Savings plan is managed by T. Rowe Price. The initial minimum contribution is $ 250. For those who cannot afford a lump sum contribution of $ 250, they can make monthly contributions under the Automatic Asset Builder program until the cumulative contribution amount reaches $ 250. The minimum for all subsequent contributions must be at least $ 50 each. The Plan offers 3 investment options:

1. an age-based option
2. a static (never changing) option and
3. a balanced investment option.

The fees include a $ 25 annual fee, which is waived if you are contributing under the systematic investment or Automatic Asset Builder programs, or if you are investing under the balanced investment option. There is also a .28% annualized program fee for all investments other than those in the balanced investment option, which makes this one of the least expensive 529 plans in the nation.

The Ohio College Advantage 529 Plan (Direct Plan) is administered by The Ohio Tuition Trust Authority; however, the funds are managed by Putnam, The Vanguard Group and Fifth Third Bank. The Plan allows contributions as low as $ 15 (one of the lowest minimum contribution amounts among all plans), although investments in Fifth Third Bank require a minimum investment of $ 500.

There are 32 investment options, however, non-residents are only permitted to invest in only 16 investment options, as The Vanguard Group of funds are only available to Ohio residents or Ohio beneficiaries/students. The only fee is the annual asset-based fee, which ranges from .23% to 1% on the account balance. There are no loads, application or annual account maintenance fees. This ranks the Ohio Plan as among the least expensive in the nation.

The Rhode Island CollegeBoundFund Plan is managed by Alliance Bernstein and offers 16 investment options through 4 investment categories: 1. Age-Based; 2. Fixed-Allocation; 3. Stable-Value; and 4. Individual Funds. There is a minimum contribution of $ 1,000, however, this minimum is waived when participating in the automatic investment plan ($ 50 minimum for each separate automatic contribution). In terms of fees there is a $ 25 annual maintenance fee, annual management fee of .4% to 1.37% and sales loads, which range from 1% to 4.25%, depending on the fund Class.

In New Jersey, there are two 529 Plans. The NJBEST College Savings Plan and the Franklin Templeton 529 College Savings Plan. Both have very good ratings of 4 out of 5 for residents. Franklin Templeton manages both plans. The NJBEST plan is available only to residents and is not sold by financial advisors or brokers. Both plans offer a first semester scholarship ranging from $ 500 up to $ 1,500 based on a graduated scale tied to the life and participation in the plan.

In order to get the minimum $ 500 scholarship the contributors must have contributed at least $ 1,200 into the plan and the plan must have been in existence for at least 4 years. Thereafter, for every 2 years in which $ 300 has been contributed (per year), the state will add an additional $ 250 to the scholarship amount. In order to get the full $ 1,500 scholarship, the plan must have been in existence 12 years with a requisite $ 300 contribution having been made in years 5-12.

The scholarship is only available to beneficiaries (students) who attend a New Jersey college or university. New Jersey does not offer any tax deductions for contributions to either plan. There are minimum contributions and minimum account balances for both plans. The NJBEST Plan minimum contribution is $ 300. If you agree to make monthly contributions of $ 25 for the first year, this minimum is waived. The Franklin Templeton Plan minimum contribution is $ 250.

Once the account balance reaches $ 1,200, in either plan, you are no longer required to make any further contributions to keep the account open. The maximum, cumulative account balance any one account may have is $ 305,000. Annual program management fees in both plans are .4% of the account balance. There are no account maintenance fees for New Jersey residents. In the Franklin Templeton Plan there are annual distribution/servicing fees of .25% for Class A shares and 1% for Class B and C shares as well as one-time sales charges for Class A (4.25%-5.75%) and Class B and C shares (1.84%-2.21%).

In this video SEC-registered investment manager Bill Parish examines 529 College Savings Plans, sharing his views on how to best choose and set up the right plan for these important savings. Also, a look at Oregon's 529 vendor Oppenheimer's failure to protect its plan's most conservative funds from massive losses, while similar funds around the country remained stable.

Sunday, June 24, 2012

College savings plans - Learn about State Tax Deductions with 529

State Tax Deductions with 529 Plans

Learning about College savings plans and State Tax Deductions with 529 Plans

When planning ahead and investing in a college savings plan to make sure that money is available for a child's college education it's important to learn everything possible about the many different types of college savings plans and the different rules regarding taxation of those savings plans. For parents, this information can be confusing but it's very important to make sure that the investment is set up correctly and the best type of investment is chosen to make sure that the money the parents have to invest makes as much money as possible for the child's education. Most parents end up investing in 529 college savings plans but the laws surrounding 529 college savings plans are complicated and can be different in each state since the 529 college savings programs are state run. Learning about the state tax deductions allowed for 529 college savings plans is very important. The laws regarding taxes, tax deductions, and 529 college savings plan are different in every state, so parents should look for information regarding taxes and 529 college savings plans in the state where they live before investing.

Parents who invest in a 529 college savings plan that is not a pre-paid college savings plan are not eligible for a Federal tax deduction on the amount of that investment however investing in a 529 college savings plan does have some benefits because money invested in a 529 college savings plan is tax free, and deductions made from the 529 college savings account that are applied to educational costs are also tax free. Some states offer parents a state income tax deduction on money that it is contributed to a 529 college savings account. Each state is different, but it's easy to find information about 529 college savings plans and tax laws that are listed by state so that residents of each state can find out what the laws are where they live and what tax deductions, if any, they are entitled to when opening a non pre-paid 529 college savings account for their child.

In terms of taxes, the thing to watch out for when investing in a 529 college savings plan that is not a pre-paid 529 college savings plan is the penalties and tax fees for early withdrawal of that the investment money. If parents withdraw the money from a non pre-paid 529 college savings plan account for any reason other than applying that money to specified higher education expenses there is a significant early withdrawal fee and tax penalty. When the investment is withdrawn early and not used for educational purposes, the amount of money that withdrawn from the earnings portion of the 529 college savings account will become subject to state income tax plus an additional 10% tax on that portion of the investment.

There are a lot of rules and complicated issues when it comes to non pre-paid 529 college savings accounts and parents should make sure that they understand all the rules and the tax laws regarding 529 college savings accounts before they invest in a 529 college savings account to make sure that in the future they are not left in a situation where they didn't put away enough money for their child's education or end up paying heavy tax penalties and fees and end up without enough money to pay for their child's education because they didn't understand the tax laws regarding 529 college savings accounts when they first opened the account. It's more important than ever these days to put aside some money for a child's education because college costs are skyrocketing every year. Be sure to invest wisely to make sure that the investment provides enough money for the child's future college education.

Saturday, June 23, 2012

College Prepaid Tuition Plans - what exactly are they?

What Are Prepaid College Tuition Plans ?

Given the costs of financing college studies, it is sometimes hard for students to pay for tuition. However, there are options for parents and family members to aid them in the process. Prepaid college tuition plans can be a viable solution that lets parents purchase today or start saving at current prices for the costs of public in-state college fees and other costs related to college studies.

These plans are also known as prepaid education arrangements and provide the family members with the possibility of purchasing (today and at current prices) the future education of their children or teenagers. As usual, these plans have advantages and disadvantages that need to be considered before deciding whether it is advisable to get into one of these programs or resort to other sources of college funds.

Benefits from Prepaid Tuition Plans

It is a low risk investment because as long as you know that your children will go to college, you can be sure that at that time you won't have to pay any more money and you will be able to dispose of all your income since the amounts set aside in the prepaid tuition plan will cover for all the costs of college tuition.
Besides, the amounts invested are guaranteed by the state governments that will ensure and assure that the money saved will produce enough revenue to at least match the increase of the costs of college tuition. That's why this investment implies such a low risk: because it has a government guarantee. Moreover, prepaid tuition plans revenues usually do much better than certificate of deposits and other low risk investments.

Disadvantages of College Prepaid Tuition Plans

The limitations of prepaid tuition plans have to be considered definitely a disadvantage unless you know for sure that your children will not want to attend to other colleges. The participation in these programs is limited to residents of the state where the colleges sit in and only for state universities, no private universities are included and other states' universities are also excluded. Therefore, the choices of the student will be limited to the public colleges that are located in that state.The low risk that was considered a benefit can also be considered a disadvantage because the earnings produced by these prepaid tuition plans are not that significant when compared to other less conservative investments.
Therefore, for those who have enough time and are less conservative investors, it is wise to search for other options first as prepaid tuition plan savings won't produce much revenue when compared with stocks, bonds, etc.

These tuition finance plans can also limit your ability to obtain financial aid from the government. When being considered for government grants and loans for college, the fact that you've participated in a prepaid tuition plan will show that you had saving capacity and will imply less advantageous terms on your subsidized loans and lower amounts (if approved) on government grants.

Another downside that is important to note is that you have to be convinced that you want to participate on these Prepaid Tuition Plans programs otherwise, cancellation and refund of these prepaid tuition plans imply high penalty fees and other costs that would turn such decision too onerous.