Funding College Education

Mark Kutzke By | On April 23, 2015

College costs today have skyrocketed from what they were for many previous generations.  Costs of state schools today can run easily over $20,000 each year. Private colleges and universities usually far exceed that.  The questions that many of the people that we meet with have are: “How can I afford to send my children to college?” and/or “How will I be able to help pay for his/her college education?”

While the answer to these questions is not easy, there are steps that a person can take to help them more easily navigate the road of college expenses.  Of course, like any investment, one of the easier ways to do so is to start investing well ahead of time when your child is younger.  529 college savings plan regulations have been established by the government and initiated by states partnering with mutual fund companies to help provide tax relief for saving up for this major expense.  When investing in 529 programs in the years preceding your children’s entrance to college, the gains that it produces are tax free as long as they are used for qualifying post-secondary educational expenses.  If you are interested in exploring this further, have questions, or would like to set up this type of account, please contact us.

For those people whom this may not be an appropriate or not an option due to an impending college expense, don’t fear, there may be other options available to you.  Most colleges and universities across the United States will offer some sort of aid package depending on a number of factors for each student.  These factors include both socioeconomic data as well as educational achievements (grades, class rank, test scores).  The Wall Street Journal has recently published an excellent article going more in-depth on this topic and provides some advice on avenues to explore on this topic.

Now for the many of us that have graduated from college and have large sums of student loans, there may be options for us as well.  Programs are in place for people of certain professions to have student loan debt forgiven if they follow certain procedures.  While these programs do not apply to everyone, if you are a teacher, police officer, fire fighter, government employee, or work for a non-profit organization (other qualifications necessary), you may be eligible for full forgiveness of your student loan. If you are interested in more information or have questions about resources regarding possible student loan consolidation, please contact us.

Other relevant links:

For current average costs of Minnesota colleges and universities (2014-2015):  click here

US Department of Education website with Student Loan Information:   click here

FAFSA Application: https://fafsa.ed.gov/

 

DISCLOSURE: The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that a college-funding goal will be met. In order to be federally tax-free, earnings must be used to pay for qualified higher education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10-percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.