Last time we looked at some solutions for college savings such as a regular savings plan and also working part time during High School.
What if you do those things, but it still isn´t enough to cover college costs? Or perhaps you are getting started late in the game?
Here are some ways to help pay for college even if you haven't saved much. (Besides winning the lottery or robbing a bank.) The first way is actually pretty obvious - although families don´t utilize it as much as they should. Contact the Financial Aid department from your college and make sure you have applied for any and all scholarship money that you have a chance to qualify for. Don´t leave any "free" money on the table.
Going along with this scholarship idea, does Johnny (or Jill) play any sports? Recently, on my Blog Talk Radio program, http://www.blogtalkradio.com/401kCoach/2009/09/02/Improving-Your-Financial-Health
I visited with Charlie Adams, the Senior National Speaker for the National Collegiate Scouting Assocaiation of Chicago. Charlie helps many high school athletes get scholarships to play various sports in college. Normally when I think of athletic scholarships, I would think of football and basketball at large universities.
However, Charlie points out that there are plenty of scholarships given to students who are decent athletes and good students. Colleges offer a wide range of athletic opportunities such as golf, lacrosse, cross country, and rowing. In fact, Charlie´s son Jack earned a scholarship to Millsaps College in Mississippi for cross country.
Charlie also talks about a book, "Athletes Wanted" by Chris Krause. http://www.ncsasports.org/about-ncsa/about-chris-krause The book points out that employers have a growing need to ¨hire quality people for their companies. Recruiters love interviewing candidates who have played collegiate sports. They have learned the value of goal setting, teamwork, time management, and motivation. So if Johnny or Jill have some athletic skills, look into this as an option.
One thing to keep in mind - Johnny and Jill need to keep their grades up. To qualify for scholarships at smaller schools in sports, there is more of an emphasis on the "Student" part of student-athlete. You may contact Charlie Adams at www.stokethefirewithin.com.
What if your child doesn't play sports? Could they be entreprenuers? There are several examples of students who saw a need and figured out a way to fill the need and profit from it. They learn (on their own) valuable skills in sales, marketing, and business management. This would also set them apart from other candidates when its time to leave college and interview for work. Here is an article on "Teen Money Making Ideas". http://teenmoneymakingideas.com/how-college-students-can-make-money-in-the-summer-in-12-of-the-top-home-based-businesses/
If Johnny starts a business and it really takes off, he may find his career in the process. There was once a college student named Bill Gates who actually dropped out of Harvard to focus on his Microsoft business full time. (Of course the reason was that he felt he wasn´t learning anything new about computers.)
If you like this option, you may want to look at books about young men and women who have started successful businesses. A great website for information is http://www.quintcareers.com/college_entrepreneur_resources.html
"OK" you think. "But I´m not Bill Gates or Shaquille O´ Neal.What else can I do?"
There are other ways to learn entrprenuerial skills in organizations which are already established. Looking back on my college years, I had an opportunity to work with the Southwestern Company. www.southwestern.com. Southwestern has been around since 1855. They have a long history of helping college students to earn money for college. Students also learn some valuable lessons in the process - motivation, goal setting, business management, how to sell, and how to deal with all types of people.
Southwestern works with over 3000 students per year in the US and the UK, and the average First Year student earns $2733/mo during the summer months. Like many other opportunities, as a student gains experience, they may become more proficient.
http://www.southwesterninfo.com/FAQ.aspx Please contact Southwestern for more information.
If none of these really work for you, there is one more idea on paying for college, and its also a great one. Talk to a local recruiter about military service. For the student who hasn't yet figured out what they want from college or what they want to do in life (and at 18, who really has it figured out?), the military gives you time to figure things out. Military service also teaches skills such as teamwork, goal setting, perseverance, and time management. And they can help you to pay for school. http://www.military.com/money-for-school/tuition-assistance/army-tuition-assistance
I've met a number of people who have served for 4 years, then went to college with money from the government. As I mentioned in my last article, a 20 year old freshman has a good chance of being more mature than an 18 year old. Wouldn't you agree then that a 22 year old freshman with skills learned in the military would be even more mature and ready to learn? It certainly adds to a resume, and can lead to all types of career choices later.
I hope these have been helpful ideas. None of them involve taking out a loan, and if we can avoid that, we'd all be better off. You can contact me at my website, www.helpmy401k.us or follow me on Twitter at www.twitter.com/deanvoelker. My Blog Talk Radio program airs weekly and the archives may be heard at www.blogtalkradio.com/401kcoach.
Showing posts with label college. Show all posts
Showing posts with label college. Show all posts
Tuesday, September 8, 2009
Wednesday, September 2, 2009
Raising Arizona (and Arizona State and Others) - SOLUTIONS
In my first part on this, we looked at the problem of rising college costs. I believe we are at a point where students must “do their homework” before taking out a college loan. You want to be sure that you will get a good return on your investment and be able to pay it back easily. Ideally, you’d like to NOT take a loan at all. College is now a “business” decision, not a right.
I wouldn’t be a good advisor to bring up a problem without mentioning some viable solutions. There are enough good ideas, that I will talk about a few now and a few more in my next piece. None of these are magic – but if you apply these common sense ideas you’ll be better off than doing nothing. So here are some ways to Make College More Affordable.
* Saving in a 529 or UTMA plan (regularly)
The key word here is “regularly”. You can set up either of these plans as soon as your baby is born. (And I highly recommend that!) Did you know that if you were to save $100/month for 18 years (216 months) at an average return of 8%, you’d have saved $46,865? And $200/month over the same period = $93,730.
The 2 plans are different, but the idea is the same. The 529 http://en.wikipedia.org/wiki/529_planallows for tax-free withdrawals for college related expenses. Here in Indiana, since 2007, you can also get a 20% tax credit on any contributions to a 529 plan. Put in $5000 and you get $1000 back in the spring. Also, money can be transferred between family members. If it isn’t used for college, you are simply taxed on the growth at withdrawal.
UTMA (U -T – M – A ….you ain’t got no alibi, its UTMA!) OK, so I should give up on ‘cheerleading’ – but I couldn’t resist. This is the Uniform Transfer to Minors Act. A parent or guardian acts as a “custodian” for an account in the child’s name. http://www.fairmark.com/custacct/regret1.htm until the child reaches age 21. At that time, the money is turned over to the child. This is also counted in the child’s assets when you go to apply for financial aid later.
One advantage that someone may see in the UTMA is that it doesn’t matter if the money is used for college or not – although there are no tax benefits. They have full control over the money.
Personally, I prefer the 529 plan (for the tax benefits) and have set one up for both of my daughters. Whichever plan you choose, (talk to your advisor) the most important thing is to save something regularly.
Another note here – a common question I get is whether families should contribute to retirement or college.If you must choose – retirement savings trump college. ‘Nuff said.
* Part Time Work
Wow, real genius stuff here, Dean! I told you this wouldn’t be ‘magic’. But think about this. I believe students should learn the value of a dollar – and appreciate the value of education. When I was in High School, I cleaned tables and washed dishes for a local family restaurant. Part of my pay went into my ‘college’ account.
Currently minimum wage for “flipping burgers” is $7.25/hour. What if Johnny flipped burgers for 3 years at Mc Donald’s and put $400/month into his college savings? In 3 years, Johnny would have saved $14,400. Between this idea and the last one, we’ve put a good dent into Johnny’s college costs, and haven’t even gotten to financial aid yet.
Not able to save as much as we’ve talked about? Getting started ‘late’ with savings? What about putting off college for a year or 2, to build up savings. There is no law that says YOU MUST enter college immediately after high school. (I checked). In fact, chances are very good that Johnny (or Jill) may be more mature at 20 and get more from their college experience, having spent some time in the ”real world”.
I’d much rather see Johnny (or Jill) wait a bit and not be burdened with debt after they graduate. If they do this, they must focus on the idea that college is still in the plan - flipping burgers is only temporary.
* Go to School, Live at Home
Being in the Chamber, I often attend networking events. Recently I had a chance to visit IUSB (Indiana University at South Bend). I was very impressed with the quality of the facilities and was very surprised to learn that their enrollment exceeds 7500 students. http://www.iusb.edu/about/ (You may have heard there is another school here in South Bend).
People are saving quite a bit by having Johnny and Jill live at home while going to college.Because IUSB is affiliated with Indiana University, many programs are similar. For those not living in this area, I would be willing to wager that you have a similar local university nearby.
In the next article I will continue to explore some other ideas which can help make college more affordable.
You can contact me at www.helpmy401k.us and follow me on Twitter at www.twitter.com/deanvoelker.My weekly Blog Talk Radio program, “Improving Your Financial Health” is at http://www.blogtalkradio.com/401kcoach.
I wouldn’t be a good advisor to bring up a problem without mentioning some viable solutions. There are enough good ideas, that I will talk about a few now and a few more in my next piece. None of these are magic – but if you apply these common sense ideas you’ll be better off than doing nothing. So here are some ways to Make College More Affordable.
* Saving in a 529 or UTMA plan (regularly)
The key word here is “regularly”. You can set up either of these plans as soon as your baby is born. (And I highly recommend that!) Did you know that if you were to save $100/month for 18 years (216 months) at an average return of 8%, you’d have saved $46,865? And $200/month over the same period = $93,730.
The 2 plans are different, but the idea is the same. The 529 http://en.wikipedia.org/wiki/529_planallows for tax-free withdrawals for college related expenses. Here in Indiana, since 2007, you can also get a 20% tax credit on any contributions to a 529 plan. Put in $5000 and you get $1000 back in the spring. Also, money can be transferred between family members. If it isn’t used for college, you are simply taxed on the growth at withdrawal.
UTMA (U -T – M – A ….you ain’t got no alibi, its UTMA!) OK, so I should give up on ‘cheerleading’ – but I couldn’t resist. This is the Uniform Transfer to Minors Act. A parent or guardian acts as a “custodian” for an account in the child’s name. http://www.fairmark.com/custacct/regret1.htm until the child reaches age 21. At that time, the money is turned over to the child. This is also counted in the child’s assets when you go to apply for financial aid later.
One advantage that someone may see in the UTMA is that it doesn’t matter if the money is used for college or not – although there are no tax benefits. They have full control over the money.
Personally, I prefer the 529 plan (for the tax benefits) and have set one up for both of my daughters. Whichever plan you choose, (talk to your advisor) the most important thing is to save something regularly.
Another note here – a common question I get is whether families should contribute to retirement or college.If you must choose – retirement savings trump college. ‘Nuff said.
* Part Time Work
Wow, real genius stuff here, Dean! I told you this wouldn’t be ‘magic’. But think about this. I believe students should learn the value of a dollar – and appreciate the value of education. When I was in High School, I cleaned tables and washed dishes for a local family restaurant. Part of my pay went into my ‘college’ account.
Currently minimum wage for “flipping burgers” is $7.25/hour. What if Johnny flipped burgers for 3 years at Mc Donald’s and put $400/month into his college savings? In 3 years, Johnny would have saved $14,400. Between this idea and the last one, we’ve put a good dent into Johnny’s college costs, and haven’t even gotten to financial aid yet.
Not able to save as much as we’ve talked about? Getting started ‘late’ with savings? What about putting off college for a year or 2, to build up savings. There is no law that says YOU MUST enter college immediately after high school. (I checked). In fact, chances are very good that Johnny (or Jill) may be more mature at 20 and get more from their college experience, having spent some time in the ”real world”.
I’d much rather see Johnny (or Jill) wait a bit and not be burdened with debt after they graduate. If they do this, they must focus on the idea that college is still in the plan - flipping burgers is only temporary.
* Go to School, Live at Home
Being in the Chamber, I often attend networking events. Recently I had a chance to visit IUSB (Indiana University at South Bend). I was very impressed with the quality of the facilities and was very surprised to learn that their enrollment exceeds 7500 students. http://www.iusb.edu/about/ (You may have heard there is another school here in South Bend).
People are saving quite a bit by having Johnny and Jill live at home while going to college.Because IUSB is affiliated with Indiana University, many programs are similar. For those not living in this area, I would be willing to wager that you have a similar local university nearby.
In the next article I will continue to explore some other ideas which can help make college more affordable.
You can contact me at www.helpmy401k.us and follow me on Twitter at www.twitter.com/deanvoelker.My weekly Blog Talk Radio program, “Improving Your Financial Health” is at http://www.blogtalkradio.com/401kcoach.
Wednesday, August 26, 2009
Raising Arizona (and Arizona State and Others)
OK, I know - cheap marketing gimmick to get you to read it. Sorry I don't have anything Nicholas Cage here. However this may be more valuable information than the movie.
Inflation affects everything - the price of bread, milk, gasoline etc. But one thing that seems to have gone up even more drastically is the cost of college. When I graduated from the University of Illinois in 1986, I left with about $3000 in student loans, which was easily repaid in a few years.
Today, student loans can reach $19,000 or more for a graduating senior from a public college.
http://encarta.msn.com/encnet/departments/financialaid/?article=averagestudentloans For
private schools that figure may be even higher.
Want to study law or medicine? For as long as I can remember (back to my finger painting days), those were the "good money" jobs. Both professions require years of post graduate education and loans can easily climb into the $100,000 range. Recently, I saw a young female med student on the news questioning President Obama about his healthcare proposal. Her concern was that at graduation, her total student debt would exceed $300,000 - yes that was not a typo. She wasn't sure if her future income would be sufficient to pay it back.
Really?? I think some thought should have gone into this before taking the loans. Its hard to blame either the President or his healthcare bill for that. Out of curiousity, I checked to see what a monthly payment on this would be. To pay off $300,000 in 12 years at 5% interest would require a monthly payment of $2775.00. Now you could take longer or the interest rate may be different, but this gives you an idea. Certainly its out of my ballpark.
Dave Ramsey always encourages his listeners to look at the opportunity cost of buying something - whether its a car, a flat screen TV, or even college. http://www.daveramsey.com/etc/cms/go_to_college_5788.htmlc
What that means is - even if you have the money, what other opportunities might you be missing? What else could the money be used for? When it comes to college, can you really afford it if it means loading yourself down with debt? What is your re-payment plan going to be?
How likely is it to get a career in your chosen field of study that will allow you to re-pay the loan?
I'm not anti-college. I just want us to think and ask questions first before jumping in.
In the early days of the United States, colleges such as Harvard and Yale were primarily for the wealthy. As the country grew and times changed, state schools offered a wider range of programs and more people were able to attend college.
"No qualified student who wants to go to college should be barred by lack of money. That has long been a great American goal. I propose that we achieve it now." Former President Richard M. Nixon said this in a special message to Congress in 1970. A lot has happened in the past 40 years. Are we back to a point where college is only for the wealthiest among us?
As a Financial Advisor, I will say that college does require financial planning and disciplined saving. Flipping burgers for the summer will only scratch the surface.
In my next part on this, we will look at some solutions which can help with college costs.
You can contact me at www.helpmy401k.us and follow me on Twitter at www.twitter.com/deanvoelker. You can also listen to me on Blog Talk Radio at www.blogtalkradio.com/401kcoach.
Inflation affects everything - the price of bread, milk, gasoline etc. But one thing that seems to have gone up even more drastically is the cost of college. When I graduated from the University of Illinois in 1986, I left with about $3000 in student loans, which was easily repaid in a few years.
Today, student loans can reach $19,000 or more for a graduating senior from a public college.
http://encarta.msn.com/encnet/departments/financialaid/?article=averagestudentloans For
private schools that figure may be even higher.
Want to study law or medicine? For as long as I can remember (back to my finger painting days), those were the "good money" jobs. Both professions require years of post graduate education and loans can easily climb into the $100,000 range. Recently, I saw a young female med student on the news questioning President Obama about his healthcare proposal. Her concern was that at graduation, her total student debt would exceed $300,000 - yes that was not a typo. She wasn't sure if her future income would be sufficient to pay it back.
Really?? I think some thought should have gone into this before taking the loans. Its hard to blame either the President or his healthcare bill for that. Out of curiousity, I checked to see what a monthly payment on this would be. To pay off $300,000 in 12 years at 5% interest would require a monthly payment of $2775.00. Now you could take longer or the interest rate may be different, but this gives you an idea. Certainly its out of my ballpark.
Dave Ramsey always encourages his listeners to look at the opportunity cost of buying something - whether its a car, a flat screen TV, or even college. http://www.daveramsey.com/etc/cms/go_to_college_5788.htmlc
What that means is - even if you have the money, what other opportunities might you be missing? What else could the money be used for? When it comes to college, can you really afford it if it means loading yourself down with debt? What is your re-payment plan going to be?
How likely is it to get a career in your chosen field of study that will allow you to re-pay the loan?
I'm not anti-college. I just want us to think and ask questions first before jumping in.
In the early days of the United States, colleges such as Harvard and Yale were primarily for the wealthy. As the country grew and times changed, state schools offered a wider range of programs and more people were able to attend college.
"No qualified student who wants to go to college should be barred by lack of money. That has long been a great American goal. I propose that we achieve it now." Former President Richard M. Nixon said this in a special message to Congress in 1970. A lot has happened in the past 40 years. Are we back to a point where college is only for the wealthiest among us?
As a Financial Advisor, I will say that college does require financial planning and disciplined saving. Flipping burgers for the summer will only scratch the surface.
In my next part on this, we will look at some solutions which can help with college costs.
You can contact me at www.helpmy401k.us and follow me on Twitter at www.twitter.com/deanvoelker. You can also listen to me on Blog Talk Radio at www.blogtalkradio.com/401kcoach.
Tuesday, May 5, 2009
College Savings Plans
With school winding down here in May, it may be a good time to bring up College Savings Plans.
College costs have increased wildly over the past 30 years due to improvements in technology,
modernizing campus facilities, and demand for those who want to attend college.
http://www.nytimes.com/2007/10/22/education/21cnd-tuition.html?hp
There isn't much you can do to bring college costs down, however, you can certainly help defray the expense with a good savings plan. The most popular Savings Plan for college right now is the 529 plan, which allows money saved in the plan to be invested in mutual funds. The money can grow tax free, and it can be withdrawn tax free also if the account is being used for educational
expenses. Think of it as a Roth IRA for college.
In Indiana, the 529 plan by U Promise www.collegechoiceplan.com is even sweeter. You can get 20% of your contribution refunded to you in the form of a tax credit. (up to $5000 per IN resident). In other words, if you contribute $5000, you get $1000 back the following spring on your Indiana state tax return.
I am also proud to see that U Promise made the list of best 529 plans according to Business Week and Morningstar.
http://www.businessweek.com/investing/insights/blog/archives/2009/04/best_and_worst.html
If you are an Indiana resident, and you would like more information on saving for your child's college education, please contact me at www.deanvoelker.com.
College costs have increased wildly over the past 30 years due to improvements in technology,
modernizing campus facilities, and demand for those who want to attend college.
http://www.nytimes.com/2007/10/22/education/21cnd-tuition.html?hp
There isn't much you can do to bring college costs down, however, you can certainly help defray the expense with a good savings plan. The most popular Savings Plan for college right now is the 529 plan, which allows money saved in the plan to be invested in mutual funds. The money can grow tax free, and it can be withdrawn tax free also if the account is being used for educational
expenses. Think of it as a Roth IRA for college.
In Indiana, the 529 plan by U Promise www.collegechoiceplan.com is even sweeter. You can get 20% of your contribution refunded to you in the form of a tax credit. (up to $5000 per IN resident). In other words, if you contribute $5000, you get $1000 back the following spring on your Indiana state tax return.
I am also proud to see that U Promise made the list of best 529 plans according to Business Week and Morningstar.
http://www.businessweek.com/investing/insights/blog/archives/2009/04/best_and_worst.html
If you are an Indiana resident, and you would like more information on saving for your child's college education, please contact me at www.deanvoelker.com.
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