college by xiuliliaofz


									       oday, a college degree is a minimum                       education. The funding methods you will utilize        CDs and savings bonds as well as other types of

T      requirement     for   most       high-skilled
       occupations and many parents assume
       that their children will continue their
                                                                 will depend largely on the age of your child when
                                                                 setting these goals and other financing
                                                                 arrangements you plan to maintain concurrently,
                                                                                                                        Your time horizon will likely dictate which types
                                                                                                                        of investments you choose because risk
education after high school. Still, the average                  which could include paying a home mortgage,            tolerance for an investment when a child will
cost of a four-year college education continues                  investing in a business and saving for                 attend college in 10 years is much greater than
to rise more quickly than the rate of inflation.                 retirement.                                            risk tolerance for an investment for a child who
                                                                                                                        will attend college in 3 years.
According to The College Board, the estimated                    In short, your child’s educational funding should
cost of being a resident student at a four-year                  be an integral component of your overall               The most common alternative when financing a
public college was over $8,000 for the 1999-                     financial plan.                                        child’s education is debt. There are many types
2000 academic year. For a private four-year                                                                             of loans available and the type of loans you will
college, add another $13,000.                                    When setting these goals, you will need to             utilize will depend upon your other financial
                                                                 determine how much money you intend to                 goals. In addition, you may foresee that your
                                                                 contribute to a college education. Financing an        child will take out loans for his or her education,
Average Costs for 1999-2000 Attendance                           Ivy League degree will require a different             which could effect how you transfer assets to the
at A Four-Year Undergraduate Institution                         approach than funding a public college                 child.
                                                                 education. In addition, your financial situation
                                   Tuition   Room &              will change over time; and some tools that are         For example, certain assets can be held for a
                                   & Fees     Board      Total   available to you when you begin planning may           minor by custodians under the Uniform Gifts to
Public                              $3,356    $4,730    $8,086   not remain available if your income increases          Minors Act.       Custodians may accumulate
(In-State)                                                       over time.                                             income until the minor reaches age 21, at which
Private                            $15,380    $5,959   $21,339                                                          time the property must be distributed. The minor
                                                                                                                        includes all income on his or her tax return
                                                                 The value of a college education cannot                whether distributed or not. Because the minor
Although the average increase in college costs                   be measured in dollars and cents. For                  should be in a lower tax bracket than the parent,
for 1999-2000 was less than 5% compared to                       many parents, financing a college                      this could increase the funds available.
the previous year (the smallest increase in more                 education is as important a financial
than a decade), the challenge of financing these                 responsibility as purchasing a home or                 Another excellent long-term savings tool is the
costs remains. Because the value of a college
                                                                 planning for retirement.                               Education IRA. Currently, only $500 per year
education cannot be measured in dollars and                                                                             can be contributed to an Education IRA, but
cents, for many parents, financing a child’s                                                                            anyone earning less than the $150,000
education is as important a financial                            Many states now sponsor tuition savings                threshold can make the contribution, and these
responsibility as purchasing a home or planning                  programs that invest parental contributions and        accounts can be rolled over to other young
for retirement.                                                  have special rules and tax treatments for              relatives if a child does not use the funds.
                                                                 withdrawals. Other states have prepaid tuition         Contributions can be made until the beneficiary
Although the cost of attending college steadily                  programs that allow relatives to purchase a            reaches age 18 and funds can be distributed for
rises each year, there are more funding tools                    portion of their child’s future education at today’s   education tax-free after that time. With an
than ever. And it is a must that multiple tools be               rates. Eligibility can be limited by your asset        estimated 5% return and 3% inflation rate,
used together in order to provide sufficient                     levels and other programs in which you                 contributing $500 annually to an education IRA
funding for an entire education. However, not all                participate.                                           for 18 years could result in almost $15,000 for
tools can be used in conjunction. Therefore,                                                                            the child by the year 2018.
careful, early planning is the key to funding an                 Now, income-producing assets are probably the
education.                                                       most popular way to fund an education in the           While your child is attending college, the Hope
                                                                 long-term.    However, parents have many               Scholarship and Lifetime Learning Credits
The first step is to meet with your financial                    choices of assets including mutual funds, stocks,      provide excellent tax credits for parents footing
advisor and set your goals for your child’s

the bill as long as income levels do not exceed a
certain threshold.                                    *Source of all cost information: 1999 Annual Survey of
                                                      Colleges, The College Board.
And if a child is taking out his or her own student
loans, he or she can take a deduction for the                                                                      Tools for Funding a
interest during the first five years of paying back                                                                 College Education
the loans. Because every little bit can count at
this point, parents and grandparents may be
able to gift the funds for the child to pay back                                                                  In v es t me n ts
these loans and the deductions act as a kind of
discount.                                                                                                         Tax a bl e S av i ng s
                                                                                                                  U nif o rm G if t t o M in o rs Ac t
It is a must that multiple tools are                                                                              S ta t e-S p o ns or e d T ui ti o n
used together in order to provide                                                                                  S avi n gs P l an s
sufficient funding for an entire
education. However, not all tools can                                                                             P re pa i d Tu i ti o n P la n s
be used in conjunction.                                                                                           Ed uc a ti on I RAs
                                                                                                                  R o th IR As
When your child is applying to colleges, he or
                                                                                                                  L oa ns
she may be fortunate enough to receive
scholarship funds or grants depending on his or                                                                   Go v er n me n t L oan s
her accomplishments and your financial
situation. Scholarships will effect the manner in                                                                 P el l G ran t s
which you use the money you have accumulated                                                                      H o pe S ch ol ars h ip C r e di t
over the years to pay for college.
                                                                                                                  L if et i m e L ea r ni n g C r e di t
Remember, planning requires a disciplined                                                                         De d uc ti o ns f or S t u d en t L oa n
approach that is consistent with your overall
goals and entails an ongoing process of                                                                            In t e re s t
assessment and adjustment to meet these
                                                                                                                  In st i t u ti o nal S c h ol a rsh i ps
                                                                                                                  Ot h er S ch o lars h ip s
We have tried to demonstrate in this brochure
that there are many alternatives to funding your
child’s education. The best approach is to begin
planning as early as possible.

We help many parents and grandparents
develop plans to fund their children’s and                                                                                   Company Name
grandchildren’s education. If you would like to                                                                                Address 1
learn more or if you would like to begin or                                                                                    Address 2
assess a program for your children, please
contact our office. {7/00}                                                                                                    Phone  Fax

         Funding A
     College Education


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