Q. Specifically I am in Illinois. They have a program: http://www.collegeillinois.com/en/
Is this the best option? Is there other better options? Is it better to just save money on your own in a mutual fund? Any additional info will help...
Is this the best option? Is there other better options? Is it better to just save money on your own in a mutual fund? Any additional info will help...
A. The optimal solution will of course depend upon your and your child's tax and other financial situations. The best way to solve this is with a trusted financial advisor who knows your situation.
However, it is possible to educate yourself through the Web. There are many sites eager to show you why you should invest your monies with them. You can learn from these sites. But, it would behoove you to take a look at the college financial aid sites as well. Things could change a lot between now and college time if you have an infant. But, at least you could get an idea. E.g.,
http://www.collegeboard.com/student/pay/add-it-up/index.html
Here are a couple non-professional tips from little old me (whose child will go to college next year). Since I am neither financial nor college admissions/aid professional, you really need to validate this for yourself.
You can't start early enough. If you and your spouse make regular annual contributions, you will be surprised to see how quickly it grows from contributions AND dividend reinvestment. Grandparents can be an absolute godsend here. Gift tax laws permit up to a sizable amount per person giving. So, if they are each contributing to your or their account or accounts regularly, the savings will grow fast. Tuition, room, board, fees, and other miscellaneous expenses vary from school to school. If you have a kid in the college class of 2012 who will attend a private university, don't be surprised if the total bill = $225,000 to $250,000... shocked yet? ... and that is for 1 child! OK, if you are a diligent saver and this is a high priority for you, this is possible if you start early enough. Remember, you won't be making $250,000 in contributions. That is the necessary future value of this/these accounts after interest, dividends, and other gains. Most people will not have saved that sum per child. So what do they do? Not send their kids to college? Of course not. That is where financial aid kicks in. You don't need to become an expert now. It is too early. But, it makes sense to get a rough sense as to how the Expected Family Contribution is calculated. You need to know what % of your savings will be "taxed" and what % of your kid's savings will be "taxed" for the purpose of the financial aid calculation. Without getting overly complicated, suffice it to say that there is a big difference between you holding $100,000 in savings for your kid's education vs. your kid holding $100,000 in UGMA/UTMA savings for his/her education vs. your kid holding $100,000 in 529 Plan savings for his/her college education through a custodian! The financial aid office will "tax" your kid's savings to a higher degree than it will "tax" your savings. But, 529 Plan money held for your child is excluded. (I am irritated that I could not quickly find the citation for this; so, you need to verify what I was told directly by an Admissions Director a few weeks ago). I chose not to use 529 Plans in my state way back when because they didn't provide me with the investment options I wanted--too conservative for me. So, I put money into UGMA account(s). For many years that is fine. But for the financial aid applications process in your kid's senior year in high school, UGMA is bad, because it will become 100% your kid's money which will be very heavily "taxed" by the financial aid calculators. One can convert savings accounts to 529s up to the last minute, without a lookback period; but, it requires actually selling and repurchasing the shares with the obvious tax implications. So, talk to your advisor. I suggest investing in 529s. If you feel overly restricted in terms of investment options which have improved a lot over the years, fine, do what you want. But, plan to convert over to 529s at an advantageous time before Dec 31st of your kid's senior year in high school. Of course stay tuned to changes in tax laws and financial aid practices. Good luck with this. I hope this helped a little.
However, it is possible to educate yourself through the Web. There are many sites eager to show you why you should invest your monies with them. You can learn from these sites. But, it would behoove you to take a look at the college financial aid sites as well. Things could change a lot between now and college time if you have an infant. But, at least you could get an idea. E.g.,
http://www.collegeboard.com/student/pay/add-it-up/index.html
Here are a couple non-professional tips from little old me (whose child will go to college next year). Since I am neither financial nor college admissions/aid professional, you really need to validate this for yourself.
You can't start early enough. If you and your spouse make regular annual contributions, you will be surprised to see how quickly it grows from contributions AND dividend reinvestment. Grandparents can be an absolute godsend here. Gift tax laws permit up to a sizable amount per person giving. So, if they are each contributing to your or their account or accounts regularly, the savings will grow fast. Tuition, room, board, fees, and other miscellaneous expenses vary from school to school. If you have a kid in the college class of 2012 who will attend a private university, don't be surprised if the total bill = $225,000 to $250,000... shocked yet? ... and that is for 1 child! OK, if you are a diligent saver and this is a high priority for you, this is possible if you start early enough. Remember, you won't be making $250,000 in contributions. That is the necessary future value of this/these accounts after interest, dividends, and other gains. Most people will not have saved that sum per child. So what do they do? Not send their kids to college? Of course not. That is where financial aid kicks in. You don't need to become an expert now. It is too early. But, it makes sense to get a rough sense as to how the Expected Family Contribution is calculated. You need to know what % of your savings will be "taxed" and what % of your kid's savings will be "taxed" for the purpose of the financial aid calculation. Without getting overly complicated, suffice it to say that there is a big difference between you holding $100,000 in savings for your kid's education vs. your kid holding $100,000 in UGMA/UTMA savings for his/her education vs. your kid holding $100,000 in 529 Plan savings for his/her college education through a custodian! The financial aid office will "tax" your kid's savings to a higher degree than it will "tax" your savings. But, 529 Plan money held for your child is excluded. (I am irritated that I could not quickly find the citation for this; so, you need to verify what I was told directly by an Admissions Director a few weeks ago). I chose not to use 529 Plans in my state way back when because they didn't provide me with the investment options I wanted--too conservative for me. So, I put money into UGMA account(s). For many years that is fine. But for the financial aid applications process in your kid's senior year in high school, UGMA is bad, because it will become 100% your kid's money which will be very heavily "taxed" by the financial aid calculators. One can convert savings accounts to 529s up to the last minute, without a lookback period; but, it requires actually selling and repurchasing the shares with the obvious tax implications. So, talk to your advisor. I suggest investing in 529s. If you feel overly restricted in terms of investment options which have improved a lot over the years, fine, do what you want. But, plan to convert over to 529s at an advantageous time before Dec 31st of your kid's senior year in high school. Of course stay tuned to changes in tax laws and financial aid practices. Good luck with this. I hope this helped a little.
How can i drop out of high school and get my GED before summer of 2012?
Q. I am currently 15 years old but my birthday is in December. I am gifted in art or anything related to art. ex: acting, singing, creative writing, photography etc... I have found an art college that I want to attend but I must first graduate or have my GED. So I need to drop out as soon as possible to begin studying for my GED.
Problem is I have no idea how to do any of that.
HELP!!
Problem is I have no idea how to do any of that.
HELP!!
A. Stay in school, they don't want GED kids at colleges.
Should my bf tell his family that we are pregnant on christmas or new years?
Q. I'm 4 months pregnant and I would some ideas on how to tell them ? Like example a picture from the ultra sound and give it to them on christmas or new years saying for the new year he will be a dad? .. Can you give me some ideas ? :)
A. I'd tell them soon. Personally I like Christmas better especially if you open gifts together at all. You can give his parents a baby related gift and that way it's announce to everyone at the same time because normally you watch while someone opens a gift.
We gave my in-laws a photo frame with 3 spots. We have 2 kids so they were in the frame and the 3rd spot was a picture of a pumpkin baby and it said "coming June 2012". If this is your first, do it with photo's of you and your boyfriend. Either put baby in the middle or do it like an equation and decorate with a "+" and "=" sign. For us it was great because grandma didn't have a frame with our kids in it yet but she had a couple of my SIL's daughter. Later on you can swap the photo with an ultrasound (or go for that first if you have one) and later on you can put his/her baby photo in there. It's an upgradeable gift and a cute way to announce it.
If you prefer New Years you can make it a toast or a resolution if you have a group discussion about those. I do prefer Christmas though, it's a nice happy 'gift' to share with others.
We gave my in-laws a photo frame with 3 spots. We have 2 kids so they were in the frame and the 3rd spot was a picture of a pumpkin baby and it said "coming June 2012". If this is your first, do it with photo's of you and your boyfriend. Either put baby in the middle or do it like an equation and decorate with a "+" and "=" sign. For us it was great because grandma didn't have a frame with our kids in it yet but she had a couple of my SIL's daughter. Later on you can swap the photo with an ultrasound (or go for that first if you have one) and later on you can put his/her baby photo in there. It's an upgradeable gift and a cute way to announce it.
If you prefer New Years you can make it a toast or a resolution if you have a group discussion about those. I do prefer Christmas though, it's a nice happy 'gift' to share with others.
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Title Post: What is the best way to save for a childs college education?
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