Smart College Savings - Smart tips about successful college savings for your loved ones.

The Best and The Worst 529 Plans

Not two 529 plans are identical. In fact, the difference between the best and the worst 529 plans can be huge. While you may be able to deduct state tax by investing in your home state's 529 plan, the high fees in a bad plan can quickly wipe out any tax savings you achieved, and more. Here comes the WSJ's report on a recent Morningstar research of 529 plan options.

"Another factor that helps lift 529s to the top rankings is whether a plan includes enough investment options for investors to build a well-rounded portfolio. Also among the winning 529s are plans sponsored by Nebraska and Colorado. And new to the list this year is the Maryland College Investment Plan. On the flip side, one of Alabama's broker-sold 529 plans turns up on Morningstar's worst list for the third year in a row, for what the firm calls the plan's high costs and lackluster set of options. Also on the worst list are Nebraska's AIM College Savings Plan, making a repeat performance, and broker-sold offerings from Alaska, Missouri and West Virginia. Congress gave a big boost to 529s last year by making permanent the plans ..." Full Story

10 Most Expensive Colleges in the U.S.

What is really surprising is except for Columbia, these colleges are not really top-tier colleges. How can they sustain the pricing power?

"1. George Washington University ($37,820) 2. University of Richmond ($36,550) 3. Sarah Lawrence College ($36,088) 4. Kenyon College ($36,050) 5. Vassar College ($36,030) 6. Bucknell University ($36,002) 7. Bennington College ($35,250) 8. Columbia University ($35,166) 9. Wesleyan University ($35,144) 10. Trinity College ($35,130)" Full Story

College Expense Keeps Climbing

The College Board bings the bad news: the college bill just keeps growing at around 6% a year. It is certainly not good news for parents with young children, and underscores the importance of savings early and more for college.

"Published tuition and fee charges at four-year public colleges average $5,836 in 2006-07. There was a $344 increase over last year, which represents 6.3 percent, or 2.4 percent after adjusting for inflation. The average total tuition, fee, room, and board charges for in-state students at public institutions are $12,796. After grant aid and tax benefits are considered, full-time students enrolled in public four-year colleges and universities pay on average about $2,700 in net tuition and fees. After declining or just keeping pace with inflation each year between 1996-97 and 2002-03, the average net price students pay at public four-year colleges has increased even more rapidly than published prices for the past four years because grant aid has not kept pace. Published tuition and fee charges ..." Full Story

How TO Pay Off Your Student Loans

While student loans have helped many poor students by enabling them to pursue further studies by providing financial assistance, it can also be an emotionally and mentally exhausting journey. Repaying a large student loan or multiple student loans can be a long burden which extends many years, well into your working years. Many students which have graduated find themselves having to set aside a large portion of their salary just to repay the student loans. So what solution is available to help? A student loan consolidation plan may be able to help you particularly if you are repaying several student loans concurrently. A student loan consolidation plan consolidate your student loans into one loan thus you only need to make one payment each month. This ... Full Story

Best Starting Salary For College Graduates

Marshall Loeb summaries a study on starting salary of college graduates. It shouldn't be a surprise that engineering students and bean counters make more money than those devoted to education and retailing.

"According to the National Association of Colleges and Employers (NACE), the largest number of job offers to new college graduates with bachelor's degrees in the past year went to people in the following fields (in order): Field Average & Starting Pay Accounting $46,039 Engineering $49,715 Building, Developing $45,052 Consulting $47,037 Financial Services $43,950 Educational Services $30,291 Oil & Coal Products $53,611 Aerospace $54,410 Retail/Wholesale Trade $34,932 Transportation Equipment Mfg. $51,610 ... More specifically, people with certain kinds of degrees are more in demand -- much more. The bachelor's degrees most desired by prospective employers are, in order: mechanical engineering, electrical engineering, accounting, business administration/management, economics/finance, computer science, information sciences and systems, marketing, computer engineering, chemical engineering. " Full Story

You Can Get Tuition Discounts At Public Colleges Too

The College Board's research finds that you have a fairly good chance to get a discount for your public school tuition too.

"Among the findings: - In 2003-04, an average of more than 12 percent of the tuition revenues were discounted back to students at public two-year institutions and the average discount rate was more than 15 percent at public four-year institutions. At private four-year institutions it was 32 percent. - More than 65 percent of the institutional grant aid at public two-year and private four-year colleges goes to support the documented financial need of students, while only 40 percent of the institutional grant aid meets students' need at public four-year institutions. - Discount rates tend to be higher at smaller public four-year institutions and at public institutions with larger out-of-state student populations. - The discount rate at public flagship institutions averaged 19 percent in 2003-04. Only ..." Full Story

Six Tips Of Paying Off Student Loans

Diana Ransom at WSJ offered some tips of paying off your student loan properly. Among those tips, it is especially to examine whether a student loan consolidation will help you to pay less interest over the long haul.

"On average, new four-year grads have just under $20,000 in college debt, according to 2005 data from the College Board. Loan repayment can be daunting on a starting salary, but here are some tips to help you manage: 1. Take aim at high charges. Besides government-guaranteed student loans, many new grads have credit-card debt and private student loans, which typically carry higher interest rates. 2. Get in touch. If you've moved or if your student-loan provider has sold your loan to another lender, it's possible you could miss documents signaling your loan repayment. If in doubt, contact your lenders. You can track them down at the National Student Loan Data System's Web site, nslds.ed.gov. 3. Consider consolidating. Many grads have already consolidated their federal student ..." Full Story

How To Cut Your College Cost: 10 Innovative Ideas

Here are ten savvy ways to reduce your college expenses. Take a look:

"1. Get college credit in high school 2. Cash in on tax credits 3. Get rewarded for your service 4. Work for the college itself 5. Transfer from a community college 6. Pay lower prices at out-of-state schools 7. Tap home equity 8. Qualify for free money as an independent 9. Work your way through a "work college" 10. Move out-of-state for a year " Full Story

Independent 529 Plans

Yes, although carrying the same 529 flag, a prepaid 529 plan is very different from the more popular 529 savings plan.

"Most investments don't come with a guarantee. But a college-savings account called the Independent 529 plan offers an enticing promise: Hand over money now, and you can pay today's private-school tuition rates at 257 institutions for tomorrow's students, even those who won't use the money for as many as 30 years, including unborn children. Sound good so far? There's at least one big catch -- the I529 works at Stanford and Princeton but not Harvard or Yale. Rice and Vanderbilt participate, but not Cornell or Georgetown. This odd state of affairs is par for the course in the confusing world of college-savings accounts known as 529 plans. A short primer: Almost every state offers a 529 plan, some have several and there are two basic ..." Full Story

Debt 101 for College Students

Perhaps it is fair to say a dose of debt education is a meaningful part of your college savings plan for your college age kids. After all, one penny saved is one penny earned.

"Keep a budget. Planning expenses will help keep spending under control, Mrs. Smith says. Dr. Lyons also advises parents to sit down with their kids and work out a four-year financial plan, including how much students can afford to borrow and how their career choice will position them to repay their loans in the long run. Pay bills on time. For a student who does use a credit card, staying current with bills is important in building a good credit history. The credit history is essential in securing loans for large purchases including automobiles and homes; prospective employers and landlords also might run credit checks on an applicant. Be careful with that card. Universities are becoming popular scenes of identity theft, Dr. Lyons says. Some ..." Full Story

Tax Free Withdrawal From 529 Plan Made Permanent

Though almost expected, the new bill certainly removed the last cloud over 529 plan as a valuable college saving tool.

"That scenario was avoided last month when President Bush signed the Pension Protection Act. Although the law mainly deals with strengthening the financing rules for defined-benefit pension plans, it also quietly eliminated the 2010 sunset provision for tax-free withdrawals from the popular Section 529 tuition savings plans. Created in 1996, 529 plans allow after-tax income to be invested in state-sponsored plans and to grow free of federal and state taxes. And thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001, as long as the 529 money is used for qualified college expenses, income earned — capital gains, interest and dividends — can be withdrawn free of federal taxes and most state taxes, too. But the tax-free withdrawals were set to expire at ..." Full Story

States Give Tax Breaks To College Savers

Tax breaks from some states make college savings options like 529 plans more attractive. (It also makes college planning more complicated, though.)

"Giving another boost to 529 college-savings plans, a growing number of states are allowing their residents to take state-tax deductions for contributions they make to other states' 529 plans. Pennsylvania, Maine and Kansas have approved such tax breaks, and a handful of other states are considering similar measures. Previously, these states offered either no tax deduction or a deduction only if a resident contributed to the state's own 529 plan. The states' move toward tax parity for all 529 contributions is likely to make it simpler and more appealing for residents to save for their children's college educations. A new law that makes permanent the 529s' federal tax benefits has also helped spark more interest in these plans. The 529 plans — named for a ..." Full Story

The Best And Worst 529 Plans

Forbes reports on a Morningstar research that sorts out the best and worse of 529 plans out in the market.

"Best Direct-Sold 529 Savings Plans • Alaska T. Rowe Price College (T. Rowe Price ) • Michigan Education (TIAA-CREF) • Utah Educational (Vanguard) Best Broker-Sold 529 Savings Plans • Colorado Scholars Choice College (Smith Barney) • Kansas Learning Quest Education (American Century) • Virginia CollegeAmerica (American) The Worst 529 Savings Plans • Alabama (Van Kampen) • Arizona (Waddell&Reed/SM&R/Pacific) • Maine (Merrill Lynch/AIM/Franklin/MFS) • Tennessee (TIAA-CREF) • Wyoming (Merrill Lynch/MFS)" Full Story

Quick Facts of 529 Plans

• Earnings from a 529 plan are exempt from federal taxes, as are any withdrawals, as long as they go toward paying college costs. • Some states waive state taxes for residents, other states allow deductions on contributions. • 529 plans have generous maximum contribution limits -- some as high as $250,000 per beneficiary. • Most states hire experienced investment companies, such as TIAA-CREF to manage their 529 accounts. • If funds are withdrawn for purposes other than education, the earnings are subject to a 10 percent penalty as well as federal income tax. States may assess their own penalties. Great for grandparents: 529 contributions are considered completed gifts and are excluded from your estate. Grandparents can also switch beneficiaries to other grandchildren. Note: Each ... Full Story

Does A 529 Plan Affect Financial Aid Eligibility?

While each educational institution may treat assets held in a 529 plan differently, investing in a 529 plan will generally reduce a student’s eligibility to participate in need-based financial aid. Beginning July 1, 2006, assets held in pre-paid tuition plans and college savings plans will be treated similarly for federal financial aid purposes. Both will be treated as parental assets in the calculation of the expected family contribution toward college costs. Previously, benefits from pre-paid tuition plans were not treated as parental assets and typically reduced need-based financial aid on a dollar for dollar basis, while assets held in college savings plans received more favorable financial aid treatment. Full Story

7 Questions You Should Ask Before You Invest In A 529 Plan

Knowing the answers to these questions may help you decide which 529 plan is best for you. Is the plan available directly from the state or plan sponsor? • What fees are charged by the plan? How much of my investment goes to compensating my broker? Under what circumstances does the plan waive or reduce certain fees? • What are the plan’s withdrawal restrictions? What types of college expenses are covered by the plan? Which colleges and universities participate in the plan? • What types of investment options are offered by the plan? How long are contributions held before being invested? • Does the plan offer special benefits for state residents? Would I be better off investing in my state’s plan or another plan? Does ... Full Story

Is 529 Plan Right For Me?

Before you start saving specifically for college, you should consider your overall financial situation. Instead of saving for college, you may want to focus on other financial goals like buying a home, saving for retirement, or paying off high interest credit card bills. Remember that you may face penalties or lose benefits if you do not use the money in a 529 account for higher education expenses. If you decide that saving specifically for college is right for you, then the next step is to determine whether investing in a 529 plan is your best college saving option. Investing in a 529 plan is only one of several ways to save for college. Other tax-advantaged ways to save for college include Coverdell education savings accounts ... Full Story

Different Types Of 529 Plans

Do you know there are actually two types of 529 plans with completely different characteristics?

"A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code. There are two types of 529 plans: pre-paid tuition plans and college savings plans. All fifty states and the District of Columbia sponsor at least one type of 529 plan. In addition, a group of private colleges and universities sponsor a pre-paid tuition plan. Pre-paid tuition plans generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board. Most prepaid tuition plans are sponsored by state governments and ..." Full Story

Understanding The Rules Of 529 Plans

Here is the crash course on the basics of 529 plans.

"Anyone can open a 529 account. Parents, grandparents, generous friends -- any of them can fund a 529 on behalf of nearly any child, regardless of income. To qualify for a deduction on your contribution, you have to live in the state that's offering the plan. (Some states limit the deduction to the person who opens the account.) You can also open more than one account in a single state for the same child. Adults who intend to return to college can take advantage of 529s too, although some states have age restrictions. You can even open an account on your own behalf in many states. Most college costs count as "qualified" withdrawals. You can spend 529 money on tuition, fees, books and supplies at ..." Full Story

Kiplinger's Pick of Best 529 Plans

It is Kiplinger's recommendation in 2003, so many things may have changed.

"Our favorites are those plans we think you should consider if your home state's plan doesn't suit you. There's no perfect plan. For conservative investors: TIAA-CREF plans are a good choice -- especially Michigan' and Minnesota's plans, which have very low expenses and have performed well. For aggressive investors: Take a look at Iowa's and Utah's plans and Nevada's recently introduced Upromise plan, all of which use low-cost Vanguard index funds. (The latter has the broadest array of investment options.) Pennsylvania's plan stands out for strong across-the-board returns. Buying through a broker: You're being served well if you're directed to Virginia's or West Virginia's plans, which have attractive investment choices. And while it's not marked a favorite, the District of Columbia's new plan is worth ..." Full Story

Best 529 Plans

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