TITLE

The College Planning Smorgasbord

AUTHOR(S)
Hogan, Paula H.; Kroeger, Bret
PUB. DATE
July 2005
SOURCE
Journal of Financial Planning;Jul2005, Vol. 18 Issue 7, p40
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article offers a conceptual framework for evaluating the various college financing options in a multigenerational context. The key driver to determining the optimal mix of college investment options is whether the family of a child is eligible for financial aid. College savings strategies vary greatly depending on whether the family is trying to maximize financial aid, or is clearly ineligible for financial aid and so instead will be concentrating on the most tax-efficient way to pay for college. An important concept is that financial aid calculations, such as the standard financial aid formula, actually compute not financial aid, but the amount the family is expected to contribute, expressed as a per-child expected family contribution. If financial aid is an option, financial planning can be complicated. Basically, the planing goal is to minimize wealth stored in the name of a child, but there are other, less obvious, considerations. For example, the rules relating to 529 plans are particularly confusing and in flux, and thus not surprisingly, there is great variation in the quality of reported financial data from students applying for financial aid. Alternatively, if a family does not qualify for financial aid, then a different set of planning options becomes appropriate, most of which focus on maximizing tax advantages. Here the key point is that the tax breaks for education expenses are designed so that the families who can afford to pay tuition usually do not qualify for the related tax breaks. In this context, the best approach to planning for college expenses is first of all to make a guess about whether financial aid is possible, then set in place a variety of strategies designed to diversify the risk of the changing landscape, and to keep planning options open. INSET: Executive Summary.
ACCESSION #
17581476

 

Related Articles

  • In Philadelphia, Program Pairs Adult Mentors With Teenagers To Provide Money—and Time. Lawton, Millicent // Education Week;9/18/1991, Vol. 11 Issue 3, p6 

    The article reports on the project initiated by nonprofit enterprise Philadelphia Futures, the Sponsor-a-Scholar program which pairs students with adult mentor in order to develop the former's interest in schooling, and help them pay their college education. The program does not take...

  • Student Financial Aid: Schools' Experiences Using the National Student Loan Data System: HEHS-98-192.  // GAO Reports;9/24/1998, p1 

    The Department of Education reported that in fiscal year 1997 it awarded more than $43 billion in financial aid to 8.1 million students. In response to concerns about unreliable data in its student loan database as well as its ability to effectively manage its student loan programs, the...

  • Untitled.  // Education Digest;Jan1937, Vol. 2 Issue 5, p29 

    The article reports on a prepayment plan, under which parents can begin financing their children's college education at birth, instituted at Bucknell University in Philadelphia, Pennsylvania. According to the university, prepayments will be invested and the net interest will be credited to the...

  • Morningstar Names Best, Worst 529s. Stock, Howard J. // Bank Investment Consultant;Apr2007, Vol. 15 Issue 4, p12 

    The article reports on the rating provided by Morningstar Inc. to the 529 state college savings plans in the U.S. Morningstar rated the plan of Colorado, Maryland, and Nebraska as best in the nation because of its low fees and high performance. According to the company, Alabama, Alaska, and...

  • Expensive Education on the Free Market. Leonard, Norman; Meek, Philip; Rose, Michael // Journal of Higher Education;Apr1960, Vol. 31 Issue 4, p215 

    The article focuses on student loan financing to cope with the rising cost of college education. The current student loan programs are characterized by high rates of interest, insufficient repayment period, and restricted availability in scope. To be able to help enrollees, a realistic student...

  • Student Loan Changes Under Consideration.  // Business Officer;Dec2011, Vol. 45 Issue 5, p6 

    The article reports on the new regulations for the federal student aid programs. It mentions that the specific plan is to lower the payments under the Direct Loan income-based repayment (IBR) which will limit borrowers to a 15% of discretionary income for a maximum of 25 years. It adds that a...

  • Are All Types of College Financial Aid Created Equal? Elliott, William // Bridges (Federal Reserve Bank of St. Louis);Winter2012/2013, p1 

    The article discusses college financial aid to yield superior educational outcomes. It states that according to a research by American Economic Development Institute (AEDI), very small account holdings would yield better educational outcomes than no savings. When compared to students without...

  • Financial Aid: The Tough Questions. Basko, Aaron // Campus Life;Aug2005, Vol. 64 Issue 1, p48 

    Presents answers to queries related to financial aid for college education in the United States. Purpose of the Free Application for Federal Student Aid; Rules governing financial aid package reviews and appeals; Factors considered by financial aid providers in deciding how much to provide to a...

  • meeting [their] needs. Harris, Shana M. // Independent School;Winter2006, Vol. 65 Issue 2, p58 

    This article calls for independent schools to ensure that students on financial aid can participate in every aspect of the school experience, but especially in those areas that might require additional or creative application of resources. Obstacles that students face in the college application...

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics