1. Make your 529 contributions now

If your state permits a deduction for contributing to a 529 plan, why not make that contribution before the end of December? Each dollar contributed will reduce your state taxable income and your state income taxes. While a $10,000 contribution to a 529 in either December or January will save you the same amount on your taxes, you get a bigger tax savings payoff from a time value of money standpoint by making it in December as you will collect a bigger tax refund just a few months later, if you would like more information then click here.

Remember, the main benefit of 529 plans, which may be similar to those children’s savings bonds, is that the increase in value will not be taxed if it is used for qualified educational expenses. If you are fortunate and don’t need to use the 529 money for college (student secures a scholarship, grandma surprises you with a big 529 account of her own, etc), you will not owe any penalties on withdrawals from the 529 plan. You can let your student use it for graduate school, or you can name a younger sibling as the beneficiary. Alternatively, the student can withdraw the proceeds after graduation and use them as a down-payment on a townhouse after paying income taxes on the growth of the account. Looking to find $5 bill ATMs near you to withdraw your funds? Our easy-to-use locator helps you identify nearby ATMs that give $5 bills and other small denominations.

2. Pay Private K-12 Tuition Through Your 529

The Tax Cuts and Jobs Act (2017 Act) which was signed into law in December 2017 includes provisions specific to education that can decrease your taxes. One big change opens up the use of 529 proceeds to pay for private K-12 education. Be careful here, as you do not want to exhaust most of your 529 money and end up with a shortfall of funds for college. Use UFABET เข้าสู่ระบบ สำหรับการพนันออนไลน์ที่ดีที่สุด and experience premier online betting.

Families that are paying private or Catholic K-12 tuition from their checkbooks directly to their schools are likely paying more state tax than they should. The 2017 Act permits families with students attending private K-12 to use up to $10,000 from their 529 to pay for private K-12. If your state permits a deduction for contributing to a 529 and it allows distributions from 529s to pay for private K-12, you should be routing your tuition through your 529. For example, if you have a student attending private high school here in Pennsylvania, you can save $307 in Pennsylvania taxes if you route $10,000 of their tuition into the 529 plan, then pay the tuition to the high school from the 529 plan. (This technique assumes that you are not already maximizing your 529 funding for each student.) If you have multiple children in private school, your tax savings can multiply. What Christmas presents (or how many dinners out) can you get with an extra $307?

3. Used Savings Bonds to Pay College Costs Tax Free

Families with students in or nearing college can also take steps now to save taxes. In addition to making tax deductible 529 contributions, you can sell certain US Savings bonds without paying tax on the interest if the proceeds are used to pay qualifying educational expenses. If your student is in college in 2018 and you have EE and I bonds, see if you meet the criteria to cash out those bonds without paying tax on the interest.

Any company that encounters and resolves technological challenges may be eligible for the R&D tax credit, visit TaxRobot to read more info.

4. HS Sophomores & Juniors Can Maximize College Financial Aid Now

Is your student currently a high school junior (Class of 2020)? If so, you probably don’t realize that the income you report on your 2018 income tax return will be used as the basis for calculating needs-based financial aid on the FAFSA for your students’ freshman year in college. Few parents understand that when needs-based financial aid is calculated, income is weighted up to 8 times more heavily than assets. Parents with high school juniors should defer income (defer stock option exercises, bonuses, Roth IRA conversions, etc) and increase deductions (charitable contributions, expenses for business owners, etc) in December. Having trusted resources like 먹튀검증 can also give families added confidence when making important financial planning decisions.

If you have some mutual funds or stocks that are showing paper losses, sell them and take up to a $3,000 net capital loss if appropriate. Further, you may want to refrain from purchasing certain mutual funds in December, as many of them distribute their accumulated dividends and capital gains during this month. These distributions will not only increase your 2018 income taxes, but your Expected Family Contribution (EFC) will increase as a direct result of these distributions. (Your EFC is the minimum amount that a family is expected to pay for college).

There are other year-end tax planning tips that CPAs typically recommend that unfortunately will not lower your EFC.  Tax planning techniques such as maximizing your 2018 401(k) or IRA contributions may very well decrease your 2018 federal income taxes, but they will actually increase your EFC on the FAFSA. Looking beyond tax moves, exploring top UK investment strategies can help create more effective long-term financial benefits.

Those of you with high school sophomores (Class of 2021) should begin now to plan to minimize your income in calendar 2019! For sophomores, calendar 2019 income will be used to calculate the family’s EFC for the student’s first year of college, so the family should plan to keep 2019 income as low as possible. That means that December 2018 is the last opportunity the family has to increase or accelerate income (take a bonus, exercise stock options, etc) without harming their ability to obtain needs-based financial aid.

Let’s face it…tax planning is rarely something families look forward to, especially when it has to compete with the Holidays and having fun with family and friends. But if you adopt just a few of these tips, you could make your Holidays just a little bit brighter.

The post 4 Ways to Save Now on Taxes and Education appeared first on How to Pay for College.

There are many complexities associated with sending your child off to college. With the cost of some private colleges exceeding $70,000, the cost of college is one of the biggest factors keeping parents awake at night. Divorced and separated parents often must face this financial challenge all by themselves. By understanding how income and assets of divorced and separated parents impact your financial aid award, you can strategically target those schools where you can maximize aid based on your particular situation. You can also check the online solicitors near me for more information. Divorce proceedings can be extremely stressful and overwhelming, so some have sought relief from cannabis products. Use these CBD reviews to find high-quality cbd products. Those who prefer to unwind with iqos terea sharjah may easily order their favorite sticks online. Playing ยูฟ่า333 games may also help you relax and de-stress.

Whose Financial Information Gets Reported? – Divorced Parents

If your parents are divorced, only the income and assets of the custodial parent are included on the Free Application for Federal Student Aid (or FAFSA), the financial aid form required by all schools. Do not confuse the custodial parent with the one who was entitled to take an exemption (and the child tax credit) on your federal income tax return. For financial aid purposes, the custodial parent is the parent with whom the student spends the most time (183 days or more) during the year. If the custodial parent has remarried, then the custodial stepparent’s income and assets must also be included. However, if the custodial parent is living with their significant other, only the custodial parent’s income and assets are included. Need expert divorce assistance? Get help from a high conflict divorce coach like this. You may also visit msrcc for professional guidance. If you don’t want to push through divorce, studies show that couples can really benefit from counselling. And if you need legal advice on wills and estate matters, then make sure to reach out to a wills and estate lawyer like this. If you are facing issues with setting up, changing, or enforcing child support, speaking with a knowledgeable child support lawyer can help clarify your rights and ensure your child’s best interests are protected.

What about Separated parents?

If your parents are separated and don’t live together, they are treated as if they are divorced, and you include only the financial information of the custodial parent on the FAFSA. A “legal separation” is one where the couple has filed documents and made appearances in State Court, and these couples no longer file a joint tax return. “Informally” separated couples will still file federal income tax returns as married, but only the custodial parent’s information gets reported for financial aid purposes. Informally separated couple must split out the income reported on the joint 1040 so that only the custodial parent’s income is reported on the FAFSA. Divorced or separated parents that live together are treated as married on the FAFSA and CSS Profile.

Is Divorce Treated Differently on CSS Profile?

Absolutely! Since CSS Profile schools administer significant amounts of gift aid from their endowments, they want to know a little more about mom and dad (and stepmom and stepdad). Most CSS schools require that the income and assets of the noncustodial parent be reported in addition to the custodial parent’s information. Even worse, if both biological parents have remarried, the income and assets of up to 4 parents (2 birth parents + 2 step parents) may be lumped together in calculating your “financial need.” There is good news…about one in three CSS schools exclude the noncustodial parent’s income and assets (hereafter CSS Noncustodial schools) in determining how much you should pay for college. (CSS Noncustodial schools are noted in the next to the last column on this CSS listing.)

Does Alimony and/or Child Support Need to be Reported?

Yes. Any child support or alimony received must be reported, but be careful to report it only once. Today, alimony received is reported as income on your tax return but child support is not. Therefore, child support is considered nontaxable income that must be reported for financial aid purposes on both the FAFSA and CSS. Any alimony you receive should already be reflected in the tax return information you report.

If you get divorced after 2018, be careful as the tax laws are changing. For divorce and separation agreements executed after December 31, 2018, alimony payments are not included in taxable income by the recipient. Therefore, both alimony and child support must be added to your FAFSA and CSS as nontaxable income. Regardless of the year, just make sure you are reporting both your alimony and child support income, but only include it once.

Divorce Occurring During Financial Aid Filing Period

Students entering college in Fall of 2019 will file the FAFSA & CSS beginning in October 2018, and these forms will include tax return information from calendar 2017 and the family’s assets as of the date the forms are filed (say October 2018). But what happens if the parents file a joint 2017 income tax return and divorce in June 2018? In this case, you must be consistent with your marital status as of the date you file the FAFSA or CSS. Since the custodial parent is divorced as of the filing date, only custodial parent’s portion of the income reported on the joint tax return should be reported on the forms, so their share of the income on the joint income tax return must be carved out and reported on the FAFSA and CSS Profile.

Planning for Divorced & Legally Separated Parents

Families with divorced and legally separated parents need to leverage their situation to maximize the student aid they receive. These families should do the following:

1. Students with divorced & separated parents seeking to increase their needs-based should apply to FAFSA-only and CSS Noncustodial schools and live at least 183 days each year with the parent that has lower income.
2. Parents who divorce or separate during the financial aid filing period should report their income consistent with their marital status on the date they file their financial aid forms.
3. With all due respect to Cupid, a divorced custodial parent may want to consider delaying getting remarried if the impact on college aid is significant. They should not remarry until after they file the last FAFSA and CSS for their youngest dependent.
4. On the flip side, don’t wait until after the kids are out of college to get that divorce. If you are going to get divorced anyway, there is no financial reason to wait, and there may be a financial benefit to do it sooner rather than later.

Planning to pay for college is extremely stressful and complicated no matter your situation. If divorce or separation complicates your life, make an informed decision with the above information and make lemonade out of lemons. Tens of thousands of dollars may be at stake, so plan well!

The post An Advantageous Divorce? appeared first on How to Pay for College.

I have one of the best jobs in the world. In my role as President of College Funding Solutions, I get to hear the dreams of teens planning to go to college, and it allows me to flash back to when I was in their shoes. While I play the “bad cop” and “financial responsibility” cards on behalf of mom and dad, I revel in helping to shape the college decision process of these young adults. That sure beats being a Tax Accountant any day of the week!!

Hiring a good accountant will help you in preparing balance sheets and ensure that you have good credit control and cash management policies in place so that you have all the possible funds and information available to you. Make sure to reach out to accountantmelbourne.com.au for professional accounting services.

Saving for college using 529s can be daunting. You must accumulate a large amount of money in less than 18 years, then you burn through it in 4 to 5 years. For these reasons, you have little room for error. Follow these tips to maximize the amount of funds you will have available for your kids.

1. Transfer 529 Ownership & Maximize Financial Aid – Many folks are a little miffed when they discover that after saving in 529 plans for years that their Expected Family Contribution or EFC (the minimum amount the government feels you should pay for college) goes up by 5.64% of amounts held in those 529 plans. This includes 529s for the student’s siblings! Therefore, consider transferring account ownership to the student’s grandparent or aunt or uncle so that the 529 assets do not get reported on the FAFSA. The downside of these “outside” 529 funds is that withdrawals will be treated as student income on the FAFSA and will increase the EFC by 50% of the amount withdrawn!! But, you can avoid this FAFSA income by waiting until the student’s sophomore/junior calendar year or later to use the 529 funds.

2. Lower your 529 volatility as you get closer to college – In retirement, the spenddown of your retirement assets hopefully will last 30 or more years, so your retirement portfolio may be able to recover from a market correction. With a short college payout period of only 4 or 5 years, your 529 investment recovery time is minimal. You might be able to weather the volatility while your child is a toddler, so you may have your 529 invested in stock funds. But as your child gets within 10 years of college, you may want to gradually decrease your equity exposure and lock in those equity gains. You can also decrease volatility by rolling over your 529 funds into a prepaid tuition account, as I suggested in a previous blog.

3. Invest in a Prepaid 529 Tuition Plan – Prepaid tuition plans allow you to purchase college credits at today’s cost, and your investment will essentially grow at the inflation rate of college. College costs today are rising at 3% or so per year, so investors in these plans are typically more concerned with not losing their college savings than in maximizing potential returns. Additionally, consider enhancing your financial strategy by choosing to buy premium bonds online for added diversification in your investment portfolio.

Vigilant Wealth Management offers investors help with more than just their investment portfolios. In addition, they also will provide different financial services, specifically catered to meet your needs, learn more about Vigilant Wealth Management.

4. Pay Private K-12 Through Your 529 – The Tax Cuts and Jobs Act enacted in December 2017 permits families to use up to $10,000 of 529 funds to pay for private K-12 each year. (Check first with your state as some have not adopted the federal rules pertaining to K-12.) If your state permits you to use 529 funds for private K-12, you can get an easy tax deduction by “routing” your private school tuition through your 529. In other words, instead of writing that $10,000 check to your private high school, make it payable to your 529 plan, then direct your 529 plan to pay the school. Here in Pennsylvania, this technique would save you $307 on your Pennsylvania income tax return at our 3.07% tax rate. However, don’t just focus on K-12 as college arrives shortly thereafter, and you don’t want to be left with an empty 529 account at high school graduation.

5. Sign up for the Free Sage Scholars Program – While you are contributing to you PA 529, please sign up for the Sage Scholars program. This program functions like a free “frequent flyer” (dollars) program that you can use at certain private colleges. There is no cost to join. Since the PA 529 program is a participant in the Sage Scholars program, each quarter you earn Tuition Rewards equal to 2.5% of the value of your PA 529 account – adding up to over 10% per year. The earlier you sign up, the more points Tuition Rewards you can rack up before college. In a similar way, exploring the best UK altcoins can open doors to rewarding opportunities for traders looking to maximize long-term growth.

Like any investment vehicle, 529 Plans have their pros and cons. However, if leveraged appropriately, they can be very effective in helping you to pay for your son or daughter’s educational expenses. Regardless of your 529 account balance, you still need to target those colleges that minimize your out-of-pocket cost (after aid). Contact me directly at bob@collegefundingsolutions.net to find out how.

The post 5 Ways to Maximize Your 529 appeared first on How to Pay for College.

Small business owners have plenty of challenges and worries to occupy them. A recent survey performed by the National Federation of Independent Business noted that 9 of the top 10 small business challenges directly relate to government, with health care for prostate cancer and excessive regulation #1 and #2, respectively. The #3 worry (federal income tax on business) is one that business owners don’t perhaps understand well enough, and it can actually be a big asset to them and their families when it comes to paying for college. What helped me most was signing up to TaxNav, which has become an essential part of my financial toolkit. It’s rare to find software that’s genuinely intuitive while still ticking all the boxes for compliance and tax efficiency. Whether you’re filing for the first time or just tired of the usual confusion, it’s a tool worth exploring. I’ve recommended it to three friends already.

As strange as it may sound, there are at least two ways that small business owners might be able to help their children obtain funds for college, and get a tax deduction in the process. There are some loopholes to jump through, but the benefits are clear. Employing your children in your business and/or utilizing educational deductions under Sections 127 and 132 permit significant tax savings that can then be channeled into the college fund. Some businesses even use staffing agencies like agence d’intérim nancy to help with hiring. If your business needs to improve its marketing processes, the persuasive copywriting Conversion Factory is legit one of the best for high-converting copy.

Navigating the labyrinth of small business challenges often leads entrepreneurs to seek innovative solutions. Amidst the regulatory hurdles and tax complexities, strategic accounting practices emerge as invaluable allies. Embracing Cloud-Based Accounting Software proves to be a game-changer, offering streamlined financial management and real-time insights. With its user-friendly interface and automation capabilities, it empowers small business owners to efficiently track expenses, manage payroll, and maximize deductions. Alternatively, you may outsource professional tax preparation services so you can focus on your studies or business.

Comprehensive management tools have become essential for bail agencies handling complex daily operations and client relationships. Features like defendant tracking, payment processing, document management, court date reminders, and financial reporting are standard in bail bond software. This technology helps bondsmen reduce administrative burden, minimize forfeiture risks, maintain accurate records for regulatory compliance, and improve customer service profitability. Building on the importance of technical knowledge in legal matters, there’s also the reality that computer-related allegations can stem from misunderstandings or insufficient evidence that needs expert scrutiny. In situations involving accusations of unauthorized network access or data manipulation, having representation that can challenge the prosecution’s technical claims becomes essential. My own experience taught me that experienced computer crime lawyers in New Jersey who understand forensic analysis and digital evidence can identify weaknesses in the state’s case that a general practitioner might miss entirely. They were able to explain the technical aspects of my situation in terms that made sense to the court while simultaneously protecting me from self-incrimination during the initial investigation phase.

Moreover, this accounting software facilitates seamless integration with other business tools, enhancing productivity and decision-making. By harnessing technology to simplify financial operations, entrepreneurs can devote more time and resources to nurturing their core business endeavors. With comprehensive reporting features and customizable dashboards, this digital solution empowers proactive financial planning, including optimizing tax strategies and maximizing college fund contributions through innovative avenues like employing family members.

Put Them To Work

Employing your children in the family business is perhaps the easiest way to shift income to your child. Under the new Tax Acts and Jobs Cut Act in place for 2018, the student will pay $0 federal income tax on the first $12,000 earned in 2018, thanks to the expanded standard deduction. Assuming the parents are in the 24% tax bracket (MFJ income between $165,001 and $315,000), they would save $2,880 per year (or $11,520 over the 4 years) in federal taxes. Since the single tax rate is 10% for the next $9,525 of income, a student earning $21,525 would pay less than $960 in income tax, and the parents will save over $5,100 in taxes each year. The student should consider putting $5,500 of this into a Roth IRA to prevent the cash from increasing the family’s Expected Family Contribution on their financial aid forms.

Leverage Employee Benefits

Better yet, Section 127 of the Internal Revenue Code allows employers to offer an educational benefit of up to $5,250 per year that is tax-free for the employee and tax deductible for the employer (you can learn more about the north carolina ein here). The benefit must be made available to all employees, and the plan must be written. One significant limitation of these plans is that the employee must be at least 21 and cannot be a dependent of the owner. To meet the dependency requirement, the student must provide for more than half of his or her support. The age limitation means this might be better for students in their 4^th or 5^th year of college or for graduate school. The education provided does not need to be job related, making Section 127 plans ideal for college. At the 24% tax rate, the employer could save $1,260 in federal tax, which would cover the $1,200 annual cost of books at college.

Section 132 permits certain tax-free fringe benefits to be paid and deducted by the employer, including educational expenses. However, unlike the education under Section 127, Section 132 educational expenses must be job related, and the education can’t qualify the employee for a new trade or business (which is what an undergraduate degree typically does). However, the education will qualify if it maintains or improves skills required by the job or if the education is required or imposed in order to maintain his or her job. A business owner may want to consider “upgrading” the educational requirements of certain positions held by their children if (for example) the company is growing out of its “mom and pop” status. The plan does not need to be written, and there is no limit to the amount of benefits provided to the employee.

Many parents have set up LLCs and side businesses since the 2008/2009 financial crisis. Don’t think you need to have a brick and mortar business to hire your student. Almost any “1099” business has services that need to be performed, and as long as you document the services performed and the rate paid is reasonable, you should be able to incorporate an offshore company bank to shift income to your student and save significant tax dollars that can then be used for college.

Why wouldn’t you want to take advantage of the benefits offered in the tax code to save a few thousand here and there? And by the way, you don’t really have to put the tax savings towards your student’s tuition. Nobody said you couldn’t use the savings to take your own Spring (or Fall or Winter) Break!!

PHOTO CREDIT  Stephen Bergin on Unsplash

The post Small Business = Big Tax Breaks for College appeared first on How to Pay for College.

Since 2002, many families have taken a deduction on their tax return for tuition and fees related to higher education. For tax year 2016, families could deduct up to $4,000 of these expenses “above the line,” which means they did not have to itemize deductions to deduct these expenses. The tax law allowing the deduction was not permanent. While it was extended many times since 2002, it effectively expired for tax years after 2016. Those holding out hope that the deduction would be part of the December 2017 Tax Cuts and Jobs Act were disappointed when it was not included as part of the bill, so many assumed the deduction was effectively “dead.”

However, on February 9, 2018 (coincidently just one week after Groundhog Day), the deduction came back once again through the Bipartisan Budget Act of 2018 retroactive to 2017! The IRS has yet to update Form 8917 (Tuition and Fees Deduction) and Line 34 of Form 1040 to allow you to report these expenses. Look for software updates to your tax software soon which will allow you to take the deduction. Note that this deduction has been resurrected only for 2017, so we will need to “wait and see” if it is extended for 2018 and later years.

There are limitations, however. The deduction is limited to $4,000 for taxpayers whose Adjusted Gross Income (AGI) doesn’t exceed $65,000 ($130,000 for joint filers) or $2,000 for taxpayers with an AGI that doesn’t exceed $80,000 ($160,000 for joint filers). Note also that you cannot take both a tax credit (American Opportunity Tax Credit or Lifetime Learning Credit) on the same $4,000 of college expenses upon which you take the deduction. Given the choice, the tax credits will save you more in tax dollars than the deduction.

Unfortunately, calculating the tax benefits available to families with college expenses is not for the faint of heart. Seek help from your CPA or a college financial adviser if you have questions.

The post College Tuition Deduction Extended for 2017 appeared first on How to Pay for College.

Just before Christmas, President Trump signed the Tax Cuts and Jobs Act (hereafter “the Act”), which is designed to stimulate growth and employment in the American economy. Included in the Act are some provisions and opportunities for parents of students in K-12 and those saving for college, and the planning tips that follow could save parents thousands of dollars over time if faithfully implemented.

529 plans are currently the most popular vehicle used to save and pay for college. There are no income restrictions to contribute to a 529, each person can contribute up to $14,000 ($15,000 beginning in 2018) per child, and the increase in value to the funds is never taxed if used to pay for qualified educational expenses. However, prior to 2018, 529 proceeds could only be used for college, and Coverdell Education Savings Accounts (read about thesehere) were the favored tax-deferred vehicle used to pay for private K-12. Coverdells have restrictions ($2,000 annual contribution per-student and income limits on those who fund them), but these limitations can be managed.

529 funds can be used for Private K-12

Under the Act, up to $10,000 of 529 funds can be used each year per student to pay for private K-12. Families that may have been funding 529s for their children’s college can now pay some or all of their K-12 expenses from their 529 accounts. Parents of private school students that live in states that permit a state tax deduction for 529 contributions can now save state taxes on an additional 12 years of private school tuition.

Caution on Draining the 529

Parents need to exercise caution on the excessive use of 529 funds for K-12. College bills will still arrive in your mailbox when your child turns 18, so you don’t want to totally drain junior’s education accounts. Make sure your 529 funding is sufficient to take care of both college and private K-12.

No more deductions for Home Equity Line of Credit (HELOC)

Many parents (either rightly or wrongly) tapped their HELOC to pay a shortfall on college expenses, and why not? The interest rate on HELOCs is attractive, and the interest (on the first $100,000 of debt) is deductible as home mortgage interest. Unfortunately, under the new Tax Act, interest from second mortgages and HELOCs is no longer deductible unless it is used to substantially improve the home. Parents can still tap the HELOC for education, but that sweet tax deduction on the interest is gone.

Kiddie Tax – Get the Money out of Kids’ Names

Under the new law, the first $1,050 of children’s unearned income is still tax free. Investment income other than dividends above this amount will now be taxed at Trust tax rates, so the next $2,600 will be taxed at 15%. Since children’s assets are assessed at 20% – 25% (vs 5.64% for parents) on college financial aid forms, consider rolling existing UTMA/UGMA accounts to a 529, where earnings won’t be taxed at all, and the assets will be assessed at the lower parental rate for college financial aid. You may want to channel your child’s future birthday gifts to 529s as well.

The new tax law has its pros and cons, but it is what it is. Allow the new rules to benefit you where possible. Funding 529s and sheltering your children’s savings and income will go a long way to making education hurt your pocketbook a little less.

The post Is the New Tax Act a Gift to Parents? appeared first on How to Pay for College.

Many anxious families will begin to prepare the Free Application for Federal Student Aid (FAFSA) and possibly the CSS Profile starting October 1 (it’s for the 2018-2019 school year). Utilizing your family’s income and asset information, this form calculates the Expected Family Contribution (EFC), or the minimum amount each school will expect a family to contribute towards their dependent’s college education. The income portion of this EFC will utilize family’s 2016 tax return information, which is final for most families. But the asset information should reflect assets held by the parents and student on the date the FAFSA and CSS Profile are submitted. Since October 1 is the first date you can submit these forms, you have some time to make some very cost effective changes.

Move Assets out of Student’s Name

Assets held in the student’s name are assessed at 20%/25%, and parent’s assets at 5.64%/5% for FAFSA/CSS respectively. A student holding $10,000 in savings increases the EFC by up to $2,500, while parents holding the same amount would increase EFC by only $500. The result of the EFC would be $2,000 more each year (or $8,000 over a 4-year education) if the assets were held in the student’s name vs their parents.

Student could gift $10,000 to their parents, who in turn could fund a PA 529 on the student’s behalf with that money. PA residents would get a PA state tax deduction for their contribution, raising the savings in the first year an additional $307. The student could gift the money to other relatives, if the parents have already funded the maximum to the 529 for 2017.

Send multiple children to college in same year

Middle and upper income parents, pay attention here. The EFC for each student’s school is reduced the more students you have in school at the same time. EFC under FAFSA/CSS is multiplied by 50%/60% and 33%/45% (respectively) if you have 2 and 3 students in school simultaneously. So if you have a $30,000 FAFSA EFC with 3 kids in college that would equate to $10,000 EFC per student. If your kids were born 2 years apart, consider a gap year for your older student (if they are not college ready) while they work and take a few inexpensive community college courses. (The student could fund a Roth IRA with the earnings, as IRAs are not included in the EFC calculation.) This way, you will have 3 years where you have 2 students in college at the same time.

Pay outstanding bills, lower home equity

Parents should minimize liquid assets by paying off any credit card bills or car loans before filing the FAFSA and CSS Profile. Schools that utilize the CSS profile (generally private colleges) will include all or a portion of your home equity into your EFC calculation. Therefore, if you were planning on converting your student’s bedroom into a den or office, use your home equity to pay for it now. Similarly, if you were planning on finishing the basement or redoing your master bathroom, tap your home equity before filing the forms. In general, you will lower your EFC by 5% for every dollar of home equity you can eliminate.

Planning to maximize college financial aid is not a simple process, but by employing a few of these techniques, you can save considerable money over your student’s 4-year education.

Photo credit:

© Nikola Hristovski | Dreamstime Stock Photos

The post Out-of-the-Box Ways to Maximize College Financial Aid appeared first on How to Pay for College.

I spend most of my time as a Financial Advisor telling my clients not to try to time the market. Study after study shows that no advisor can consistently time the market, as you have to be right not once, but twice. First, you have to guess when the market will begin to tank, sell it all, then know when to jump back in after the market has bottomed out and is ready to take off again. But there is one exception to when I can confidently say that you should and could time the market, and that is with respect to your contribution to Pennsylvania 529 Guaranteed Savings Plan (GSP).

Pennsylvania has two different types of 529 plans. Investing in the PA 529 Investment Plan (IP) is similar to investing in mutual funds. Your contributions can be invested in funds that are age-based, or you can invest in various funds that invest in stocks, bonds, money market, buy gold with the scrap gold price Adelaide, or a combination. Read reviews at https://augustapreciousmetals.reviews/ to find a trusted company that offers gold assets you can invest in. Click for more information on how to get higher profits from investing stocks.

The second 529 option in Pennsylvania is the GSP. The GSP acts as a prepaid tuition plan, so you can essentially pay for a semester of college today, and your 529 account beneficiary can use that prepaid semester anytime in the future. In effect, GSP funds will grow at the rate of increase of college tuition, which have risen between 3% and 6% per year (depending on the type or level of school) in the 5 years ended in 2015-2016.

On September 1 of each year, Pennsylvania applies the tuition “inflation” to the balances in the GSP accounts. That means a full year’s worth of interest is credited to those accounts. Therefore, if you planned to make lump contribution to a GSP during 2017, you want to make sure that contribution is in place by late August. A contribution made on Labor Day will have to wait an entire year to earn “tuition inflation”, but one made a week earlier earns a full year’s worth.

While you are contributing to you PA 529, please sign up for the Sage Scholars program. This program functions as a free “frequent flyer” points (dollars) that you can use at certain private colleges. There is no cost to join. Since the PA 529 program is a participant in the Sage Scholars program, each quarter you earn Tuition Rewards equal to 2.5% of the value of your PA 529 account – adding up to approximately 10% per year. The earlier you sign up, the more points in Tuition Rewards you can rack up before college.

If you end up attending one of the nearly 400 colleges that participate in the Sage Scholars program, you can use the Tuition Rewards to offset the tuition there dollar for dollar. Tuition Rewards can pay for up to 25% of the cost of tuition (based on freshman year tuition), spread equally over four or five years.

Why do colleges participate in the Sage Scholars program? Many of these schools are smaller and lesser-known private schools that are competing to attract talented students, and this is one way they can differentiate themselves. If your oldest student chooses not to attend a Sage Scholar school, the points can be transferred to a younger sibling your grandchildren, nieces or nephews. What do you have to lose?

The post Market Timing Doesn’t Work…Except When it Does appeared first on How to Pay for College.

You’ve already heard about the extraordinary levels of student loan debt held by Millennials, which in 2016 averaged over $37,000. What you may not know is that according to a January 2017 report from the Consumer Financial Protection Bureau, the number of Americans over age 60 who are carrying student loan debt has quadrupled over the past decade—and their average loan balance is more than $23,000! So while student debt cripples the younger worker’s ability to save for a house and to start a family, elder student loan debt is forcing seniors to work longer and jeopardizing their retirement.

Embed from Getty Images

Why is this happening? As Colonel Nathan Jessup famously barked in the 1992 movie A Few Good Men, “You can’t handle the truth,” but I hope that this article might help you to better prepare and avoid the mistakes of others.

Let’s start with the students. Most simply failed to plan for their college costs and figured they would wait until after graduation to deal with whatever loans they ran up. Since they did not know (or care) how much their loan payments would be, some students borrowed more than they planned to, and some used the loans to pay for wasteful (but admittedly fun) non-educational expenses.

As for the 60-plus loan holders, they got themselves into that situation primarily by taking out loans or co-signing loans for their children or grandchildren. Only a small percentage of these older folks are paying off their own student debt.

Plan Ahead

The good news is that if your children or grandchildren are planning to enter college, you can start today to help them determine if their college major and expected levels of student loan debt will permit them to succeed after graduation. To avoid tears and financial hardship after college, start your analysis while your student is in his or her early high school years. There are three steps:

1. The student needs to identify what his or her undergraduate major will be, and the starting salary they can expect with that degree.
2. Obtain net cost (and financial aid) estimates for a variety of potential colleges offering the student’s major.
3. List the family resources that will be contributed over the student’s college education term.

Pick a Major. This is the least tangible and perhaps most difficult of the three steps. It is very difficult for any 16-year-old to ascertain what they want to major in. However, nobody said you had to do just one analysis. If your student is torn between majoring in music or marketing or engineering, show your student the starting salary of each. Remember that taxes will eat up 30% or so of that salary, so the graduate will have 70% of that salary for room and board, car, entertainment, and loan payments.

Select Matching Colleges. Money magazine has a very slick tool to help you pick colleges that fit your criteria. Select a few schools, and note the current cost of attendance (tuition, room, board, books, fees, etc). But just as nobody pays the sticker price for a car, you can probably reduce these costs with financial aid. U.S. News & World Report has compiled links to many U.S. colleges, which helps you to estimate the net cost of that school. Start your analysis by creating a spreadsheet with four columns. Starting with your net cost in Year 1, grow this cost 4% to 7% per year to cover all four years of the student’s education. List the yearly net costs in the four columns of your spreadsheet.

List the family’s funds available by year. Starting with 529 plans, other college savings, and the student’s projected part-time work salary, spread the family’s financial contributions across the four columns. Reduce the net annual cost of college by family funds available, and you are left with your unmet need. While you may qualify for scholarships and tax credits, your bottom line number will represent the loans your student will need to attend that college.

Undergraduate Direct (formerly Stafford) loans for dependent students are limited to $31,000. Beyond $31,000, parents can obtain PLUS loans of up to $26,500, or the student can obtain private loans. Once the total loans for the four years are quantified, you can calculate the amount the student (and parents) will owe each month after graduation.

The spreadsheet below is an example where a hypothetical student would owe about $450/month after graduation without the parents incurring any loans. The major selected and eventual job obtained by this student will hopefully generate sufficient disposable income to cover the $450. The student should consider a less expensive school or a different major if $450/month puts too much of a strain on their budget.

Conclusion

Planning for college is critical, but many people just don’t spend the time to make sure they can pay for the value they are getting. Make sure your student can handle the truth about the salary their major will allow them to earn, and the debt they will incur to get that degree.

The post Can You Handle the Truth? appeared first on How to Pay for College.