How To Find College That Fit On You

In trying to decide what type of college will best meet your wants and needs there are many things to consider. Listed below are some of the factors you will need to consider in deciding where you want to go to college.

Type of institution- Private or Public. College or University. Church sponsored.

Colleges can be either public or private. Public colleges are those that are supported by the state in which they are located. Many highly ranked colleges in the United States are state-supported institutions. These colleges can often provide an excellent education at a price for an in-state resident that is much less than comparable private colleges. At the early stages of your investigation, I would encourage you to consider both private and public colleges.

While private colleges frequently cost more than comparable state institutions, they often have the financial means to offer generous need-based or scholarship-based financial aid. This aid can make the cost of a private college the same or less than attending your state college.

Many of the more selective private universities and colleges have a religious affiliation. The extent of spiritual influence varies. But at the beginning of your college search, we strongly encourage you to investigate all private colleges, regardless of religious affiliation.

Academics- What courses and majors are you looking for

The most important reason for going to college is to get an education. The type of academic atmosphere and variety of courses studied is an important factor to be considered when choosing a college. Be careful, however, of choosing a college based solely on it having a particular major or field of study. Research shows that 90% of all college graduates do not major in the field of study they originally had intended. This happens for several reasons.

First, most colleges have majors in subjects you have never before studied such as political science or anthropology. Second, as you gain experience and maturity in college, your interests may change. Take time to explore your options and be realistic about your talents. Be sure to pursue a course of study that is of genuine interest to you, not just one you think might lead to a good career.

If you do have a strong interest in a particular area, such as science, it is important to evaluate a college’s facilities and offerings in those areas to make sure they have adequate resources. Remember that many smaller colleges may not offer majors in certain professional fields, such as engineering, business, or physical therapy. If you are certain of a specific field of study, be sure that the colleges and universities you are considering offer that major.

Don’t exclude a smaller college, however, simply because you think the resources may be inadequate. Remember that all of the resources of a college are available to its undergraduate students whereas at a large university, many of the specialized equipment might be reserved for graduate students only. Some of the largest producers of PhD’s in this country are small colleges.

Atmosphere- Liberal, conservative or something in between

Each college has a particular “feel”. Many factors go into creating the feel of that college’s including the responsibility the administration of the college allows the students, the competitiveness of the students with each other and the students involvement in social concerns.

Every campus will have a different feel. What is important is to determine if the campus atmosphere will be comfortable for you as a person. The best advice regarding student life is to look for an intellectual and social climate in which you will feel comfortable and challenged.

There is no substitute to visiting the college to discovery how any college feels. By talking to students, professors and administration on a campus, students can gain a better feel for that college’s culture. Also, look around as you are on the campus. What activities are putting posters up, and what are people talking about? These are just a few of the issues to look at in understanding the feel of each college

Student body and gender- Co-ed college or single sex

While most campuses now are coed there are still some all women colleges available for students to consider. The women’s colleges can be an excellent choice for the right student as they often offer not only strong academics but also strong support for women that might be lacking in similar coed colleges. And lest you fear that you will be living in a convent, almost all women’s colleges now have some sort of relationship with coed schools so men will be around even in an all women’s college.

Setting- Where do you want to live

The physical environment of the college may be very important to you. Some people prefer the variety of activities offered by a large city. However, a large city requires certain adjustments that not everyone will be comfortable with. For instance, an inner city college will often not have the classic college campus look. Rather, it will consist of high rise classes rooms and dorms.

Others want to go to college in a more rural setting. These more rural campuses will often have the classic ivy covered buildings with beautiful scenery in all directions. But the excitement of a large city will be missing from such a campus and for those students seeking big time athletics or popular concert venues may not be comfortable in such a setting. The decision of a location and campus setting comes down to the question of where you would like to spend the next four years living.

Size- Large university or small college

The following are generalizations, so if some of these areas are of concern, ask questions at the colleges you are considering:

A large university (15,000-50,000+ students) may offer a variety of academic opportunities including elaborate facilities and large libraries, as well as the stimulation of a large faculty, graduate students and undergraduates. However, housing may be more difficult to obtain, more courses may be taught by graduate students, lecture sessions may be very large, and opportunities for leadership in campus organizations may be diminished.

A medium-sized university (5,000-15,000 students) may offer fewer majors and more modest facilities than a large university, but also may offer greater opportunities to participate in the activities of your choice.

Small colleges (under 5,000 students) usually offer smaller classes, earlier opportunities to take classes with well-known professors, and more chances for participation and leadership in campus activities. However, facilities and classes may be limited and options for activities and diversity reduced.

Location- Where do you want to spend the next 4 years

When considering the possible locations of your future colleges, consider questions such as:

How important is it for me to attend college close to home?

How much do I value attending college with students of different geographic backgrounds?

How frequently do I anticipate going home during the academic year?

How extensively does the weather affect my studies or quality of life?

Consider whether you would prefer a geographically diverse student body, or a regional community of students from more homogeneous backgrounds.

Campus life- What happens on campus when people aren’t in class

Whether you enjoy your college years will often depend on the experience of living on a college campus. Learning in college comes not only from your class work but also through interacting with your college friends, extracurricular activities, and just hanging out in the dorm. Here are some factors that can affect your college experience.

Housing Living on-campus for the first few years of their college experience is important for many students. Dormitories can become a focus of college campus life and the easiest way to meet new friends. If it is an important consideration for you, remember to ask any college in which you are interested about the availability of on-campus housing for all four years. Some colleges only have enough housing for the first year or two of the college experience.

Extracurricular activities The extracurricular activities you engage in are not only fun but can be part of your learning experience. Look at the view books of the colleges to see what activities are available. Talk to people at the colleges you are considering to find out what activities are popular on that campus. Many colleges have 100 or more groups for students with a variety of interests. Also ask about how easy it is to start a new group if you have a particular interest not currently represented on the campus.

Fraternities and Sororities The presence of a Greek system can have a dramatic effect on campus life. Ask people on campus about how the fraternities and sororities affect the social life of any college in which you are interested. Do they dominate the social scene or is it spread between many different groups? Can anyone go to a Greek party or are the limited only to certain students?

Campus Employment Many students will hold a part-time job on or off campus while enrolled full time in college. Talk to current students about the availability of jobs and what types of jobs students typically get. With budget cutbacks, some colleges are starting to limit the number of jobs available to students on campus. If you need to have a job but have to seek one off campus, think about the time involved in getting to such a job and the additional costs of transportation.

Athletics- Are big time athletics important to you.

Many students who engage in high college athletics may want to continue to play that sport in college. College students participate at three levels: intramural, club, and intercollegiate. Intramural play is most common. Intramurals allow students to compete at a variety of different levels of competition with a primary emphasis on enjoying the sport for personal fitness, relaxation, and fun. Club sport teams are usually jointly sponsored by students and the college, and may compete against other colleges’ club teams.

Intercollegiate athletics is the university equivalent of varsity-level sports. These programs are categorized by the NCAA into three divisions of varying degrees of competition: Division I, Division II, and Division III.

Selectivity- How hard is it to get into a college.

Your academic performance in a challenging, rigorous program of study is the most important factor in determining your admissibility to colleges. Admission committees value a consistent level of achievement over four years, but they also give strong weight to students who demonstrate significant improvement over the course of their academic career. While your grades are the most obvious indication of potential future success, colleges also want to see that students have challenged themselves in a competitive, demanding academic program throughout their entire high college career. The more honor and AP courses you are able to take successfully, the stronger candidate you will be. Does that mean that you should take AP courses even if the material if too difficult for you? No. But most admission committees will give more weight to a B in an AP course than an A in a much simpler course.

Standardized testing also plays a critical role in admissions. Virtually all colleges will accept either the SAT I or the ACT. Many of the highly selective colleges also require or recommend SAT II subject test. The most important thing to keep in mind for each of the colleges you are considering is their ‘middle 50%’ range of testing. While a quarter of admitted students have scores either above or below this test range, such a median range will give a general indication of the strength of the applicant pool and how you compare.

After looking at your academic performance and your test scores, most selective colleges will then look at subjective factors such as your recommendations, your essays and your extracurricular activities. The amount of weight given to these subjective factors varies from college to college.

Financial aid- If I do get in, how am I going to pay for the college.

Financial aid may consist of grants or scholarships, loans and work study. Grants and scholarships are money that does not need to be repaid while loans need to be repaid. Work study is generally a job offered on the campus of the college offering the financial aid although it may also be a job off campus.

There are two basic types of financial aid; need based aid and merit based aid. Need based aid is given by all colleges to students who have need. Anyone who can’t pay the full cost of the college has need.

A form called the Free Application for Federal Student Assistance (FAFSA) determines the amount of need for federal grants and scholarships. Many highly selective colleges also require a form known as the Profile form The FAFSA form is filled out after January 1 of the year the student will first attend college.

Merit-based aid includes scholarships typically for students who have good grades or have some other special talent such as athletic or musical talent. Most highly selective colleges offer little or no merit-based aid.

In looking at colleges you should ignore the cost of the college. Yes, you read that right. Ignore the stated cost of the college when you are first deciding which colleges to investigate further. Many of the most expensive private colleges meet 100% of the students need while cheaper public colleges usually meet less than 100% of the need. This means that for many students it can be cheaper to go to an expensive private college than to attend a cheaper state school. Until you know what percent of need the college meets, don’t eliminate a college from consideration just because it is expensive.

 

Benefit Choose The Right College For You

If you are a high school senior or junior making decisions about the college you will attend and your goal is to graduate with a good job, you should think about a few issues that are seldom discussed. Since the cumulative effect of your choices can greatly impact the number of employers that will want to interview you in your senior year of college, wise students carefully think about each decision.

When evaluating colleges, most students and parents consider factors such as:

– Accreditation
– Admission Requirements
– Grant/Scholarship Money
– Tuition, Room & Board
– Size, Location and Environment
– Distance from Home
– Safety and Security
– Class Size
– Dorms
– Medical Facilities
– Campus Activities, Entertainment & Sports
– Gut Feelings

Although those college selection factors are important, there are other considerations that should also be evaluated. Here are a few things that may affect your chances for finding a good job when you graduate.

Reputation Of The College– Students should apply to the best colleges they can afford, colleges with a good reputation in their field of interest. A good college reputation will help when you begin to look for a job. Even if you are still uncertain about your major, keep in mind that nationally known and respected colleges tend to be more attractive to many employers. You will have to decide whether graduating from a college that is highly respected in your field, is worth the financial sacrifice.

Questions: Is there a two-year or lower cost four-year college that you can attend for the first two years and then transfer to a better college? Have you considered working full time and attending college at night or on weekends, as a way to afford a college with a good reputation in your area of interest?

Job Search Preparation and Employment Assistance – There will be great variations in the quality and quantity of people, training and services that colleges provide to students in the critical areas of job search preparation and employment. Some colleges recognize the importance of job search preparation, accomplishments and work experience. Other colleges don’t even help very much with the senior year job search.

Since your goal is to graduate from college with a good job, a great deal of weight should be given to colleges that aggressively support and encourage each student’s job search preparation efforts through ongoing training, coaching and job identification. A short meeting with someone in Career Services in the senior year of college is totally inadequate for any student who hopes to land a good job.

Questions: How many people work in the Career Services Office, as compared to the total number of students? Does the freshman orientation program emphasize preparation and planning for the end goal? Does the college recognize that preparation for the senior year job search starts in the freshman year and continues throughout the college experience? How much job search training and personal attention will students receive each year? How many employers visited the campus last year to recruit students in your specific field of study? How does the college help seniors find jobs in their own field? Have the college leaders created a campus culture that truly helps students find good jobs? Does the college maintain a close relationship with alumni who can help students find good jobs? Do your professors and instructors serve as consultants to employers or belong to associations in your field? Do they introduce students to their industry contacts?

Active Student Participation – Employers love students who can present them with a list of significant accomplishments. Getting involved with on-campus and off-campus activities is a good way to demonstrate student capabilities and successes.

Questions: Does the college and the local area offer students a wide array of opportunities to participate in campus, community, work and leisure activities where students can accumulate a list of successes and impressive accomplishments? Will the student take advantage of these opportunities to work and participate?

Your College Major – Not all college majors lead to good jobs. However, most students will do better when they select something they do well at and enjoy. Therefore, students should do some research and identify colleges that have a good reputation in their field of interest.

Even though a college has a good overall reputation and offers 60 – 80 different majors, not every major offered is of the same quality or has the same reputation among employers. When a college has a great reputation in a given field, more employers will seek out, interview and hire students from that college. Wise students take the time to find out which colleges have the best reputation in their field of interest before they make their final college selection.

Questions: Does you college major lead to a good job? With the major you’ve selected, what kind of jobs are you most likely to obtain when you graduate? Which employers offer those jobs? What do those employers want and expect from students interviewing for those jobs? What should you do during the college years to get prepared for those jobs and those interviews?

Your College Minor – Many students don’t give much thought to their college minor. However, it is important for students to select a minor that will support or compliment their college major. When a minor is directly aligned with their major, it tends to strengthen a student’s expertise, especially in technical areas. Some students choose a business minor, recognizing that there is a business component to every field. All businesses need people who have technical expertise in that field, but can also run the business as managers and hold positions in sales, marketing, customer service and human resources, etc.

Questions: Which college minors will best support and compliment the selected major? Would it make sense to minor in business so as to open a broader array of employment opportunities in the field of interest?

Feeling comfortable with your field of study is extremely important. However, graduating with a good job is also important. That’s why savvy students think about each college selection factor and concern from an employment point of view. Why not select a college that will help you find a good job?

 

Passing Grade At College

Parents and students are experiencing college costs that are straining nearly every family budget. In order to cover those costs, families are being forced to make the very tough choices and huge sacrifices that will affect them for the next twenty or thirty years. And yet, year after year, most colleges continue to raise tuition by five, six or even seven percent. With parents receiving low or no pay increases in this bad economy, those tuition increases don’t seem right.

If the truth be known, the goals of college parents can be quite different from the goals of colleges and their leaders. Because that difference can be large, it is starting to become a problem for some parents and their college-age children. So, let’s get it out in the open. What exactly do parents want and expect from colleges today? Parents want colleges to:

Minimize Tuition, Room and Meal Costs – Parents want colleges to do everything possible to keep their costs down. Since many families have two and three children, it is becoming the norm for them to spend huge sums of money to put their children through college. Now that the cost of a college education has grown to between $100,000 and $200,000 for each child, can anybody blame parents for being concerned about costs?

Maximize Scholarship and Grant Money – When students receive scholarship and grant money, the need for college loans and family sacrifices is reduced. Parents want colleges to provide more grant and scholarship money to students. They believe that it’s time for colleges to work harder and get more creative, in order to help students with their college expenses.

Parents do not consider college loans to be financial aid. They see loans as huge, nearly life-long, financial burdens disguised as financial aid. That’s why parents ask, “Why is it that colleges often have three, four or even six people working in the financial aid office helping with parent and student loans, but not even one person is dedicated to uncovering and obtaining money that doesn’t have to be paid back?”

In the current economy, even student loan money has become harder to find. That’s why there is no better time for colleges to greatly expand their efforts to identify more sources of student aid money in the form of grants and scholarships. There is no reason why colleges can’t assemble a list of the sources that current and former students have previously uncovered and then expand that list through their own efforts. It’s time!

Help Students Discover Their Direction – Parents want their children’s hopes and dreams to come true. However, while some students are already clear about their direction in life, many are still trying to find a path to follow. Since few students can afford to stay in college for five or six years while they explore the possibilities, colleges must help them.

Although undecided students may not know exactly what they want, an effective counselor can help to narrow the field of choice. That’s because students do know the things they’ve liked and disliked in the past. They also know where they’ve been the most successful and least successful. Students know if they like science and math or prefer english and history. They know if they are shy and reserved or fun loving and outgoing. They know if they are good at sports or prefer intellectual pursuits. They know if they prefer to lead or a follow. They know if they have exceptional communication skills or not. The best counselors can help sift through the clutter a bring clarity to confusion. For many students, great counselors seem to perform miracles.

Importantly, counselors also know that few answers reveal themselves to students who are standing still. Only when undecided students are moving, experiencing, learning and growing can they discover their unique path to future success. Therefore, early on, counselors must help the undecided students to get out there and begin to participate in campus, work and community activities. When students become involved, they give themselves the opportunity to discover the things that motivate them, the things that uncover previously unknown interests, possibilities and capabilities.

Parents want colleges to take more interest in their undecided children. Students like this need help in figuring things out. Only competent, caring and dedicated counselors can do that well. However, when undecided students turn into decided students, they can perform at the highest levels. Colleges need to help with that transition.

Provide An Outstanding Education – Parents want their children to receive the highest quality education possible. That requires exceptional instructors. When college instructors make their classes interesting, students rarely hesitate to participate, challenge a statement or ask a question. Learning becomes fun. Instructors like this not only heighten the interest of their students, they inspire them. Parents know that the quality of an instructor’s classroom performance can directly affect the performance of students.

Importantly, because of the instructor’s reputation for developing exceptional talent, the most respected employers stay in close contact with the college and visit the campus for recruitment purposes. Additionally, these instructors are able to attract leaders from the outside community to serve as mentors, networking contacts, guest speakers and sources of part-time and full-time employment opportunities.

Help Students Develop And Follow A Plan – We all know that most students will be more successful when they follow a well thought out and detailed plan that leads to their goal. However, few students are both knowledgeable and disciplined enough to develop a plan on their own. That’s why parents would like someone at the college to guide their children through the process of creating and following a comprehensive plan that is likely to lead to a great job.

Each plan should maximize the student’s career success skills, boost their self-confidence, develop their communication and leadership skills and present opportunities to meet respected and influential people through participation in campus, work and community activities. With the proper guidance, students will end up with a step-by-step, semester-by-semester plan that will almost guarantee success.

Teach Students How To Land A Good Job – More than anything else, parents want their children to graduate from college with a good paying job, so they can afford to live independently, pay their student loans and handle their own expenses. With that in mind, parents want colleges to do everything possible to prepare students for a comprehensive, senior year job search.

A great plan, along with thorough and focused preparation, is the best way to ensure job hunting success. Preparation includes academic success, research of potential employers, job hunting web sites, employment agencies and newspapers, developing a list of accomplishments that will be presented in the resume and during interviews, creating an informational network, identifying questions to ask and answer, taking practice interviews, crafting an exceptional resume and sales letter, building a relationship with references and much more.

Few students will land a great job by waiting until their senior year to get started. It takes more time than that. Colleges that don’t make a concerted effort to help students develop a job hunting plan and then guide them through the steps required for job hunting preparation are putting their students at a disadvantage, instead of giving them a competitive edge.

Provide A College-Wide Network – Parents want college leaders to call upon every possible resource, in order to provide students with the networking opportunities that will lead to information, contacts and job opportunities.

The best college networks actively include every corner of the campus community. They consist of all parents, current students, alumni, professors, administrators, local employers and community leaders. Unfortunately, few colleges aggressively strive to maximize these critical networking contacts.

Parents want their college investment to pay off for their children. That means a great job and an independent life. They don’t want to see their bright, enthusiastic, well educated graduates end up in low paying jobs that hold little promise for the future. Unfortunately, far too many college students are unprepared for their senior year job search and are forced to accept jobs that are not related to their fields of interest and don’t pay very well. They end up frustrated and disappointed. That’s not the dream that parents have for their children.

Knowledgeable parents expect colleges to do much more than simply provide students with an education and then wish them well, as they try to enter the job market. And why shouldn’t parents and students expect more than a couple of handouts at the beginning of the senior year, a list of resources posted on the career services web site, an unremarkable one page resume, an obligatory half hour meeting with a career services counselor and visiting employers who are only looking for candidates in other fields? Everyone knows that it takes much more than that to land a good job.

Now that college parents and students are beginning to expect more for their money, they are using factors such as those described above to evaluate colleges, before they make their final selections. Since some colleges perform these important functions better than others, parents and students have started to ask this question of college leaders, “Does your college deserve a passing grade?”

 

All About College Planning

College Planning

Graduation ceremonies abound this time of year. It is a reminder that college expenses are just around the corner.

18 years ago, parents might have begun saving for their child’s college costs with a Uniform Gift to Minors Act (UGMA) or a Uniform Transfer to Minors Act (UTMA). This is an account that is set up in the minor’s name. A parent may be the custodian on the account.

These were popular because the earnings were taxed at the child’s tax rate. Tax laws eventually changed and now the first $1,000 is tax exempt. The amount between $1,000 and $2,000 is taxed at the child’s rate. Amounts over $2,000 are taxed at the parent’s rate.

The amount you may accumulate in an UGMA is unlimited. However, the annual gift tax amount does apply which is currently at $14,000.

There aren’t any restrictions on how the money may be used. It can be used for travel costs to the college, off campus housing, clothing, medical insurance etc. Monies can also be used on behalf of the child prior to college such as private schooling and summer camps. However, basic needs of the child need to be paid by the parents or guardians.

Unlike some college savings programs, you can’t change the beneficiary on the account. The child, for whom you set the account up, is the one who needs to use ALL the assets. Ownership of the account is the student’s.

This has 2 drawbacks. If you apply for financial aid, the monies are counted as the child’s and 30% of the assets will be included in the family contribution. As the parent’s asset, only 10% of the assets is included.

The second drawback is the control of the assets transfers to the child at the age of majority, which may be 18 -21 depending on the state. At 18 years of age, a car can be much more appealing than a college education.

Fortunately, Congress has established other tax favored means of saving for college expenses.

We will explore those options in the next few weeks.

Educational Savings Accounts

Are college expenses looming on your horizon? Educational Savings Accounts are another option available to save for college costs.

This savings account is a nondeductible contribution limited to $2,000 per year, per child. The earnings on the contribution grows tax deferred and can be 100% tax free if used for qualified expenses. The $2,000 limit is from all sources, including grandparents.

Qualified college expenses include tuition and fees, books, supplies, equipment, and room and board if the student is attending at least half time. Educational Savings Accounts may also cover expenses for K-12.

Contributions may be made until the child reaches 18. And the monies must be used by the time the child/beneficiary reaches 30. However as the asset is the parents’, the beneficiary may be changed to another family member. This allows flexibility in planning for the child’s further education. Some children may choose other routes like military, or receive scholarships.

And since the asset is the parents, it is counted as such in the financial aid family contribution.

The money may only be withdrawn tax free if it is used for qualified expenses. If it is used for other purposes, the earnings are included in taxable income, and is subject to a 10% penalty. Be careful to not overfund.

529 Plans

A more commonly known college savings plan is the Qualified Tuition Program or 529 plans. What is less well known is there are 2 types of this plan under this program.

A lesser known program is the prepaid tuition plan. Prepaid tuition plans allow you to buy future tuition at today’s prices. With 6% inflation per year in college costs, locking in a price has some advantages. The drawback is, knowing which college your child will want to attend. Once you fund at a college, you are locked in – very few exceptions for refunds.

The more recognized 529 plans act similarly to the educational savings plan. The contributions are not deductible. But the earnings grow tax free. The monies are withdrawn tax free if they are used for qualified college expenses and ONLY for college expenses. If they are used for other purposes, the gains on the funds are included in taxable income and subject to a 10% penalty.

The amount you may fund is limited to the $14,000 annual gift tax exclusion. Unless you select the 5 year election, then your maximum is $70,000. The collective maximum you invest is determined by the program and may be as much as $300,000 per beneficiary.

Nearly every mutual fund family has a 529 program. However, your state may have a specific plan. For example, Idaho has the Ideal plan. If you contribute under this program, you may deduct up to $8,000 per year on your Idaho income tax return. You are restricted to the investment choices of the program.

The 529 plans maintain some flexibility. There is no age restriction of when you have to use the funds. Also, you can change the beneficiary on the plan to another family member.

One key to college planning is flexibility. Life brings changes and you need to be able to adapt your plans.

U.S. Savings Bonds for College

Double the money! Another college savings option with relatively low risk is the U. S. Savings Bonds. These types of bonds are usually purchased and redeemed at your bank. They are issued in denominations of $50 to $10,000. For example a $50 bond would cost you $25.

The typical bond issue is Series EE. The earnings are usually tax deferred for Federal and tax free for state. Some post 1989 EE bonds may be redeemed federally tax free if used for qualified higher education. To be federally tax free, the bond owner must be at least 24 years old before the bond’s issue date. Bonds purchased for grandchildren in the grandchild’s name usually won’t qualify for this exemption.

Parents have a restriction of income for the bonds to be tax free. If you are married filing jointly, your phase out range for tax exemption of savings bonds for education currently is from $113,950 to $143,950. As head of household, the range is $76,000 to $91,000.

However, giving a series EE bond to grandchildren may build a nice fund for the child. There is more flexibility in how the money can be spent – without penalty. And anybody can give a gift of a bond. Parents may encourage gifts of this kind to keep children from being over indulged with the latest, greatest toys.

The series EE bond has a 20 year cycle. It can be redeemed before the 20 year period. However, if you redeem within the first 5 years, you will have a penalty of 3 months interest – similar to a Certificate of Deposit. To determine the value of your Series EE bond you can go to the bond calculator at http://www.treasurydirect.gov.

Roth IRA for College

Roth IRA’s are another option that can be part of your game plan for college funding.

One of the challenges in planning for college is to know what your newborn’s talents will be, what college they should attend, or will they get scholarships or have great athletic talent. Add the fact, that if you over fund your 529 plan or educational savings account, you will have a 10% penalty to use the monies for non-qualified expenditures.

I know of an instance where the child attended college in England in order to absorb the monies accumulated in the 529 plan.

So how do you adequately fund without over funding? One means is to use a Roth IRA. You can withdraw principal contributions from a Roth, if it has been established for at least 5 years, without incurring income tax or a penalty. This is a means to save tax free and use it for college if necessary.

You can fund a Roth IRA up to $5,500 a year. There are income restrictions. Your contributions is phased out if you are married filing jointly and your Adjusted Gross Income is over $167,000. And you aren’t eligible if your income is over $181,000. If you are single, your adjusted gross income phase out range is between $105,000 and $120,000.

A word of caution is careful to not jeopardize your own retirement to fund your child’s college. Or you may decide to work a few years more to replenish the funds distributed from your retirement account.

Tax Credits and Other Options

College funding is often like a chess game. You have to move pieces around carefully. Tax laws are chess moves that can be played in the years the dependent is a student.

The American Opportunity Credit gives you a tax credit for college expenses. The first $2,000 of college expense is credited to your taxes – 40% is refundable, 60%reduces your taxes but is not refundable. 25% of the next $2,000 is eligible for credit. The total credit is $2,500 in one year. This credit can be used on first 4 years of undergraduate courses.

Lifetime Learning Credit may also be used to offset college expenses. This credit is non-refundable, but does reduce your tax bill. The credit is 20% of college expenses up to $10,000 or maximum of $2,000. This credit can be applied to both undergraduate and graduate work.

Both credits are applied to qualified college expenses defined as tuition and fees, books, supplies, and equipment. Room and board is not qualified expenses. These tax credits do have income limitations. But they can be used for taxpayer, spouse or dependents.

Another savings option available to some parents comes from their employer’s stock purchase program. Frequently, these programs allow employees to buy at a 10% – 15% discounted price. And you can payroll deduct giving you disciplined savings. This is another way to accumulate assets, leave it as an asset in your financial aid calculation with only 10% counting towards family contribution. It is also in your name, so if it isn’t needed for college, you can use it as you please. Several clients have had this option work well for them. One client set aside stock from a previous employer for his children. Both children received full ride scholarships. The clients now own a cabin. FLEXIBILITY!!!

Another option you can use similar to the Roth IRA is a traditional IRA. While this will come out as taxable income to the parent, it can be withdrawn free of the 10% early distribution penalty. A word of caution: The 1099R will be issued with reason listed as unknown. Higher education expenses are one of the penalty exemption reasons. Be sure you, or your tax preparer, are aware of this and complete the early distribution form correctly. Again, be careful to not jeopardize your own retirement in helping your child.

After all these many suggestions of HOW to save – WHAT investments do you use? To receive tax deductions on your state income tax return, you may have to use the state program. Regardless of which fund family you use, the investing philosophy is the same. It is similar to retirement planning. The younger the child is, the more aggressive you can be in your investing. The closer to college the child is the more principal preservation becomes your focus. In the 2008 melt down, I called my clients with children nearing college age to tell them to take a couple years tuition to cash. They did not have recovery time before tuition would be due. You want the funds to be there when the child is ready to start college. And you want to sleep peacefully.