College Savings and the Market

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Just a short time ago, tuition bills arrived hand-in-hand with nightmare producing, stomach-churning market volatility.

For those with college funds in financial vehicles subject to market ups-and-downs, it may be too late to act, especially if you need to pay the bill. If payment is not yet due, then it’s a sit and hope scenario.

Sit and hope the market shoots back up and you can “recapture” the money that has been lost. Make no mistake, if your money is subject to the market, you can’t recapture what has been lost; you can only return to and exceed the value once held.

So, what can you do?

First of all, stop “saving” money in financial vehicles that are subject to market forces. That’s not savings; it’s investing. It’s gambling.

Don’t gamble with money you can’t afford to lose!

Place your money where it won’t be lost when the market shoots downward, where it will earn a guaranteed return compounded annually, where you have access to it if and when you need it, where it won’t count against you in financial aid calculations, and where you can use it for something other than college-related expenses if it’s not needed for those expenses.

Be willing to sacrifice potential gains in order to avoid horrendous losses!

If your money is invested, there exists no foolproof way to prevent that money from loss when markets are volatile and the trend is downward. However, you can plan ahead and save.

Don’t invest and hope the money is there when you need it.

Contact us to learn how to properly save for the expense of a college education.

 

6 Conventional Ways to Pay for School

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Whether you’re a high school senior beginning the “freak-out, how to pay” phase of your college planning campaign, a high school student on whom the upcoming, unbelievable expense is beginning to dawn, or the parent of a college-bound student of any age facing yet another addition to the ungodly amount of debt you currently manage, there are a number of conventional ways to cover the expense when you’re short on cash.

Option #1 – The current flavor of the day, month, or year (your choice!) – the 529 Plan. Although it’s called a “savings account,” it truly is an investment account. Sure, you might get a tax break. And, yes, the earnings grow tax-free. So, it might be right for you. However, the money you place in a 529 Plan is subject to market loss and you could end up with less than you’ve actually contributed. Moreover, the plan comes with government restrictions on when and how you can use the funds.

Option #2 – You could attend a cheaper school. While it may look cheaper on paper, it could actually cost you more. Rather than focus on “sticker price,” a price that families with a properly designed college planning campaign will not pay, focus on finding the right school at the right price. A school that may cost more on paper, but may actually be less expensive in the long run.

Option #3 – Apply for scholarships and grants. While these represent only about 3% of all available financial aid and thousands of students apply, it’s possible you could win one, perhaps a few. But, you are legally obligated to report those “winnings” to the schools who can then reduce the financial aid award. Certainly, apply for those you could win; just don’t rely on this strategy.

Option #4 – Borrow money from the government. No matter who you are, if these are available, take them. They have lower, fixed interest rates set by Congress and flexible repayment terms. With a properly designed college planning campaign, such loans shouldn’t be as fearsome as the media portrays.

Option #5 – Private student loans. While it means more debt, these loans are in the student’s name (with a co-signer), typically at lower interest rates than PLUS loans, and somewhat flexible repayment terms. With a properly designed college planning campaign, such loans shouldn’t be as fearsome as the media portrays.

Option #6 – Find a job. Whether on-campus (typically through work-study programs) or off, the money earned can offset the cost you may need to cover through loans.

Then, there’s the unconventional way, a way that shelters savings from financial aid calculations, that does not restrict how and when you can use those funds, that does not subject your savings to market correction (i.e., loss), and that is guaranteed to increase in value year-in and year-out.

Contact us for more information.

Overwhelmed?!?

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Most families of college-bound students, regardless of when they address the topic of a college education, find the prospect of paying for the education both confusing and daunting.

Especially so when the family doesn’t realize there are services such as ours ready and able to assist and provide peace of mind.

For most families, confronting the issues of admission, financing, and graduation must be addressed in conjunction with affordability.

That’s why we exist.

We’re here to assist families in designing their college planning campaign, helping not just with the proper funding aspects of a campaign, but in identifying the right schools for the right price based on academics, location, culture, and any other aspect of import to the family.

We are waiting to hear from you…