http://today.msnbc.msn.com/id/38733522/ns/today-parenting/
Great college statistics: http://www.usnews.com/
Quotes from the video:
What's the criteria you use to rank schools?
Alumni giving rates, graduation rates, admission rates and we divided that by the net price that students actually paid, not the sticker price on the website, it turns out yale university came out on top, even though they have a sticker price of $53,000, that's because they're so generous with financial aid that 54% of students don't pay that big sticker price , they get financial aid and the average price paid by that 54% was about $14,000.
Harvard is on the list, the initial price to go to Harvard is about $55,000, that's the sticker price.
Schools like Harvard , Princeton and Yale are starting to charge on a sliding scale. so for example at Harvard , if you come from a family that earns less than $60,000, you're going to get basically a full ride. If you come from a family that earns between $60,000 and 180,000, Harvard promises they won't charge you more than 10% of your family's income. You get a Harvard education, that means room, books, board, travel. That's a great value.
Tuesday, August 17, 2010
Monday, August 16, 2010
Paying for College
Here are a few notes from an article by Carmen Wong Ulrich titled "Smart Ways to Pay for College" ...
Freshmen headed to school this month face bills up to $55,000 a year, and the cost of a four-year degree for a baby born today could reach $500,000.
529 Plan Pros: There's no annual contribution limit. Accounts can hold up to $380k (the cap varies by state). Grandparents, aunts, uncles, even family friends can chip in. If you kids decide to skip college, you can transfer the 529s to other college-bound relatives without tax penalties.
529 Plan Cons: Risk. By the time your child is a freshman in high school, less than 70% of your savings chould be in stocks. Also, if the interest you earn isn't used for college expenses, you have to pay penalties and taxes.
Coverdell ESAs - Parents can invest up to $2k in these education savings accounts (ESAs) each year. The money grows tax-free until you withdraw it to pay for school expenses.
Coverdell ESA Pros: Coverdells tend to have lower fees and more investment options than 529 plans. The funds may also be used to pay for K-12 expenses like school supplies, uniforms, or tuition.
Coverdall ESA Cons: Only couples earning less than $220k combines or single parents earning less than $110k are eligible. And unless Congress votes before January to extend Coverdells' current benefits, the contribution limit will drop to $500 per year and K-12 expenses will no longer be covered. (If that happens and you have a Coverdell, you can roll over the funds into a 529 plan without incurring a penalty.)
Roth IRAs - Although Roth IRAs are usually intended for retirement, you can use the funds without penalty before age 59 1/2 to pay for your child's college tuition, housing, books, or other expenses. You can invest up to $5000 a year (or $6000 if your 50 or older.)
Roth IRA Pros: Like a 529 plan, your savings grow tax-free. Unlike a 529 plan, the funds can pay for your retirement, if you choose.
Roth IRA Cons: Though it may be tempting to raid your retirement fund to pay your child's tuition, resist this urge. Consder using your Roth IRA for college only if you already have a sizable retirement fund elsewhere. As much as you may want to help your kids, you'll assist them more by taking care of yourself first. Remember, they have years to pay off student loans - and if you don't save enough for retirement, they'll have to take care of you. Another drawback: For 2010, individuals must earn less than $120k to qualify; married couples filing jointly must earn less than $177k.
Savings Accounts, Money Market, CDs & Bonds - flexibility, low risk, no penalties; however, with low risk comes low reward - and with the exception of some tax-exempt bonds and money market funds, you'll pay income toaxes on your earnings.
Freshmen headed to school this month face bills up to $55,000 a year, and the cost of a four-year degree for a baby born today could reach $500,000.
529 Plan Pros: There's no annual contribution limit. Accounts can hold up to $380k (the cap varies by state). Grandparents, aunts, uncles, even family friends can chip in. If you kids decide to skip college, you can transfer the 529s to other college-bound relatives without tax penalties.
529 Plan Cons: Risk. By the time your child is a freshman in high school, less than 70% of your savings chould be in stocks. Also, if the interest you earn isn't used for college expenses, you have to pay penalties and taxes.
Coverdell ESAs - Parents can invest up to $2k in these education savings accounts (ESAs) each year. The money grows tax-free until you withdraw it to pay for school expenses.
Coverdell ESA Pros: Coverdells tend to have lower fees and more investment options than 529 plans. The funds may also be used to pay for K-12 expenses like school supplies, uniforms, or tuition.
Coverdall ESA Cons: Only couples earning less than $220k combines or single parents earning less than $110k are eligible. And unless Congress votes before January to extend Coverdells' current benefits, the contribution limit will drop to $500 per year and K-12 expenses will no longer be covered. (If that happens and you have a Coverdell, you can roll over the funds into a 529 plan without incurring a penalty.)
Roth IRAs - Although Roth IRAs are usually intended for retirement, you can use the funds without penalty before age 59 1/2 to pay for your child's college tuition, housing, books, or other expenses. You can invest up to $5000 a year (or $6000 if your 50 or older.)
Roth IRA Pros: Like a 529 plan, your savings grow tax-free. Unlike a 529 plan, the funds can pay for your retirement, if you choose.
Roth IRA Cons: Though it may be tempting to raid your retirement fund to pay your child's tuition, resist this urge. Consder using your Roth IRA for college only if you already have a sizable retirement fund elsewhere. As much as you may want to help your kids, you'll assist them more by taking care of yourself first. Remember, they have years to pay off student loans - and if you don't save enough for retirement, they'll have to take care of you. Another drawback: For 2010, individuals must earn less than $120k to qualify; married couples filing jointly must earn less than $177k.
Savings Accounts, Money Market, CDs & Bonds - flexibility, low risk, no penalties; however, with low risk comes low reward - and with the exception of some tax-exempt bonds and money market funds, you'll pay income toaxes on your earnings.
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