Education Plan
College: An Investment in Yourself and Your Children's Future.
How To Set Up Education Funds?
The benefits of an education:
It's widely recognized that people with a college education get further in their professional life – more often achieving their career
and monetary goals, than those without a college degree.
Education is an investment that pays for itself, giving you the opportunity to open doors that would otherwise remain closed. What’s more,
chances are up to 30%
greater that you will not face unemployment if you have a college degree.1
Unlike the past, it’s a lot harder to get very far these days armed with only a high school education.
* Figures indicate the difference in yearly income between someone with a Bachelor’s degree and someone with only a high school diploma can be almost $18,000. A
Master’s degree can up the ante by more than $8,000, and a Doctorate can get you roughly two and a half times what a high school diploma will.
* A college graduate will earn about $1 million more over their working lives than high school graduates.
* By the age of 33, the typical college graduate who enrolled at age 18 has earned enough to compensate for both tuition and fees at the average public four-year
institution and earnings they missed out on during the college years.
What College Costs?
* Despite the rising cost of education, as described below, statistics show the investment for a college education is well worth it as you can see.
* An excellent education for your child does not necessarily require that you spend $40,000 in today’s dollars for one year of tuition at an Ivy League school.
There are many well-regarded, reasonably-priced private colleges. The average public college or university tuition is lower yet, especially for residents of the state where the school is
located.
|
Type of Institution |
Projected 4-years and fees |
Projected 4-years and fee |
| Enrolling 2010 | In 18 years (enrolling 2028) | |
| Private Collage | $119,400 | $340,800 |
|
Public/University
(in state resident)
|
$33,300 | $95,000 |
|
2 years community college
& 2 years private college
|
$68,000 | $196,300 |
(Based on average tuition and fees for 2010-2011 as reported by The College Board® and assumed to increase 6% annually.)
* According to The College Board®, the average 2010-2011 tuition increase was 4.5 percent at private colleges, and 7.9 percent at public universities. The
ten-year historical rate of increase is approximately 6 percent. These figures are substantially higher than the general inflation rate. They are also higher than the average increase in personal
incomes.
* The figures above do not include other costs your
child will incur as a college student, such as room and board, books, supplies, equipment, and transportation. These additional expenses can increase your child’s cost of attending college by a
substantial amount.
Education Funding Alternatives:
| Feature | UGMA |
CSA Education
IRA
|
529 Plans | |
|
After Tax $ |
yes | yes | yes | yes |
| Tax-deferred | no | yes | yes | yes |
|
Investment
flexibility
|
yes | yes | no | yes |
|
Tax advantage
access
|
no | yes | yes* | yes |
| Protection | no | no | no | yes |
|
Penalty for other
usage
|
no | yes | yes | no |
|
Financial aid
impact
|
yes | yes | yes |
no |
There will be tax and 10% penalty on earnings for 529 Plan and Education IRA if not used for Education purpose
Funds in 529 plan are counted as parent Asset, education IRA and UGMA as student asset
* Federal tax free. State may impose tax on earnings
summary:
Life Insurance is very good plan for high education, it does
NOT impact applying financial Aid.