Savings for College
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46 year income difference college vs. high school education
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$1,093,000
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% of population with Bachelors Degree
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20%
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% of population with high school degree
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85%
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% of population with an advanced degree
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10%
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cost of all undergrad costs: public 4 year
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$18,943
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cost of all undergrad costs: public out of state
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$32,762
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2015 UNCC out of state
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$34,294
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2015 UNCC in state
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$20,705
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projected cost of in-state UNCC in 2030
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$185,526 (5% inflation)
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the best risk management program to guarantee a college education fund in the event of a premature death is...
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life insurance
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in needs analysis, a college education fund is considered a...
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cash need
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college education saving plans (3)
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- coverdell education savings account -Uniform Gift to Minors - 529 plans
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Coverdell education savings account (ESA) Advantages
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- tax free accumulations -may roll over to another child in the family -distributions for k-12 and higher education are tax free - investment flexibility
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Coverdell education savings account (ESA) disadvantages
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$2,000 annual limit per child. -not adequate for college savings taxpayers earning ($110,000S) or ($220,000M) are not eligible
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Uniform Gift to Minors advantages
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-Distributions not restricted to education expenses -No funding limit -Parent controls the investments
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UGMA "kiddie tax"
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annual income in excess of $2,000 taxed at parent's rate until child is age 19. (23 if a student) age 19 or 23, child's tax rate applies
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Uniform Gift to Minors Disadvantages
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-Income over $2,000 taxed at parent's tax rate (Kiddie Tax) -Loss of parental control at child's age 18 (age of majority)
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Section 529 Plan Advantages
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-High Contribution limit ($410k) -Earnings are tax free -Distributions for higher education expenses tax free -Funds may be rolled over:
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Section 529 Plan Disadvantages
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-Income tax plus 10% penalty on earnings for distributions not used for higher education expenses
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Which education program limits annual contribution to $2,000?
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coverdell account
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Which education savings program provides the greatest spending flexibility?
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UGMA
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Which education savings plan involves a "Kiddie" tax on earnings
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UMGA
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529 distributions will be tax free if used for:
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higher education expense
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Which education savings program has the most negative impact on students financial aid eligibility
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UGMA (20% of account value considered in Fin Aid)
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Insurance Scholarship Programs
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- spencer education foundation -griffith foundation -loman foundation -GIS -UNCC RMI Program
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2015 national average loan balance after graduation
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$35,000
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national percentage of students with loan debt
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71%
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Federal Loan Programs
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-Stafford Loan -Perkins Loan -Parent Plus Loan
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2 Federal income Tax Credits
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- American opportunity credit -lifetime learning credit
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American opportunity Tax Credit
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-Maximum taxpayer income for eligibility is $90,000 (single) -Up to $2,500 per student per year -Qualified higher education expenses -First four years of post-secondary education (** Higher numbers than "lifetime" because 'Merica)
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Lifetime Learning Tax Credit
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--Maximum taxpayer income for eligibility is $64,000 (single) and $128,000 (joint) --Qualified higher education expenses of taxpayer, spouse or dependents ($2,000 credit per tax return) --All years of post secondary education - undergraduate and graduate. Completion of degree or credential not required. No limit on the number of years. (***"Lifetime"= no limit on the amount of years)
