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529 Plans Use For K-12 Education Proposed

Posted on Jun 26, 2012 with No comments

Jun 26, 2012

It has been suggested by legislatures that the college saving program be used to pay for childrens schooling for kindergarten through high school.

Rep. Ann Marie Buerkle, R-N.Y., introduced legislation that would extend the 529 college savings plan to elementary and secondary-education expenses. At this time the I.R.S. code says that 529 plan money can only be spent on expenses for higher education. The bill designation is HR 5932.

With tax reform on the table in Washington, the 529 plans could be included in a broader tax reform. Also there is talk of the widening of covered expenses covered under the 529 plan, like making computers and other technology an eligible 529 plan expense.

529 college savings plans allow parents to save for college and the growth be tax free. At this time there are over $158 billion dollars in 10 million state 529 plans.

The possibility of this legislation passing is a possibility because in 2002 Coverdell education plans were allowed to expand there savings accounts to include K-12 education expenses.

Is this a good idea?


Any legislation that encourages saving is good legislation. We have a serious lack of saving for the future in this country. There is also a lack of necesary funds for students in elementary education. Putting more in savings accounts to educate children would not only help the children but also the economy.



Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Gmail.com. Want to be heard? Leave a reader comment below.
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Tax Credits and Deductions for Education

Posted on Jun 24, 2012 with No comments

Jun 24, 2012

The cost of education has gone through the roof over the last decade and finding ways to save a little money is more important than ever. Uncle Sam has several ways to help you save a little money on your tax bill. There are a variety of tax credits and deductions available to help you save some money.

The Lifetime Learning Credit.


This credit has a limit of $2,000 a year and is only applicable to you if you have taxes owed. The income limits are $100,000-$120,000 for married, $50,000-$60,000 if single. This credit is not limited to for years like Opportunity credit. You can use it for graduate work or schooling to improve job skills.

The American Opportunity Credit.


This credit can cut your owed taxes up to $2500 a year per a tax estimator . It can only apply to the first four years of a college education. The American opportunity tax credit includes expenses for course-related books, supplies and equipment that are not necessarily paid to the educational institution.

The following expenses do not qualify:

  • Room and board. 
  • Transportation. 
  • Insurance. 
  • Medical expenses. 
  • Student fees unless required as a condition of enrollment or attendance.Same expenses paid with tax-free educational assistance. 
  • Same expenses used for any other tax deduction, credit or educational benefit. 

Tuition and Fees.


If you can't use these two credits maybe you can take a deduction off your income for tuition and fees. This can give you a deduction up to $4,000. fill out Form 8917 and submit with your 1040. The income limit for this deduction is $160,000 if married, $80,000 if single, but it’s not scaled as the credits are, there are thresholds, and your deduction allowed is $2000 or $4000 maximum. Fill out Form 8917 and submit it with your 1040.

Student Loan Interest.


As with the tuition/fee deduction, interest on student loans can offset your taxable income without needing to itemize. Up to $2500 of interest may be deducted with a MAGI limit of $150,000 married, $75,000 single. Refer to Student Loan Interest Deduction on IRS website.

Remember using these strategy's to reduce your taxes can be confusing. Using one strategy may rule out using another. You can not use them all together. Seek out a good accountant to help you do your taxes for you.

 

Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Gmail.com. Want to be heard? Leave a reader comment below.
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5 Top Rated 529 College Savings Plans

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Every year since the 529 plan was implemented, states plans have become better and better. With most states having a 529 plan, a bit of a competition has begun. When you have almost 50 states competing for your college savings dollar, the product they have is going to get better.

According to Morningstar, plans are getting good marks for lower fees and higher quality investments. This is the eighth year 529 plans have been rated. Besides lower fees, investment options have grown stronger.

Six plans have risen to the top of the list for quality, investment options, and low fees. Here are the top 529 plans:


1. T. Rowe Price College Savings Plan and Maryland College Investment Plan.
The Maryland plan run by T. Rowe Price is constructed on well planned funds. They have age based options for asset allocation. Most of the funds are index funds, but if you want actively managed funds they are available.

2. CollegeAdvantage 529 Savings Plan
The Ohio plan has a mix of fund family's. They include Vanguard, PIMCO, Oppenheimer, and GE. Ohio believes clients want a larger variety of funds to choose from. The various funds are becoming more common and that produces lower fees.

3. The Vanguard 529 College Savings Plan
The Nevada based plan feature Vanguards famously popular list of index funds. A $3,000 minimum is required to open an account. This puts off many savers who are starting their college saving. Utah has the same investment option but does without the high minimum investment.

4.Utah Educational Savings Plan
The Utah plan offers Vanguards index funds also. The plan offers a set it and forget option. You can indicate what investments you want your plan to have and every year the investment percentages are adjusted as the child nears college age.

5.CollegeAmerica
This Virginia based plan has American Funds in its inventory. It's the nation's largest 529 plan by far. American Funds wide range of investments make financial planners happy with their mix and match style of building a 529 plan. Like the others, this one in inexpensive and packed with high quality investments.

Plans that didn't get pick were penalized by confusing investment options, high fees, and below average returns.



Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Gmail.com. Want to be heard? Leave a reader comment below.
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Is Upromise a 529 plan?

Posted on Jun 21, 2012 with No comments

Jun 21, 2012

UPromise is rewards program you sign up for that allows you to accumulate money to use for college or paying off student loan debt. It's not a 529 College savings plan.

How does the program work?


Upromise has its own website where you can earn rewards by making purchases through its portal. They have a list of over 600 online retailers who are partnering with Upromise to save you money and add to your college savings. The cash back rewards range from 1% to 25% depaending on the purchase and the store. Large stores like eBay, Target, Walmart, and JC Penny all have joined with UPromise. Also the Home Depot, The Apple Store, Dell, Verizon Wireless, and Macy’s are all on board with UPromise.

You an also register your credit and debit cards to earn cash rewards. Some restaurants that participate can earn you rewards of up to 8%. If you use your registered debit or credit card at Upromise program restaurants your earning a high percentage reward. Imagine over the years by just dining out 8% of the total is going into your account.

You can also use your Upromise at your grocery store, supermarket, and drug store. You can even just register your grocery or drug loyalty cards with Upromise and even use cash on purchases.

The best yet, you can register your friends to your account and earn rewards on their purchases.

How can I redeem my my earned rewards?


  • Deposit your cash back into a 529 education investment account for you or a family member. 
  • Transfer your cash back to your student loan to help pay off your debt. 
  • Move your rewards to a Sallie Mae high-yield savings account. 
  • Request your rewards to be sent to you in the form of a check.

Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Gmail.com. Want to be heard? Leave a reader comment below.
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3 Factors in Picking a 529 College Saving Plan

Posted on Jun 20, 2012 with 1 comment

Jun 20, 2012

529 College Savings plans are tax-advantaged accounts for saving money for college. They are basically an IRA for college savings.

Almost every state has it's own 529 college savings plan and variations of plans within a state. Though not overly confusing, 529 plans need to be looked at carefully for the similarities and differences.

When choosing a 529 Plan there are three basic factors to look at to make sure you join the right plan that does what you want it to for the least expense.

1. Investment Options. There are as many types of plans as there are ways to invest in them. The plan you may chose has a wide selection of investments from conservative to speculative. Picking the right one for your goals and age of the child is imperative. You can even pick the types of investments whether they be within the U.S. or globally. Picking the right ones means the difference between good growth and poor growth. It would be smart to get some good advice and recommendations from knowledgeable professionals before investing.

2. Costs. Costs subtract from your bottom line. A percentage or 2 can really add up over the life of a 529 Plan. Don't let that 1% slip away into someone else's pocket, it belongs in yours, so shop around to get the smallest account costs.

3. Tax Benefits. Before selecting a 529 Plan out of state be sure to check your in state plan. If it has tax benefits on your state tax return it pays to invest within state even if you prefer an out of state plan. Check with your states tax rules to see if you can still invest out of state and claim the tax deduction.

There are currently 21 states where residents can choose any 529 plan without considering the impact of a state tax deduction:


  • No state income tax -- Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming 
  • No deduction for any 529 plan contributions -- California, Delaware, Hawaii, Kentucky, Massachusetts, Minnesota and New Jersey 
  • Deduction available for contributions to any 529 plan -- Arizona, Kansas, Maine, Missouri and Pennsylvania 

All other states give a state tax benefit for saving to the "home state" 529 plan.


529 plans are a great tool for funding college expenses, and selecting the right plan can be complicated. A good starting point is your home-state plan if you get a state tax benefit. If you live in one of the 21 states listed above, I recommend using the Nevada, New York, Utah or West Virginia plans, as those states offer passive investment options at a low cost.


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Can 529 Plan Money Pay Your Rent?

Posted on Jun 18, 2012 with No comments

Jun 18, 2012

When college students first attend school they usually choose the dorms as their residence. As they become accustomed to college life they find the restrictions of dorm life to cumbersome. To have a little more freedom they choose the off-campus residences. Your 529 plan is allowed to be used for your dorm residence bill. But does the rule say you can use the money for off-campus rent payments.

The good news is yes. But the bad news is not necessarily the full amount. The 529 plan rules say as long as the student is enrolled at least half-time in a degree program, room and board qualify as proper expenses to be covered by tax-free withdrawals from the 529 plan. But be careful, the maximum amount permitted for off campus living costs is the amount the college cites as the off-campus room-and-board figure for federal financial aid purposes. Ask the college's financial aid office for the number it reports to the Department of Education.

Your other expenses like electric, water, and other reasonable expenses are also allowed. Only as long as the total doesn’t exceed the school’s official room-and-board figure.
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529 Plans Are a Tool For College Savings

Posted on Jun 17, 2012 with No comments

Jun 17, 2012

Paying for college is a continual struggle and sacrifice for most parents. The difficult economy is making money to pay for future college expenses harder and harder to find. According to the most recent study by Sallie Mae, "How America Pays for College 2011," the amount parents paid towards college costs from savings and income has fallen from 36% to 30% over the past two years.

Many financial advisers advise parents to save at least 6% of their income to be sure to have enough when college time arrives. With a time frame of 18 years many parents feel anxious if they are saving enough for college. Many smart parents have even decided to start saving for their child's college even years before the child is born. That's what I call good savers.

If you are a good saver you probably know about how 529 college savings plans can help you to meet your goals. These state sponsored savings and investment plans are set up with an asset management company to administer the investments and monthly deposits. Usually the parents are the owner of the account and the child is the beneficiary.

The benefits of a 529 plan


  • The account owner does not pay current income taxes on the unrealized gains in the account. 
  • The owner/parent, not the child/beneficiary, always has control of the account. 
  • If the beneficiary/child doesn't go to college, the account can be used for another family member or other individual. 
  • Anyone can contribute to the account. There are no income limitations. 
  • Most states have no age limit for when the money has to be used. 

The best quality of a 529 plan is the tax benefits. While invested, the the growth and investment gain is tax-deferred. Second, when withdrawls are used for qualified higher education expenses, the income is tax free.

If the money in the account is no longer needed for college (because the child gets a scholarship, doesn't go to college, etc) then the account owner can withdraw the unused money. When withdrawals are taken for non-qualified distributions, the earnings are taxed at ordinary income tax rates and there is also a 10% penalty on the investment earnings. The taxes and penalty are not assessed on principal.
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Win $5,529 for College

Posted on Jun 15, 2012 with No comments

Jun 15, 2012

For the third year, the Path2College 529 Plan and Georgia Public Library Service have partnered to offer the Summer Reading Program and the Summer Reading Program Sweepstakes to encourage Georgia’s children to read during the summer months.

The Path2College 529 Plan will award one Georgia student, 16 years old and under, who participates in the Summer Reading Program with $5,529 toward a Path2College 529 Plan account.
Entries must be submitted online by July 31.

For more information about the sweepstakes, including the official rules and online entry form, visit http://www.path2college529.com/news/reading.shtml.
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Should I Stop Contributing to a 529 Plan When My Child Enters College?

Posted on Jun 14, 2012 with No comments

Jun 14, 2012

When your child enters college it makes sense to stop contributing to a 529 college savings plan, right? Think again there are reasons to keep on putting money in.

Ask yourself, are you fully funded for your child's college education? Do you have enough in there to make it four years? If not keep on contributing.

Even if you decide it's time to stop there is another way your 529 account can save you a little money. Even if you have used up all your 529 money you can still capture your states tax deduction by dumping the college cash cash into the 529 plan for 24 hours. After 24 hours withdraw it and use it to write a check for a college expenses.

It's seems wrong but it can save you money. Most states offer tax deductions for there 529 college plans and they do not say how long the money has to stay in the account. According to FinAid.org, 32 states and the District of Columbia offer full or partial state income tax deductions for 529 plan contributions.

The Vanguard Group reports that smart 529 savers have asked them to disburse the money immediately after they have deposited it. But Vanguard has said there policy states the money has to stay in the account a couple of weeks before it can be disbursed.

If you are thinking of trying this technique be sure check with your state plan to make sure if it hasn't imposed a waiting period for contributions to qualify for deductions.
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How To Mess Up Your 529 College Savings Plan

Posted on Jun 13, 2012 with No comments

Jun 13, 2012

If you were smart enough to open a 529 College Savings plan be confident that you have found one of the best ways to save for your childs college expense. So many parents love their 529 plan because when they withdraw money for college expenses, the money comes out tax free.

There are rules when you withdraw and if you do it wrong you will trigger a tax bill. The way to do it incorrectly is to withdraw more cash than you are going to spend on college needs. If you are using the money for tuition, fees, books and supplies, as well as room and board for students attending college at least half time, your doing it right.

If your 529 withdrawals exceed your costs, you would face taxes on the excess distribution and a 10% withdrawal penalty.

Your thinking that if your careful this won't happen. But if you are not careful you could be tripped up by the double dipping rule.

Here's the problem: The government will punish you if you try to claim the American Opportunity, Hope or Lifetime Learning education tax credits for the same expenses that you pay with the cash from your 529 plan or Coverdell Education Savings Account.

Why the double-dipping rule? You are already enjoying a tax benefit via Uncle Sam when you pull tax-free money out of a 529 or Coverdell. The government doesn't want you to get yet another tax freebie for the same cash.

Before you try pulling money out of a 529 plan or Coverdell, consult your accountant or IRS Publication 970: Tax Benefits for Education.
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A List of 529 Plan Tax Breaks By State

Posted on Jun 10, 2012 with No comments

Jun 10, 2012

A 529 Plan is a great way to save for your child's college costs. You get to save for college in an organized tax free account. Not to mention you have your choice of which state to invest your money because you do not have to use the 529 plan of the state you reside in. Another great incentive to saving in a 529 plan is that your state may offer tax breaks and incentives for saving.

If the state you reside in has an income tax and you contribute to its 529 plan you may be eligible for generous tax breaks. But some plans give you the tax break even if you contribute to an out of state 529 plan. Be sure to check your states regulations for tax breaks specifics before starting any investment plan.

I have compiled a list of state 529 tax breaks:


Alabama - Up to $5,000 per year
Arizona  - $750 for single filers / $1,500 for joint filers (any state plan)
Arkansas  - Up to $5,000 for single filers / $10,000 for joint filers
Colorado  - Fully deductible up to contributor's adjusted gross income
Connecticut  - Up to $5,000 for single filers / $10,000 for joint filers
District of Columbia  - Up to $4,000 per contributor per year
Georgia  - Up to $2,000 per beneficiary per tax return
Idaho  - Up to $4,000 per contributor per year
Illinois  - Up to $10,000 for single filers / $20,000 for joint filers
Indiana  - 20% tax credit up to $5,000 in contributions per individual tax return per year (maximum yearly credit is $1,000)
Iowa  - Up to $2,685 per beneficiary (adjusted annually for inflation)
Kansas  - Up to $3,000 for single filers / $6,000 for joint filers per beneficiary (any state plan)
Louisiana  - Up to $2,400 per account for single filers / $4,800 per beneficiary for joint filers
Maine  - Up to $250 per beneficiary (any state plan) for contributors with adjusted gross income of $100,000 or less if single filer or $200,000 or less if joint filer
Maryland (Investment Plan)  - Up to $2,500 per beneficiary per year with a 10-year carry forward of excess contributions
Maryland (Trust)  - Up to $2,500 per account per year with an unlimited carry forward of excess contributions
Michigan (Savings)  - Up to $5,000 for single filers / $10,000 for joint filers
Michigan (Trust) - Full amount of contribution
Mississippi Savings (MACS)  - Up to $10,000 for single filers / $20,000 for joint filers
Mississippi Pre-Paid Tuition (MPACT)  - Full amount of contribution
Missouri  - Up to $8,000 for single filers / $16,000 for joint filers (any state plan)
Montana  - Up to $3,000 for single filers / $6,000 for joint filers
Nebraska  - Up to $2,500 for married filing separately / $5,000 for all others
New Mexico  - Full amount of contribution
New York  - Up to $5,000 for single filers / $10,000 for joint filers
North Carolina  - Up to $2,500 for single filers / $5,000 for joint filers
North Dakota   - Up to $5,000 for single filers / $10,000 for joint filers
Ohio   - Up to $2,000 per beneficiary
Oklahoma   - Up to $10,000 per contributor per year with a 5-year carry forward of excess contributions
Oregon   - Up to $2,000 for single filers / $4,000 for joint filers
Pennsylvania   - Up to $12,000 per beneficiary per taxpayer (any state plan)
Rhode Island  - Up to $500 for single filers / $1,000 for joint filers
South Carolina  -  Full amount of contribution
Utah  - 5% tax credit on contributions up to $1,650 per beneficiary for single filers or $3,300 per beneficiary for joint filers (maximum credit of $82.50 per beneficiary for single filers and $165 per beneficiary for joint filers; maximum is adjusted each year for inflation)
Vermont   - 10% tax credit on up to $2,500 in contributions per beneficiary per year (maximum $250 credit per beneficiary per year)
Virginia   - Up to $4,000 per account per year; No limit for contributors age 70 and older
West Virginia   - Full amount of contribution
Wisconsin  - Up to $3,000 per beneficiary per tax return

No tax breaks for 529 plan contributions


The following states do not have tax breaks for contributions to a 529 college plan.

California
Delaware
Hawaii
Kentucky
Massachusetts
Minnesota
New Jersey

Not applicable due to lack of state income tax 

In the following states, there is no state income tax, so a tax break for college savings plan contributions is not applicable.

Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming

These generous tax breaks make the incentive for saving even greater.

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The Best Way to Save for College: A Complete Guide to 529 Plans 2011-12 - Book Review

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This is the first comprehensive analysis that I've seen of an extremely important and relatively new way to save on a tax-deferred basis for your children's or grandchildren's college expenses. It's well-written, comprehensive, and objective, and it gave me enough data to make an informed decision. Before I opened the book, I had researched New York's plan through another source; I was delighted to see the discussion in this book present all of the plan's features (pro and con) that I had discovered--and more.

I haven't met the author (Joseph Hurley). But when I e-mailed a question to him at the address published in the book, I received a thorough and helpful answer later the same day. That's great service from the author of an exceptionally valuable guide.

Ok, I really did read this book from front to cover because I'm kind of freaking out on how to help pay even part of my 3 kids colleges. It was worth the read. #1 thing. Any money put into Indiana's college 529 plan you get a 20% tax credit back each year on your Indiana Tax return. So if you contribute $5000 that is a a $1,000 back. You can also continue to put in while your kid is already in college. Many other things.

With over 100,000 copies sold, The Best Way to Save for College has become the one book college-bound families and professional planners must have. The Best Way to Save for College is still the number one resource on all 529 programs and other college savings strategies (including Coverdell Education Savings Accounts).

Read below for a preview of the 2011-12 edition's chapters:

Chapter 1: History of 529 Plans 
Chapter 2: Why You Should be Invested in a 529 Plan 
Chapter 3: Section 529 Overview 
Chapter 4: Financial Aid Considerations 
Chapter 5: Prepaid vs. Savings 
Chapter 6: Compare 529 Plans: A Checklist 
Chapter 7: Income Tax Planning with 529 Plans 
Chapter 8: Estate Planning with 529 Plans 
Chapter 9: 529 Plans vs. Coverdell ESA 
Chapter 10: 529 Plans vs. U.S. Savings Bonds 
Chapter 11: 529 Plans vs. Other Investment Alternatives 
Chapter 12: Managing your 529 Account. 

Section Two: State by State Comparisons 

Overall Rating (based on customer reviews): 4.0 out of 5 stars
4.0 out of 5 stars

product image
The specs of 'The Best Way to Save for College: A Complete Guide to 529 Plans 2011-12' are:
  • Publisher: Savingforcollege.com Publications (2011-05-26)
  • Language: English
  • ISBN-10: 0974297771
  • Product Dimensions: 8.9x5.9x0.9 inches
  • Shipping Weight: 1.2 pounds
Here are some REAL customer reviews:

"THE book on 529 savings plan"
"This is the most complete book on 529 plans. However, it does not have any discussion on the topic of asset allocation. In last few years, how the 529 was invested could really make or break your college savings.Read more

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What is a Private College 529 Plan?

Posted on Jun 9, 2012 with No comments

Jun 9, 2012

The one thing you can always count on when you send your child to college is that tuition will continue to rise. Preparing for that day when the child is just a baby is a smart thing to do. One solution for this problem is to prepay your college expenses.

When you prepay you really are just paying a smaller amount today for college costs many years away. Imagine what a college education will cost in 18 years. Why not lock in your rates today and save some money.

A prepaid tuition plan like Private College 529 lets you buy tuition certificates that are guaranteed by 270+ participating private colleges and universities, including Princeton and Stanford in addition to smaller liberal arts schools and research universities. Other schools can join at any time and new schools will honor any outstanding prepaid tuition. A semester of undergraduate tuition purchased through the plan today will be worth a semester of tuition for up to 30 years— no matter how much tuition rises or what happens in the financial markets.

You don't commit to a particular school when you enroll in the plan or at any point until your student enrolls and you redeem your tuition certificates. Because tuition rates vary among institutions, your contributions purchase different amounts at different schools. You are able to track how much tuition you own at any of the participating schools anytime by logging in to your account online.

Your prepaid tuition must be held for 36 months before it can be redeemed at a member school. The sooner you prepay, the more you're expected to save over time, for instance if tuition rises at a rate of 5 percent annually, enrolling now could potentially save you thousands of dollars by the time your child enters college. The plan offers the same federal tax benefits as any other 529-college savings or prepaid tuition plan and does not charge enrollment, management or annual fees; 100 percent of your contributions go towards the purchase of tuition.

And do not worry if your student does not attend a college in the plan . You are able to name another beneficiary, roll over into another 529 account or request your funds back. Savers are being urged to make their contributions by June 30th, before the new rates take effect.

For more information, visit www.privatecollege529.com.
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Top 10 Best 529 College Saving Books

Posted on Jun 8, 2012 with No comments

Jun 8, 2012

Planning for college can be very confusing. I have compiled the top 10 best 529 college saving plan books. These great books educate you all about the way 529 plans work. They describe how, where, when, and which 529 plans can help you save for college expenses. They also help you plan for college with other types of savings ideas. I am sure one of these books will answer all your questions and help you plan for college.

In future posts I will be reviewing these books more in detail to help you chose the best of the best.

List of Top Ten 529 College Savings Plans


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Clearly, this is the definitive guide to 529 plans. It is a must read for anyone who needs a detailed understanding of the most important financial vehicle since the advent of the 401(k)."-William L.



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Written for the individual investor, this 86-page guide explores the planning and savings options available to families that are saving for a child's education




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A practical approach to affording your kids from cradle to college.Bringing home your bouncing baby boy or girl should be an exciting time of celebration–not cause for worry about how you’re going



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This bestseller has been completely updated to provide you with the answers that you need to find wonderful colleges and universities at more affordable prices. The second editio



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Written for the individual investor, this 85-page guide explores the planning and savings options available to families that are saving for a child's college education. The areas covered include: affo



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Pay for College Without Sacrificing Your Retirement is the only book of its kind that weighs the cost of college within the framework of an overall family financial plan. With a range of practical str



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With over 100,000 copies sold, The Best Way to Save for College has become the one book college-bound families and professional planners must have. The Best Way to Save for College is still the number


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Debt-Free U: by Zac Bissonnette - Book Review

Posted on Jun 6, 2012 with No comments

Jun 6, 2012

There is a book I recently read called "Debt-Free U: How I Paid For An Outstanding College Education Without Loans, Scholarships, Or Mooching Off My Parents" by Zac Bissonnette. Zac is the new poster child for a debt free college education. I can see he will soon be on all the morning shows hawking his new book. He is presently in a public college and paying cash.

Zac's premise is that if you pick an affordable school, live within your means and work during college, college without loans, financial aid or parents looting home equity or retirement accounts is within reach. Zac knows because that's what he's presently doing.

Here's the math on going to college, according to "The College Board", public four-year colleges charge an average of $7,020 per year in tuition and fees, plus another $7,404 for room and board. That's a total of $14,424 per year.  


Most families qualify for a tax credit of $2500 on the first $4000 in college expenses. So after tax that $14,424 is really $11,924. If you break it down it's $229.31 per week. Then divide that in half makes it $115 for the child and $115 for the parents. Not bad seems manageable. Nearly all colleges allow you to pay monthly over the course of the semester. So you can really cash flow college.

If the child works during the summer 40 hours plus and at least 20 hours a week during the school year at $8.00 per hour, it comes to $11,200 per year.

34 weeks work 20 hours per week at $8.00/hour = $5440
18 weeks work 40 hours per week at $8.00/hour = $5760

According to Zac Bissonnette, junior will only need half of that total because Mom and Dad will pay the other half. So junior has plenty of money for other things.

Included in this scenario is that it is assumed you start out with no savings. If Mom and Dad did save it would make it a little easier. It's assumed you received no financial aid or grants. According to the website knowhow2go.com 60% of students qualify for grant aid to the extent of $3,300 per year for four year public colleges and $1,800 for two year public colleges. That's a big help. Also assumed the student stays on campus, no private housing.

The only problem with this plan is that it's a lot of work. With today's tough economy, are you willing to work hard to stay out of debt.
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Prepaid Tuition Plans Are 93% Funded

Posted on Jun 5, 2012 with No comments

Jun 5, 2012

According to The College Savings Plans Network (CSPN), on average for this fiscal year, Section 529 prepaid tuition plans are 93% funded. This an increase over last years report of 91% funded. In total, $22.4 billion has been saved in more than 1.6 million prepaid tuition accounts administered by 20 states.

This may still concern you that the plans are not 100% funded. But consider the country's public pension funds are only 76% funded.

Betty Lochner, vice chair of College Savings Plans Network, said the levels of funding on the plans in the survey are at ideal levels. In fact, Lochner said that having plans 100% funded is unnecessary due to the way these savings plans are structured.

"Having a plan 100% funded means that if everyone when to school today and took their money out—including all of the babies—you could pay for everyone," she said. "When you are over 90% funded, you are really well off, because not everyone is going to go to school today. The babies will go in 18 years."

Lochner says the uptick in tuition funding is due to the climb out of the recession over the past year.

"People have more confidence and are starting to prioritize," Lochner said. "We saw the dip in 2008 and 2009 when the crisis hit and the stock market crashed—investments didn't do as well."


Many families are turning to 529 plans because they see it as a great way to head off the rising costs of college tuition.

Each state has made there 529 plans able to withstand good and bad economies. The states have triggers in their plans to cover budget shortfalls and to keep the plans stable. Even if some unforeseen problems arise, the plan holders will never lose more than they have put into the plan.
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What is a Prepaid College Tuition Savings Plan?

Posted on Jun 3, 2012 with 2 comments

Jun 3, 2012

Investing for college can be confusing. There are hundreds of different plans to pick from. You can chose your own states college savings plan or go to another states plan. But basically before you pick where to place your college savings you need to pick what type of plan is going to suit the goals you have.

There are two ways to save for college, a pre-paid tuition plan or an investment program where your savings will grow according the rate of return of the plan you chose.


Prepaid Tuition Plans


Prepaid tuition plans allow a parent, grandparent, or family friend to establish an account in the name of a student to “lock in” the cost of a specified number of academic periods or course units in the future at current prices, typically at the public colleges and universities located in the state sponsoring the program. For example, if an account holds shares worth two years’ tuition, these shares will always be worth two years’ tuition even several years later when tuition rates may have doubled. The account may be funded by a lump sum or periodic cash payments.

There are two main types of prepaid tuition plans—prepaid units and contracts. Prepaid unit plans sell units representing a fixed percentage of tuition. While the price of a unit may increase each year, once purchased, the unit remains valued at the same percentage of tuition it had when originally purchased. Under a contract plan, participants agree to purchase a specified number of years of tuition and mandatory fees and/or room and board. The purchase price depends on the age of the child, the type of payment (lump sum or installment), and the number of years or units purchased. Contract plans usually offer lower prices for younger children because the state has more time to invest the money.

Prepaid tuition plans provide a hedge against tuition inflation and enable the state to pool money to make long range investments so that the earnings meet or exceed college tuition increases. Most prepaid tuition plans also have some type of guarantee from the state, ranging from full faith and credit obligations to a statutory guarantee. The specifics of prepaid tuition plans vary greatly from one state to another.
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Most Americans Unfamiliar With 529 Plans

Posted on Jun 2, 2012 with No comments

Jun 2, 2012

Don't be to upset if you are not up to speed on 529 plans. You are in good company because most of your fellow Americans are also in the same situation. Investment service company Edward Jones recently released a survey saying 62% of Americans have no idea what a 529 plan is. In the survey the volunteers were asked from a list of several types of financial products, which was a college savings plan. Nearly two-thirds chose the incorrect answer.

Knowledge of 529 plans rises with the level of income of the survey panel. Only 27% of respondents making less than $35,000 per year properly noted which was a 529 plan. With respondents with income between $75,000 and $100,000 per year the percentage rose to 57%. People who made $100,000 or more had a 62% positive response to what a 529 plan was.

It makes sense that people who earned an above average income knew more about 529 plans. Knowledge of this type goes hand in hand with knowledge of IRA's and saving for retirement, among other different saving vehicles.

According to the survey, almost half of the family's with children were aware of the 529 plan and what it does.

Why is there such a lack of knowledge on 529 plans? If the survey was on IRAs and Roth IRAs I am sure the number of people with knowledge of these products would be nearly 100%. Saving for retirement, which we all focus on throughout our working life, is on our minds through the large amount of advertising the investment house and brokerages invest in.

With 529 plans the level of advertising is almost nil because the investment industry does not sell these items. All the 529 plans sold today come from state operated college savings plans. Yes, many of the most popular brokerage house run these plans but they are not responsible for the promotion of them.

The individual states who operate 529 plans do a poor job of letting us know they even exist. The have not educated the public of these services and what the can do for a family's college saving plans. They need to do better in there promotion and education of the public to their benefits.
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