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The 529 Plan Grandparent Loophole

Posted on Jul 31, 2012 with No comments

Jul 31, 2012

You have been saving for college in a 529 plan for many years now but still the amount of money is not enough to pay everything. So you apply for financial aid using the FASFA form. On the FASFA form you must report the assets of the parents and the child when determining Expected Family Contribution (EFC).

The EFC is how much money your family is expected to contribute to your college education for one year. Typically, the lower your EFC, the more financial aid you will receive.

Many people think that not putting the 529 Plan money in the parents or child's name will help them get more money. This is wrong. If a grandparent or non-custodial divorced parent owns the 529 account, you don't have to report it as an asset on the FAFSA at all. You may be tempted to exploit this loophole, but there's another consideration, according to Hurley of You'll have to report each 529 distribution as student income instead, and the federal government counts 20 percent of that as an EFC.
That's much worse than the 5.64 percent that's counted if the parent or dependent student owns the account and you report it on the FAFSA.

Another reason for having the 529 account in the parents name is if the grandparents is it keeps it from being taken to pay long term care expenses if the grandparents ever have to enter a nursing home. As an asset of the grandparents the asset is part of the estate an you may run into problems later.

The bottom line is the grandparents can still set up these plans but ultimately the best ones to have ownership of the account is the parents.

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

Do 529 Plans Affect Financial Aid?

Posted on Jul 30, 2012 with No comments

Jul 30, 2012

You have done a good job saving for your child's college education by using 529 plans. When it's time to enroll in college and you want to apply for financial aid, will your ability to qualify for the aid be hampered by your assets of the 529 plan?

To answer that question depends on many factors. Is your child attending public or private college. Most of the time the government counts only a small percentage of your 529 savings when determining if your child gets grants or loans. The Expected Family Contribution (EFC)The EFC is how much money your family is expected to contribute to your college education for one year. The lower your EFC, the more money you can receive.

The federal government counts less than 6 percent of a parent's assets as an Expected Family Contribution (EFC) for college — a maximum of 5.64 percent, to be exact, as long as the parent owns the account. The smaller the EFC, the more need-based federal aid you may receive.

For example, say you have $10,000 in a parent- or dependent student-owned 529 account. When you
file the Free Application for Federal Student Aid (FAFSA), your child's eligibility for aid will be reduced by no more than $564 (5.64 percent of your 529 savings).

The bottom line is do not worry you are messing up your financial aid money by having a 529 plan. If it affects it at all it will only be minimal, no reason to not have the benefits of a 529 plan.

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

What Does Dave Ramsey Think About 529 Plans

Posted on Jul 29, 2012 with No comments

Jul 29, 2012

When investing for college Dave Ramsey, the money man on talk radio and TV, says put the first $2,000 in a Education Savings Account (ESA, Coverdell Savings Account). ESAs are very simple and work much the way a personal IRA does. When saving for a young child who will attend a public school, the ESA will usually be all you need.

For investing more than this amount or if your income exceeds $200,000 annually, choose a 529 plan. The challenge with 529s is that every state has a different 529 plan and they all work differently. Some allow you to pick mutual funds, some require you to choose funds based on your child’s age, while others are pre-paid tuition programs.

When choosing a 529 plan, pick a plan that allows you to choose the funds up front and to keep those funds all the way up until time to use the funds for education. Remember to stick with the four types of funds Dave suggests. Don’t use the pre-paid plans or ones that do age-based asset allocation.

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

529 College Savings Plan Fees Continue to Drop

Posted on Jul 28, 2012 with No comments

Jul 28, 2012

Congratulation parents, costs for 529 plans are continuing to drop. 529 plans are investment accounts that help you save for college and post high school training and have tax saving benefits. This shrinking of fees is just an overall benefit for all parents saving for college.

No matter where you save with a 529 plan you are going to have to pay management fees for your account. There isn't an overall way to compare fees between 529 plans and that is why you must inquire what the total fees are when applying for a plan. The terminology between plan companies int he industry can be different so check thoroughly.

The best part about the expense on these plans shrinking is that extra money continues to grow and will affect the bottom line when you finally use the money. A little extra growth will mean a lot when applied over a 18 year time frame.

529 college-savings plans continue to bring down their costs, according to a study by, with several states cutting expenses in their lowest-cost investment options by more than 25% over the past year.

While most 529 plans saw no appreciable change in expenses over the last year, plans in Alaska, California, Maine, Maryland, Mississippi, Nevada (Upromise), New York, and Virginia saw decreases of 25 percent or more. Only three 529 plans experienced an increase in their lowest-cost options, due in each case to a slight jump in the expense ratios of underlying funds.

Among direct-sold 529 plans available to residents of any state, Virginia's VEST offered the lowest-cost option, a money-market option with a 10-year cost of only $117 on a $10,000 investment. Plans from California, New York, Ohio, and Utah each had at least one investment option with 10-year costs below $300.

Resident-only 529 plans in Louisiana, Rhode Island, and South Carolina were also noted for offering very low-cost options.

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

3 Tips For a 529 College Savings Plan

Posted on Jul 27, 2012 with No comments

Jul 27, 2012

If you are already saving for college in a 529 college savings plan then you are ahead of most people. The majority of family's do not or can not invest because they just do not have the money according to a Sallie Mae survey. 

The 529 plan offers so many positive benefits like tax-free growth. If you are already using a 529 plan for college savings then you will definitely reap the benefits when your child enters college.

I have found 3 ways you can maximize your savings. These ideas will help you tweak your accounts for a better return.

1. Vanguard 529 Plan. If you do not have an idea where to invest in a 529 plan choosing a 529 plan that has Vanguard investments would be to your benefit. Even if you have to have an out of state plan Vanguard is the superior choice. Vanguard is known for there low expense costs and their variety of funds.

2. Open a separate account for each parent. When choosing a Vanguard run 529 plan you are limited to having only 5 funds in the account. When using two accounts you can have more diversification. By opening two accounts for one child you get to hold 10 investments. There is also a limit of one trade per year. Having two accounts allows you to make adjustments at two points in the year.

3. When making your monthly contribution to your Vanguard 529 account you get to choose which investment gets the new money. This allows you to self direct your asset allocation to your own liking. By choosing different investment choices you have the flexibility to shape you diversification. Doing this will keep your chosen asset allocation in balance every month.

You have the best vehicle at your finger tips to help you invest for college in the most economical way. Your 529 plan will allow you to have the necessary money ready for your child's education. The more money you have in these accounts the less you will be dependent on borrowed money.

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

Top Tips For a 529 College Savings Plan

Posted on Jul 26, 2012 with No comments

Jul 26, 2012

If you have already started your 529 College Savings plan then you are way ahead of the game when saving for college in the smartest way possible. If you haven't started yet what are you waiting for. From the time when your child is born to the time when the first withdrawal is made can be 18 years, enough time for the account to grow into a substantial amount of money.

Though the 529 plan sounds complicated it is in reality very simple to use. Just fill out some forms, designate an owner and a beneficiary, and set up automatic withdrawals from your checking account.
Below are a few interesting tips concerning 529 Plans:

1. Uncle Sam has made a great way to help you save for college. The 529 College Savings Plan named after Section 529 of the Internal Revenue Service gives college savers a special savings programs allowing funding for qualified higher education expenses without paying taxes on earnings or interest on those savings. According to the IRS, qualified higher education expenses generally include tuition, fees and related books, supplies and equipment, as well as limited amounts for room and board.

2. Don't take out to much from your 529 Plan account. To be completely tax free, withdrawals must be used to pay qualified expenses during the current tax year―or calendar year―not the current school year. If you need $30,000 to pay tuition from September through May of this year, take only what you need to cover costs through December, when the tax year ends. In January, the remainder of the money can be withdrawn for the academic year.

3. Don't take out to little from your 529 Plan account. What if there is money left over in a 529 plan after graduation? Unfortunately, you may end up paying taxes on your investment earnings if they aren't used for qualified higher education expenses. All is not lost, however, since money can be used to fund a child's graduate education. Also, the account beneficiary can be changed to another family member if a different relative has qualified higher education expenses to pay.

Don't wait, start your 529 Saving Plan today.

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

Falling Behind On Student Loans? There are Options

Posted on Jul 25, 2012 with No comments

Jul 25, 2012

The Consumer Financial Protection Bureau has partnered with the U.S. Department of Education to release a new web tool for borrowers who have fallen behind on their student loan payments. The tool should help borrowers learn about their options. It's never a good idea to just ignore the problem.

Student loan default is a looming problem in the U.S. Over a quarter of all student loan borrowers are at least one monthly payment behind. Millions of federal student loan borrowers have defaulted on their loans.

The unemployment rate among new college graduates is more than twice that of their older counterparts. More than a third of college graduates under age 25 have taken jobs that do not require a college degree.

Over the past decade, student debt has grown to an average of over $22,000 for graduates of public colleges and universities and over $28,000 for private school grads. That’s a 20% increase. A growing number of borrowers – greater than one in eight – have debts of $50,000 or more. For too many, this grim economic reality makes making each loan payment in-full and on-time a monthly struggle.

Check out the Student Loan Debt Collection Assistant.

There are serious consequences of loan default. there can be thousands of dollars in penalties and fees. Your credit can be damaged for many years to come keeping you from other types of consumer loans, car loans, and mortgages. The worse part and not known by many people is that you can not discharge your student loan debt in bankruptcy. This debt you owe will be with you from now on.

The only good point to being in default is you cannot qualify for income-based repayment, an alternative payment plan can have a monthly payment as low as zero for extremely low income borrowers.

If you’ve fallen behind on your loans, check out the new web tool, available here on and at the new, launched by the U.S. Department of Education earlier this week.

Got further questions? Catch me on twitter and DM me @529SavingsPlans or e-mail me at 529CollegePlans at Want to be heard? Leave a reader comment below. Student Loan Debt Bubble, 1980-2011 


Fees Dropping on 529 College Savings Plans

Posted on Jul 24, 2012 with No comments

Jul 24, 2012

It's every parents wish to send there children to college. The 529 plan has been a great tool to save for college in a tax efficient way. Like all investment accounts there are administrative fees. Recently, many 529 plans have been reducing the fees. When the amount you pay for fees drops that means more money stays in your pocket.

Why are expense fees dropping?

Because we have a choice of so many 529 plans each state keeps an eye out for what another state is charging in expense fees. When one state lowers their fees another state notices and does the same to stay competitive. Companies that run the 529 plans for the state are told how other states are lowering their fees. A state does not want their 529 plan to listed as expensive in the media so down comes the fees. It turns into a domino effect and the public benefits.

How much are fees dropping?

According to mutual fund rating company Morningstar, one plan that had a price of 0.6 percent lowered their fee to 0.2 percent. It doesn't seem like much but if you figure $5,000 to start and investing $100 for 11 years your going to have $500 more money in the account.

How do dropping prices impact 529 purchases?

Any investment advisor will tell you just because something is cheap, it doesn't mean it's good. A low fee schedule must also be considered along with the investment's tax benefits, investment quality, and investment manager experience.

Finding the right balance between fees and investment quality will help you meet your goals for a substantial 529 plan that's ready when college time arrives.

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

How to Change the Beneficiary on a 529 Plan

Posted on Jul 23, 2012 with No comments

Jul 23, 2012

If you own a 529 college saving plan, there may come a time when you want to change the beneficiary. It could be for many different reasons. The student may have chosen another path and does not need the money any longer. The student could have finished with their schooling and money left over in the 529 plan could be used by another college student. To have everything legal with the IRS you need to change the name of the beneficiary on the account.

The majority of 529 plans are issued by the state. Each plan has there own state specific rules concerning the changing of beneficiary. Most do not have any problems changing the beneficiary but first check with your plans specific rules first.

One problem you may have is some states have waiting periods that must occur before you can change beneficiary's. There could also be an age cap that would only allow students up to a certain age to participate.

Changing beneficiary of the 529 plan account has a few more restrictions. According to 529 rules, you are restricted to choosing someone who is a member of the same family as the original beneficiary. Same family members can be confusing to most individuals. Same family members normally includes immediate members, as well as in-laws, first cousins, half-siblings, etc. You can change the beneficiary to be yourself as well.

After you are sure the new beneficiary is eligible the next thing to do is contact your plans supervision and fill out any necessary form work and give them the name of the new beneficiary.

When you change the beneficiary you are under no obligation to notify the previous beneficiary. All you have to do is provide the name, address, date of birth, and social security number of the new beneficiary to the 529 plans administrator. It simple and easy to do.

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

Can a 529 Plan Pay for Grad School?

Posted on Jul 21, 2012 with No comments

Jul 21, 2012

Today many college graduates that have recently finished their degree work in college have found that the supply of jobs for them is from few to zero. They are finding all their hard work and study is not going to get them the job they desire at this time. Many jobs that are available, are jobs not in your field of study or just paying an extremely low salary. The frustration this causes for the recent graduates is a hardship for them. They have been planning to enter the workforce and begin their careers.

Many students are deciding to go back to school now and earn another degree or attempt grad school. They take a low paying job just to make ends meet and go back to school, hoping when they finish a better economy awaits them and that great job.

The 529 plan they have been using still has money in it and they wonder if grad school can be paid with their 529 plan cash. Also can living expenses, books for grad school, and other related educational expense be paid with the 529 plan funds.

In Section 529 of the Internal Revenue Code created qualified tuition programs that make it possible to set aside money for college without paying taxes on the earnings. This money can be used for all the

There are no income limits on who can set up a plan, an important consideration for working adults. How much you can contribute depends on the plan. Distributions from the account must be used to pay for qualified higher education expenses.

According to the IRS, these costs generally include tuition, fees and related books, supplies and equipment, and room and board, if at least a half-time student. If you’re not sure which of your costs qualify, ask your CPA for more details.

Good news for the grad student.

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

How to Prepare For a 529 College Savings Plan

Posted on Jul 19, 2012 with No comments

Jul 19, 2012

Saving for college is confusing to many people. They know that they should be saving money but really do not know where or in what type of an account to use. Navigating the waters of where to put college money investments, parents sometimes make the wrong choice and that can be deadly to any college saving plan.

Thanks to Uncle Sam for creating the 529 plan and the states for operating these plans the novice can have an easy time getting started in saving for college.

1. The best thing the Internal Revenue Service has is the rules for creating a 529 plan. This plan allows you to accumulate money and later withdraw it tax free when used for college and education related expenses. The plans are created to be dead simple to sign up for and to plan monthly contributions. So once set up the plan grows through the years totally on auto pilot. You can save as little or as much as you want, even some plans have no minimum dollar contribution requirements. If you don't want an automatic deposit set up you can opt for just writing a check and mailing it whenever you have money available.

2. To make the whole process uncomplicated you should pick an investment plan that is easy to understand. You can go as complicated or as simple as you like. You can pick an age related plan that adjusts to more safer investments as the student gets closer to starting college. You're able to adjust your plan over the years as you see fit. Age based investment options are great for parents who don't want to self manage their account.

3. Save as much as possible. The best way to save for college in your 529 plan is to set up a monthly deposit from your checking account. It's automatic and you won't ever forget to add money to the plan. To keep investing on a monthly basis, be sure to pick an amount to save that is high enough to make a difference but low enough that you won't be forced to stop the deposit.

4. Tax incentives from your state. Check your home state's plan to see if they have any incentives to using resident sponsored state 529 plans. If your state has an income tax, you may be eligible for a healthy tax deduction if your state allows it. Some states allow you to apply the deduction even if you invest in an out-of-state plan. Check your states rules to see if you can use the deduction. Some states let you deduct the entire contribution off their income tax.

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

How Much Can I Save in a 529 Plan?

Posted on Jul 17, 2012 with No comments

Jul 17, 2012

529 College savings plans give parents a lot of flexibility when saving for college. You can choose a 529 plan in any state, not just the state you reside in. Each state has their own plan which is different from any other plan. Some states offer a tax deduction off of the states income tax.

Often 529 college savings plans have no cap to what you can put into them. In some states you can save as much as $300,000 during the life of the plan. Not only will you have enough for sending your student off to college but you will also have enough for them to continue on to graduate school.

Saving for college for your child with a 529 plan is easy to start when the child is born. Just fill out a few forms and set up a monthly withdrawal from your bank account and you are done. Some parents are so excited about saving for college that they start saving for the child even before it is born. The plan has to have a beneficiary when started, so parents just put their own names and later switch it to their child's name after birth.

Thanks to Uncle Sam's fine idea of structuring 529 plans to be tax efficient you will never have to pay one penny in taxes on it's growth. If the investments double or triple over time yow will never have to pay income taxes on withdrawals when you use the money for college expenses.

Another benefit to saving with a 529 plan is you do not have to be an expert in investing. All the effort of opening up a bank account is all you need to do. All investment decisions are made by the funds managers. These are trained professionals who know how to make your money grow and how to keep it safe when it's time to be used to pay for college.

Many parents worry that a large 529 account will hurt them when applying for financial aid. The money you have in your account will not count as income on the FASFA form. Though investing the money in a regular investment account will be counted as savings and assets.
For the best way to save for college, use a 529 college savings plan.

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

Parents Spending Less on College

Posted on Jul 16, 2012 with No comments

Jul 16, 2012

Many families have had to cut back on college spending in the past year. They are choosing to send their children to less expensive schools and finding other ways to save money.

New findings in a survey by money lender Sallie Mae reveals the average amount spent by parents of
college students was reduced by 5% in the 2011-2012 school year. Decisions on where a student will attend college is now being based more on the amount of money the parents have to spend.

This study more than any other evidence shows just how deep the recession has cut into college education expenses. Families are being more cost conscious, saving more money, and spending less.

The survey, conducted for Sallie Mae by the Ipsos polling firm, was based on telephone interviews in April and May with 1,601 college undergraduates and parents.

Parents spent an average $5,955 on college from their income and savings, results showed. That was down from $6,664 a year earlier and $8,752 the year before. They also borrowed slightly more — $1,832 compared with $1,573 in the 2010-11 survey — although that was still less than they did two years ago.

Students took on more of the burden by digging deeper into their own funds. They spent an average $2,555 on college from their savings and income in the last academic year, up from $1,944 the previous year. But their spending wasn't enough to make up for cutbacks by their parents.

All told, parents funded 37 percent of college costs through spending or borrowing, down from 47 percent two years ago. Students accounted for 30 percent; grants and scholarships footed 29 percent; and relatives and friends paid for 4 percent, according to the survey.

"American families are frustrated by the cost but they're being creative and employing different solutions to make sure their students can go to college," said Ipsos pollster and managing director Clifford Young.

A shift toward two-year colleges also was evident for a second straight year, Salllie Mae said. Respondents included 29 percent who attended two-year public schools, up from 21 percent the previous year.

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

Can a 529 Plan Reduce Financial Aid?

Posted on Jul 15, 2012 with No comments

Jul 15, 2012

If a 529 plan is held by a parent for the child it is reported on the financial aid form (FASFA) as a parental asset. Parental assets are assessed at a maximum 5.64% rate in determining family contribution.

If the 529 plan is owned by the student the asset is reported as parental assets when the student files as a dependent. Your 529 plan assets are treated at the better rate of 5.64% while non 529 assets are treated at the 20% rate.

Distributions from the 529 plan to pay for this years college expenses are not part of the base-year income. So the 529 plan money used for the college student is ignored when calculating the parents income.

When you file the FASFA and the parents have a 529 plan account, only 5.64% of that account will be counted against you for your family responsibility, as assets. So it's good to have the 529 plan in the parents name. If you have the 529 plan in the child's name the 529 plan money counts toward the parental assets. Any non-529 plan money is counted at the 20% rate and reduces your financial aid.

It is somewhat confusing. This treatment only applys to the federal financial aid rules; each school can set it's own rules when handing out need based scholarships. You can and will be penalized when 529 accounts are part of a families financial assets. Check out your colleges financial aid rules when it comes to 529 plan treatment on a financial aid application.

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

529 Plans Use of ETFs Increasing

Posted on Jul 13, 2012 with No comments

Jul 13, 2012

More State 529 plans are introducing ETFs into their investment portfolios. Recently, Nebraska added four new ETFs to three of its 529 plans, New York added six new ETFs to one of its plans, and Nevada's Upromise 529 dropped mutual funds in favor of ETFs. Traditionally, states have used mutual funds exclusively.

The move to ETFs has taken place because of the last few years of poor returns in the stock market. A desire for diversification, and lower fees for plans with ETFs compared to the industry average. Plan managers adding ETFs argue that doing so provides portfolio flexibility and protects against losses.

This new trend has its critics and skeptics. College-savings programs have been seen as long-term investments for decades, and the addition of ETFs to this model may encourage shortsightedness and more risk-taking with active trading. ETF proponents point to the positive results so far: the Arkansas iShares 529 plan has outperformed its peers, returning an average of 3.3 percent last year, while 529 plans lost an average of almost 1 percent. Investors are opening new accounts with this Arkansas plan more quickly than they have with any other 529 in the past three years.

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

The Georgia Path2College 529 Plan

Posted on Jul 12, 2012 with No comments

Jul 12, 2012

The Path2College 529 plan is an education savings plan run by the State of Georgia It is designed to help families save money for college costs. The tax advantages of the plan include the earnings portion of any distributions used to pay for a qualified higher education expenses are free from federal and Georgia income tax.

All Georgia taxpayers can now contribute and deduct up to $2,000 each year for any beneficiary. There are federal estate benefits to the plan as well. Contributions to the plan may reduce the taxable value of the taxpayer’s estate. Contributions may qualify for an annual gift tax exclusion of $13,000 per donor, per beneficiary.

The Path2College plan is easy to start, any citizen over 18 can open an account and contribute to the Path2College plan on behalf of the beneficiary. The funds in the account can be used at nearly all higher education institutions (public or private) in the nation and many institutions abroad. Additionally, the funds are not limited to tuition expenses; the funds can be used for books, supplies, and some room and board costs.

The plan offers seven investment options so students can pick a combination of options that's best for them. The plan offers small minimum contributions so the plan is not too hard for families on a budget. The accounts do have a maximum contribution level of $235,000; however, the account can continue to accrue earnings after it has reached the maximum.

An annual asset-based management fee is required to cover the cost of investment management and administrative services. The fee is computed at an annual rate of 0.29%-0.40% of average daily net assets of the account excluding assets held in the Guaranteed Option.

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

10 Best College Planning and 529 Plan Books For the Kindle

Posted on Jul 9, 2012 with No comments

Jul 9, 2012

If you have never done any planning for your child's college it's a bit confusing and overwhelming. It's best to start your planning while your child is still in high school. Take advantage of all your high school has to offer in counselling and advisers who are there to help yo in the process.

If you want to do some at home planning you can pick up a few books that have a lot of good ideas and tips concerning 529 plans, scholarships, and choosing a college. If you have a Kindle these books I have listed all are published on the Kindle and will be more convenient for you to read and take with you as you go to work or on vacation.

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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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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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The Essential Guide to College Saving PlansIt is estimated that the average family has saved only $5000 for their children’s college education. That’s less than half of the average cost of a singl

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There’s no question: The cost of college continues to soar, even when the rest of the economy stagnates, and this reality is not likely to change any time soon. Fortunately, everyone, including you,

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The 529 College Savings Plan is the best way for families to save for college. It offers tax advantages and breaks not found with other investment vehicles-helping more and more families find a way to

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Before the advent of 529 plans, UGMA accounts were the principal method of saving for college. When state administered 529 plans were created by Congress in 1996, conventional wisdom said they were th

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This book gives parents and students the information they need on various ways to finance a college education. No student should decide not to apply to a college or university because he or she believ

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529 College Savings Plans Exposed Reveals The Good, The Bad, And The Ugly In Easy To Understand Layman's Terms! Exposes Everything Your Broker Should Tell You So You'll Be Awakened BEFORE You Get

529 College Savings Plan529 College Savings Plan
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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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Dr. Petry has won several national writing awards for his books and has a tremendous amount of experience that enriches his writing. This includes having taught 15,000 students as a Professor of Finance.

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

529 Plans Add ETF's to Investment Choices

Posted on Jul 8, 2012 with No comments

Jul 8, 2012

529 College Savings Plans are the backbone to any preparation to college financing. With the goal of offering parents better returns and more diversification many 529 plans are now going to offer ETFs. 529 plans on average lost about 1% last year, whereas the S&P 500 gained 2%. In contrast, a 529 plans that offer iShares returned 3.3% in 2011 and has returned an average of almost 1% since 2007, compared to the 3% industry loss.

The 529 savings plans are a tax-advantage method for saving toward future college expenses. Investors can establish a college savings fund that pays for a beneficiary’s room, board, mandatory fees, books, computer and tuition. Investments in the savings plan are not subject to federal tax as long as the money is used for college expenses. Currently, mutual funds make up the lion share of the college-savings 529 industry.

There is a growing trend to incorporate ETFs into 529 plans to make them more attractive. Even today Nebraska now includes four ETFs in three of its 529 plans, one of New York’s plans has six ETFs and Nevada’s Upromise 529 is almost exclusively comprised of ETFs, reports Annamaria Andriotis for SmartMoney.

529 plan investment managers are adding ETFs in an attempt to make quick and easy changes to portfolio allocations at a fraction of the cost. ETF products can be traded throughout the trading day while mutual funds can only be reconstituted at the end of the day. Additionally, 529 plans with ETFs have an average expense of 0.61%, compared to the industry average of 1.12%.

Many changes are coming for 529 College Savings Plans, with the addition of ETFs, these plans will look more like an average investors account. It will help performance and attract more savers.

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

What's the Best Way to Save for College?

Posted on Jul 5, 2012 with 1 comment

Jul 5, 2012

Between a prepaid tuition plan and a 529 college savings plan, a 529 college savings plan is the better choice. With a prepaid tuition plan, you're basically paying for future tuition at in-state public schools at today's prices. This looks like a great deal, but it is not risk free.

"Most of the prepaid tuition plans are operating at an actuarial loss, signifying that they don't have sufficient assets to pay for future obligations," says Mark Kantrowitz, publisher of and and author of Secrets to Winning a Scholarship. 
"The programs may be guaranteed, but only one-third of the plans have any kind of a state guarantee. And it isn't clear exactly what that means." 

In other words, you may be left with a bad investment.

A 529 college savings plan isn't risk-free, either, but that risk can be managed. "Select an age-based asset allocation, which starts off with an aggressive mix of investments and gradually shifts to a less risky mix as college approaches," Kantrowitz says. You should also stick with a direct-sold 529 plan, which carries lower fees than an adviser-sold version.

The only reason in which it could make sense to consider a prepaid tuition plan is in the case of divorce — if parents have agreed to divide college costs and one would like to take care of his or her college support obligation in advance.

Unfortunately, some states don't offer a 529 college savings plan, so families who want to put money into a 529 will have to look elsewhere. You can invest in any state's 529 plan; pay attention to fees, and if you can, choose a plan with lower expenses, such as those managed by Fidelity, Vanguard, or TIAA-CREF.

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

Moving Your 529 College Saving Plan is Easy

Posted on Jul 3, 2012 with No comments

Jul 3, 2012

You have been saving regularly in a 529 College Saving Plan for many years and you like your plan but have found another plan that has lower fees. Is it possible to move the money from one 529 plan to another?

This is a common question that has many people baffled. But the simple answer is yes. If you want to move your money to another plan, to another plan that happens to be in another state it is relatively easy.

A question many people worry about is if you move the investment does it negate your tax free growth status? No, you still can keep your tax free status because the plan you are coming from and the plan you are going to are both 529 plans.

The two ways a transfer happens is either by you receiving a check from the old 529 plan or a direct transfer from one 529 plan to another. When you choose the first option you have 60 day to complete the process. If you miss the the time frame you will be subject to taxes and penalties.

Current tax law considers a rollover valid when you transfer the money either to a different plan for the benefit of the original beneficiary or to a different qualifying beneficiary.The wording of the rule is deceptively simple, yet may be tricky.

For example, rollover treatment can be disallowed if you withdraw funds from your 529 plan, then change your mind and redeposit the funds into the same account with no change in beneficiary. That's true even if you complete the transaction within 60 days.A one-time-per-year limit may apply to rollovers.

In addition, some states impose penalties, fees, or recapture taxes when you transfer to an out-of-state plan.

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

Many Parents Not Using 529 Plans to Save for College

Posted on Jul 2, 2012 with No comments

Jul 2, 2012

A disturbing statistic from "Bright Start College Savings Plans, which is Illinois 529 College Savings plan, one-third of households not saving for college education expenses. Also 80 percent of those families state that they do not contribute because they just don't have the money.

College savings expert Andrea Feirstein, managing director of New York-based AKF Consulting Group, urges parents to set aside these reservations and start planning to save today.

"Time is your biggest asset when saving for the long-term," she says. "Even small initial amounts will add up and can grow as your child grows."

Financial planners warn that saving for college ahead of time is a worthy goal because the amount of debt many students are accumulating because of loans is staggering. Many students will take as many as 10 year to pay off their student debt. Such a burden diminishes from a graduates future. It's time to end this debt crisis and save for college. Paying cash and staying away from debt is starting to be a growing trend out of necessity because the amount of interest is soon due to double and the 6 month waiting period for payments to start is being eliminated.

Feirstein offers five tips on how to "find" money to save:

  • Start with small changes. Bring your lunch to work and save as much as $50 a week, depending on your habits. Scale back on or eliminate luxuries like magazine subscriptions, monthly manicures and premium cable channels. 
  • Open a tax-advantaged 529 college savings plan and ask family and friends to contribute to your child's account in lieu of birthday and holiday gifts. 
  • Create a family matching plan in which your child puts part of their allowance, earnings or gifts into a savings account and you match dollar-for-dollar (or more). This will also help your child with their own good savings habits for the future. 
  • Set up a direct deposit to have a small portion of your paycheck to go directly into a college savings account. 
  • Take account of all your spending. Make a spreadsheet that buckets every single dollar you spend. Review it every month to see where you can divert money into a savings account. 

With a time frame of 18 years to save for the goal of a college education any small amount of savings will later translate into a nice nest egg to draw off of when college time arrives.

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

529 Plan Comparison Website Can Help You Pick the Right College Savings Plan

Posted on Jul 1, 2012 with No comments

Jul 1, 2012

Many people find the decision to save for college with a 529 college savings plan a natural choice to help their children's future. The choice of what plan to choose is quite a more difficult decision.

You can take the easy way out and just pick the plan of the state you reside in or you can take the time and explore other choices that may benefit and increase the return on your investment.

When filing taxes on state returns some 529 plans allow you to take a nice tax deduction. This only works if your state has an income tax, it doesn't work with federal taxes. Pursuing this option sometimes lets you deduct your whole yearly contribution from your income. It's a very good incentive for saving. It's to bad the federal taxation rules do not have this, I can see savings by families increasing to their benefit.

Other factors in deciding which plan to choose is how much are the expenses for the 529 college savings plan. Fees vary as much as 1% between various plans. You may think that is a very small amount but over a period of 18 years of saving it can really add up.

To help you choose the right 529 College Savings Plan I have included a link to a great website that compares plans in a easy way. Side by side you can compare fees, investments, and costs of several plans simultaneously.

529 College Savings Plan Comparison

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

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