|
|
|
|
|
|
|
|
|
It's hard to dispute the value of a college education. In addition to the intrinsic rewards, there is the sheer economic advantage that a college degree offers. Over a lifetime, a college graduate can expect to earn $1 million more than someone with a high school diploma (according to a 2001 report by The College Board).
The challenge is to be able to fund a college education for your child, grandchild, or even for yourself. With costs continuously climbing, good planning is essential. Here are three important steps to help you get started. You may want to contact a financial professional to help you identify your options, understand the financial implications of your choices, and create a roadmap to achieve your education funding goals.
|
|
Getting started!
1. Determine your education funding goals.
2. Estimate how much you need to save.
3. Identify options for funding a college education .
|
|
| For more help with Education Planning, contact the Private Client Group |
|
|
|
1. Determine your education funding goals.
What, specifically, do you want to accomplish with an education funding plan?
- Ensure that a child or grandchild can afford to attend the college of his/her choice
- Cover the full cost of a four-year college education
- Contribute a significant portion of the cost of a four-year education
- Save for a graduate or professional (law, medicine) degree
- Establish a college savings fund for a newborn child or grandchild
- Create a fast track college savings fund for a child already in elementary or high school
|
|
| Think about your education funding goal in relation to other financial goals you want to achieve. Looking at college funding as part of an overall financial plan will help you set priorities and gain a clearer picture of what it will take to accomplish your objectives.
|
|
| For more help with Education Planning, contact the Private Client Group |
|
| Back to Top |
|
|
|
2. Estimate how much you need to save.
With college costs increasing faster than inflation, it is difficult to know how much you will need to save between now and the time your child or grandchild enrolls. Here are some things to consider:
- Public university or private college
- Post-baccalaureate degree (MBA, law or medical school, PhD)
- Number of children to be educated
- Number of years to enrollment
- How much saved to date
- Other assets you can tap
|
|
| For more help with Education Planning, contact the Private Client Group |
|
| Back to Top |
|
|
|
3. Identify options for funding a college education.
Designing a good plan to pay for a college education is more than looking up the costs of a few good schools. A good education funding program takes into consideration a number of factors:
- Affordability — How much can you realistically set aside in a given year? How much (or what percentage) of the child's education do you want to pay for?
- Flexibility — How much latitude do you want in terms of how easily you can make changes in the savings or investment plan?
- Risk suitability — What is your tolerance for investment risk? How much risk is appropriate for the savings timeframe you have available?
- Tax favored treatment — With tax advantaged investments, the value of your college savings program may be greater than you realize.1
Another important consideration is to structure your education plan so that it can be funded whether you live, die or become disabled.
Depending on your individual situation, strategies and tolls to meet your education funding objectives may include:
- Individual Mutual Funds2
- Education Savings Plans3
- 529 College Savings Accounts4
- UGMA/UTMA
- U.S. Savings Bonds5
- Irrevocable Trust Accounts
|
|
Should you hold college savings in a child's name or your own?
There may be ways to structure the account ownership to gain optimum tax advantage. Consult your attorney or other trusted advisor for details and to determine what would be best for you.
|
|
|
| For more help with Education Planning, contact the Private Client Group |
| NOT A DEPOSIT |
NOT FDIC INSURED |
MAY LOSE VALUE |
NOT BANK GUARANTEED |
| NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY |
|
This information provided represents the opinion of U.S. Bank and is not intended to be a forecast of future events, a guarantee of future results, or investment advice. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Investors should consult their investment professional for advice and information concerning their particular financial situation.
1 This discussion is intended to be informational only and is not exhaustive or conclusive. U.S. Bank and its representatives do not provide tax or legal advice. Each individual's tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.
2 If investing in mutual funds, each fund's investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other information; contact the fund or your investment professional for a copy. Read the prospectus carefully before investing.
Mutual fund investing involves risk; principal loss is possible. Investing in certain funds involves special risks, such as those related to investments in small-and mid-capitalization stocks, foreign, debt, and high-yield securities, and funds that focus their investments in a particular industry. Please refer to the prospectus for additional details pertaining to these risks.
An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although these funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in these funds.
FAF Advisors, Inc. is a registered investment advisor and subsidiary of U.S. Bank National Association. FAF Advisors serves as investment advisor to the First American Funds. U.S. Bank and its affiliates receive compensation for services rendered to First American Funds as disclosed in the fund prospectuses.
U.S. Bank may also enter into agreements with non-proprietary mutual funds or their service providers whereby U.S. Bank provides shareholder services and/or sub-transfer agency, custodial and other administrative support services and receives compensation for these services. Compensation received by U.S. Bank directly or indirectly from mutual funds does not increase fund fees and expenses beyond what is disclosed in the prospectus. For more information, please review the fund's prospectus.
3 As with any investment, it is possible to lose money by investing in an educational savings plan. Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information; contact the fund or your investment professional for a copy. Read it carefully before you invest or send money.
An Education Savings Account should be considered a long-term investment. Education Savings Accounts generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. For more detailed information about taxes, consult your tax attorney or accountant for advice. The information included in this section should not be considered advice. Please consult with your tax adviser or financial planner to select the path that's right for you.
4 As with any investment, it is possible to lose money by investing in a 529 plan. Before investing, carefully consider the plan's investment objectives, risks, charges and expenses. This information and more about the plan can be found in the plan's prospectus; contact the fund or your investment professional for a copy. Read the prospectus carefully before investing. Consider before investing whether your or the beneficiary's home state offers a 529 Plan that provides its taxpayers with state tax and other benefits not available through the plan.
Federal tax-free status for qualified educational expenses is effective through December 31, 2010 in accordance with the Tax Relief Act of 2001. On January 1, 2011, all provisions of the Tax Relief Act will expire and qualified educational expenses may be subject to federal tax unless its provisions are extended by federal legislation. All non-qualified withdrawals are subject to federal and state income tax and a 10% penalty. State tax treatment may vary. Check with your tax advisor for rules on your state tax treatment.
529 Plans generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. For more detailed information about taxes, consult your tax attorney or accountant for advice. The information included in this section should not be considered advice. Please consult with your tax adviser or financial planner to select the path that's right for you.
5 U.S. Savings bonds must be held to maturity to earn face value and maximize interest. Inflation in college costs erodes the purchasing power of low interest bonds.
|
|
| Back to Top |
|
|
|
