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Help! How Do We Pay for College?
$36,993. That's the average price of one year's tuition, room and board at a four-year private college for the 2010-2011 school year. The average price at a four-year public university is $16,140 for in-state students and $28,130 for out-of-state students.*
With the sticker price of higher education increasing by the minute, it's easy to feel overwhelmed. Renée Vanek, President, Affinity Investment Services, helps answer some commonly asked questions to help you save for your children's future college costs.
Q: We have a lump sum to invest for our young child's higher education. Do you have any suggestions for ways to maximize potential growth by the time she turns 18?
A: Consider investing the lump sum in a state-sponsored 529 college savings plan that allows your earnings to grow income-tax deferred. When used to pay for qualified higher education expenses, the money is also free from federal income tax. If you select an age-based portfolio, your money is invested in a group of mutual funds that shifts automatically from aggressive investment options to more conservative choices as your child nears college age.
Do You Qualify for Student Loan Forgiveness?
The federal government may cancel or "forgive" all or a portion of an educational loan under certain circumstances. To qualify, you must:- Perform volunteer work in the AmeriCorps, Peace Corps or Volunteers in Service to America (VISTA).
- Serve in the military, such as the Army National Guard.
- Teach in a school that serves low income families or practice medicine in certain types of communities.
- Meet other criteria, such as serving in public-interest or nonprofit positions as specified in the forgiveness program.
Q: How can we help our grandchildren save for college?
A: Grandparents can also set up and manage 529 accounts. As the plan's contributor, you can choose from among the investment options in the plan and retain ownership of the account until it is used for the child's college expenses. Should a grandchild not go to college, you can change the beneficiary of the 529 account to another family member or yourself. If the funds are withdrawn for anything other than qualified education expenses, you will owe federal income tax plus a 10% penalty on the earnings portion of the withdrawal.
Q: What if our 529 savings aren't enough to cover college expenses?
A: Financial aid and scholarships may be options for your child and can help reduce the total bill. Go to www.fafsa.ed.gov to access the Free Application for Federal Student Aid (FAFSA). Also encourage your student to apply for scholarships from Affinity and other organizations. And don't forget to explore student and parent education loans to complete a financial package. Affinity also offers an Education Line of Credit to help bridge the gap.
Help is Here
Affinity can help your family arrive at the best combination of savings, current income and borrowing to meet your children's higher education goals. an Affinity Financial Advisor1 can help maximize your college savings so you can stay on track for retirement and other objectives.
Contact a Financial Advisor online or schedule an appointment by calling 888.734.1300. To learn more about borrowing options to meet your needs, call 800.325.0808 to speak with a loan officer or contact our Member Service Center.
Securities and investment advisory services offered by Affinity Investment Services, LLC, 73 Mountain View Boulevard, Basking Ridge, NJ 07920, member FINRA/SIPC. Investments offered by Affinity Investment Services are not deposits or obligations of Affinity Federal Credit Union. They are NOT NCUA INSURED and NOT GUARANTEED by Affinity Federal Credit Union or any governmental agency and are subject to INVESTMENT RISK, including LOSS of PRINCIPAL. Investments may lose value. Affinity Investment Services, LLC is a wholly owned subsidiary of Affinity Federal Credit Union. Business Continuity Disclosure Statement.
