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Planning for a Child’s Education

Dec 30, 2015

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Planning for a Child’s Education. Jerome Brooks David Sevy Tobi Vincent. $286,000!. The approximate future cost to fully fund four years of college expenses for a newborn at a private university!. Why we chose this topic…. We all have children ages 18 months or less. - PowerPoint PPT Presentation

  • Planning for a Childs EducationJerome BrooksDavid SevyTobi Vincent

  • The approximate future cost to fully fund four years of college expenses for a newborn at a private university!

  • Why we chose this topicWe all have children ages 18 months or lessWhatever principle of intelligence we attain unto in this life, it will rise with us in the resurrection. D&C 130:18

  • Understanding the costsKey factors to considerWhat type of school your children will be attending public or privateWhat percentage of the funding will you supply as a parentHow many children you will be sending to collegeHow many years until your children reach college age

  • Education costs continue to riseAverage annual increase in education costs

    Chart1

    18273

    50414

    53338

    56432

    59705

    Year

    Private Four-Year Tuition

    Sheet1

    Private

    2002$18,273

    2020$50,414

    2021$53,338

    2022$56,432

    2023$59,705

    Public

    2002$4,081

    2020$11,664

    2021$12,340

    2022$13,056

    2023$13,813

    Room and Board

    2002$6,000

    2020$15,201

    2021$16,006

    2022$16,855

    2023$17,748

    Sheet1

    Year

    Private Four-Year Tuition

    Sheet2

    Year

    Public Four-Year Tuition

    Sheet3

    Year

    Room and Board

    Chart2

    4081

    11664

    12340

    13056

    13813

    Year

    Public Four-Year Tuition

    Sheet1

    Private

    2002$18,273

    2020$50,414

    2021$53,338

    2022$56,432

    2023$59,705

    Public

    2002$4,081

    2020$11,664

    2021$12,340

    2022$13,056

    2023$13,813

    Room and Board

    2002$6,000

    2020$15,201

    2021$16,006

    2022$16,855

    2023$17,748

    Sheet1

    Year

    Private Four-Year Tuition

    Sheet2

    Year

    Public Four-Year Tuition

    Sheet3

    Year

    Room and Board

    Chart3

    6000

    15201

    16006

    16855

    17748

    Year

    Room and Board

    Sheet1

    Private

    2002$18,273

    2020$50,414

    2021$53,338

    2022$56,432

    2023$59,705

    Public

    2002$4,081

    2020$11,664

    2021$12,340

    2022$13,056

    2023$13,813

    Room and Board

    2002$6,000

    2020$15,201

    2021$16,006

    2022$16,855

    2023$17,748

    Sheet1

    Year

    Private Four-Year Tuition

    Sheet2

    Year

    Public Four-Year Tuition

    Sheet3

    Year

    Room and Board

  • Education Funding OptionsQualified Tuition ProgramESA Coverdell Education Savings AccountUGMA Uniform Gift to Minors ActUTMA Uniform Transfer to Minors ActU.S. Savings BondsIRAHope Scholarship CreditLifetime Learning Credit

  • Qualified Tuition ProgramsCollege Savings Plan - 529Maximum contribution above $100,000Anyone can contributeMay be state or local tax deductibleGrows tax deferredTax-free distributions for qualified purposesPrepaid Tuition PlanGuaranteed to rise at the same rate as tuitionBest if used for in-state, public institutionsCan be used only for tuitionCan be transferred to other family members

  • ESAsCoverdall Education Savings AccountSupplement for other education savingsMaximum contribution $2000 annualFor Children under 18Multiple people can contributeContribution are non-deductible Tax benefitsAssets grow tax deferredUsually state tax deductibleWithdrawn tax-free for K-12 and college

  • What is a custodial account?An account set up by a custodian for the benefit of a third party

    UGMAUniform Gift to MinorsUTMAUniform Transfer to MinorsSavings fund is placed in the name of the child

  • Why use an UGMA/UTMA?Using your nameAdvantagesComplete controlFunds can be used for other goals

    DisadvantagesDoesnt use childs tax rateReduced contribution to personal retirement plansUsing your childs nameAdvantagesLower taxes for earningsNo contribution limits

    DisadvantagesChild may not pursue educationAssets are irrevocableChild takes full control at age of minorityMay limit childs opportunity for financial aid

  • Tax credits and deductionsHope Scholarship Tax Credit$1,500 tax credit per year per studentFirst two years of collegeModified AGI $80,000 to $100,000 jointlyLifetime Learning Credit$2,000 maximum per returnUnlimited number of yearsModified AGI $83,000 jointly

  • Financial AidApproximately 55% of students rely on some type of financial aidOptionsGrantsSubsidized loansMerit based scholarshipsWork-study programs

  • In ConclusionTo fully fund the education of a newborn, you will need approximately $286,000!

    Start planning early to ensure

    A secure future for your childPeace of mind for yourselfFinancial rewards for both of youSocial benefits for everyone

  • Where can I learn more?E*tradeFidelity InvestmentsSalomon Smith BarneyFirstradeYour bankYour personal investment planner

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