ARBOR WEALTH: Tuition hikes, the 529 Plan and Rascal Flatts

McDowell

Margaret McDowell

Published: Thursday, July 31, 2014 at 12:23 PM.

“My wish for you … is that this life becomes

All that you want it to.” From “My Wish” written by Steve Robson and Jeffrey Steele and recorded by Rascal Flatts

 

The cost of educational expenses, which includes college tuition, increased by over 2 percent last year.  Nevada just enacted a 17 percent university tuition increase over the next four years. Let’s hope last winter’s freeze applies to tuition hikes at Florida ’s public universities.

College is affordable for fewer American families than ever before. Ironically, a college education is, more than ever, widely viewed as a prerequisite to decent employment in today’s tight job market. 

How much does college cost these days? Say last year you paid $15,000 in tuition, plus housing, a meal plan, activity fees, and spending money, and your child’s total college expenses were $25,000. And let’s say you currently have a senior and a freshman in college. Well, with a 2 percent increase, now your total annual expenses are $51,000 instead of $50,000. 

Many parents and grandparents utilize 529 education savings plans to fund college expenses.  Investors fund the account and their dollars grow tax-free, and stay that way as long as distributions are for qualified college expenses. Any form of savings is beneficial, but in the case of 529’s, sometimes college parents and grandparents may be better off simply investing their discretionary income in a taxable brokerage account in their own name. 



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