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Ask the Expert: A Tip to Relax About College Savings


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Your Family CAN Save for College​​

As the school year ends this month for families, vacation plans will unfold. One step parents can take to enjoy a truly relaxing summer is to eliminate worries about paying for college. You can do that this month by prepaying tuition and saving on the cost with Private College 529 Plan.

Private College 529 is a prepaid tuition plan owned and operated by nearly 300 participating colleges and universities … many of them in New Jersey and the Northeast (Princeton to Amherst and a lot in between). Families purchase tomorrow’s tuition at today’s prices. Guaranteed.

Why June?

On July 1, colleges and universities throughout the United States – public and private – begin a new academic year and implement new tuition rates. By opening an account before then, you can take advantage of the lower 2016-2017 rates. Tuition at the nation’s private colleges and universities has been rising 3 percent to 4 percent a year. So, the tuition you prepay in June would become more valuable starting in July!

You can start small and keep adding to your account. You lock in the tuition rates in effect during the year you prepay it. As I noted in last month’s column, very few families can save 100 percent of the cost of college, but very few families pay 100 percent, either!

Prepaying tuition frees families from worries about rising tuition. You own the tuition you’ve prepaid no matter how much tuition increases in future years and regardless of what happens in investment markets. The participating schools bear the investment risk, and they guarantee that the tuition you paid for will be provided.

No Fees

Private College 529 adds another layer of peace of mind. Most 529 plans charge families fees: to apply for an account or to manage the funds in the account. With Private College 529, families pay no fees. Participating colleges and universities pay all of the costs. The key point for you is that every dollar you contribute to your account buys tuition.

Save A Lot

The biggest antidote to college anxiety comes from the ability to save on the cost. By prepaying over time and locking in lower tuition rates, families can potentially save thousands of dollars. See a hypothetical example in my previous article.

Locking in current tuition by July, paying no fees, and saving money. They sound like ways to ease anxiety over college savings … as effective as a nice vacation.

If you missed my recent webinar on saving for college, you can view a recording here.

Nancy Farmer is President of Private College 529 Plan, a consortium of nearly 300 private colleges and universities. She has been helping families save for college for nearly two decades. Email her at president@pc529.org.

 

_____________________

Private College 529 Plan is sponsored by Tuition Plan Consortium, LLC. OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc., is the program manager. Participation in the Plan does not guarantee admission to any college or university, nor does it affect the admissions process.

Purchasers should consider the risks associated with purchases and refunds of Tuition Certificates. The Disclosure Statement contains this and other information about the Plan, and may be obtained by visiting privatecollege529.com or calling 1.888.718.7878. Purchasers should read these documents before purchasing a Tuition Certificate. Tuition Certificates are not insured or guaranteed by the FDIC, TPC, any governmental agency or OFI Private Investments Inc. or its affiliates. 

Private College 529 Plan is distributed by OppenheimerFunds Distributor, Inc. Member FINRA, SIPC
225 Liberty Street, New York, NY 10281-1008.
©2017 OFI Private Investments Inc. All rights reserved.

OFI Private Investments Inc. is not affiliated with NJ Family.

NP1111.187.0517

 


Ask the Expert: Your Family CAN Save for College

When I talk with families in New Jersey and around the country about planning and saving for college, I often hear: “I live paycheck-to-paycheck. How can I afford to put away money for college?”

That’s  totally understandable. College costs are rising and family incomes have been pretty flat for years. In Sallie Mae’s annual survey of “How America Saves for College,” half of all families said they can’t afford to save. One-third of the families who made that statement have incomes above $100,000 a year.

Saving for college seems daunting for parents of young children. But, if you remember one thing from this article, it should be this: Few families can save 100 percent of the cost of college; but few families pay 100 percent of the cost of college.

Look for Ways to Save When Your Kids Are Young

While families struggle to find dollars to put away for college, there are some great opportunities, as your kids get older:

Your toddler no longer needs diapers. Diapers can cost nearly $900 a year, according to babycenter.com. Once your child is toilet-trained, put some or all of those dollars into college savings.

Your baby goes off formula feeding. Baby formula is expensive nutrition. Once your child graduates to table food, put some of that $60-$100 per month into your 529 account.

Your child moves from daycare to kindergarten. Babycenter.com says the average cost of center-based daycare is nearly $1,000 per month. There’s another source of funds for your college account.

As a parent, you’ll know when your situation frees up dollars to put toward college. Think work bonuses, tax refunds, or inheritance. Use these life events to your children’s advantage.

Consider Private College 529

Another way to maximize your savings is to prepay college tuition, using a prepaid plan such as Private College 529 Plan.  Do this to lock in tomorrow’s tuition at today’s prices, potentially saving thousands of dollars on the cost. Check out my example in last month’s article. Eleven states offer prepaid tuition 529 plans, but New Jersey isn’t one of them. Don’t forget—few families pay the entire posted price of college.

Private College 529 is owned and operated by its nearly 300 members and the prepaid tuition can be used at all member schools – guaranteed. The members extend from Princeton to Stanford and everything in between, including great schools in New Jersey and nearby states. Think Sarah Lawrence, Pace, Carnegie Mellon, Franklin & Marshall, Johns Hopkins, Dickinson, American and more. There are no investments to pick, no need to worry about falling stock prices, and no fees.

Finding reasonable ways to save money and prepaying to cut the cost are two active steps you can take to make college more affordable for your family. If you missed my recent webinar on saving for college, you can watch it here.

Nancy Farmer is President of Private College 529 Plan, a consortium of nearly 300 private colleges and universities. She has been helping families save for college for nearly two decades. Email her at president@pc529.org.

___________________

Private College 529 Plan is sponsored by Tuition Plan Consortium, LLC. OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc., is the program manager. Participation in the Plan does not guarantee admission to any college or university, nor does it affect the admissions process.OppenheimerFunds, Inc., is the program manager. Participation in the Plan does not guarantee admission to any college or university, nor does it affect the admissions process.

Purchasers should consider the risks associated with purchases and refunds of Tuition Certificates. The Disclosure Statement contains this and other information about the Plan, and may be obtained by visiting privatecollege529.com or calling 1.888.718.7878. Purchasers should read these documents before purchasing a Tuition Certificate. Tuition Certificates are not insured or guaranteed by the FDIC, TPC, any governmental agency or OFI Private Investments Inc. or its affiliates. 

Private College 529 Plan is distributed by OppenheimerFunds Distributor, Inc. Member OppenheimerFunds Distributor, Inc. Member FINRA, SIPC
225 Liberty Street, New York, NY 10281-1008.
©2017 OFI Private Investments Inc. All rights reserved.

OFI Private Investments Inc. is not affiliated with NJ Family.

NP1111.180.0417


Here’s Why Your Family Can Afford a Private College

Many New Jersey families consider private college options for their children. But so many others don’t because they mistakenly believe that they can’t afford it.

If you’re in the second camp, consider some basic truths:

  • Don’t focus on sticker prices. Private schools give generous aid packages. The average private school student paid a net $14,000 in tuition during the 2016-17 academic year, after discounting, according to the College Board’s latest statistics.
  • Consider graduation rates. Nearly 80 percent of private school students graduate in four years, compared with only half of public school students, according to the U.S. Department of Education. Private school graduates pay tuition for fewer years and earn a paycheck sooner.
  • Nearly 300 private colleges and universities help you cut your cost. They are members of Private College 529 Plan, a consortium of schools that enables families to prepay today’s prices for tomorrow’s education. Participating schools guarantee the tuition no matter what happens with investment markets or how much tuition increases in the coming years. Prepaid tuition can be used at any participating school, and you do not pick an institution until the child enrolls. The plan charges no fees, so every dollar contributed goes directly to your child’s tuition.

“Where can we use this plan?” you ask. Participating colleges and universities range from coast-to-coast – Princeton to Stanford and everything in between. That includes the likes of Sarah Lawrence, Johns Hopkins, Notre Dame, Duke, Emory, MIT and Wellesley. There are large research universities, small liberal arts colleges, faith-based institutions, STEM schools, and more.

Private College 529 plans can potentially help you save thousands on college costs. Here’s an example of how it works.

  1. Assume tuition at College A is $35,000 a year now.
  2. You open a Private College 529 account for your 8-year-old child with $35,000.
  3. If College A’s tuition increases 4% a year for 10 years, tuition would be $51,809 when he or she arrives on campus.
  4. Your tax-free tuition savings would be $16,809.

Remember, you are not locking in a particular school – your prepaid tuition is honored at all of the Plan’s current and future participating schools.

Congress created 529 plans to provide an incentive to families to save for college costs. There are two kinds of 529s – savings plans and prepaid tuition plans.

  • Savings plans are really investment accounts. Almost all states – including New Jersey – sponsor them. Families deposit funds, select from the investments offered by the sponsor, and later use the assets to pay for any qualified college expenses like tuition, room and board, books, etc. Account gains are federal tax free, if used for college. However, these plans can lose value. In retirement terms, they are similar to Roth IRA's.
  • Prepaid tuition plans are offered by about a dozen states and Private College 529. (Private College is the only 529 that is sponsored by its participating schools, not by a state.) They enable families to lock in today's lower tuition rates for future schooling, thereby saving on the cost. New Jersey does not offer such a plan. Families don’t need to worry about investment results or tuition increases. Prepaid plans can be used only for tuition and mandatory fees; books, room and board andother college expenses must be covered by separate funds, such as a 529 savings plan. Think of prepaid plans as you would a defined benefit pension.

Like to know more about how you can afford to pay for college? Sign up for my free webinar on either Saturday, April 29 or Monday, May 1.

Next month, I will have more to say about how families can find money to put away for college so check back here to learn more about the smartest ways to save.

Nancy Farmer is President of Private College 529 Plan, a consortium of nearly 300 private colleges and universities. She has been helping families save for college for nearly two decades. Email her at president@pc529.org.


Private College 529 Plan is sponsored by Tuition Plan Consortium, LLC. OFI Private Investments Inc., a subsidiary of OppenheimerFunds, Inc., is the program manager. Participation in the Plan does not guarantee admission to any college or university, nor does it affect the admissions process.OppenheimerFunds, Inc., is the program manager. Participation in the Plan does not guarantee admission to any college or university, nor does it affect the admissions process.

Purchasers should consider the risks associated with purchases and refunds of Tuition Certificates. The Disclosure Statement contains this and other information about the Plan, and may be obtained by visiting privatecollege529.com or calling 1.888.718.7878. Purchasers should read these documents before purchasing a Tuition Certificate. Tuition Certificates are not insured or guaranteed by the FDIC, TPC, any governmental agency or OFI Private Investments Inc. or its affiliates. 

Private College 529 Plan is distributed by OppenheimerFunds Distributor, Inc. Member OppenheimerFunds Distributor, Inc. Member FINRA, SIPC
 

 

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