Category Archives: Cost saving strategies

Finding Money

Of his two college choices, my son is leaning heavily towards the more expensive one. (Good news: it’s not as much more expensive as we had originally thought, but still around $4,000-$5,000 more for freshman year, including transportation– not exactly chump change.) We tasked him with finding some ways to bring his costs down and we’ve been pleasantly surprised with what he’s learned. Continue reading Finding Money

Planning for All Four (or More) Years

A friend whose son is my twins’ age was surprised recently when I told her some of the colleges my daughter was applying to. She thought they seemed unlikely choices given my constant messaging of finding affordable schools. Her son was interested in some of the same ones and the net prices they found were quite high. The answer: we have the benefit of two children in college all four years. That means our EFC gets divided between then and in many cases, this yielded lower likely net costs. Good news for my Continue reading Planning for All Four (or More) Years

Why 529s Always Make Sense

It’s easy to explain to parents of younger children why 529s make sense: Contribute now and your account grows tax-free for 18 years until college. If you live in one of the more than 30 states that offers a tax deduction, that’s an even bigger incentive. Here in Oregon, for example, we get a tax deduction for the first $4,865 in contributions to the Oregon College Savings Plan. If I contributed that much for my newborn (well, they act like newborns sometimes) I’d get an immediate return of 9% (state tax rate) or $437.85. Suppose that my account then grows for 18 years at 5% (I’m drastically simplifying the math here), I’d have almost $12,000 when my child was ready to start college, and no tax bill to access it. Added bonus: the FAFSA and Profile don’t count that gain as income in their formulas, unlike how it would be treated if it were in a taxable account. Continue reading Why 529s Always Make Sense

College Endowment Returns

If you’re still smarting from your year-end 401k statement, you might not want to read this. The 2018 NACUBO-TIAA Study of Endowments showed that even institutional investors were not immune to market performance, with endowment returns down almost 1/3 from 2017 to 2018. Endowments still managed an average return of 8.2%, though the 10-year average annual return came in at 5.8%, short of the 7.2% 10-year return target. Continue reading College Endowment Returns

Budgeting for Books and Supplies

When comparing the two schools my son is considering, we noticed an interesting data point: one school estimated books and supplies to cost $800 annually; the other $1,146. One of the schools my daughter applied to estimates $1,800. While I can certainly understand that different meal plans or living options might be more or less expensive at different schools, it’s hard to understand why books would cost 50% or 100% more from school to school. Continue reading Budgeting for Books and Supplies

To Borrow or Not to Borrow

Planning for college cash flow can be tricky. It’s not just that the average public university costs over $25,000 per year whereas the average family has saved just over $18,000 total. There’s also the combination of tax credits and their attendant rules, a confusing menu of borrowing options, and misunderstandings about how aid formulas treat savings. Add multiple children with overlapping college years and it’s no wonder many parents throw up their hands in despair. One common theme I hear from parents is a version of, “We’ll just spend our savings until it’s gone and then borrow what we need.” This may or may not be the right answer. Continue reading To Borrow or Not to Borrow

AOTC And New Tax Law

One of the big changes to the tax bill was making our young adult children less valuable to their parents from a tax perspective. The dependent exemption is gone and the child tax credit for 18- to 23-year-old dependents is only $500. The change does open a door to higher-income families for the American Opportunity Tax Credit, though.  The AOTC phases out at MAGI of $160,000, so it’s not unusual for families to be ineligible but to still find college unaffordable.

Here’s how the AOTC works, from irs.gov: Continue reading AOTC And New Tax Law