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Back to School Planning Justus Morgan |
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That
right of passage that occurs every fall is once again upon us. It’s back to
school time for area children. Whether it’s your child’s first year in
kindergarten or their senior year of high school, it’s a good time to reexamine
your commitments to your children’s education. A leading
goal for many parents is funding their children’s college education. To
support this goal, there are as many funding vehicles, tax deductions and
financial aid packages as there are schools from which to choose. Before
looking at specifics, my recommendation is to begin with an education funding
strategy. This will help ensure your college funding goals align with your
other financial life objectives. As in the
case in setting any goals, until you are sure about what you want to
accomplish, the number of options can be overwhelming. An education funding
strategy defines what the parents expectations will be for their role as well
as the student’s financial and non-financial role in education. Having the
strategy clearly defined first will better enable you to make good choices
about how you will meet the financial education needs for your children. Most
parents think of the cost of college as the end-game for setting aside money
for education. While this certainly is an important milestone, there may be
other equally important educational considerations that parents should take
into account. For instance, if a child is struggling in school right now,
then investing in tutoring would be more appropriate than setting that money
aside for a future college expense that may never occur if the immediate need
is not addressed. As the educational needs of your child changes over time,
so might how you execute your strategy. To assist
with formulating a strategy, here are some questions to consider: -
What were the parents’ experiences with education funding? Who paid
for their expenses, if any? This will influence how parents make decisions
about how they will or will not contribute to their children’s educational
funding. -
How much do parents expect their children to contribute? What
resources will this come from (work, savings, loans, scholarships, grants.)? -
Will there be any expectations for student performance to receive
parents’ financial assistance. For example, some parents establish a certain expectation
around the grade point average that must be maintained in order to receive
funding. This is also very common in company sponsored reimbursement plans. -
What are parents willing to pay for prior to college for education
expenses (tutoring, summer school)? -
How do parents plan to pay for their contribution amount (income,
savings, or loans)? -
How will parents’ contributions to education
expenses affect saving for other goals (such as retirement)? The
education funding strategy is not something that can be created and then set
aside without periodically reviewing it as circumstances change. A parent’s
strategy for a child in first grade most likely will need some revisions by
the time the child graduates from high school. Only after a strategy has been
defined, should parents look at tactics to support the plan. Following is a
list of resources to assist in identifying which tactics might be most appropriate.
Your financial advisor can also assist you in developing an education funding
strategy that fits with your overall financial life objectives: -
FinAid! (http://www.finaid.org)
– financial aid advice -
Saving for College (http://www.savingforcollege.com)
– information about 529 college savings plans -
EdVest College Savings Plan (http://www.edvest.com)
– Having a
clearer picture of responsibilities and attitudes toward the goal of funding
education will go a long way toward making the goal achievable. Justus
Morgan is a certified financial planner with Financial Service Group, Inc., a
registered investment advisory firm in |