financialforum
College Prep
With the cost of a college education on the rise, it’s important
to start saving early. Phil Dyer, CFP, provides some planning
tips to help you make the most of your money.
H
igher education costs are choice for most families, because “kiddie
increasing at twice the rate of tax” rules now apply to children under
infl ation. The College Board age 19 and full-time students under
estimates for a child born in 2004, a four- age 24. If you already have money in
year education at a public college will a custodial account, consider spending
cost approximately $128,000, and four it down for items that directly benefi t
years at a private university will cost the child, such as summer camps, private
approximately $304,000. secondary school, a computer, or other
With the average college senior gradu- allowable expenditures and starting
ating with about $20,000 in student loans a 529 plan instead.
Start Saving Early
— and an increasing number graduating Also, tuition payments made directly
For College Costs
with a six-fi gure debt — the numbers to a college or university are exempt from
■ MOAA offers the are getting scary. What can a parent or the normal $12,000-per-donor-per-year
Vanguard
®
Degrees of
grandparent do? Get a game plan in place gift tax exclusion and a great way for
Success 529 College
early, and stick to it! grandparents or other relatives to help.
Savings Plan to help
you start saving for col-
Consider the following: Decide who will cover college costs: Dis-
lege. Visit
www.moaa
Start saving early: Saving $100-$300 a cuss — as a family — what you or other
.org/529 for more infor- month in a tax-advantaged section 529 col- family members will cover, and then
mation and to sign up.
lege savings plan from birth or early child- communicate that decision to a would-
hood goes a long way toward covering the be student. For instance, a parent might
cost of a public university education. Plans decide to cover four years of the average
owned by grandparents or other relatives in-state tuition, room and board, with
currently have a minimal effect on fi nan- anything on top of that his or her child’s
cial aid calculations and will pay dividends responsibility. There is no right answer,
long after your grandchildren have out- but don’t wait until spring of your child
grown gifts of clothes or toys. or grandchild’s senior year of high school
Stay away from custodial accounts: to discuss this in detail.
Uniform Gifts to Minors and Uniform Do your research: Visit
www.fi naid.org
Transfers to Minors accounts — better to review the basics of college aid as
known as custodial accounts — used to early as possible. MO
be primary college savings tools and pro-
vided families the opportunity to shift
— Former Army Capt. Phil Dyer, CFP®, is
income from parents or grandparents in
deputy director, Benefi ts Information and Finan-
a high tax bracket to a child in a lower
cial Education. To fi nd a fi nancial planner near
you, contact Garrett Planning Network at
tax bracket.
(866) MOAA-GPN (662-2476) or
www.moaa
Recent tax law changes, however,
.org/garrett, or visit
www.moaa.org/fi nancial
have made custodial accounts a poor center for other resources.
46 MILITARY OFFICER AUGUST 2008 PHOTO: SEAN SHANAHAN
AAug_Financial_Forum.indd
46ug_Financial_Forum.indd 46 77/7/08 7:22:05 PM/7/08 7:22:05 PM
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