Want to Graduate Debt Free....Consider

If you’re about to start college or have a child who is going to start college soon, you’ve probably already heard the horror stories about college debt and how it can ruin a person’s life and future for many years past graduation. While this can sometimes be true, it definitely doesn’t have to be, not if you choose a school that’s within your (or your child’s) budget and try to get other forms of help, outside of loans that have to be repaid, where you can.   

Saving for the future can also be a big help when it comes to graduating debt free or close to it. However, the school a person chooses can also go a long way toward determining how much debt a person has upon graduation. For the most part, private, small schools fare the worst in terms of debt-production for students, while public schools and community colleges are the best.

Some particular schools that are known for being easy on the finances, often due to financial aid options offered, low cost, or other factors, include:

l  College of the Ozarks

l  Yale University (surprisingly!)

l  Haverford College

l  Davidson College

l  Duke University

l  Wellesley College

l  Vanderbilt University

l  Stanford University

This is not to say, of course, that if you go to one of these schools you will absolutely graduate debt free, but these schools, with their good track records, might improve your chances! However, there is definitely no substitute for saving early, planning smart, and doing your best to pursue scholarships, grants, and other “free money” for college. With all of these practices put together, you can likely graduate without too much debt weighing you down, if any at all!

Using Your 529 Savings

People who plan successfully for their children’s educations will often have a nice amount of funds available in their 529 plans. When the time comes, however, these same people are often quite confused about how best to access and use these funds. Fortunately, it’s not all that difficult, at least if you know a few basic tips and rules related to using the 529.  

Where to Withdraw

First things first, you may be wondering, if you have multiple 529 plans, which one you should withdraw from first. Really, even though people stress a lot over where to withdraw the money, it really doesn’t matter all that much, as long as all of the funds will ultimately be used for college.

With that said, though, you may want to withdraw from the accounts with the greatest earnings. The reason for this is that those earnings won’t be taxed providing you use them for college related costs. From there, you can choose to use the other accounts only as needed, and you typically won’t have as many earnings to report on your tax return.

When You’ve Withdrawn Too Much…

Another common concern people often have with their 529 plans is if they accidentally withdraw more than the qualified educational expenses they pay. Try not to let this happen to you because you’ll end up paying taxes plus penalties on the excess you’ve withdrawn.

You also can’t put the money back into the plan if you make this dire mistake. If it’s too late and you’ve already made this “goof,” there is SOMETHING you can do though. Just choose to use the excess on other qualified expenses before the year is up. 

As you can see, there are plenty of questions and concerns that people have surrounding their 529 plans. If you run into any others, remember you can (and should!) always ask a qualified financial adviser or accountant for advice.

Is College REALLY for Everyone?

In today’s world, we’re often led to believe that a college degree equals success for everyone. Students are basically told that, without a college education, they’ll have no career prospects. Unfortunately, though, that’s not always true, and when people wrongly believe it is, they will often go into debt paying those ever-rising tuition costs for something they don’t really need. Of course, for some people and some professions, college is necessary, but it’s wrong to say that’s always the case.

Is it Worth It?

It’s important that you think of college as an investment, one that, if all goes according to plan, you will get a return on. That “return,” in this instance, should be a higher paying job that will enable you to make more money throughout the rest of your life.

As with any investment, before signing up for college, you need to think about the return. Consider the career you plan to go into, for example. Compare the average salaries of people in your desired profession to the cost of college, including loans and factoring in expected scholarships or grants as well.   

Also think about the personal value of an education; after all, it’s not all about money. If you feel that an education is a personal necessity for you- that you wouldn’t feel as good about yourself without a degree, then it may be worth it to go to college, no mater what the financial costs.

Don’t forget to consider as well whether or not it is required for people in your desired profession to have a college degree. If you can do the same job without one and earn roughly the same salary, it may not be worth it. Really, though, this is a decision that only you can make.

Degree Choice Matters

Keep in mind that every degree isn’t necessarily as valuable or worthwhile as every other degree. A degree in Philosophy, for example, is probably not going to land you a well-paying job soon after graduation, if it does at all. Degrees that specifically train you to do something, however, or that are very high in demand are likely going to earn you money right off the bat.

When choosing a degree, don’t think just about what you’re passionate about. Think instead about what you want to do in the future and what you can build into a lasting career. These are all very personal decisions that you’ll need to make on your own, but do keep in mind that an investment advisor can always provide you with valuable guidance and advice that can help you to make the right decision for yourself and your future self.