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College

[expand title=”How much should I be saving for college?” trigclass=”noarrow” tag=”h3″]

With college costs increasing at twice the rate of inflation, it is important to start saving early. Interest working for you now in a regular savings program is much better than having interest work against you in the future in the form of education loans. Use our college savings calculator to determine how much you should be saving for college on a regular basis.

  • Current Savings and Assumptions
    Annual college cost inflation (%)
    Amount saved so far ($)
    Name Current Age College Start Age Years Attending Annual Amount
    Assumptions
    Before-tax return (%)
    Marginal tax bracket (%)
    Annual increases (%)

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[expand title=”Will I be able to repay my student loan?” trigclass=”noarrow” tag=”h3″]

  • When you borrow money for college you might not be thinking about your ability to repay the loan once you graduate. Outstanding student loan balances may infringe upon your ability to qualify for a home, auto and other personal loans. Use this tool to help gauge the feasibility of your student loan repayment with your anticipated future income.

    Assumptions
    Anticipated annual income upon graduation ($)
    Original loan amount ($)
    Annual interest rate (%)
    Initial payment period (months)

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[expand title=”What are the advantages of the Coverdell ESA?” trigclass=”noarrow” tag=”h3″]

  • Tax-deferral can have a dramatic affect on the growth of an investment. With the new Coverdell ESA (formerly known as the Education IRA) your contributions can grow tax-deferred and distributed income tax-free as long as distributions are used for qualified education expenses. These costs can include school uniforms, computers, and transportation for elementary or secondary school, public, private or religious.An annual limit of $2,000 per year for any individual under age 18 applies. Once the beneficiary reaches age 18 they can take control of the account but funds must be used by the time the beneficiary turns 30 years of age or transferred to a younger sibling.The ability to contribute to a Coverdell ESA is phased out for single filers with Modified Adjusted Gross Income (MAGI) between $95,000 and $110,000 and for joint filers with MAGI between $190,000 and $220,000. The annual contribution deadline is April 15 of the following year.

    Savings and Assumptions
    Annual savings amount (limit $2,000) ($)
    Number of years contributions are made (limit 18)
    Before-tax return on savings (%)
    Marginal tax bracket (%)

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[expand title=”What are the advantages of a 529 College Savings Plan?” trigclass=”noarrow” tag=”h3″]

  • Tax-deferral can have a dramatic affect on the growth of an investment. With a state-sponsored 529 College Savings Plan your contributions can grow tax-deferred (some states allow contributions to be partially or completely deductible) and distributed income tax-free as long as distributions are used for qualified education expenses such as tuition, fees, room and board at higher education institutions.There is no limit on contributions but some states tend to limit contributions once the plan assets have reached a defined maximum (typically $200,000 – $250,000). Under a special election, you may make contributions of up to $70,000 per beneficiary in a single year without triggering a federal gift tax by accelerating five years’ worth of contributions (gifts) as of 2013. Married couples may contribute $140,000 per beneficiary in a single year.*Assets are professionally managed by fund managers selected by the state. Participants can choose from two to almost 30 mutual fund-type investments. Control of the account remains with the contributor regardless of the age of the beneficiary.* A $70,000 gift is viewed as an accelerated gift over five years. Any other gifts to the same beneficiary by the contributor within five years may result in a federal gift-tax liability. If the contributor dies within the five-year period, a prorated portion of the contribution may be included in his or her taxable estate for federal estate tax purposes.

    Savings and Assumptions
    Initial investment amount ($)
    Annual savings amount: ($)
    Number of years contributions are made:
    Before-tax return on savings (%)
    Marginal tax bracket (%)

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[expand title=”What is the value of a college education?” trigclass=”noarrow” tag=”h3″]

  • It may surprise you that, on average, an individual with a bachelor’s degree earns approximately $57,026 per year, compared to the $34,197 average yearly salary of a worker with a high school diploma. Use this calculator to see the value of a college education.Source: U.S. Census Bureau, American Community Survey, 2006-2008.

    Earnings and Assumptions
    Current age
    Retirement age
    Anticipated annual income (no degree) ($)
    Annual salary increases (no degree) (%)
    Anticipated annual income (secondary education) ($)
    Annual salary increases (secondary education) (%)

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[expand title=”What are the payments on a parental (PLUS) loan?” trigclass=”noarrow” tag=”h3″]

  • PLUS loans are low-interest federally insured loans for parents of undergraduate students to help pay a dependent student’s college cost. PLUS loans are also available to graduate and professional students. The rate is fixed 7.9% for loans made on or after July 1, 2006.

    Loan Information
    Amount to borrow (year 1) ($)
    Amount to borrow (year 2) ($)
    Amount to borrow (year 3) ($)
    Amount to borrow (year 4) ($)
    Annual interest rate (%)
    Number of months (10 yrs = 120 max)
    Desired amortization schedule

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[expand title=”Should I live at home, on campus, or off campus?” trigclass=”noarrow” tag=”h3″]

      • Before deciding on room and board options when attending college, it may help to itemize and project expenses. These expenses will vary depending on whether you will commute from home, stay on campus or rent an apartment off campus. Use this calculator to help determine whether living on or off campus is better and to see the costs associated with these alternatives.

        Assumptions
        Number of years until college
        Estimated annual inflation rate (%)
        Number of months expenses incurred each year
        Expenses
        At Home On Campus Off Campus
        Cell phone ($)
        Clothing ($)
        College activity fees ($)
        Computer equipment ($)
        Entertainment ($)
        Food (meals) ($)
        Food (snacks) ($)
        Furnishings (one-time) ($)
        Furnishings (monthly rental) ($)
        Health (insurance, copays, prescriptions) ($)
        Housing (cable) ($)
        Housing (renter’s insurance) ($)
        Housing (utilities) ($)
        Housing (rent) ($)
        Housing (one-time deposit) ($)
        Internet access ($)
        Laundry ($)
        Memberships (gym, sports, etc) ($)
        Parking fees ($)
        Personal (haircuts, household items, etc.) ($)
        Telephone ($)
        Transportation (gas) ($)
        Transportation (insurance) ($)
        Transportation (maintenance) ($)
        Transportation (payments) ($)
        Travel expenses ($)
        Utilities deposit (one-time) ($)

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