Ch.10 college funding: make sure the kids are fit too Flashcards
does college guarantee wealth?
no
how much are the percentages of success?
15% education
85% attitude, perseverance, diligence and vision
what’s the most expensive way to own a car?
car lease
what’s the first rule of college?
pay in cash
what’s the second rule of college?
if you have cash or a scholarship, go
what kind of plans should you make in order to stay away from loans?
make plans to avoid borrowing
how much a year does inflation go up?
4%
how much does tuition inflation go up per year?
7%
what should you fund college with?
an educational savings account (ESA)
why should you fund college with a ESA
grows tax-free when used for higher education
what is a 529 plan?
Qualified Tuition Program, is a tax-advantaged savings plan designed to help families save for future education expenses, with earnings growing tax-deferred and withdrawals tax-free when used for qualified expenses
how many 529 plans are there?
7
what’s the first 529 plan?
kindlife phase: allows a plan administrator control your money and move it where there’s more conservative investments. only 8%
what’s the second 529 plan?
fixed portfolio plan: sets fixed percentage of your investment in a group of mutual funds and locks you in until you need the money; might be better returns but you have less control/pass
what’s bad about a 529 plan?
you have to give up an element of control
what is a family of funds?
brand name of a mutual fund
why is the flexible plan good?
allows you to move investment arounds periodically with certain family funds
you can choose the type of fund, amount in each, and move it around
when you go to college what should you be after?
you’re after knowledge not a pedigree
what are work study programs?
federally funded financial aid programs that allow eligible students to earn money through part-time jobs, helping them cover educational expenses
