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How To Protect College Funds In Bankruptcy
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The cost of a college education has skyrocketed in recent years and there appears to be no end to tuition increases. For the 2009-2010 school year, the average cost of a private four-year college was $26,273, up 4.4 percent from the previous year. The percentage of increase was even greater for public schools, which rose 6.5 percent over the previous year to $7,020. What that means is on average, the cost of a four-year private college education would be more than $100,000. Unfortunately for parents who want to provide the best education possible for their children, it doesn’t look like this trend is turning around any time soon. Estimates put the increase in college tuition at double the inflation rate, which is currently between 5 and 8 percent.
Most states offer incentive programs that bring relief to parents and enable them to begin saving money from the time that their children are born. One of these options, the 529 College Savings Plan, is operated by a particular state or educational institution and helps families set aside funds for future college costs. These savings plans are beneficial for three reasons. First, they offer a targeted way to budget for your child’s college education. Secondly, they are tax sheltered assuming the funds aren’t withdrawn early. Finally, they offer safe interest-earning growth of the money. Unfortunately, they aren’t always guaranteed to get into the hands of your kids.
For individuals struggling with personal finances and debt from a job loss, personal injury, death, or divorce, repayment of debt can be nearly impossible. It can be tempting to tap into a child’s college fund to deaden the calls from creditors. Fortunately, there is a way to keep the creditors at bay without using any child’s college fund. By filing for bankruptcy, individuals can shelter debt from creditors. No other method of dealing with debt has this availability. Here’s how:
First, individuals can protect college fund money from creditors by moving the money from a 529 College Savings Plan into an account under the Uniform Gift to Minors Act or the Uniform Transfers to Minors Act. These funds are then placed under the management of a parent until a minor turns 18. From there, minors can use the funds for college without the threat of having creditors confiscate the funds to reconcile debts.
If you are seriously considering filing for bankruptcy in the Los Angeles area and want to find out more about how to protect your investments from creditors, contact the firm that focuses exclusively on California bankruptcy laws: Borowitz and Clark. Every day, the Los Angeles bankruptcy lawyers at Borowitz and Clark help people save their homes, their cars, and wipe out their debts. Not all bankruptcy attorneys are the same. While the process appears complicated, the Los Angeles bankruptcy lawyers at Borowitz and Clark will be able to help you understand your options and avoid making bad decisions. You get one chance to file bankruptcy right the first time. They know what they’re doing, because bankruptcy is all they do. Unlike many firms, they never leave a paralegal or secretary in charge of a case. That’s why their cases succeed at such a high rate—even higher than many other bankruptcy firms. For a free consultation, contact a qualified Los Angeles bankruptcy lawyers at Borowitz and Clark toll-free at 800-509-3200, or visit www.blclaw.com.
Job Strategies for Today’s College Grads
0Approximately, 15 million people are unemployed. Simply put, landing a job today is an extreme uphill challenge, considering the large number of graduating students combined with the rising number of the unemployed. Currently, college graduates find themselves competing with other individuals who are more seasoned and experienced for basic entry level positions in their career field. Therefore, emerging leaders need a different type of strategy during economic turbulence.
With the fierce competition for limited jobs, many students wonder if they will be able to land a good job in the marketplace. I understand and see it when talking to my own students. Hope is not lost. William Bailey and I spent several months researching strategies for current and future college graduates. The results were outlined in our new book, Job Strategies for the 21st Century. We have found a huge disconnect between what organizations want in potential employees and what today’s graduates are providing.
Economic troubles in our nation and abroad continue to create an unstable and unpredictable job market. Parents across this country tell their children “get a good education and you will get a good job.” However, in this economic rollercoaster, this is not always true. US manufacturing jobs continue to evaporate as global outsourcing becomes the norm for businesses that seek to increase their profits.
According to some business estimates, employers are expected to cut 2.7 million jobs in 2009 (2 million were cut in 2008). These glooming trends make it difficult for even college students to be optimistic. However, having a good plan can increase the odds for most students in landing a good job. Opportunities will present themselves in some form in the future. Therefore, college students need to be proactive about landing a job.
Below are strategies for college students entering the job market during economic turbulence:
1. Branding
2. Communications
3. Critical Thinking
4. Current & well-versed
5. Flexibility
6. Global Citizen
7. Job Homework
8. Leadership
9. Love & Passion
10. Networking
11. Opportunity
12. Seasoned Worker
13. Uniqueness
Although many people are feeling very pessimistic about future career opportunities, hope is not lost if people are prepared for the future. Bestselling Sci-Fi author H.G. Wells explained, “‘We were making the future,’ he said, and hardly any of us troubled to think what future we were making. And here it is’.” By taking control of the career strategy, college graduates can make a positive step in navigating these difficult economic times and landing their future jobs.
Philadelphia Schools Partner With the Community College of Philadelphia to Aid High School Dropouts
0Dropout rates across the country have been on the rise over the past decade. In school year 2004-2005, an estimated 5,550 students dropped out of the Philadelphia schools. This is the highest dropout rate in the state, about three times higher than the state average.
To assist these Philadelphia schools dropouts and offer them an opportunity for a better life, the Philadelphia schools have partnered with the Community College of Philadelphia, the largest degree-granting institution in the city with over 38,000 students enrolled annually.
According to a report by the American Youth Policy Forum, 75 percent of the inmates housed at our state prisons are dropouts, and 59 percent of the federal prison population are dropouts. Though the Philadelphia schools already have programs in place to aid students currently in school, they knew that more had to be done to aid those who had already dropped out.
Part of the Gateway to College Program, the Philadelphia schools dropouts begin school in the fall of 2006. The program offers dropouts the chance to simultaneously work toward a diploma and associate’s college degree or certificate.
The college expects to enroll 360 Philadelphia schools dropouts over the next three years. The dropouts must be between the ages of 16 and 20, with at least an eighth grade reading level. They can attend day, evening and weekend classes at the college, with their first semester in small learning groups of 20 students. Classes include the basics of reading, writing and math, as well as a college survival course to help them be successful in their future college courses and a two-hour academic lab each week.
Dedicated academic coordinators act as advisors, mentors and coaches for the Philadelphia schools dropouts. They also assist with student needs issues, such as course selection, time management, and study habits. After the first semester, the Philadelphia schools dropouts take classes with the college’s general student population.
The Gateway to College Program was developed by the Portland Community College and funded by the Bill & Melinda Gates Foundation and its partners — Carnegie Corporation of New York, the Ford Foundation, and the W.K. Kellogg Foundation. The plan is to replicate the program at 17 colleges nationwide by 2007. Philadelphia is its largest urban center to participate to date.
The Community College of Philadelphia was granted $10.25 million over a seven-year period, of which $350,000 is slated for planning and startup for the first three years. Remaining monies and in-kind services will come from the college and the Philadelphia schools.
The new program expands options for vulnerable youth, who were left behind by the Philadelphia schools traditional system. These are youth who often have been written off as failures by teachers, administrators, and parents. This is their second chance.
Your Child’s College Education Savings Plan, Discover 4 Great
0With higher education costs increasing at double digit
percentages an effective college savings plan for your kid’s
education is becoming much more critical. Most parents will find
that their kid’s future college costs will be much more than
they have planned. This leaves many kids to be faced with
obtaining financial aid to compensate for a portion of their
higher education costs. This article will explore the pros and
cons of 4 common college savings options. This article will also
seek to show which of these 4 options are a better option if
part of your kid’s higher education costs are to be funded by
financial aid.
529 College Savings Plan: Since January 2002, 529 college
savings plan have become a new option for achieving tax free
college savings. These plans are state sponsored investment
programs that offer special tax treatment. It allows just about
everyone to save for their kid’s college education. While there
are many benefits of a 529 college savings plan, perhaps the
most important is that your investment earnings are tax deferred
if you use the funds for qualified education expenses.
Additionally, another big advantage is that the maximum amount
you can contribute to a 529 savings plan can go as high as
hundreds of thousand dollars but be aware these are based on
your States specific guidelines. If for some reason you do not
use the investment funds for college, you can still withdrawal
your investment earnings, but you will have to pay a federal
penalty of 10% and federal income taxes on your earnings. The
penalty can be waived if your child receives a college
scholarship, or in the event your child becomes disable or
dies.
A 529 plan can typically be easily purchased through an
investment broker or mutual fund company like Vanguard or
Fidelity. Please be aware that one of the biggest disadvantages
of a 529 plan is that investment options can sometimes be
limited. However, as 529 plans become more popular it is likely
that more plan options will open. For instance, the State of
Ohio just announced the option for bank CDs and saving accounts
for 529 plans. One last main advantage of a 529 college savings
plan is that the money in the plan is classified as a parents
assets so less that 6% of the value counts against your kid’s
eligibility for financial aid.
Coverdell Education Savings Account (CESA) (formerly known as an
Educational IRA): A Coverdell Education Savings Account is a
savings account created as an incentive to help parents and
students save for higher education expenses. A Coverdell
Education Savings Account is easy to set up at most financial
institutions and banks. A Coverdell Education Savings Account is
similar to a 529 college savings plan, but different in the
contribution limits. With a Coverdell Education Savings Account
you can only contribute $2000 per child per year and to qualify
your adjusted gross income must be less than $110,000 if you are
single and less than $220,000 if you are married filing jointly.
For financial aid eligibility a Coverdell Education Savings
Account is classified as a parent’s asset so less that 6% of the
value counts against your kid’s financial aid eligibility.
UGMA/UTA Custodial Account (Uniform Gifts to Minors Act/Uniform
Transfers to Minors Act): A UGMA/UTMA account allows someone to
make gifts to a minor without setting up a trust. While there
are benefits to a UGMA/UTMA account the first limitation is that
these types of accounts offer very little federal tax advantage.
Secondly if your child is 14 or under only the first $800 of
income is tax free, the next $800 is taxed at your child’s tax
rate and after that there is no tax benefit at all. The other
big disadvantage is that an UGMA/UTA Custodial Account has to be
set up in your child’s name. This can create a big problem if
your child needs financial aid since all of the assets will be
reviewed at a 35% rate. As a result, a UGMA/UTA Custodial
Account is not advisable for those who may need to qualify for
financial aid eligibility.
The main advantage of a UGMA/UTA Custodial Account is that there
is no limit on the investment contribution and it is very easy
to set up at most major financial institutions including some
insurance companies. However, as can be seen above the
disadvantages of a UGMA/UTA Custodial Account far outweigh the
benefits.
Taxable Investment Accounts: Taxable investment accounts can be
a broker account, a mutual fund, a certificate of deposit or
just a regular savings account. Essentially it is just a regular
account that earns taxable interest, or investment income. A
benefit of a taxable investment account if set up in the parents
name is that the assets are classified as a parent’s asset so
they do not count as a negative in the financial aid formula.
Additionally, taxable investment accounts offer lots of
flexibility, and are easy to set up at any financial
institution. However, the big limitation to taxable accounts in
saving for college is that they offer no tax advantage for
college savings.
In summary, a solid savings plan for college is a very important
undertaking for parents to consider. The above 4 education
investment options can be highly useful in the college planning
process. Furthermore since some of these investments offer
substantial federal tax advantages and do not count against
financial aid eligibility they can maximize parent’s investment
resources.
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Is College Still an Option?
0Has times ever been this difficult? For those born well after the Great Depression, the current economic recession is probably as low as it has ever been.
From upper middle-class families who once gave to the needy now receiving free meals to single mothers choosing welfare over work because the cost of transportation and child care would be more than their paycheck, the recession is forcing many out of their normal lifestyles and forcing them to reassess their financial future.
With families struggling to stay in their homes, many parents have had to make the difficult decisions of delaying their child’s college education or forcing them to narrow their choices to those that fit into their current budget.
However, what about the parents that are determined to send their child to college despite their economic circumstances? Where should they go to began preparing in advance for their child’s higher learning?
Alex Brown has recently launched a website, Zadoodie.com, which will assist children in finding funds for their college education.
”Many children and young adults are faced with the problem of not having enough money to attend or complete college,” said Brown. “The earlier you start to save the less you have to worry about when the time comes to pay for a college education.”
Zadoodie.com is designed to help parents begin saving funds early in their child’s maturation so they can avoid the economic uncertainties that many are facing today. The website is working with a United States government 529 college savings plan and offers information to parents who are unfamiliar with the 529 college savings plan and/or have not set up an account.
According to the Securities and Exchange Commission (SEC) government website, “A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs.” Legally known as “qualified tuition plans,” 529 plans are funded by states, state agencies, or educational agencies and are commissioned by Section 529 of the Internal Revenue Code.
The two types of 529 plans are pre-paid tuition plans and college savings plans. Each state, including the District of Columbia, commissions a 529 plan. Furthermore, some private institutions of higher learning sponsor a pre-paid 529 plan.
Furthermore, loved-ones can donate funds to a student’s personal account by visiting Zadoodie.com, who in turn transfers the money to the student’s fund. The website also allows members to earn 10 dollars annually for each new member they bring to the site. Furthermore, Zadoodie.com shares up to 50% of the adverting revenue from the site with active members and offers weekly scholarships to those members.
Before launching the site, Zadoodie.com had already helped students earn up to $1,000 for their college education.
In spite of the current economic conditions, it is still imperative that the leaders of tomorrow be offered the same educational advantages of previous generations, and that journey for knowledge begins with the financial preparation of their elders. As Malcolm X said, “Education is our passport to the future, for tomorrow belongs to the people who prepare for it today.”
More Ways To Use The Taxation System To Pay College Education Costs
0In addition to Education IRAs and federal tax credits there are
many other ways to use the taxation system to pay for the high
and increasing costs of a college education. You need to
consider all of these tax benefits in order to ensure that you
can benefit from this form of government support to families who
are helping their kids get a higher education.
Some of the other ways to let the taxation system pay for some
of your family’s college education expenses include deductible
expenses, Section 529 plans, regular IRA’s, savings bonds,
investing on your child’s behalf, and putting your child to work
for you.
You can deduct up to $4,000 a year in qualified educational
expenses but you can’t combine a deduction and a tax credit for
the same student in the same year. You can however split the
deduction and the credit if you have more than one child who
qualifies.
Many people also contribute money to Section 529 plans which are
named after the section of the IRS code that regulates these
plans You can also put money into so-called Section 529 plans.
Section 529 plans are regulated by the states that hire an asset
management company to look after the business side. You can
contribute to these plans for future college education and the
earnings added to the funds are tax-free.
You can now also use your regular IRA penalty-free if you want
to use some of it pay for qualified educational expenses. You
can deduct up to $2,500 in interest paid for educational loans
as an above-the-line deduction. Like many other deductions these
benefits are not available to single, or dual high-income
earners.
But perhaps the easiest way to get taxation monies working for
your child’s college education is through a special U.S. Savings
Bond exclusion. You can exclude a portion of the interest that
accrues on such bonds if you meet certain qualifiers. Those
qualifiers include having paid education expenses in the year of
redemption; are not married and filing separately, and if you
meet the general base income restrictions.
Still another way to beat the taxman and save money on college
education is to make investments in your child’s name. Children
under 14 face a much lower tax rate and even as their income
grows it will likely be at a lower rate than yours. Just make
sure that the investment is in your child’s name and stay on
their good side because ultimately that money is theirs.
The final way to meet your college education needs that works
for some people is to hire your kids if you are self-employed.
There are some restrictions but once again any monies you give
your children should be plowed back into their own or the family
college education fund
Saving For College is Easy With 529 Plans
0Saving for college has never been a cinch, but the U.S. Congress has made it a little easier. Congress has made the tax benefits of 529 college savings plans permanent, which is great news for parents saving for their child’s college education.
529 plans are tax-advantaged savings accounts for saving for college. A 529 account is opened on behalf of a beneficiary, usually a future college student. You invest money in the account over time and your returns grow tax free. The money is then withdrawn to pay for college or other education expenses and you don’t pay income tax on the growth when you withdraw it. If you withdraw the money for an expense other than qualified education expenses, there’s a 10% penalty plus you have to pay taxes. However, 529 plans are usually transferrable between beneficiaries. So if you child gets a scholarship, you can move the rest of the money in the 529 plan to a sibling, cousin, etc.
All 50 states and Washington D.C. have 529 plans, and they each have slight differences. For example, some states offer state tax deductions or credits in addition to the federal tax benefits. They also have various minimum investment requirements and maximum amounts you can invest over the life of the account. Most of these minimums are small — sometimes only $15. Maximums refer to how much you can invest in the 529 savings plan over time. This number is typically enough to cover even the most expensive colleges, and most states increase the maximum as college costs increase. The maximum amount you can invest in a 529 typically does not include your earnings. For example, if the cap is $300,000 and you invest $295,000 but the earnings are $50,000, you will not have hit the maximum even though you have $345,000 in your account.
Although your state offers a 529 plan, it’s smart to consider other states’ 529 plans as well. Some 529 plans underperform the market and others have high fees. If you decide to invest in another states’ fund, keep in mind that you won’t get the state tax benefits. Some states, such as Texas don’t have income taxes, so residents of these states should shop around for a better deal on a 529 plan. Utah is an example of a state that has low fees for its 529 plans for both in-state and out-of-state residents.
Also, some 529 plans are “direct funds” whereas others are “advisor funds”. A direct fund means you can invest directly with the state or the 529 manager. An advisor fund requires you to use a qualified financial advisor to purchase the fund.
Some states also offer a variation on the traditional 529 plan called a pre-paid plan. A pre-paid tuition plan lets you effectively “lock in” the future cost of a college education.
Regardless of which 529 plan you choose, investing in 529 plans is a smart move to invest for college. Between the low minimum investment amounts and the tax-free returns, a 529 is a great way to save for college.