Ed Bove's College Planning Blog

Students Trading Sex For College Money!

Can you imagine your daughter seeking out a "sugar daddy" to pay her college costs?  It seems unimaginable, but it's for real.  Students are out there trading sex for college money.  Can it get any worse than that?  How can it be prevented?

That's what college planning is all about!

Take a look at this news report from PIX Morning News in New York.  I almost fell out of my chair when I saw it:

Sextra Credit: Inside The Sugar Party

What do Hurricane Irene and the College Process Have in Common?

It's simple: They both cause people to panic and rush around like lunatics!

Here is when that revelation struck me.  I was in Home Depot this morning to pick up a quick item, and the place was jammed!  When I got inside, I saw a long line of people with carts leading to the customer service booth. I was wondering what they were waiting for.  Then I overheard one of the managers saying that they were all waiting for the delivery truck to arrive with a new shipment of generators.  He was walking up and down the line of people telling them they would get them on a first-come, first served basis, and he couldn't promise there would be enough for everyone.

I walked away shaking my head and I thought to myself: "If they needed a generator, they could have easily gotten one at any time.  Why did they wait until the day before a hurricane hits to try to get it?"

And then it dawned on me: I could be asking the same question about parents dealing with the college process.  They've had 17 years to save up for their children's college education and formulate a plan for dealing with the process.  But just like the people in line waiting for the generators, they waited too long!!!  What would have been easily attainable before, is now going to take a lot of tough work and last-minute planning.

Parents who attend our free college planning workshops often ask me: "Is it too early for me to start planning?"  My answer is: "It's never too early!"

People should be a lot more concerned about being too late!  That's when they end up in long lines hoping for a generator -- or a miracle that will help them pay for college.

 
By the way, I know it's not a very good shot, but this is a picture I took of the folks waiting in line this morning.  I hope none of you are among them when college time comes around.

Is The Stock Market Roller Coaster Ride Making You Sick?

Just when you thought it was safe to venture back into the stock market, it has recorded it's biggest losses since the Crash of 2008.  I can't tell you how many people I consulted with back then who shared horror stories about the massive hit they took in their children's college savings accounts.  And, as Yogi Berra would say, it's deja vu all over again!

Now don't get me wrong: I'm not saying there's no place for the stock market in our lives.  It can be a great place for long-term investing.  But short term, it's mercurial rises and falls can make or break your portfolio.  And if you have a student who is getting ready for college in the next year or two, can you afford to take the chance that another downturn could wipe out their college funds? 

With the skyrocketing cost of higher education, how can you possibly take the chance of losing any of the hard-earned money you've put aside for college?  Shouldn't you be looking for safer, more reliable vehicles as the time draws close?  I'd certainly say so.

IRS Will Accept Returns During Government Shutdown, Will Not Extend Filing Deadline

The IRS has announced that it will continue to accept tax returns despite the possible federal government shutdown. Taxpayers are still required to file their 1040 forms by the April 18th deadline. If the government shuts down after midnight tonight, the IRS will suspend the processing of paper returns, but will continue to accept electronically filed returns.

E-File will remain open for both individual and business returns. The IRS has urged individuals to file electronically, because most of these returns are processed automatically and should not be delayed.  Because of limited IRS staffing in the event of a shutdown, paper returns will be accepted, but will not be processed. Taxpayers who file paper returns will experience a delay in receiving their refunds. Limited telephone customer service functions will remain available during any shutdown.

 Tax Payments

Tax deposits and payments will continue to be processed, both for electronic and paper tax returns. Taxpayers should continue to make these payments as normal if the government shuts down.

 Audits

The IRS will suspend audits during the shutdown, so examination appointments will have to be rescheduled.

 Reason for the Shutdown

The shutdown may occur because Congress has not reached an agreement on a continuing appropriations bill to fund the government. Government funding officially runs out at midnight on April 8th. It is difficult to predict how long any shutdown may last. In the past, shutdowns commonly extended from a few days to a week. However, the 1995 shutdown lasted 21 days, the longest government shutdown on record—so far.

Late Tax Law Changes Will Delay Some Returns

The IRS has announced a delay in the start of tax season for some individual taxpayers affected by the Tax Relief Act of 2010. This delay affects individual taxpayers who itemize deductions, claim tuition and fees deduction, or claim the educator expense deduction. The delay affects both paper-filed and e-file returns. (For a complete list of forms, see Forms Affected By the Extender Provisions below.)

The IRS is asking preparers to wait for the IRS prescribed start date – mid-to late February 2011 – before e-filing these returns; returns submitted on paper prior to the IRS prescribed start date will be ‘shelved’ and processed later than returns filed on or after the start date. IRS e-file is the fastest, best way for taxpayers affected by the delay to get their refunds.

For more details from the IRS, visit the following link: http://www.irs.gov/newsroom/article/0,,id=233449,00.html

Forms Affected By the Extender Provisions:

Taxpayers must wait to file if they are affected by any of the tax credits or deductions that expired at the end of 2009 and were renewed by the 2010 Tax Relief Act, enacted Dec. 17.

The delays affect taxpayers claiming: 

• Itemized deductions (claimed on Schedule A of Form 1040)
• Tuition and Fees Deduction (claimed on Form 8917)
• Educator Expense Deduction (claimed on Form 1040, line 23, or Form 1040A, line 16)
• Casualties and thefts (claimed on Form 4684)
• District of Columbia First-Time Homebuyer Credit (claimed on Form 8859)

Think your child will graduate in 4 years? Try 6!!!

I tell people all the time in my workshops that it takes many college students closer to 6 years to graduate rather than the traditional 4.  We spend so much time and energy trying to figure out how to pay for school and how to get financial aid, that sometimes we overlook something equally as important:

The more we do to help our students select the right college for them and the best course of study, the more likely they'll graduate in 4 years.

That in itself, could save you tens of thousands of dollars.  Think about it.

By the way, you don't have to believe me; read this:

Why Your Child Won't Graduate From College in Four Years

Draining Your Retirement Account To Pay For College Is a Really Bad Idea

I read an article today saying that a recent study showed parents are tapping into their retirement funds to pay for their children's college education.  In other words, they are imperiling their own future in an attempt to secure their kids' future.

If parents are resorting to this tactic, it tells me that they are either desperate to find funds for school, or they haven't been properly educated on the right places to save money for college.  Either way, it's a really bad idea.

I've been preaching to my clients for years that your retirement takes priority over college.  As my mentor Ron Caruthers, the nation's leading college planning expert, always told me: "You can always borrow for college; you can't borrow for retirement."

If people are dipping into their IRAs and 401(k)s because they they think that's a good strategy to pay for school, they are sadly mistaken.  In fact, that may very well be the worst strategy.  Not only will they get hit with a big-time tax bill, they'll also lose untold amounts of money that they could have been accumulating for their golden years.

And, if they're doing it because they don't know where else turn to get the funds to pay for school, that's even scarier.

In either case, these folks urgently need an educational slap upside the head to wake them up.  They need to learn sound college funding rules so that they can get their children through college without needing to move in with them when they retire.

By the way, in case you'd like to read the article yourself, here's the link.

Proposed State Budget to Slash Scholarship Programs

More disturbing news out of Trenton as published reports indicate that the proposed state budget would slash millions of dollars from popular merit scholarship and need-based aid programs.  All the more reason that people need to think outside the box and explore all possible methods to deal with the heavy burden of paying for college.

You can read more about the proposed budget cuts here:

Star Ledger online story

Press of Atlantic City online story

Strategies to Maximize Aid Eligibility

Many TV and newspaper articles I see on college funding are -- I hate to say it -- fluff pieces.  They point out the incredibly obvious and give precious little useful information.  But I have to say, I came across a Wall Street Journal story the other day that was right on the mark.  It was insightful and offered some great tips and strategies to help people plan for paying for college.  Here it an excerpt for your reading pleasure:

Financial Aid 101: How to Get More

Even Well-Off Families Can Outwit the College Bean-Counters

By Jane J. Kim

Now that families have sent in their college acceptance letters, reality is setting in.

How in the world are they going to pay the bill?

Faced with steep budget cuts and slumping endowments, schools are raising tuition and paring back aid, putting additional strain on families still struggling to recoup investment losses suffered during the financial crisis. Earlier this year, for example, Harvard University announced that its tuition, fees and board would increase by 3.8% for the 2010-2011 year, exceeding $50,000 for the first time. Dartmouth College and Williams College announced plans to replace grants with loans in the aid packages of some students.

Parents Paying for Tuition

Many state schools, traditionally far cheaper than private schools, are imposing significantly steeper hikes in percentage terms. Tuition at Washington's four-year state schools is expected to rise by another 14% this fall, on top of a 14% increase a year ago—while students at the University of California's campuses face a 32% rise in tuition and other costs. Families are likely to see even larger tuition increases at state schools in 2011 as federal stimulus funds run out.

It adds up to another depressing reminder of how difficult paying for college can be for upper-middle-class families. Many are too affluent to qualify for significant financial aid, but not wealthy enough to afford to pay out of pocket.

Fortunately, there are a surprising number of short- and long-term strategies that parents can use put their finances in the right light to qualify for more aid.

To read the rest of the article click here.

Show Me The Money!

Remember that line from the film "Jerry Maguire"?  In the movie, that was the bottom line for a football star who was seeking a new contract.  "Show me the money."  Everything else was superfluous.

That line popped into my head when I read a news story about the Obama administration's plan to overhaul the country's educational system.  In part, the proposal calls for the adoption of standards to ensure that students are ready for college.

I read that and thought it to be a wonderful goal.  Then the line from the movie popped into my head.

It's all well and good to make sure our students are prepared for college.  But if families can't afford to send them to college, what good is it?

Show me the money!

Most families have not saved a fraction of the amount necessary to pay for the spiraling college costs for their children.  And any time government official talk about dealing with college costs, all they seem to do is propose new loan programs.  Wonderful.  That's what we want: to be deep in debt until we're old and gray.

Show me the money!

Here's an excerpt from an Associated Press article:

(AP) ATLANTA — President Barack Obama is promising parents and their kids that with his administration's help they will have better teachers in improved schools so U.S. students can make up for academic ground lost against youngsters in other countries.

A plan to overhaul the 2002 education law championed by President George W. Bush was unveiled by the Obama administration Saturday in hopes of replacing a system that in the last decade has tagged more than a third of schools as failing and created a hodgepodge of sometimes weak academic standards among states.

"Unless we take action — unless we step up — there are countless children who will never realize their full talent and potential," Obama said during a video address on Saturday. "I don't accept that future for them. And I don't accept that future for the United States of America."

In the proposed dismantling of the No Child Left Behind law, education officials would move away from punishing schools that don't meet benchmarks and focus on rewarding schools for progress, particularly with poor and minority students. Obama intends to send a rewrite to Congress on Monday of the law.

The proposed changes call for states to adopt standards that ensure students are ready for college or a career rather than grade-level proficiency — the focus of the current law.