Newsletter Volume 2

When advising parents on college savings, I often encounter the question, “How much should I save?” Unfortunately, there’s no universal answer due to various factors such as the child’s age, college costs, retirement savings, current budget, and potential scholarships. It’s crucial to prioritize your goals. Is ensuring a well-funded retirement more important than paying for your child’s education? If retirement funds run out, are you prepared to live with your child, and are they ready for that possibility? Ensuring your family’s financial stability in unforeseen circumstances is also vital. These complexities highlight why there’s no one-size-fits-all savings amount.

An honest discussion with your child about education costs and career aspirations is essential. While prestigious colleges can offer value, is it worth an extra $50,000–$100,000 in tuition? Also, your experience with job salaries can also help ground their income expectations when they enter the workforce. Graduating with substantial student loans can be financially crippling for decades. College offers numerous benefits, not all financial, but it is important to discuss the value for your dollar when considering such a large expense.

College savings strategies vary with the child’s age. For older children, loans, scholarships, and current cash flow are primary sources. However, not all loans are equal; federal student loans have capped interest rates, unlike private student loans. Make sure you read the fine print on private student loans.

For younger children, recent enhancements to 529 plans offer advantages. A 529 plan, named after the tax code section, is funded with after-tax dollars, grows tax-free, and is tax-free for qualified expenses. Recent tax code changes allow 529 plan qualified expenses to include private elementary/high school costs, student loan payments, and Roth IRA contributions for the child, reducing concerns about having unused college funds.

The good news is that lots of children attend college annually without bankrupting their parents. With careful planning and realistic goals, college financing can be managed effectively. If you’re reading this, you already have an advocate to help you navigate these challenges!

We are excited to announce that Jake will be attending the University of Oregon this fall! After working hard to reach this significant milestone, we couldn’t be prouder of him. The University of Oregon, known for its beautiful campus and vibrant community, offers an excellent education and numerous opportunities for personal and academic growth. Jake is eager to explore new subjects, make lifelong friends, and fully embrace the college experience. Please join us in congratulating Jake on this exciting new chapter in his life! We can’t wait to see all the amazing things he will achieve at the University of Oregon! Go Ducks!