Frequently Asked Questions

College costs are increasing at a rate of about 7% per year. Student loans are becoming so common. And some people think they can just default on them with bankruptcy. But you can't dump a student loan. Nope, the government will even garnish disability and social security checks to get your payment.

Recently a woman's case against the government went to the supreme court to prevent the government from garnishing her disability check for her student loan payment. She argued that she could not even afford her medicine if they garnished her check. The supreme court said, "sorry, but you shouldn't have taken the loan."

Brutal!

I don't care if you have to attend the local community college, junior college or whatever, stay away from those loans. Even if it takes you 5 years to graduate instead of 4 years because you had to work a lot of hours on your job, it would still be better than having all those loans.

And finally, please don't go into $60,000 of debt for college, so you can graduate with a degree that will allow you to earn $25,000/year. Now how long will it be before you can payoff that loan?

529 plans give you a good way to contribute for your grandkids. Explore the Coverdell ESA first (also known as the Education IRA) then save in the 529 plans.

The Coverdell ESA allows you to save $2,000 per year per child of after-tax dollars with all growth being tax-free if used for education purposes. The big advantage of the Coverdell is that you can invest it in anything you want. You can build your own portfolio of mutual funds for example.

The 529 plans limit you to the state's selected funds. You can invest in funds from other states, but you would lose the state tax deduction, if any.

College costs are increasing at a rate of about 7% per year. So make sure you calculate how much you might need by high school graduation.

My wife and I are saving for our two children such that they can attend one of the major four-year public universities without borrowing. If they choose to go out of state or if they choose to go to a private school, they will have to pay for anything over the amount the state school would have cost. On the other hand, if they earn scholarships, the equivalent amount of the scholarships will be given to them by us as cash.

The Numbers:

Approximately $130,000–$150,000 for four years of college, including tuition, fees, dorm, meals and books.

$2,000 per year (deposited $166.67/mo) in a Coverdell ESA growing in good mutual funds at 10% per year, would give you $53,000 for your 5 year old assuming he/she started college at 18 and it would give you just over $100,000 for your newborn.

Can we just stop and look at the importance of starting this now? 5 years earlier of contributions, nearly doubles the balance.

If you haven't started, now is the time. My wife gets sick of hearing me say this, but it's one of my favorite quotes: "The best time to have planted the oak tree was 30 years ago. The next best time is today."

We have our prep book Chad Cargill's ACT which is used individually and in classroom settings.

Studies have shown that students raise their composite ACT score an average of 2.4 points after completing the course. Students with below a 20 in reading raise an average of 5.9 points in reading alone.

The books are $30 each.

Use every resource you can find. Try the following:

• Counseling office
• Parent's work
• Companies
• Foundations
• The internet

Some free websites that may help are www.fastweb.com and bigfuture.collegeboard.org.

I do not schedule workshops on Wednesday evenings.