As with everything else, the cost of college education is rapidly rising. This is a multi-factorial problem. The onus of responsibility of this rising cost is not just on the colleges and universities themselves.
I am going to say something here, that may offend some, but it needs to be said. If college age kids would focus first on college, and partying second, and parents would stop funding this, the cost of college would go down. You see, colleges and universities see your children as an open checkbook, YOURS!
It is all too easy for your child to change their major seventeen times, change colleges twelve times, take three super senior years, and end up with a Gen Ed degree. Unless your child is Thomas Callahan, III from Tommy Boy, this is not going to work for most families.
Children need to have a sense of responsibility, once again. They need to have a sense of commitment. This is where I have developed the Asher College Savings Plan. It is tax-deductible during your investment period, much like a 529 plan, only there are a few different nuances.
In the Asher College Savings Plan, one starts with a Whole Life Insurance Policy from the time the child is born. It accrues value until the day they die. Do this much as you would for a 529 college savings plan.
When the child is ready for college, you, as the parents, need to be active in the admissions process. Help your child choose their school. Also, help them choose a mutually agreed upon major. Their should be one person in the world that knows your child better than anyone else, and that is YOU! You have known them their whole life! Help them find their way without spending extra time in college. Time is money, and college time is getting even more expensive every single day.
There needs to be parameters on this plan. These can be up to you. I suggest that parents meet with children at midterm and at semester end for a “check up” and to see how things are going. Make sure that you set a budget, and stick to it! Also, if the child’s grades fall below a set level over too long, then they are off your version of the Asher College Savings Plan.
Here is the BIG difference between the traditional college students that I went to school with and what I would suggest for people to do from here on out. Don’t be an open checkbook. Make your children take out student loans for their education. What?!? That is ludicrous! WRONG!!! It builds their credit. If they are keeping their grades up and all is well, pay their interest being accrued on the loans during school off while in school.
This will be the biggest help to them in the event that they don’t finish school for some unknown reason. It will be the biggest help to you, as well, when you go to pay it off in full at the end.
So, what is the advantage of this plan? The main advantage is that the child knows if they don’t keep their grades up, get finished on time, and whatever other guidelines you put in place, the cost is on them, COMPLETELY.
Another advantage is that it prevents colleges and universities from seeing you as an open checkbook. This is what is driving the cost of college up more and more every day.
The main advantage to you is when your child goes to college, your money that you have invested is still making money while you are using low-interest to no interest money for your child to go to school with student loans.
Another advantage to this plan is, what if your child doesn’t decide to go to college? WHAT?!? Yes, what if they decide to go to trade school or start their own business? Some of these things you cannot withdraw from a 529 plan for. Well, you can withdraw from a Whole Life plan for these types of life events.
Also, what happens if for some reason, you happen to have the loss of a child? Most 529 plans you would have to transfer these monies to the estate or to another qualified individual.
There are places for both 529 and Whole Life plans, I just believe that a Whole Life policy gives you much more flexibility for planning for future events such as college. And, if it’s not college that your little guy or gal decides to do, it can be borrowed against for a home, family, or business start-up too, with amazing tax advantage.
As always, feel free to contact us with any questions you may have. We are here for you!
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