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The Business Forum
“How Am I Going
to Afford My Child’s Education?”
Johnson listened to her husband Bart read about rising
college costs, her mood shifted from contentment to
anxiety about the future. “How are we going to afford to
send Emily to school?” Bart wondered aloud.
True, when it comes to
college planning and college cost projections, the
numbers have become a bit scary. In recent years, college costs
have been rising faster than the inflation rate, at
about 4% to 6% per year. At that rate, a four-year
degree for today’s newborn could top $100,000 at a
public college — and more than $250,000 at a
to start an investment plan now,” said Mary. With
11 years until Emily enters college, the family has time
to develop a solid investment plan.
They will begin by investing $100 a month in an
aggressive investment mix,
made up mostly of stock investments. When Emily is about 12, they’ll cut
down their stock investments and move a majority of
their money into more conservative bond and
money market accounts. When Emily turns 15, they
will shift everything
into bond and
money market products
to try to protect what
they have saved while earning a moderate return.
that probably will not be enough to meet their needs. So
Bart and Mary will investigate other options as well.
They could be in for a pleasant surprise. In addition to
the traditional financial aid resources, the following
options are now available —
Education Savings Account (formerly known as the
Education IRA), which allows qualified families to
invest up to $2,000 per year, per child under age
18. Earnings accumulate tax free as long as the
money is used for qualified education expenses.
The HOPE Credit,
which allows qualified individuals to take a tax
credit of up to $1,500 for education-related
expenses during the first two years of postsecondary
Learning Credit, which allows qualified individuals
to take a tax credit of up to $2,000 in education
(Note: Both the HOPE and Lifetime Learning
Credit cannot be taken in the same tax year. Neither
credit can be used in years when money is withdrawn
from a Coverdell Education Savings Account.)
Emily can take student loans, the interest on which is
now tax deductible.
like Bart and Mary, you find yourself wondering how you
will afford your children’s education, start by
investigating your options.
more information, consult the following organizations:
Brian M. Clay
is a Fellow of
The Business Forum Institute and the President of Clay, Malek &
Northam Wealth Management in Southern California; whose clients
include both companies and individuals. He has been recognized for
numerous honors and accomplishments including being named to the
Consumer Research Council of America's "Best Financial Planner"
list. Brian's professional registrations include the Series 6, 7,
24, 63, 66 held with LPL Financial, and CA Life & Health Insurance.
He also holds the Chartered Mutual Fund Counselor (CMFC) and
CERTIFIED FINANCIAL PLANNER™ (CFP®) designations. The CFP®
designation is considered by most to be the highest certification in
the industry. To be recognized as a CERTIFIED FINANCIAL PLANNER™,
individuals must meet rigorous experience and ethical requirements,
complete financial planning coursework, and pass a certification
examination covering the financial planning process, risk
management, investments, tax planning and management, retirement and
employee benefits, and estate planning. They must also meet ongoing
continuing education requirements and uphold the CFP® Board Code of
Ethics and Professional Responsibility. Brian is an LPL Registered
Principal. Securities and Financial Planning Services offered
through LPL Financial, A Registered Investment Advisor – Member
FINRA/SIPC. For a list of states in which he is licensed to do
business, please visit
Brian holds a Bachelors degree in Economics from the University of
California, Los Angeles (UCLA).
Brian's Web Site
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