5 Reasons to Start a 529 Plan

5-Reasons-to-Start-529

Saving for your child’s college education can be stressful, but it can also be one the best things you can do to help ensure he or she has a solid financial start in life. If you’re considering different savings options, check out these benefits of a 529 plan.

1. Plans are good nationwide.

Most states, including Iowa, and a number of institutions offer 529 plans, and the plans are not restrictive to the state you live in or where the student attends college. That means parents can take out a College Savings Iowa 529 Plan and the student can use the funds at any eligible school in the country and even some colleges or universities outside the United States.

2. Anyone can open a 529 plan account.

Parents, grandparents and even friends can open a 529 plan for a potential college student. You can even start a 529 plan for your own education.

Parents: Enter to win a $1,500 contribution to a 529 plan.

3. There are tax benefits.

While contributions are not deductible at the federal level, Iowa taxpayers may deduct some contributions from their adjusted gross income. When the plan owners deduct funds to pay eligible college costs, that money is not taxed. For the beneficiary, all earnings on the 529 plan grow tax free.

4. Plans are flexible.

You can choose to change the investment options up to twice per calendar year. Plan owners can make regular contributions, open an account with an initial deposit and never make another contribution, or make deposits whenever it’s convenient. You can even change the beneficiary if the person the account was opened for decides not to attend college.

5. You stay in control of the account.

When you open a 529 account for your child, or anyone else, you maintain control of the account and how the funds are spent. The money is not automatically transferred to the student to spend.

By: Iowa Student Loan

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Parent Budget Plan

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You’ve likely heard that college is expensive, but it can be difficult to pin down exactly what that means for your family and your student. How much do you need to save for college? How does that break down into a monthly amount?

Because every situation is different, you and your student should consider the following factors:

  1. How long before your student will enter college. As with most financial tools, the power of compound interest works in your favor over longer periods of time.
  1. The overall cost of college. Consider how much different types of college cost today, and plan for a yearly increase of about 2%. Also try to determine how long your child may be in school. It’s now quite common for students to have a fifth year of college, and graduate education can add to that.
  1. How much of your student’s costs you’ll cover. Are you planning to pay 100% of the college costs? Will your child be eligible for financial aid like grants, scholarships, work-study and federal student loans? Do you expect your student to earn and save money for college?
  1. Current savings. Financial aid formulas often take a percentage of all assets into account, but you may have plans to save some money for your own retirement, other children’s education expenses and other needs. Consider what part of your current savings you can dedicate to your student’s college costs.
  1. Rate of return. Interest rates vary by market conditions and by financial vehicle. Plan for a reasonable rate of return on your current savings and investments.

Once you have the above numbers, you can calculate your child’s total expected college cost as well as a monthly contribution to reach that goal by the time your student starts the first college class.

A calculator like the one at http://www.savingforcollege.com/college-savings-calculator/ can help. (You can input custom information to personalize your calculation after getting your initial result based on student’s age.)

Here are some example results from the SavingforCollege.com personalized results calculator.

EXAMPLE SITUATION
Current Age of Student 12 14 16
Years Until College 6 4 2
Current Annual College Cost (average for a public four-year institution) $22,826 $22,826 $22,826
Years in College 4 4 4
Percent of College Costs Paid 60% 60% 60%
Savings Goal Met by Beginning of College Beginning of College Beginning of College
Frequency of Contributions Monthly Monthly Monthly
Expected Annual College Cost Increase 2% 2% 2%
Annual Earnings of Savings 5% 5% 5%
RESULTS
Projected Total Cost of College $105,949 $101,835 $97,881
Monthly Savings Goals $541 $836 $1,718

By: Iowa Student Loan

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Parents: Register to Win a $1,500 College Savings Plan Deposit

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A college savings account is a great way to set your future college student up for success by helping them to possibly reduce debt later in life.

Iowa Student Loan’s Save Now, Save Later: College Savings Plan Parent Giveaway is a great way to give that savings account a boost.

Now through Oct. 30, you can register to win one of 30 deposits of $1,500 to a College Savings Iowa® account. All you need to do is complete the one-time registration process, including completion of the cosigner version of Student Loan Game Plan, an online educational tool.

Enter now to win a $1,500 deposit

“(The program) is a good way to show the impact of borrowing,” said Greg F., of Pocahontas, a 2015 award recipient. “Too many people don’t think about all of the interest that they have to pay. And saving is easy, even if you can only start small.”

Eligible registrants are:

  • an Iowa resident;
  • and a parent or legal guardian of a high school student in Iowa (grades 9, 10, 11 or 12).

Full details and the Official Rules for the 2016 program can be found at www.iowastudentloan.org/savenow.

Winners will be selected in November and notified soon after.snsl-fact-sheet

By: Iowa Student Loan

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Big Money Savers for College Students

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College expenses encompass more than tuition and room and board. Items like transportation, fees, books and supplies, and personal expenses are often rolled into the total cost of attendance, or COA. If you’re looking to reduce your overall cost, and the amount you need to borrow to pay for college, here are some large-ticket items to consider.

Each of the following strategies can save hundreds of dollars each semester.

Books and Supplies

The traditional advice of buying used textbooks instead of new still applies, but you also have other options. Consider the following example for the same textbook with a list price of $257.60.

Buy new paperback from university bookstore: $247.40
Buy used paperback from university bookstore: $185.55
Download electronic version: $143.09
Buy new paperback online: $50.00
Buy used paperback online $22.99
Rent paperback online: $17.99
Buy used loose-leaf version online: $1.76
Use library copy as needed: $0.00

As you weigh your text book options, keep these tips in mind.

  • Think about whether you are likely to want to use the book again after the class is over.
  • Talk to your professor and students who previously took the same class to see how much the text is used. Online reviews and college sites can help you make an informed decision about whether you even need a copy.
  • Ask your professor if an older edition of the same textbook would provide the information needed for the class.
  • Many textbooks now come with access codes or supplements that are not available or not guaranteed in certain formats. These may sometimes be purchased separately.
  • While college libraries generally stock copies of required textbooks, remember that availability may be limited during crucial times.
  • If you decide to rent books, pay careful attention to usage and return guidelines as you may be required to pay full price for books not returned on time.

Lower costs more by purchasing needed supplies in late summer and early fall when discount stores stock up for back-to-school. Compare this list of similar supplies. (Opting for generic items saves even more.)

Item University bookstore Big box retailer
2” ring binder $7.99 $3.14
5 one-subject wirebound notebooks $11.19 $0.85
300 3×5 Index cards $8.97 $1.24
4-pack dry erase markers $8.00 $4.49

Transportation

If you can possibly get by without a car on campus by using public transportation, catching rides home and biking or walking to class, you save in multiple ways.

  • Car insurance. Check with your insurance provider on resident student or occasional driver discounts for college students who don’t have a car on campus and attend college at least 100 miles from home. Discounts can vary but may be as high as 35%. Also consider whether you will be driving while at home over breaks and how that might affect your coverage.
  • Parking fees. The cost of a student parking permit can be well over $100 per year. Add to that the cost of any tickets for parking in unpermitted spaces or exceeding time limits, as well as the cost of metered parking.
  • Fuel and maintenance. Besides the cost of gas, which increases the more you drive, think about the cost of oil changes, tire repairs and other maintenance costs.

Health

Some college and universities charge students a fee for health or dental coverage while they attend school. Carefully review your billing statement or contact your financial services or cashier’s office to see if you’re paying for this insurance. Then, speak with your parents or guardians about any existing coverage to compare cost and benefits.

In addition, cut habits like smoking, vaping or drinking. These products are expensive to purchase and may result in additional costs for doctor visits, fines and more.

Classes

If you took advanced classes in high school or are otherwise academically prepared, check out the testing options. You may be able to test out of or transfer credit for required general education courses, saving you the cost of tuition for those classes.

Also work with your academic adviser to stay on track academically. Repeating classes or taking unnecessary ones costs you money for every credit hour.

In addition, streamlining your coursework can help you leave college earlier, allowing you to save on housing and other costs associated with attending school.

Daily Expenses

Avoiding or reducing daily expenses can also save you upwards of $100 per academic year.

By: Iowa Student Loan

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Crossing the Line: Improve Academic Standing for Financial Aid

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Good grades and test scores typically mean more scholarship opportunities. Did you also know that a small margin can sometimes push you over the line for eligibility, or even for higher awards? Here’s a look at how small improvements matter.

PSAT/NMSQT

The Preliminary SAT (PSAT) is also the National Merit Scholarship Qualifying Test (NMSQT). If you take the PSAT as a junior, you’re automatically screened for the National Merit Scholarship Program. The top scorers in each state receive special recognition.

  • About two-thirds receive Letters of Commendation and become eligible for special scholarships sponsored by corporations and businesses.
  • About one-third become Semifinalists, and most of those complete several steps to become Finalists. Finalists are eligible for:
    • Merit Scholarships from the National Merit Scholarship Corporation, corporations and colleges.
    • Special scholarships up to and beyond full tuition from certain colleges.

The difference between a Commended student’s score and a Semifinalist’s score could be a single point in a metric called the “Selection Index,” which is based on your PSAT scores.

How to Cross the Line
Preparation is key for the PSAT.

  • Take the PSAT 10 as a sophomore to become familiar with the test format and see where your strengths and weaknesses lie to better prepare yourself for the PSAT as a junior.
  • Use practice tests <link to https://collegereadiness.collegeboard.org/psat-nmsqt-psat-10/practice> to review the test concepts and learn which answers are considered correct or incorrect and why.
  • Be sure to practice in timed test-taking situations.

ACT and SAT

Most colleges require you to attain a specific minimum score on either the ACT or SAT before admittance. Once you have narrowed down your college choices, review their scholarships pages. Many academic scholarships are based either entirely or partly on those test scores, and one or two more points may push you into a category for a more substantial award.

How to Cross the Line
Many of the same techniques above for the PSAT apply when taking other standardized tests like the SAT and ACT. Keep these additional pointers in mind:

  • While the PSAT and SAT are both offered by College Board and have many similarities, the ACT comes from another provider and the format and content areas may be quite different. Use specific practice tests for the SAT or the ACT, depending on which test you plan to take.
  • Check to see if the colleges you’re applying to require or recommend that you take the optional essay portion.
  • You may retake either the SAT or ACT to try to improve your score.
    • Concentrate on preparing for the areas in which you want to improve, but continue to practice all parts of the test so your other section scores don’t fall.
    • Consider your options for sharing your scores with colleges. You may want to wait to see your new score before you submit it to a college, but an additional fee could be required.
    • If your score improves in some parts of the test, but you have a lower composite score because of lower scores in other sections, see whether your college will superscore, or consider your best score for each section of the test separately.

High School Grades

While you’re checking the test score requirements for scholarships, pay attention to the required high school GPA as well. Will bumping up your overall GPA a fraction of a point move you into another scholarship category and make you eligible for hundreds or thousands of additional dollars?

Increasing your GPA may also make you eligible for increased money from outside scholarship sponsors. When you search for scholarships, try a search with an additional 0.1 or 0.15 added to your actual GPA to see if you get more results. (Don’t lie on scholarship applications; improve your GPA before you apply.)

How to Cross the Line
Increasing your GPA may take some extra effort, but if it nets you additional cash for college, it’s worth the work.

  • Don’t wait. Take steps to improve a specific grade early in the semester or year. Later, you’ll have fewer opportunities to earn points, and a perfect final test can only offset so many earlier mistakes.
  • Take advantage of every extra credit opportunity.
  • Ask your teachers how you can improve your grade. Some may be willing to provide credit for an extra project or paper if you explain why you need the grade boost. (This is most effective if you’re an engaged student who generally completes all work on time, even if you don’t always get an A.)
  • Improve your study habits. See these tips for studying smarter.

By: Iowa Student Loan

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7 Problems with Overborrowing

7-Prob-w-Overborrowing

Borrowing more money than you need to for college or for non-education expenses can jeopardize your financial future and bring you stress and disappointment. Make smart decisions when it comes to borrowing for college to avoid future pitfalls. Keep these overborrowing problems in mind:

1. You have to pay interest too. Most students delay loan repayment until after college, meaning that interest builds up during school and increases the amount that must be paid back. If you use student loan money for unnecessary things, interest will accrue on that money too before you even start repayment.

2. Repayment can take longer. If your monthly payment is more than you can afford after college, you may have to look at alternative repayment plans. These plans may reduce your monthly payment but extend over more months, which will lead to you paying more interest over time.

3. Missed payments will have consequences. The more you borrow, the more you will have to pay back every month. If you are unable to pay your bills and miss payments, your credit history will be impacted negatively, which may lead to higher interest for future loans and credit of all types.

4. You may have to limit entertainment expenses. The more money you have to pay back on your student loans each month, the less you will have for entertainment. When you look back, will you think using student loan funds for one spring break was worth it when it seems like you can never afford to go out to dinner or a ballgame with friends?

5. You may need a second job. To pay your student loans after college, you may have to find a second part- or full-time job. A second job may help with your bills, but it can impact your personal life, the attention you pay to your primary job and your overall health.

6. You might delay buying a house or starting a family. Numerous reports show that adults with high levels of student loan debt put off traditional adult milestones, such as purchasing a home, getting married or starting a family due to economic distress.

7. You may be unable to save for your future. Saving for your future, especially your retirement years, will be essential once you start your career. But if you’re unable to contribute money to a 401(k) or other retirement fund because you are repaying student loans, you may miss out on a decade’s worth of saving and have to work longer than you would like during your lifetime.

By: Iowa Student Loan

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6 Ways to Help Your Student Save

6-Tips-to-Help-Your-Student-Save

If you’re not independently wealthy, chances are you’ll be relying on a variety of sources to help your child pay for college: scholarships, loans, your own savings and earnings, and your student’s savings and earnings. How can you help your student maximize savings so you don’t end up draining your retirement resources to help them out?

1. Understand how much your student will need.

Many free online calculators provide estimated college expenses for a variety of college types for the year your student will enter college. Try different scenarios to understand the range of expected college expense.

2. Foster an environment of saving.

What do you do with your paycheck? If you expect your child to save 50% of earnings in a savings account, set an example by building your own savings. The same goes for discount shopping, clipping coupons and so on.

3. Encourage your student to reduce expenses.

If your child tends to spend a large portion of earnings and gift money on clothes, for example, work with him or her to find ways to dress in the same manner for less. Think creatively—garage sales, thrift shops and discount store sales can provide a wealth of bargains.

4. Explore interest-bearing accounts with your child. 

Leverage savings by depositing the money in an interest-bearing account. Spend some time researching options and discussing the risks and advantages to different account types. Make an appointment with a specialist at your own financial institution and attend with your student so you both learn your options.

5. Know the options to reduce college costs.

If you realize you and your child will not be able to save enough for college by the time he or she will be ready to enroll, consider how to reduce the overall cost of college. Will your student be able to live at home? Attend a less-expensive school, at least for part of his or her education? Work while attending college? Apply for more scholarships and grants? Graduate early?

6. Set goals and monitor progress.

Use what you’ve learned about college costs and financial products to set goals. Then, periodically check that your student is working toward those goals. You may consider a matching contribution or other reward for progress.

By: Iowa Student Loan

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When, Where and How to Find a College Job

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If you plan to earn money by working in college, you’ll need to understand the first steps to finding a job. Here are the basics.

When to Look for a College Job

Now. If you plan or need to start working right away, start looking now. Use the tips below to start your search before you leave home or as soon as you’re moved in.

If you’re counting on work-study earnings as part of your financial aid, be aware that those jobs sometimes fill quickly, so the sooner you start, the better. See other work-study tips.

Or later. Some students prefer to wait until they have at least a few weeks of managing a new class schedule, a different type of homework load and the college environment before adding a job to the mix. In that case, you should start looking for suitable work a month or more before you hope to start.

 

Where to Look for a College Job

Today’s college students have multiple choices for the job search. As you search, remember that if you can tie your part-time job to your major or intended career, you’ll also be gaining experience future employers may value.

College career center. Most campuses offer job postings through their career services area. Often, these are also listed online so you can begin looking before classes start.

Departmental offices. If you’re interested in helping professors with administrative duties, tutoring other students, leading campus tours or becoming a resident assistant, you may approach specific offices directly.

Community and campus openings. Many college towns face an increased population of students, faculty, parents and sports fans during the academic year, and employers hire accordingly. Consider restaurants, sports facilities, retail outlets, gyms and even specialty openings like auto repair or photographer’s assistant if you’re qualified. You may also find that your skills as a babysitter or lawn worker in high demand from faculty and other residents.

Online searches. Find on- and off-campus jobs by searching for openings listed on the web.

 

How to Land a College Job

After looking at your options and considering how they mesh with your particular skills and goals, take steps to improve your chances of getting a job.

Apply early and often. You’re likely not the only student looking at a particular job. Get your application in early, and apply for a number of different positions. If you have specific parameters, like you must work on campus, you may need to increase the number of jobs you apply for to improve your chances.

Reach out to an individual. Personal referrals often help if you know someone who already works for the employer you would like to work for. Even if you don’t have a contact, researching and reaching out to a hiring manager can give you a leg up.

Be professional. Include a cover letter, a professional resume and references with your application if the position warrants it. (Your campus career center is a good resource for developing these items and determining their need.) Provide accurate contact information and be ready to respond to a phone call, text or email. If you meet with the employer, send a thank-you.

Prepare for interviews. You may need to schedule an interview around classes and other commitments. Make sure you put your best foot forward by preparing well.

Follow up. Don’t assume a lack of timely response is a “no.” Before you leave an interview, ask for a timeline and be prepared to call or email your interviewer for an update after that date. If an interview isn’t required, it still doesn’t hurt to call about progress on hiring for the position a few days after the application period closes.

By: Iowa Student Loan

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Back to School

BacktoCollege(TSI)

Graduating from college in May of 2006 was a bitter sweet day in my life. No more finals. No more moving in and moving out of college dorms. No more loading everything into my car and driving hours just to unload it later that day. College is awesome and stressful all at the same time.

Whether you are going to college for the first time or heading back to college for the fourth time it’s always good to have a plan for when you get there. Most students have a plan to get to college, unload, and find where their classes are. And maybe, more importantly, find the closest dining hall. But sadly, few college students have a financial plan for when they get to college. Consider these four topics when heading back to college:

1. Track your spending

It is easy to spend more than you make when you’re away from home. Remember when you spend more than you make you are borrowing someone else’s money to satisfy your needs and wants. 80% of Americans live paycheck to paycheck and this is not fun. Stick to a budget! My wife and I use www.mint.com. It’s free, fast, and has a pretty easy to use app.

2. Keep your personal info safe

So often it easier to leave your room unlocked when running from class, to lunch, and to intramural soccer. Identity theft is a big deal. It can take up to 7 years and 700 hours to repair your identity. Keep your personal info safe and your financial future secure.

3. Find ways to save money

A great way to save money is by spending less. Look into a more realistic meal plan. Borrow books for your classes and don’t pay full price for anything. Many times just asking for a discount will get you one. Look for reward programs at the places you shop often. Lastly, actually save! Start by putting 5% into a savings account and you will thank yourself when you graduate and need a reserve to begin life.

4. Be smart about what you borrow

Many college students get in trouble borrowing too much for school. A good rule of thumb is to not borrow more than you will make the first year in your career of choice. For example, if you plan to teach science and anticipate making $40,000 per year, do not borrow more than $40,000 total for college. Work part-time and as much as you can during the summer and you will thank yourself later. Student debt is crippling college graduates from pursuing their dreams and it’s because of student loan repayment ignorance. Plan for your payments and you will be ready and equipped. Check out Return on College Investment and see what your starting salary will look like.

By: TS Institute

This is Contributed Content. Any opinions, advice, statements, services, offers, or other information contained in Contributed Content are solely those of the respective author(s) or contributor(s) and do not necessarily state or reflect the opinion of Iowa Student Loan and/or this blog. See the “About” page for additional important information about Contributed Content.

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