College Funding Solutions

While there are numerous ways to fund a college education, here are several of the most popular:

Mutual Funds

Mutual funds pool the funds of many investors to pursue common investment goals like aggressive growth, conservative growth, income, or combined growth and income. They allow you to invest relatively small amounts (typically $1,000 for the first investment and as little as $50 for subsequent investments). Mutual funds offer the benefit of professional management and diversification among a variety of stocks and/or bonds. Today there are more than 7,000 mutual funds to choose from.

If your child is young, aggressive growth funds might be your best choice. Historically, the stocks of small companies have outperformed all other asset classes. (Of course, past performance doesn't guarantee future success.) The more time you have before you need the money, the better aggressive growth is likely to work for you.

Mutual funds are offered by prospectus only. The prospectus provides complete information, including charges and expenses. Before investing in any mutual fund, read its prospectus carefully.

For information on how to choose mutual funds to fund your child's or grandchild's college education, contact us.

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Zero-Coupon Treasury Bonds

Zero-coupon bonds work like U.S. Savings Bonds: you buy them at a deep discount and receive the face value at maturity. Most zero-coupon Treasury bonds (often called "zeros") are available with a minimum $1,000 face value. They are backed by the full faith and credit of the United States and are exempt from state and local income tax. At current rates, a $10,000 investment can grow to approximately $20,000 in twelve years.

Prices and yields are subject to availability. Zero-coupon Treasury bonds sold prior to maturity may be worth more or less than their original cost, and their prices vary more with interest-rate movements than with other bonds of similar maturity. Interest income is subject to Federal ordinary-income tax each year, although the investor does not receive it until maturity.

For more information on how zero-coupon bonds can help you fund your child's or grandchild's education, contact us.

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College Financial Aid

FinAid, The Financial Aid Information Page

FinAid offers a wide range of resources. It's well worth a visit on the strength of one of these alone: FastWEB (Financial Aid Search Through the WEB), a database that uses an online questionnaire to match your needs to more than 180,000 private-sector sources of aid. FinAid is maintained by Mark Kantrowitz, author of The Prentice-Hall Guide to Scholarships and Fellowships for Math and Science Students, and is sponsored by the National Association of Student Financial Aid Administrators.

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CollegeNet

CollegeNet is designed mainly to help users search databases for appropriate colleges, but it also offers a financial-aid link to a variety of resources. Information sources found through the links include the Department of Education, the Federal Trade Commission (for avoiding financial-aid scams), and banks offering student loans.

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Custodial Accounts (UTMA)

Custodial Accounts, under the Uniform Transfers to Minors Act (UTMA), provide a way to save for college that is tax cost effective. You can transfer up to $10,000 a year to your child or grandchild without incurring gift taxes. The Custodian guides account while child is a minor until they reach the age of majority of 18 or 21, depending on your state's regulations (age 21 in New York State). Funds are clearly set-aside for the child. There are no costly legal fees or reporting requirements. Investment income typically is taxed at child's lower tax rate.

For more information on Custodial Accounts and how they can help you fund your child's or grandchild's education, contact us.

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Educational IRA
*please keep in mind that this information will be changing in 2002 due to the new tax laws.

You or your child may establish Education IRAs to help finance the cost of paying for qualified education expenses such as tuition, room and board, books and supplies. An Education IRA offers tax-free accumulation and tax/penalty-free withdrawals for qualified education expenses. Funds are clearly set aside for the child/student and anyone can contribute - parents, grandparents, other relatives, friends or the child him/herself. A maximum of $500 can be contributed per child in the year 2001, $2000 per beneficiary after 2001.

For more information regarding Education IRAs and how they can help you fund your child's or grandchild's education, contact us.

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529 College Savings Plan
*please keep in mind that this information will be changing in 2002 due to the new tax laws.

Have you heard about the 529 College Savings Plans? First authorized by Congress in 1996, qualified state tuition programs, or 529 college savings plans, allow states to offer investors professionally managed, tax-advantaged portfolios to help meet rising college expenses. Proceeds may be used at any accredited post-secondary school in the Untied States for part or full time education. Contributions may be state tax deductible; earnings accumulate tax-free; and qualified distributions may be tax-free after 2001.

For more information on the 529 College Savings Plan and how it can help you fund your child's or grandchild's education, contact us.

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