Colleges That Don’t Make Students Take Out Loans

Are student loans a thing of the past?

Each year, more and more studentsCollegeLoans_062816 are graduating from college with thousands of dollars in student debt that they’re responsible for paying back. A 2014 study by The Institute for College Access & Success (TICAS) found that nearly 69 percent of students graduate with an average student loan debt of $28,950.

However, according to Edvisors, a college finance website, more than 70 schools have adopted “no-loan” policies, where grants replace loans within their financial aid packages. Additionally, other colleges have eliminated loans for those students who are eligible for financial aid. At these schools, the number of students who borrow is much smaller, and college graduates have loan balances that are much lower than the national average of nearly 70 percent (according to TICAS).

While these policies don’t necessarily eliminate loans in their entirety, the financial aid package is based on the school’s estimate of what the family can afford to pay. If a family chooses not to pay the full amount, the student must borrow money to make up the difference. Also, some students borrow to cover costs that aren’t included in their financial aid packages, such as health insurance or laptop computers.

Schools that don’t make students take out loans typically have a smaller number of students who borrow, and the college graduates who do take out loans have balances much smaller than the national average.

According to Kiplinger in May of 2015, these five schools are among the best when you want to graduate with minimal student loans:

Yale University
Students who are eligible for financial aid—families with incomes of as much as $200,000—can utilize Yale’s no-loan program. According to Kiplinger, the total annual cost to attend Yale is $60,850 and the average need-based aid is $44,268. However, the percentage of students with loans is 16 percent.

Vanderbilt University
In 2009, Vanderbilt decided to take on a no-loan policy. All students who are eligible for financial aid are able to use the policy. Almost half of students at the university receive need-based aid, and 87 percent of students take four years to graduate, which minimizes costs. The total annual cost is $60,294, and the average need-based aid is $39,373. The percentage of students with loans is 22 percent.

Davidson College
This liberal arts college provides 100 percent financial aid through grants and campus jobs to the 46 percent of students who receive need-based aid. The average need-based aid is $33,717, and the total yearly cost is $59,146. The percentage of students with loans is 22 percent.

Princeton University
As the first school to employ a no-loan policy back in 2001, Princeton has an average student debt that is very low compared with that of other colleges. The total annual cost to attend Princeton is $59,165, with the average need-based aid reaching $37,183. The percentage of students with loans is 24 percent.

Offering need-based financial aid to over 60 percent of attendees, Harvard also meets all of those students’ demonstrated financial need, all without loans. Families who make between $65,000 and $150,000 annually are generally expected to give a maximum of 10 percent of their income. The average need-based aid is $41,975, and the total yearly cost is $59,607. The percentage of students with loans is 26 percent.

Digging yourself into debt while going to college isn’t necessary. Contact us today to find out what the best steps are for your individual situation.

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New Purchasing Rules for 529 Plans

Purchasing computers and computer-related equipment with your 529 plan

Aside from tuition, books and housing, New529Rules_062116a computer can be one of the biggest expenses when starting college. Many students find that their new college lifestyle and coursework necessitate the purchase of a new computer.

In 2009 and 2010, funds from 529 plans could be used to pay for computers, which was a big help to students and their families. After that, however, computer purchases were allowed only if the educational institution specifically required the computer for attendance.

Fortunately, a new law passed at the end of 2015 reinstated the permission to use 529 funds for computers, whether or not they are explicitly required by the school. Although the legislation extended retroactively for all of 2015, that does not mean you can withdraw funds to pay for a computer purchased in 2015 now that it’s 2016.

“Most tax advisers tell their clients: ‘Make sure your expenses and distributions occur in the same year,’” states Jamie Canup, partner and chair of the Hirschler Fleischer tax practice in Richmond, Virginia, who was interviewed by U.S. News & World Report.

“The rules aren’t clear once you cross the calendar year,” states Deborah Ziff for U.S. News & World Report. “…but Canup says he wouldn’t risk trying to do it now that it’s 2016.”

If you missed out on getting tax benefits for a computer purchased last year, there are plenty of other advantages to the new legislation, and it is permanent for future years. Plus, the definition of a computer includes tablets, such as the iPad. Funds can also be used to purchase peripheral equipment, which includes a printer and scanner. Educational software is also eligible, but computer games are not.

“Peripheral equipment is defined as auxiliary machines designed to be placed under control of the central processing unit of the computer,” according to Ziff. “Exceptions include typewriters, calculators, adding and accounting machines, and copiers.”

In order to cash in on these new benefits, you must keep in mind some additional rules. First of all, the student must be the primary user of the computer and any peripheral equipment.

Furthermore, in addition to being the primary user, the student must be enrolled in an eligible educational institution. Another technicality to consider is that your internet access may be part of a bundle with other noneducational services, such as cable. If this is the case, it is best to speak to a tax professional to determine how to handle the bill.

“The legislation does two other things regarding 529 plans: It allows account owners who take a withdrawal but then get a refund from the school — for instance, because their child gets sick and has to drop out for the semester — to redeposit that money in the 529 plan within 60 days with no penalties,” states Ziff. “It also changes reporting standards that apply to account holders with more than one plan per beneficiary.”

Previously, 529 account administrators aggregated all accounts that had the same holder and beneficiary. New rules state that each 529 plan needs to keep its own discrete ratio of earnings and contributions. This is a good thing, because it allows account holders to decide exactly where they want to withdraw funds from.

“This matters because only earnings are subject to taxes and penalties for withdrawals that don’t qualify as educational expenses,” reports Ziff.

Although it isn’t necessary to give any special documentation to the administrator of your plan when you make a withdrawal, you do need to maintain and save records of your expenses and purchases, including the date and price of each. This information needs to be saved in your tax records.

“If the withdrawals were for eligible expenses, you don’t need to do anything when you file your taxes — just keep the 1099-Q form and your receipts in your tax records,” according to Lankford. “The 1099-Q will specify which portion of the withdrawal is considered principal and which is earnings.”

So, if you already have a 529 plan, keep this information in mind to get the most bang for your buck, and if you are looking for a new plan, make sure to talk to your financial adviser to find the best one.

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What to Know About “Spear Phishing”

The latest scam thrives on familiarity

Most of us are aware of the term SpearPhishing_061416“phishing” — a con game in which scammers use spam, malicious websites, and online messages to trick people into divulging sensitive financial or personal information.

Now there is a new twist on the old game, called “spear phishing,” and it is vital that everyone become aware of this increasingly popular tactic for scam artists.

Rather than casting a large net and hoping someone bites, spear phishing utilizes personalization, pinpointing you as the specific target.

“The emails are ostensibly sent from organizations or individuals the potential victims would normally get emails from, making them even more deceptive,” the FBI website states. Since you are familiar with the sender, you may be less vigilant and more apt to act without thinking.

How it works: Using your web presence against you
An angler looking to spear-phish will troll social networking sites, blog pages and utilize any piece of information you put out there to his or her advantage. The scammer can easily get your email address, gain access to your friends list, gather insight on places you frequent, find out about any recent purchases you may have made and much more. Then the crook will correspond with you, using that information as a means to request sensitive information in a seemingly legitimate manner. They will get you to click on a (fraudulent) link or respond to the correspondence and provide account information, PIN codes, username and/or passwords, etc.

How to avoid getting caught up in a scam
The most important takeaway from a spear-phishing scare — being smart online — applies not only to a potential stolen identity. How much and what specific information you put out in the online realm makes you susceptible not only to Internet fraud but also to real-life criminals.

Do you consistently “check in” at a certain place and time? That’s prime information for a burglar, especially if you just posted a picture of your awesome new flat-screen TV, for example. Just be careful about the information you divulge that you think is harmless but that could be pieced together to harm you.

  • Here are a few other tips you should consider to protect yourself from spear-phishers:
    Vary your passwords – Make every password you use different from the last, and change your passwords often, advises the website for Norton by Symantec, a popular and reputable online security provider. Internet security software and aspects of your operating system can help you keep track of your various passwords.
  • Keep your security software up to date – A simple click of the mouse when an update bubble appears could save you from a cyberattack. When you get update notices, don’t ignore them.
  • Don’t be hasty – Double-check with any source that requests personal information from you. Call or email (in an entirely new thread) to verify its validity. And keep in mind that most companies, financial institutions, etc., will not request personal information via email.
  • Do it yourself – Similar to starting a new email thread, when you want to check out a link provided in an email, always enter the URL manually rather than following the link provided. Also, if you want to call the alleged source organization, don’t use the number provided in the email — always look up the number yourself to ensure it isn’t fraudulent as well.

The FBI, the U.S. Secret Service and local law enforcement are working diligently to remove threats from these criminals. But ensuring you are aware of the issue of spear-phishing and prepared to avoid it is a great start.

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Saving Versus Investing Over Time

Does one take precedence over the other?

It’s the age-old questionSaveVsInvest_Featured to which everyone wants an answer: Is saving over time or investing your money more likely to make you the big bucks?

While both strategically saving and investing will make you money, investing is more likely to up your financial game over the long term, and is best for helping you reach those faraway goals, such as saving for a wedding or a child’s college education. Savings accounts work better for goals in the near future, such as going on vacation or making a large purchase.

While investing over the long term certainly has its advantages, it can pose many more risks than saving accounts do. With funds ensured by the federal government, money up to $250,000 would be restored if anything happened to your financial institution with a savings account. In addition, savings are ready at hand in the event you need money quickly — a possibility investing doesn’t always provide.

Investing, however, offers the potential for major profit and a higher return than a regular savings account. Over time, your investment may appreciate, which will increase your net worth. So if you sell what you invested in for a higher price, you make a profit. With a savings account, you can earn interest, but that’s generally much less than an investment profit.

Of course, when you invest money, you risk losing some or all of it. The key with investing is focusing on the things in your control.

“The only thing that you can control is the amount of capital you invest. Even during periods of low market returns, the frequent addition of investment capital can have a lasting effect,” says Director of Investor Education Bob Stammers of the CFA Institute. “Consistently adding capital to your portfolio, [when combined with] the long-term returns earned on that capital, is an excellent way to steadily move toward your overall financial goals.”

Even if you’re investing your money, it’s still important to be good at saving as well.

“An average saver will do better than a great investor who doesn’t save,” says CFP Professional and Principal David A. Schneider at Schneider Wealth Strategies in New York City.

In addition, whether you save or invest, it’s best to start sooner rather than later.

“The sooner you start saving and investing, the easier it is on your budget,” says President Carrie Schwab-Pomerantz of the Charles Schwab Foundation. “The sooner you start, the less you have to save because you have time on your side.”

“Every $1,000 saved in your mid-20s grows to over $10,000 at retirement, assuming 6 percent growth every year. But waiting until your mid-30s means that same $1,000 will only grow to $6,000,” explains Chartered Financial Analyst and CEO Shane Leonard of Stockflare. Think of it this way: Investing a mere dollar at age 25 could be more than five times as valuable as doing so at age 45.

Stop by to see what kind of investment and saving options we have for you today.

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