RUSHVILLE —
It’s not so easy being a college kid these days. The job market for recent graduates has been shaky while, at the same time, students are leaving school with more debt than ever before. If you have children who will someday be attending college, should you be worried?
You might indeed have cause for concern. Americans now owe more on student loans than on credit cards, according to the Federal Bank of New York, the U.S. Department of Education and other sources. For the college class of 2011, the most recent year for which figures are available, the average student loan debt was about $26,500, according to the Institute for College Access and Success’s Project on Student Debt.
This type of debt load, coupled with the struggles to find a well-paying job commensurate with their education, is causing many recent graduates to get off on the wrong foot in terms of developing savings and investment strategies that could help them throughout their lives.
So, what can you do?
If you want to help your kids pay for college, you may want to consider a 529 plan. When you invest in a 529 plan, all withdrawals will be free from federal income taxes, as long as the money is used for qualified college expenses. (However, non-qualified withdrawals may be subject to ordinary income tax plus a 10% penalty on the earnings portion.) Contribution limits are high, and, contributions may be eligible for a tax deduction or credit for residents in certain states.
A 529 plan, while valuable, is not the only college savings vehicle available. You may also want to consider a Coverdell Education Savings Account, which, like a 529 plan, can generate tax-free earnings if the money is used for higher education expenses. However, a Coverdell account’s contribution limits are much lower than those of a 529 plan. You could also establish a custodial account, known as an UGMA or UTMA, which offers some tax benefits and no contribution limits.
Nonetheless, while these vehicles may help you save and invest for college, they may also divert resources that you might have used for other financial goals such as a comfortable retirement. Of course, it’s not an “either-or” situation; there’s nothing stopping you from contributing to a 529 plan, Coverdell account or custodial account along with your 401(k) and IRA.
Clearly, though, it will take discipline and perseverance on your part to save and invest for both your children’s education and your own retirement. Like everyone else, you don’t have unlimited resources. But you do have another ally - time. The earlier you begin investing for education and retirement, the greater your chances of achieving your goals in these areas. And by understanding how your goals interact, you can work to make sure you don’t inadvertently derail one when saving for another.
Avoiding the student loan “debt trap” while still making progress toward your retirement savings will require creative thinking - and both you and your children may have to make some sacrifices along the way. But the ultimate goals, a college degree that isn’t one big IOU and a comfortable retirement, are worth the effort.
Business
Help your children avoid student debt burden
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Dream Home contest winner
Pictured (left to right) are Michael Davis, BMO Harris Bank, winner Scott Adkins, Katie Adkins, their children, Debbie O’Neal-Leisure branch manager BMO Harris, Hubert the BMO Harris mascot, Laura Simmonds, Christine Lykins and Steve Eichler of BMO Harris.
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Wells Fargo makes lead gift to RMH Pediatrics
On behalf of Wells Fargo Bank, Bruce Everhart, Marissa Taylor, and Theresa Alexander recently presented $5,000.00 towards the Rush Memorial Hospital Foundation Kedo’s Kids Campaign to Rush Memorial Hospital President and CEO Brad Smith and RMH Foundation Executive Director Faith Mock.
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Local American Family Insurance agent Kevin L. Snyder recognized
Kevin L. Snyder, an American Family Insurance agent in Rushville has been recognized for providing outstanding customer experience under the American Star Excellence in Customer Experience Certification. Snyder joins other American Family agents who have demonstrated the highest level of commitment to outstanding customer service.
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Fussner to attend Chamber Institute
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Should you take a pension buyout?
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Full Service Day at Admiral
Admiral Service Station will take you back to the days when your gas was pumped and windshields cleaned for a Relay for Life fundraiser from 10 a.m. to 4 p.m. May 25 at Admiral Service Station, South Main St., Rushville.
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Trane celebrates a 100-year legacy
Trane, a leading global provider of indoor comfort solutions and services and a brand of Ingersoll Rand, is celebrating its centennial anniversary of delivering performance, innovation, commitment and knowledge to its communities.
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Broadband Networks Wireless Internet announced as new brand name for Omnicity
Broadband Networks has announced Broadband Networks Wireless Internet as the new brand name for the company formerly known as Omnicity, Incorporated. Broadband Networks purchased the Rushville-based, wireless broadband Internet service provider in December 2012.
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Job Fair to be held in Greensburg
A major Job Fair will be held in Greensburg Thursday, April 25, 2013. This event will take place from 11 a.m. until 7 p.m. at the Greensburg City Hall Auditorium, 314 West Washington Street.
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