Posts tagged College
It’s almost graduation time—or possibly the time you’re starting your college search. Given the skyrocketing costs of a four-year college education, some parents and students are wondering if a higher education is really worth the investment. According to employers, it is. Although what one decides to study seems to be less important to businesses than what he or she can bring to the table.
The Association of American Colleges & Universities recently conducted a study that highlighted the five attributes that employers look for in newly minted graduates:*
Possesses innovation. This is a bit tricky as sometimes “innovation” is more of a buzzword than it is a skill. However, 95% of employers say they give hiring preferences to college graduates with capabilities that enable them to contribute to innovation in the workplace. It’s up to the job candidate to figure out how to add innovation to a project, department, or company. Researching online and conducting informational interviews can provide insight into what innovation means to a specific organization.
Has critical thinking, communication, and problem solving skills. It doesn’t really matter if a student majored in French or literature, or excelled in math or science. According to the study, 93% of employers said that a demonstrated capacity to think critically, communicate clearly, and solve complex problems is more important than a job candidate’s undergraduate major.
Has a broad learning background. Also, regardless of major, 80% of employers think that broad knowledge in the liberal arts and sciences is essential. To employers, this shows the broad-based perspective and integrative thinking skills they are seeking for a variety of positions.
Has an e-portfolio. In the study, 83% of employers said an electronic portfolio goes a long way in exhibiting a job candidate’s talents. Post papers, a senior project, a portfolio, blog or videos—whatever is relevant to the desired position to indicate a student’s skill and proficiency.
Has real-life experience. Work study, internships, and community service all showcase an ability to add value, prioritize commitments, and work within a team. Classroom learning is beneficial, however, it can be passive and 86% of employers agree that active hands-on learning gives students an opportunity to apply critical thinking, develop team skills and ethical judgment, and further hone their education.
Whether a student decides on pursuing a higher education or not, the bottom line is that it’s more important to focus on knowledge and skills than a specific field of study. Employers want students who can be flexible and adapt quickly to changing demands. The ability to think creatively, solve complex problems, communicate clearly, manage multiple priorities, and work as a team will help students to thrive in a 21st century environment and be successful in their life and careers.
There’s good news in the mail: Johnnie or Susie just got accepted into a top college. Naturally, you’re proud of your child. But now comes the hard part—figuring out how to pay for four years of education at an elite school.
Tuition costs at private institutions, in particular, can seem staggering. Still, there are ways to send your son or daughter to a great college without bankrupting your financial future. Start with these five steps:
1. Compare and contrast financial aid offers.
There’s no standard format for the wording of award offers, so carefully review the information in each one your child receives. Typically, the offers will list financial aid from several sources, including school scholarships, work-study programs, and federal loans, and also will note your “expected family contribution,” calculated from the information you provide on the Free Application for Federal Student Aid (FAFSA). But some schools provide more information than others, so try to compare apples to apples.
2. Do the math.
Once you determine how much aid each school will provide, figure out your how much you will have to provide. Incorporate the amounts you expect your child will be able to cover—perhaps for such things as books, meals, and entertainment—into your calculations. That will give you a better handle on what you’re really facing.
3. Expand the hunt for financial aid.
Don’t give up just because your child isn’t a star athlete or a computer genius. You can find scholarships to fit a wide range of niches and groups on websites such as Fastweb.com, SchoolSoup.com, and SallieMae.com. In addition, students may qualify for state aid. Also, many corporations offer scholarships to children of employees. And remember to reach out to civic, religious, and ethnic groups within your community.
4. Consider a payment plan.
Frequently, colleges provide tuition payment plans that charge little or no interest. You may have to pay just a small up-front fee. Contact the school for the necessary arrangements.
5. Explore loan options.
If your family must borrow money, start with federal loans, which typically have the lowest interest rates. Currently, a subsidized federal Stafford Loan offers a fixed interest rate of 3.4%, while the federal PLUS loan features a 7.9% rate and Perkins loans have a fixed interest rate of 5%. Apply for these when you fill out the FAFSA. As a last resort, you might turn to private loans, but be aware that the interest rates on those tend to be higher.
This is just a quick lesson on navigating the financial aid waters. The schools your son or daughter is considering also may be able to provide ideas for reducing the financial burden on your family.
A Section 529 college savings plan can be a tax-smart way to help your children pay for their higher education. But you should also be aware of several potential pitfalls of this planning device. Here’s a brief rundown on the main pros and cons.
The account can make money.
A Section 529 plan works much like a mutual fund, with account assets typically invested in equities by professional money managers. They do the hard work while you sit back and watch the account grow.
Count on the tax benefits.
Contributions to the plan are gift-tax-free, the earnings within the plan are income-tax-free and any distributions that are used for qualified education expenses are also income-tax-free. That’s a hard combination to beat.
Funds may be invested automatically.
Frequently, a plan will let you have funds automatically withdrawn from your checking or savings account. Not only is this convenient, it also takes some of the guesswork out of saving for college.
Contribution limits are generous.
State law effectively controls the amount you can sock away in a Section 529 plan, but the limits are favorable. In some states, you can contribute as much as $200,000 to your child’s account, which should be sufficient to cover tuition for four years at most schools.
Account assets are portable.
Although 529 plans are sponsored by individual states, the money can be used to pay for college wherever your child attends. Also, if funds are left over when your son or daughter completes school, you can use the excess to pay college expenses for another child. You don’t have to close the account until the youngest child reaches age 30.
Funds must be used to pay qualified expenses.
If you make a withdrawal and use the cash for any other reason—say, to pay emergency medical expenses—the distribution attributable to earnings is taxed on both federal and state levels, and you’ll owe a 10% penalty. You’ll also be taxed on any leftover amount you receive after closing the account.
The investments are out of your hands.
This is the flip side of having professional money management. If you’re a savvy investor, you may prefer to have greater control over the funds. Should you be inclined to use a different investment option outside of a 529 you’ve established, you’ll be taxed and penalized if you withdraw funds and invest them elsewhere.
It might affect financial aid eligibility.
The impact of a Section 529 plan is usually negligible if held by a parent. Nevertheless, it must be factored into the equation to determine the “expected family contribution” (EFC) for college costs.
For most families, Section 529 plans are a good deal, but they’re not for everyone. We can provide the necessary guidance.