教育财政

Private WealthManagementwilliamblair.com Education Financing With college costs rising faster than inflation, planningfor education financing is more critical than ever. Introduction Introduction Among its many benefits, a college education can have a significant impact on futureearning potential. It is an important investment. It is also becoming a more expensiveone as increases in college costs continue to outpace inflation. Fortunately, if you want to help pay for your child’s or grandchild’s education expenses,numerous financing options are available. These options have various advantages anddisadvantages that you must carefully consider to determine the best strategy for yourparticular situation. To help you achieve all your financial goals, education planning needs to be integratedinto your overall financial plan. Education-financing goals must be weighed againstother goals, such as retirement. This paper will review:•Rising Education Costs •Savings Vehicles•Alternative Sources of Funding Rising Education Costs Rising Education CostsWhile the value of a college degree continues to have factors have put downward pressure on college costincreases, but there is no certainty this trend will continueover the long run. Looking back over the prior 40 years,there were much larger tuition increases. For example, inthe 30 years preceding this most recent 10 years, four-year private colleges saw annual increases of 2.72% aboveinflation, while four-year public colleges saw similarannual increases of 2.82% above inflation. a significant impact on potential future earnings, thepublished cost of this investment has historically increasedfaster than inflation. Over the past 10 years, publishedinflation adjusted (real) tuition, fees, and room and boardcosts of four-year private colleges had annual averageincreases of 0.22% above inflation to $60,920 per year,while four-year in-state public schools saw an annualaverage decrease of 0.28% at $25,850 per year. It is important to note that these figures are averagelisted costs and expenses vary widely between schools.Additionally, the increases in listed tuition, fees, androom and board are higher than the amount that moststudents actually pay when considering needs-basedgrants, scholarships, and tax benefits that students mayqualify for. Within the past five years there was a period of highinflation, as well as higher non-college starting wages.Starting in 2025 there has been a decline in internationalstudents, and domestic student applications are expectedto decline for a few years starting in Fall 2026 due to abirth rate dip during the Great Recession. All these recent Savings Vehicles are set by the sponsoring state and generally are quitehigh. You can contribute only cash, not securities. Youretain control of the investment account and name thebeneficiary. Additional restrictions and limits may apply,depending on the state. Savings VehiclesWhether you need to build up assets to finance your children’s or grandchildren’s education or you expectto be able to pay their education costs out-of-pocket, youmay benefit from using one or more savings vehicles.The earlier you begin, the greater the potential benefits. Valuable estate-planning benefits are also available with529 plans. 529 Plans A significant benefit of a 529 savings plan are theincome tax advantages. Contributions are not federallytax deductible, though may be in some states. However,plan assets grow tax-deferred and distributions usedfor qualified education expenses are not taxable. Thismeans that any growth in the plan is tax-free as long asdistributions are used to pay education expenses suchas tuition, fees, books, and room and board. Familiescan also use 529 plan funds for credentialing programslike skilled trades, vocational training, and professionalcertifications. Eligible expenses include tuition, exam fees,required materials, and continuing education expenses tomaintain certifications, expanding 529 coverage beyondtraditional college costs and supporting those who choosealternative educational paths. You can use up to five years of your gift tax annual exclusion(currently $19,000) to front-load the plan. That adds up toa $95,000 immediate contribution—$190,000 for a marriedcouple splitting the gift. The contribution is removed fromyour taxable estate (although there could be estate taxconsequences if you accelerate your annual exclusions anddie before five years have passed)—yet you still have controlover the 529 plan. You cannot make additional annualexclusion gifts to the beneficiary for five years. You are able to change the beneficiary to certain familymembers in the same generation, such as a sibling orfirst cousin of the beneficiary—or even to yourself if youare considering going back to school. This will allow youto avoid taxes and penalties if the initial beneficiary hasdecided not to pursue a higher education or does not useup all the plan funds on his or her qualified