Financial Planners and Agents

College Funding

 

What's The Best Way to Pay For College?

    If you said "Full scholarship including room, board, tuition, books, and fees", then you are exactly right.  Okay, so we should have re-phrased the question:  "What's the second-best way?"

    If you are a parent or grandparent, by now you have probably been bombarded with infomation about college funding plans.  Among the most famous are the so-called "529 Plans", sponsored by state governments. 

    Unfortunately, §529 Plans have their drawbacks:
  1. Lower Growth Rates-- 529 Plans' growth rates typically range at the upper end of Certificate of Deposit rates.  Because of this, they may not be able to keep up with inflation in the cost of college.
  2. Not self-completing-- What if the parent, grandparent, or other payor dies prematurely, before the fund is completed?  529 Plans offer no means of self-completion, so your child or grandchild may not be able to complete his or her schooling.
  3. Restrictions on Use-- What you can use the money for, and who you can use the money for are severely restricted.  Usually, depending on the state, you can use the funds for college for your child or grandchild, and limited categories of relatives.  If you use the money for impermissible purposes, you are penalized.

AOA's College Funding Plans, by contrast, have many strengths:

  1. Better growth rates-- many of our plans have historical look-back rates in excess of 6%.  Although past performance is no guarantee of future performance, it gives us a much better historical starting point.
  2. Tax-free growth of cash values, not tax-deferred.  Properly structured, you will never have to pay tax on your growth or on your withdrawals.
  3. Complete Flexibility-- You can use the funds for anything.  If your child gets scholarships, and doesn't need the funds in the college plan, then you can use then for your retirement without penalty.
  4. Funds can be taken out tax-free for any purpose.
  5. Funds in the AOA College Plans can be taken out without penalty.
  6. Borrowing capability-- with the AOA Plans, you can actually borrow out at rates substantially below bank loan rates, while keeping your cash values intact and growing.
  7. Self-completing-- if the payor dies, the plan will self-complete through the life insurance aspect of it, guaranteeing the funds for your child or grandchild to complete his or her schooling.  After all, isn't that what you are most interested in for your college funding plan -- the guarantee of completion?

In summary, there is much to like about AOA's College Funding Plans: better rates, tax-free growth, complete flexibility, tax-free withydrawals, borrowing, and self-completion.  What's not to like?  It's simply the best, smartest, tax-wisest way to fund college.  Time is your friend, because your growth will grow at compound interest rates.  That means delay costs you in your final amounts.  So, click here to contact your AOA Representative for a quiet, confidential face-to-face conversation about better ways to do financial things.

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