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AGS
FINANCIAL SERVICES |
Gary
F. Restall |
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College
shock - being
prepared
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This
article is in
response to having
been asked recently
to write something
about the financing
of education,
especially as the
parent in question
recently got
sticker-shock looking
at college expenses
for their senior high
school student.
Let’s call this The Basics of Education & Finances 101 as hours could be spent discussing this topic. Many questions come to my mind before we get into the financial recommendations. Each answer could dictate a different response, financially speaking. When you combine questions, it can become very complex. There are many fantastic financial options available. Some may be more appropriate than others depending on the answers provided. Obviously, therefore, thought has to go into the subject long before actually looking at the finances. You need to ask yourself the following questions. Who is thinking about the education issues? The parents, the potential student, grand-parents or other relative? What will happen if your thoughts about education may not be the same as the thoughts of the student? When are you thinking of the subject? When the future student is only a "twinkle" in the eye, an unborn child, a newborn, a child or a teenager? Or are you thinking about it for yourself as an older person or a retiree? When will the education take place? Within a few weeks, months, years or decades from now? Why is there a need or purpose for the education? Is it private school, college or post-graduate? Is it self-taught, "street-smarts" practical, formal education or a combination? Is it work-related (mandatory or voluntary), for a hobby or a desire for the knowledge? How long will the education last? Will it be a certificate program lasting several weeks or several months? Or will it be a formal 2 or 4 year or more degree program? Or will it be continuing education classes required to stay current in one’s job or profession? How much is the education going to cost? This cost may be different from what you will actually pay. Is there any flexibility in the cost or is it maybe negotiable? When will the funds be needed? Immediately, within 3 to 5 years or longer, and for how long? Lump sum or payments? What is the relationship of the time frame of when you are thinking of education vs. actually needing the funds? What are the funding options? Personal savings or investments, equity in assets such as a home, or working full or part-time before, during and/or after the education? Gifts from relatives such as grand-parents (tax-benefits may be available)? Scholarships and grants from a multitude of sources - private and public? Loans from parents, relatives, friends or formal lending sources? Are there reimbursements (full or partial) available - depending on grades, achievements, affiliations, tax deductions and/or incentives, and how do you obtain them? When will funds be available - before, during or after education? What are the requirements to obtain the funds? This obviously depends on who has the funds. They will make the decisions. Will initial applications, deadlines or other performance such as grades, sports or social activities be required? Will the funds need to be paid back in a lump sum, monthly or annually, and when do the payments begin? Are there interest, finance charges or fees involved? When discussing education and finances, you need to consider regular cash flow, investment opportunities, taxes, other goals such as retirement and estate planning, as well as the potential stability of the student. Education and finances may seem overwhelming at first glance, but it doesn’t have to be. Education is one of the most costly expenses most people face and should be investigated as early as possible for the most beneficial financial outcome available. The options are un-limited, and the stress and hassle can be greatly reduced with good planning in advance. Good sources for information abounds. Bottom line - The answer to the question what about education and finances, depends on how the previous questions are answered. ___________________________________ When this
article was
written and
published, Gary F. Restall of
AGS
FINANCIAL SERVICES
was an
independent
full-service
Registered
Financial
Planner, Registered Investment Advisor
and an Insurance
Broker.
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