For most people in Atlanta, it is back to school time this week for your children. For many of you across the country, it’s only a month to Labor Day and then everyone will be in full speed back to the grind. As the dog days of summer approach us and with school back in session, here are five great back to school money tips you should review today!
1) There are alternatives to student loans for college – With student loans at an all-time high and many students having to stay in state because of the rising cost of college, will there be alternatives on how to deal with this menacing situation of paying for college? Over the past year, several large schools have started to offer a new program where instead of taking out debt, the student offers a percentage of their future income back to college in a unique structure that is different than traditional student debt.
Purdue University, as an example, has a program called Back A Boiler that they offer today in limited supply. This program introduces a new concept called an Income Share Agreement (ISA) where the student offers to income share a percentage of their future income until they fulfill an obligation with the school. In this case, the ISA is equivalent to 2.5 times the initial funding while at school. In this case, if the student borrows $30,000, there is no interest on this amount that accrues, but they would have to income share until $75,000 of total money is paid off which would equal the 2.5 times number.
In the investment world, this looks a lot like a venture debt structure, where you have no equity in a company but instead you loan money to a company in return for some multiple of your cash until you get completely paid off. This new ISA could be a neat structure for you and your child to look at for college funding.
2) Back To School Supplies – Walmart has a feature that allows users to type in their zip code to find a list of local schools, and the schools’ specific supply lists. Each list is broken out into the supplies along with the quantity the teachers request. Click on the Find Items link for Walmart prices. Another option is School Tool Box, which similarly allows shoppers to find their own school’s lists, and often serves as a school fundraiser. This tool also divides the lists further by gender, which some schools require.
Amazon’s back to school sale also includes kits. The kits are organized into grade appropriate levels, but do not appear to allow for prepackaged kits according to specific school lists. Amazon hasn’t forgotten college students and teachers. Best Buy’s back to school sale offers significant markdowns on MacBooks and iPad Pros, select laptops and Surface laptops. Deals like the $100-$150 off select computers can be combined with other offers.
Apple’s Back to School 2018 sale runs through Sept. 25 and offers homeschool teachers and Kindergarten-12 faculty (plus higher education faculty, students and parents) a variety of Beats headphones with qualifying Apple product purchase.
3) Bungee Jump – There is a new app out there called Bunjii, which is basically an app that looks like Uber for moving. On this app, you can let them know how many pieces of furniture you are moving and how many miles away you will be moving the furniture. They will price out what it costs to move, and then you can track it and rate it to give your opinion. This could be the future of moving, especially for college kids and people who often move apartments.
4) Know the New 529 Rules – With the Trump tax law changes here in 2018, you can now use the 529 plans to pay for K-12 private or religious school. This means if you have been paying tuition yearly out of pocket, it might be a great time to put some money away, so you can grow it tax deferred over the next year and tax it out tax free for the K-12 education. Remember, that you can only take out up to $10,000 per year for K-12 schooling. In the state of Georgia, if you use the Path To College you can also get a $4,000 state income tax deduction per eligible child.
5) Set Up An Allowance Plan– It is a huge mistake to “give” an allowance because your children will have to “earn” down the road as their salary will not be given. Think about what you might be rewarding every week for behavior and what the earnings are worth if your children reach their allowance goals. It is to allow your kids to stop doing their basic weekly responsibilities, and back to school is a great time to revisit their family roles and how you are calculating weekly reward if you have set up an “earned” allowance plan.
If you want to set run the numbers to see what you might need to save for your children’s college education, please go to oXYGen Financial to set up an appointment.