Another Reason to Open a Roth IRA: Paying for College

student-loan-debt

I was reading the business section of the LA Times when I came across this nugget:

Because you make Roth IRA contributions with after-tax dollars, you can withdraw them at any time without taxes or penalties, just like 529 plans.

I knew that. I’ve done that, but it never occurred to me to contribute with the intention of using that money for college costs. Do you know what that nugget means? It means that:

  • Instead of opening two accounts and having to schedule two contributions, you can open one.
  • You can take out the money you put in, not the interest that you’ve earned, to pay for college costs after letting it grow for years and years.
  • If you don’t end up using it for college expenses you can let it continue to grow until retirement.
  • If you do want to use the money for college costs, the money in your Roth IRA with not count against your child for financial aid like a 529 plan would.

That is revolutionary. You can contribute, let the money grow, it won’t count against your kid when you apply for financial aid (FAFSA, scholarships, loans, etc.), and you can leave it there to continue to grow until you need it for retirement. The absolute best part? You can leave the funds left in the account after you die to your spouse OR any beneficiary that you designate and that money can continue to grow.

There seems to be no downside to opening a Roth IRA.

 

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NBC Latino

Shay Olivarria was interviewed by NBC Latino! Whoo hoo!

 

We’re so proud that Shay Olivarria was interviewed by Kristina Puga of NBC Latino for this article with tips about dealing with the possible doubling of the student loan interest rate that’s coming July 1. Read it and share it!

 

Shay Olivarria is the most dynamic financial education speaker working today. She speaks at high schools, colleges, and companies across the country. She has written three books on personal finance, including Amazon Best Seller “Money Matters: The Get It Done in 1 Minute Workbook”. Shay has been quoted on Bankrate.com, FoxBusiness.com, and The Credit Union Times, among others. To schedule Shay to speak at your event visit www.BiggerThanYourBlock.com

Student Loan Forgiveness Bill

I saw this post on Default: The Students Loan Documentary‘s Facebook page and I knew that you would be interested in reading about it:

Rep. Hansen Clarke (D-MI-13) introduced the Student Loan Forgiveness Act of 2012 (H.R. 4170) on March 8, 2012. If enacted, this legislation will provide student loan forgiveness for federal education loans, allow private student loans to be refinanced into federal direct consolidation loans and cap all federal student loan interest rates at 3.4%.

This legislation would address some of the calls for student loan forgiveness raised by forgivestudentloandebt.com and the Occupy Wall Street protesters.

Of course this has not been passed, but it’s a great step in the right direction. To read the whole article on Fastweb, click here.

To read about more ways to manage your money order a copy of 10 Things College Students  Need to Know About Money. Not sure what’s in it? Check out the reviews here.

 

 

College is Overemphasized

What's your ROI?

I’m sure I’m not the only person that remembers all the “a mind is a terrible thing to waste” commercials promoting college attendance in the 1980’s and 1990’s. Many a young person attended college and maybe even grad school in hope of graduating and starting a wonderful career that would provide for them financially. That’s a wonderful possibility, but we need to understand that it’s only one possible outcome. Some people graduate from college and can’t find a job or find a low paying job and struggle to pay back student loans.

I just read an article about America’s overemphasis on promoting college as the only pathway to success. There are certainly careers that require a college degree. There are also careers that require master’s degrees, doctoral degrees, and various types of training. I’m not for or against attending, and graduating, from college. I do want people to know that there are several paths to success. Don’t do things because you think you’re supposed to. Understand the return on investment (ROI) that you’re going to get from different career paths. Most high net worth individuals are business owners, corporate executives, and doctors/dentists. If you’re planning on one of those careers paths, you need to think long and hard about what skills you need to achieve your career goals and what the best way might be to get/grow those skills.

(Time + cost (fees, books, loans, etc.))/ expected yearly income = return on investment.

Would you spend $40,000 to earn $32,000 a year? That’s just what some of us were trained to believe we should do. Whatever you choose, make sure that it’s a choice that you’re making. Don’t choose not to attend an educational program (community college, trade school, university, etc.) or choose to attend one based on the influence of people that may have something to gain from selling you an educational experience. Figure out what you want and choose the path that you believe will help you get there.

PEACE

Default: The Student Loan Documentary

I’m so pleased to tell you that the makers of Default: The Student Loan Documentary have partnered with Bigger Than Your Block to include the trailer for Default in all copies of my second book, 10 Things Students Need to Know About Money.

As you know, my work educating folks about how important personal finance is includes college costs as well. Right now paying for college is one of the biggest challenges many families have. Traditionally, taking out loans has been the way many college students have bridged the gap between costs and available funds. While loans are not bad in and of themselves, many students weren’t sure of what they were getting themselves into and found themselves with a mountain of debt. Default: The Student Loan Documentary will help families better understand loan products. I’m proud that this informational documentary trailer will be available with 10 Things College Students Need to Know About Money.

Default – The Student Loan Documentary Needs Your Help!

We totally support the making of this documentary and right now they need our help.

From Default’s Facebook:
“Default: the Student Loan Documentary is competing to win $10,000 on www.ideablob.com
In order to qualify for the monthly showdown, we have to win one weekly sprint. We have decided to compete from July 8th to July 14th. If we get more votes than any other ideas during that week, our votes get reset to 0 and everybody will have to vote again for us to win at the end of the month. Please vote now.”

To hear the full interview with Aurora Meneghello click here.