Monday’s need-to-know money news

Today’s top story: 6 college money lessons you didn’t learn in high school. Also in the news: Affordable ways to refresh your home, 5 ways not to blow a financial windfall, and the high financial cost of being gay.

6 College-Money Lessons You Didn’t Learn in High School
Lessons to take with you on campus.

Affordable Ways to Refresh Your Home
New looks for less.

5 Ways Not to Blow a Financial Windfall
You don’t need a yacht.

The High Cost of Being Gay
Marriage equaliity doesn’t equal financial equality.

Millennial parents more likely to save for kids’ college

Zemanta Related Posts ThumbnailMillennial parents are far more likely than their predecessors to save for their children’s educations and far more of them want to pay the whole tab for college, according to a survey.

Whether they will be able to do so is questionable, though, given the relatively small amounts most have saved so far.

Seventy-four percent of parents aged 30 to 34 polled for the 2015 Fidelity Investments College Savings Indicator have put aside money for college, compared to 58 percent of parents the same age who were polled in 2007.

Nearly half (48 percent) of the group born between 1981 and 1985 plan to pay for all college costs, compared with just 16 percent of parents the same age in 2007, according to the survey conducted for Fidelity by Boston Research Technologies.

In my latest for Reuters, a look at why Millennials want to cover all college expenses for their children.

In my latest for DailyWorth, everything you need to know about debt consolidation.

Q&A: Best way to pay for college

Dear Liz: We have two children in college, both entering their junior years. We have two more in high school. The two currently in college need additional financial assistance, as they’ve tapped out their federal student loans.

We are middle class, grossing about $125,000 a year, so we don’t qualify for much financial aid. We’re considering a cash-out refinancing of our home, but we feel as though we can do it only once, since each time we refinance it will cost us some fees, plus interest rates are likely to start edging up soon.

However, if we take out a big chunk of cash that could last us for the next two years for the first two children, and possibly some for the other two, we’re concerned that having that much cash sitting in the bank will reduce the amount of financial aid we receive, which would be counterproductive.

Is there a way to earmark the extra cash clearly for education expenses so that it doesn’t count negatively on our Free Application for Federal Student Aid (FAFSA)? Or do we just need to take this year’s cash out now, and refinance again each year (which seems crazy)?

As an aside, now that we have a little experience with this college thing, we will guide the two younger ones to community college or living at home while attending a less expensive public college, or something along those lines.

The first two just sort of went — without a lot of financial forethought.

Answer: The chunk of cash from such a refinance would be counted as a parental asset, provided the savings account is in your names and not those of your child.

So a maximum of 5.64% of the total would be included in any financial aid calculations. That’s not a big bite, but if you’re not getting much financial aid it could offset or erase the small amount you’re getting.

The bigger danger is that you’re taking on debt for something that won’t increase your own wealth or earning power. If you should suffer a severe-enough financial setback, such as a layoff, you could wind up losing your home.

In general, parents shouldn’t borrow more for their children’s college educations than they can afford to pay back before retirement — or within 10 years, whichever is less.

This rule of thumb assumes that you’re already saving adequately for retirement and will continue to do so while paying back the debt. If that’s not the case, you shouldn’t borrow at all.

If you’re going to borrow and can pay the money back quickly, a home equity line of credit may be a better option than a refinance. Interest rates on lines of credit aren’t fixed, but the costs are significantly less and you can withdraw money as needed.

Yet another option: parent PLUS loans, which currently offer a fixed rate of 6.84%. Approach these loans cautiously. It’s easy to borrow too much, since the program doesn’t consider your ability to repay. And like federal student loans, this debt typically can’t be erased in Bankruptcy Court.

Friday’s need-to-know money news

2Today’s top story: Knowing when it’s time to talk to a financial advisor. Also in the news: Money tips for college students, why you might need life insurance if you’re getting divorced, and five reasons why you have a bad credit score.

7 Times You Need to Talk to a Financial Advisor
Going it alone isn’t always a good idea.

Back-to-School Money Tips for College Students
How to avoid going broke in the first month.

Getting Divorced? You Might Want — or Need — Life Insurance
Covering your financial obligations.

5 Reasons You Have a Bad Credit Score
Time for credit check.

Wednesday’s need-to-know money news

Social-Security-benefitsToday’s top story: With the holidays comes identity theft. Also in the news: What divorcees need to know about Social Security, a different way to budget, and how money can wreck your marriage (but it doesn’t have to).

The 12 Scams of Christmas
‘Tis the season to protect your identity.

What Older Divorcees Need to Know About Social Security
Understanding the complexities.

Focus on Cash Flows, Rather than Expenses, to Spend Without a Budget
Static expenses vs itemizing everything.

Yours, Mine, Or Ours? How Money Wrecks Your Marriage
But it doesn’t have to!

10 Things You Need to Know If Your Kid’s Applying for College
Besides kissing your wallet goodbye.