Parents have enough to worry about. A pair of authors with decades of experience want to give them one less big thing to fret over: when, and how, to start a college fund.
The “when” is easy — now, says John Hupalo, a nationally recognized expert in education loan finance. The “how” is a bit more complicated, which is why Hupalo and co-author Peter Mazareas founded the company Invite Education and wrote Plan and Finance Your Family’s College Dreams, a 277-page book that, as Hupalo puts it, “provides plain-English guidance for families around this confusing issue.”
Hupalo, Stern MBA and long-time Wall Street executive, and Mazareas, Booth MBA and former executive director of the Massachusetts Educational Financing Authority (MEFA), aren’t just experts on financing a college education. They’ve been to the front lines, as well, having put five children through college between them — a fact that gives their advice some real-life cache.
“What we wanted to accomplish when we started Invite Education in 2012 was to provide a series of information tools and services to empower families to make better college financing decisions,” Hupalo tells Poets&Quants, “and out of that business we started to realize that a book would really provide the kind of plain-English guidance that families need. So in the course of building the business we talked to many, many families and guidance counselors and others and they kept saying to us, ‘It’s so confusing, we don’t understand this,’ so we built the product, the website, to provide step-by-step guidance for families.”
‘TRY TO START SAVING TOMORROW’
Mazareas is a co-founder of 529 Plans, qualified tuition plans that are sponsored by states, state agencies, or educational institutions and authorized by Section 529 of the Internal Revenue Code. In the mid-1990s he helped shepherd legislation through Congress that enabled the creation and implementation of the plans, which have since helped millions of students go to college.
Hupalo met Mazareas nearly 20 years ago when Mazareas hired him at MEFA. It was around that time that Hupalo’s two daughters were born — just in time to take advantage of 529 savings plans. “I was fortunate,” Hupalo says. “The 529 plans are literally just 20 years old (now) and they came just at the time that the girls arrived, so we were able to save in the 529 for the girls.”
The plans are a key piece of the overall advice Hupalo and Mazareas offer through their book and company. But they are not the only piece.
“I would say try to start saving tomorrow, because saving now is better than putting it off,” Hupalo says. “And what you need to think about saving is, first, check out the potential state 529 college savings programs that are available. Oftentimes I guide people toward the state-based programs because there may be state tax benefits that make those individual programs most attractive. For families that are earning under $110,000 per year or $220,000 for the couple, Coverdell college savings are also in the mix, and with Coverdells you can contribute up to $2,000 per year. The other benefit is you can use those for K-12 expenses and not just college expenses. Sometimes that’s helpful.”
Another avenue for savings: bonds, particularly EE bonds, as well as savings and brokerage accounts. But such accounts are less attractive, Hupalo says, because unlike 529 accounts they don’t allow for tax-deferred savings. “With 529 accounts you get a tax benefit, both federal and usually state tax benefits,” he says.
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