An Expensive Education

December 24, 2004 08:29 PM

An Expensive Education

Excerpt: Politicians and regulators are steaming over brokers' dominance of the 529 college savings plan market, and scheming to find ways to reduce their role.

Politicians and regulators are steaming over brokers' dominance of the 529 college savings plan market, and scheming to find ways to reduce their role.

Perhaps daunted by all the options offered--all 50 U.S. states and the District of Columbia offer plans with varying investment choices and fees--75% of parents and grandparents opening new accounts are buying into broker-sold, high-cost plans, rather than investing in the lower-cost plans available directly from such operators as TIAA-CREF, Vanguard and Fidelity.

Congress, the Treasury Department, the National Association of Securities Dealers, the Securities and Exchange Commission and the Municipal Securities Rulemaking Board are weighing in, troubled by the fact that broker-sold plans may charge a load and often have annual expenses of more than 2%. Direct-sold plans, by contrast, can have annual expenses of less than 0.5%. The regulators' goal is to help consumers save more for college and protect taxpayers, who subsidize these plans. (Investments grow tax deferred, and withdrawals for education are free of federal and usually state tax.)

READ FULL STORY ...

Pay Now, Learn Later (December 24, 2004)

By now you probably know that earnings of Section 529 college savings accounts are free of federal tax if used for higher education. But taxes are only part of the problem. What if your investments tank? Just ask Laurence and Margo Williams of Alexandria, Va ...

Is Yale a Waste of Money? (December 24, 2004)

Wouldn't it be neat if, instead of a diploma costing $160,000, you could buy a $16,000 certificate saying you got in? Someday the university education system will simply price itself out of business and save us all a lot of grief. In the meantime we ...

A Lesson in Saving for College (December 23, 2004)

Thanks to obscure savings-plan rules, the best way to finance your kids' education may be to sock away money in your own retirement account One of the toughest financial dilemmas parents can face is how to provide for both their children's college education as well ...

Read all 10 posts in the same category of College:

Flaws Showing in 529 Plans for College Savings - Feb 20, 2005
Utah, Alaska Among Top 529 Plans - Feb 13, 2005
Start Saving For College ASAP, If You Can - Feb 05, 2005
Online Banks Are Boosting Yields Online Banks Are Boosting Yields - Jan 15, 2005
Financial-Aid Rules Sow Confusion for 529 Owners - Jan 15, 2005
NASD Says Do Your Homework On 529 Plans - Dec 24, 2004
Pay Now, Learn Later - Dec 24, 2004
Is Yale a Waste of Money? - Dec 24, 2004
A Lesson in Saving for College - Dec 23, 2004

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