MGT 480
March 23, 2003
Executive Summary:
This research is defined by this project statement: Send xxxxxxx, the 5 year old son of xxxxxxxxx to College for four years and finance all Tuition & Fees, Books, Room & Board, Personal Expenses and Transportation. ... xxxxxx has determined that an amount $500 per month ($72,000 over a 12 year period) is available to put towards xxxxxxˇ¦s College fund. ... The question is how to best invest these monies to secure the desired college education. The research shows comparison of the Washington GET Program, the Coverdell Education Savings Account, and the Victory Diversified Stock (Mutual) Fund. ... Our research which is detailed within the body of this paper will show that the risks of mutual funds and are too high to gamble with for xxxxxxxˇ¦s education and future. It will also show that those ˇ§saferˇ¨ education funds do not provide enough funds to accomplish the desired goal. ...
Background:
Parents and grandparents dream about being able to send their children to college. ... "College is an investment of a lifetime. ... While the cost of college may be imposing to many families, the cost associated with not going to college is significant." Source: Trends in College Pricing 1999, the College Board
The only question lately about college tuition seems to be, ˇ§How much more is it going to rise?ˇ¨ As a parent with young children, its never too early to be thinking about their college education. Higher education can provide our children with the skills necessary to succeed. However, the cost of a university education continues to rise at a rate greater than inflation. Next to buying a home the cost of college, either public or private, is one of the biggest expenses a family will face. The cost of a college education today is increasingly outpacing growth in family incomes. ... Between 1980 and 1999 college costs have increased faster than the rate of inflation (as measured by the Consumer Price Index). According to the College Board, in the last 5 years college costs have grown an average of 5% per annum. If college costs rise by only 5% per year over the next 18 years, the total costs for four years of college could range from $80,000 for a public university to $200,000 for a private university.
Source: Trends in College Pricing 1999, the College Board
Problem Statement:
One of the learning teamˇ¦s members, xxxxxxx, has 2 sons: xxxxxxx, who will be six on March 28th 2003, and xxxxxx, who will be 4 on September 9th 2003. xxxxx needs to prepare a plan to send his children to college. ... The question is, if he receives other moneys for tuition, and the other money more than covers the other college expenses, how much money would be lost? ... In todayˇ¦s world of modern technology and global communications, there are several alternatives to the traditional four-year state university, such as online education, technical certifications, and specialized shorter-term universities. ... Will the child go immediately from high school to college; will they likely take a year off? ...
Research Scope:
To collect and analyze data for funding xxxxxxxˇ¦s college education, it was determined that four types of funding would be researched. These four types of funding were the GET Program, the Coverdell Education Savings Account, a Victory Diversified Stock Fund, and a Federal PLUS (Parent) Loan. ... Total cost for a 4 year education
8. ... GET enables parents, grandparents and others to prepay college tuition and mandatory service and activities feesˇXfor up to five years worth of higher education expenses. ...
Coverdell Education Savings Account (Formerly known as Education IRA):
The Coverdell Education Savings Account (ESA), formerly called the Education IRA, allows qualifying taxpayers to make annual nondeductible contributions of up to $2,000 for any one beneficiary age 18 or younger. ... Withdrawals from the Coverdell ESA used to pay for qualified elementary, secondary and higher education expenses are federally tax and penalty free. ... Since the primary purpose of this investment is for the college fund of a child, the investment can be conservative in nature.
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