Q: What should we do with funds that were previously allocated funds for a 529 plan?
We live in New Jersey where there is no tax benefit for using a 529 plan. Is it worth investing the money we would have put towards a 529 plan in other areas, for example mutual funds or ETFs? Should we choose a different state’s 529 plan?
There are other benefits to owning a 529 Plan to pay for college expenses beside the state tax deduction offered by some states. for example, earnings within a 529 plan grow tax free if used to pay qualified education expenses. That said, some 529 Plans levy a sales charge and performance varies by plan and model. You have not stated the age of the children for whom the 529 Plan is intended to be used, which is also an important consideration, and whether you will be qualified for need-based aid from the college. Assets in a 529 Plan are treated just like any other investment and may reduce a potential financial aid award. Probably best to consult a qualified college planner to review your individual situation.
Q: Can you a receive a tax benefit for contributing towards your child’s school tuition?
My wife and I are currently retired. We wish to invest $75,000 in our son’s pursuit of a graduate degree. Can we receive any tax benefits for doing this?
I appears from your zip code, that you are a California resident. California does not offer a state tax deduction for a contribution to a California 529 Plan. If your son is no longer claimed on your federal tax return, you may not claim any of the federal credits. If your son is still claimed on your federal tax return, you may qualify for the Lifetime Learning Credit. Review IRS Publication 970 for details.
Q: Can I consolidate my student loans with Sallie Mae?
I owe roughly around $30,000 in student loans with Sallie Mae and the amount I am required to pay monthly is absurd. I have student loans through the state of Kentucky as well, but they put me on a payment plan that is affordable. I have contacted Sallie Mae and requested some kind of assistance and all they have offered is forbearance. I am a veteran and I currently am 40% disabled and still constantly fighting the VA on my claim due to my struggle with everyday life. Is there anything to do at all? What are my options?
You should call Sallie Mae and tell them you cannot afford the payments. Ask them if they have repayment programs based upon ability to pay. If they say no, ask for a supervisor and keep working your way up the chain of command. If that doesn’t work, you may want to try and obtain a loan on more favorable terms and pay off the Sallie Mae balance.