Education Costs Continue to Escalate &
with College Costs
Education Costs Continue to Escalate
The cost of attending college continues to increase. The
College Board reports that 2012-2013 tuition and fees have
risen significantly (www.collegeboard.org).
Private four-year colleges are up 4.2% (to an average of
$29,056)from 2011-2012 for tuition and fees. Public four-year
colleges are up 4.8% (to an average of $8,655) from last year
for in-state tuition and fees.
Public four-year colleges are up 4.2% (to an average of
$21,706) from last year for out-of-state tuition and fees.
Even public two-year schools are up 5.8% (to an average of
The report indicates that the subsidies provided to full-time
undergraduates at public universities through the combination
of grant aid and federal tax benefits averaged $5,750 in
Help Grandchildren with College Costs
to a Section 529 college savings program is a great way for
grandparents to help their grandchildren pay for college.
It is also a great way to remove
assets from the grandparent's estate without paying estate
tax. As an added feature, money in a 529 plan owned by a
grandparent is not assessed by the federal financial aid
formula when qualifying for student aid.
Grandparents, as well as other taxpayers, have a unique
opportunity for gifting to Section 529 college savings plans
by contributing up to $70,000 at one time, which currently
represents five years of gifts at $14,000 per year. ($14,000
is the annual gift tax exclusion amount for 2013.) A married
couple who elects gift-splitting can contribute up to double
that amount ($140,000 in 2013) to a beneficiary's 529 plan
account(s) with no adverse federal gift tax consequences.
Electing to spread a 529 plan gift over five years.
In 2013, Linda contributes $75,000 to a 529 plan account
for the benefit of her grandson, James. She makes no
other gifts to James in 2013. Because the gift exceeds
the $14,000 annual gift tax exclusion, Linda elects to
account for the gift ratably over five years beginning
with 2013. Only $70,000 (five times the current annual
gift tax exclusion) is eligible for the election;
therefore, Linda is treated as having made an excludible
gift of $14,000 in years 2013-2017, and a taxable gift
of the remainder ($5,000) in 2013.
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W. Edward Newton Jr.,
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