College

I’VE TAUGHT BEHAVIORAL economics, which holds that even our most important decisions are influenced by unrecognized biases. For my students, there’s no better example than the choice of where they went to college.
Although the cost is enormous, the decision of where to go hinges on the smallest things. A teenager who says, “I want to be close to my boyfriend,” will zero in on a nearby college, even if her high school romance is fading.

THE CONTROVERSY over student loans has caught up with the latest federal government repayment program. That program is known as SAVE, or Saving on A Valuable Education.
SAVE is an income-driven repayment plan, or IDR. It’s the sixth iteration of an IDR plan. Due to the favorable terms and the high estimated price tag, it was recently halted by legal challenges.
IDR plans follow the same general formula to determine the monthly payment on student loan debt.

YOU COULD CALL ME a 529 superfan. The college savings plans helped me put my two kids through college. Their state and federal tax advantages cut the exorbitant cost of college just enough so we didn’t have to borrow for our two kids’ education.
Which makes it surprising that I knew the man who created the 529 plan—but I didn’t realize he’d fathered them.
I covered Senator Bob Graham of Florida as a newspaper reporter in Washington in the 1990s,

WE’RE A SINGLE-INCOME family with five children, so the prospect of paying for college for all our kids is daunting, to say the least. Yes, our oldest is now in her second year of college. But we still have a long way to go before they’ve all crossed the finish line.
Our kids are ages 19, 17, 12, nine and six. We’ve been homeschooling them since the beginning, with a few brief exceptions, including one daughter in a Department of Defense high school in Korea for a year and another daughter in a private high school for two years.

WITH NO DISRESPECT TO our representatives in Congress, a new rule taking effect in January reminds me of a scene from The Jerk, an old Steve Martin movie. Playing the role of a carnival huckster, Martin shows off a wall of attractive prizes, but then narrows the choices to an impossibly small set of options.
Congress did something similar when it instituted a new rule governing 529 education savings accounts. The rule in question opens up greater flexibility in how surplus 529 funds can be used.

STUDENT LOANS ARE a hot topic—one that’s fraught with confusion and complexity. Still, many borrowers should consider taking action this year. Want to get a better handle on what’s happening? Let’s start with three changes that have lately been in the spotlight:

Federal student loan payments, along with the interest charged, were paused from March 2020 to September 2023. That gave borrowers more than three years to make principal-only payments or, alternatively, to potentially accrue credit toward loan forgiveness without the need to make payments.

WHEN I WAS YOUNG and unschooled about money, I borrowed thousands of dollars to attend Northwestern University. As I recall, tuition was around $12,000 a year in 1980, and I had only $3,000 to my name. How could I pay?
The dean sent me a letter explaining that the college would lend me the money for my master’s degree in journalism. It would also extend me a work-study job, which would help pay for my spartan off-campus room.

I RECENTLY COMPLETED a course called England: From the Fall of Rome to the Norman Conquest. Before that was Books That Matter: The Federalist Papers. Okay, I’m a nerd, I’ll admit it.
Since I retired, I’ve looked for avenues to broaden and deepen my understanding of subjects that I was taught in high school and at the liberal arts college I attended. Back then, there were college courses,

OUR FIVE KIDS SPENT a collective 24 years in college. All five have bachelor’s degrees, and three also have master’s degrees. The youngest graduated May 2023. Only one child qualified for non-merit aid—a $300 Pell grant.
My wife and I didn’t give them money for college. We don’t live near a major public university, so four of the five had to live on campus. Here’s what prepared them for college and how to pay for it.

WHAT SHOULD I DO with the required minimum distributions from my rollover IRAs?
I’m age 65, which means that—under last year’s tax law—I must begin taking taxable distributions in 2030, the year I turn 73. I’ve been looking at my retirement cash flow, and it appears that my wife and I won’t need the money for our living expenses.
I’m investigating using the money to help fund my grandkids’ college education. I built a spreadsheet that maps my age against the age of each grandchild and determined the years they’re expected to attend college.

MY DAUGHTER IS MORE than halfway through her junior year of high school. College and career choices are hot topics in our household. My wife and I have a dilemma: Should we encourage our daughter to pursue a college degree that matches her passions—or nudge her toward one that has a better chance of paying the bills?
My daughter is no slouch in math and science, but her true love turns in another direction.

TRUTH HAS A FUNNY way of punching you in the gut. I received my punch thanks to the 2022 decline in the stock market, which put a dent in the “funded” status of the 529 college-savings plans for my two sons, ages 16 and 14.
Buy and hold is all well and good if you have an infinite investment time horizon. Strict adherents will argue that mark-to-market gains and losses are just noise. Time will smooth out the ripples.

WHEN OUR KIDS applied to colleges, the smallest detail of each campus visit mattered a lot. If our daughter admired the student leading our tour, the school skyrocketed in her estimation. If the class our son attended to “get a feel for the place” turned out to be a test period, Grandpa’s alma mater was forever struck from consideration.
In economic terms, the college decision features asymmetric information. Colleges know a lot about us from our detailed personal and financial applications.

WE PUT OUR TWO KIDS through college using 529 plans—and I estimate the accounts easily added 10% to the value of our college savings, compared to what we would have accumulated if we’d invested through a regular taxable account. Yet only 37% of families use 529s to help pay for college, according to a 2021 survey by Sallie Mae.
Like an IRA, a 529 plan gives you a tax break for saving for a specific goal—but,

WE HAVE A PROBLEM: We may have saved too much for our daughter’s college education.
My wife and I started contributing aggressively to our daughter’s 529 college savings account as soon as she was born. For the first two years, we invested the full amount of the annual gift-tax exclusion, which was then $14,000. Now, the exclusion is at $16,000, but lately we haven’t been saving as much as we used to. The reason: Our early aggressive saving,