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September 20 , 2019
New Mexico’s Legal & Financial Weekly
Vol. 9.99 No. 38
FORECLOSURE SALES: 1 PROBATE: 26 AUCTIONS: 8 NOTICE OF SUITS: 3 OTHER: 47 SPANISH NOTICES: 0
Yes, There May Be A Positive to Come Out of the Student Debt Crisis
A
re all those stories about crippling student debt having an effect on college campuses? Just ask post-Millennials now trying - albeit not always successfully - to avoid being saddled with the same heavy burden of debt as their predecessors.
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According to Fidelity Investments’ new “College Savings: Lessons Learned Study,” not only did 83 percent of current college students surveyed consider what their total costs would be before matriculating - just 69 percent of recent graduates had such foresight - but 39 percent of them said the potential price tag was such “a huge factor” that they purposely limited their choice of schools to the most affordable. Only 32 percent of recent graduates, alas, had shown similar restraint. “It seems today’s college students are perhaps more aware of the financial situation they entered into than those who graduated before them,” said Melissa Ridolfi, Fidelity’s vice president of retirement and college leadership. “That’s a positive development.”
Which logically brings us to another key finding of the study: Only 17 percent of current students and recent graduates had taken advantage, prior to college, of what’s arguably one of the best ways to fund higher education: 529 savings plans. Unlike regular bank savings accounts, they provide a tax-advantaged way to save money to cover tuition, books and other education-related expenses at most accredited twoand four-year colleges, universities and vocationaltechnical schools.
All told, student debt in the U.S. now totals more than The key phrase being $1.5 trillion - second only to “tax-advantaged.” Meaning, mortgage debt, Forbes reported. And the 69 percent or so of the Class of earnings grow federal income tax-deferred and withdrawals for qualified 2018 who took out student loans graduated with an average debt balance expenses are free from federal (and, in many places, state) income taxes of $29,800. thus affording the opportunity to have even more saved for college.
So you can understand why recent graduates would be so stressed out Significantly, Ridolfi said families using a 529 plan managed by Fidelity over whether they’d ever be able to pay off their loans that they’re now have been starting to sock money away earlier than ever before, with having second thoughts about their decisions: contributions beginning on average when the child is about age six and a half. Thirty-six percent of Fidelity 529s are even opened for beneficiaries * 40 percent said that while they don’t regret going to college, they would’ve under - yes - age 2. made different choices in hindsight. You say a child hasn’t even uttered his or her first complete sentence * Only 14 percent felt the value of their education was worth more than the before they’re two? Probably not. But just so you’re not bushwhacked money they’d spent. when they suddenly hit their late teens, free online resources like Fidelity’s College Savings Learning Center and College Savings Quick Check - a Oh, and future college students should listen up for this sage advice from calculator that even shows you the impact of saving a few dollars more a the more than 4,000 respondents surveyed - all recent graduates, current month - can help prepare you for what lies ahead. undergraduates, and parents of either or both - on what would’ve done wonders to ease their own stress levels. Think of them as your own first baby steps. “When asked ‘If you knew then what you know now when it comes to school selection, what would you do differently?’ the number one answer -(NewsUSA) for all respondents was ‘I would’ve started saving earlier,’” Ridolfi said.