Imagine your reaction to the following scene: You return home from work one night to find your teenage daughter happily running about with a letter in her hand. When you calm her down, she tells you she has just been accepted to the incoming freshman class of the private college of her choice. After she informs you that the tuition, room, and board are $40,000 a year, you ask, “So, what’s the good news?”
Many parents may be in for “sticker shock” when they have to confront the cost of a four-year private college degree. Graduate school may have an even more staggering effect. While schools have attempted to minimize increases, costs continue to rise each year. These daunting financial pressures can effectively motivate some serious financial soul searching.
Although parents and students can avail themselves of a wide variety of scholarship programs, loan packages, and work-study arrangements, it may be wise for some parents to look at more creative ways to hold down college costs. While not for every situation, ask yourself if the following ideas will benefit your family:
Expense Minimizer—The Student Condo: Under this arrangement, Mom and Dad purchase a condominium for their child. Although a student condo is not purchased for its tax advantages (check with your tax professional however, about the possibility of deducting the mortgage interest), parents can feel secure that their child can live in quieter-than-average housing, free from many of the distractions of college dorm life. In schools with inner city campuses, the safety factor alone may be enough to allow Mom and Dad a good night’s sleep.
With increasing room and board costs, an affordable condo may not be a far-fetched option. The student condo may be an interesting solution to those who hold an optimistic view of real estate values a few years down the road, especially if more than one child can use the condo while attending a school in the same area. If you believe the condominium approach is attractive for your situation, look at the importance of insurance coverage and riders for expensive equipment.
In addition, if your child uses equipment for “profit or gain,” be sure those items are clearly defined and separated from equipment used for educational purposes (e.g., computers, printers, audio visual, photographic, musical instruments).
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HighTower Great Lakes is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.
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