College Savers Stuck?

While parent's invested in 529 plans were wondering how they were going to pay for college a Wall Street Journal article directed at these investors said "Don't Panic!" However, no guaranteed solutions were provided. Keep your options open the article suggested and make sure that you are in a position not to miss out on future stock market gains. The big question is when will these gains come. Is there enough time? College savings is usually accomplished in a relatively short period time. It took the stock market 25 years to recover from 1929. On September 3, 1929 it hit a high of 381. On July 8, 1932 the low was 41. It took until November of 1956 for the market to reach 381 again.

With 529 plans, investors put after-tax dollars into an account that typically offers a range of mutual funds and other investments. Distributions and earning are tax free, as long as they're used for qualified higher education expenses.

The College Plan uses a different approach on how to best pay for college. It is called the Fillmore Hill Plan. In the decades prior to the early 40's, counter balance cars (1/2 trolley car and 1/2 cable car) took passengers up and down San Francisco's Fillmore Street. One car would go down so another car could come up the other side. This college savings program works in a similar manner. Using the Money Merge Account system, the mortgage balance goes down at an accelerated pace while equity goes up at a much quicker rate because less interest is being paid. The goal of the program is to pay off the mortgage prior to start of college so that the dollars that paid the monthly mortgage can be used for college. If this is not possible because of the lack of time, additional strategies may be used if financially feasible.

Homer Sweeney