College & Education — Page 2

Coursera: Free Online Courses on Accounting and Finance

December 6, 2021 By Jonathan Ping 2 Comments

One of my newer interests is better understanding individual businesses and how they work. Accounting is the “language of business” used to write annual reports, 10-Ks, 10-Qs, income statements, and so on. I was afraid a textbook would be too boring, so I am auditing the online Coursera course Financial Accounting Fundamentals by Professor Lynch of the University of Virginia. Here’s a quick summary of what is covered in the course:

Accounting is often called the language of business. It is this language that organizations use to communicate their economic performance to others. In this course, you will acquire the tools that you need to understand the fundamentals of accounting, the language of business.

You will learn to record business transactions in the company’s accounts, understand how they flow into the financial statements, and learn to draw basic conclusions about an organization’s financial health from the three most commonly used financial statements, the balance sheet, the income statement and the statement of cash flow. Are you ready? Then let’s go!

Auditing is completely free and lets you view all the materials and take “practice” quizzes, but you can’t take the “real” quizzes needed to earn the “shareable certificate” (which is fine with me as this is just for personal improvement and not future employment). The course assumes no prior knowledge, requires a commitment of roughly 2-3 hours per week, and lasts for 5 weeks. I finished the first week in about an hour and a half by watching videos at 1.25x speed. So far, I’ve enjoyed filling in the gaps in my knowledge.

This course is the first of a 4-part series by UVA called Entrepreneurship: Growing Your Business:

Welcome to Entrepreneurship: Growing Your Business, a new specialization from the Darden School of Business, University of Virginia. This Specialization was designed to give you the real-world tools and processes you will need to take your business from idea, to action, to growth and revenue. You’ll learn how to create budgets and read financial statements, how to lead with values, how to leverage new business models for growth and how to create new business innovations. Ideal for entrepreneurs, small business owners, and those who have a business plan but aren’t sure what to do next, Entrepreneurship: Growing Your Business will help you on the path to success for you, your business and society.

There are a few similar Coursera courses from UPenn Wharton and the University of Illinois.

I used to feel that I didn’t need to know any of this stuff (just buy a Target Date fund and work on your career, etc), but now I want to compound knowledge in this area as well. I’ll be able to use it for the rest of my life as a private investor living off of my portfolio. This is also related to working for yourself for an hour each day.

Filed Under: College & Education, Deals & Offers, Investing

Last updated: December 7, 2021

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Student Loans: File Waiver For Expanded Public Service Loan Forgiveness (PSLF)

November 15, 2021 By Jonathan Ping Leave a Comment

Like many folks, I left college with a negative net worth due to $30,000 in student loans. After reading through several articles about changes in the Education Department regarding student loans, I think the overall takeaway is that if you’ve had problems with your student loan management in past years, now would be a good time to check again – especially if you are working towards the Public Service Loan Forgiveness (PSLF) program.

The idea behind PSLF was that if you worked full-time in public service (ex. military, government, nurses, teachers, non-profit workers) and made regular income-based payments for 10 years (120 monthly payments), you would have the remaining balance forgiven at the end of those 10 years. However, this incentive turned out to be an elusive reward at the end of a long and winding maze. The program started in 2007, and as of April 2020, only a little over 2,000 people total (under 2% of the 145,000+ applicants) were ever approved for PSLF.

The maze appears to be opening up a bit, with over 30,000 people expected to be approved in 2021. Most importantly, you must take action and file for a PSLF waiver as soon as possible (must be done by October 2022):

On Oct. 6, 2021, the U.S. Department of Education (ED) announced a temporary period during which borrowers may receive credit for payments that previously did not qualify for PSLF or TEPSLF. Learn more about limited PSLF waiver.

The previous rules were pretty complex and rigid. For example, you could have been paying more than required, but if you weren’t on the right repayment plan, your payments didn’t count toward the 120 monthly payments required (10 years).

Under the new rules, any prior payment made will count as a qualifying payment, regardless of loan type, repayment plan, or whether the payment was made in full or on time. All you need is qualifying employment.

This change will apply to student loan borrowers with Direct Loans, those who have already consolidated into the Direct Loan Program, and those who consolidate into the Direct Loan Program by Oct. 31, 2022.

If you file for the waiver, these types of past monthly payments can now count towards the 120 required:

If you were previously ineligible because your loan was of the wrong “type” (will have to consolidate)
If you were on an “ineligible” payment plan method
If you were deployed active military and placed your loans on hold
If you had partial payments
If you had payments that were late

You must still be:

Employed by government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service
Work full-time
Have Direct Loans or consolidate into Direct Consolidation Loans. Private student loans are NOT eligible.

It is still rather confusing as to which jobs exactly qualify as “public service”. Your job description doesn’t matter, only the status of your official employer. You could be a teacher or a nurse, but one might be a nurse at a nonprofit hospital and the other might be at a private hospital (or their hospital changed from one to the other at some point, out of their control).

There are also now special considerations for borrowers misled by their schools. Examples of such schools include Corinthian Colleges (Heald College, Everest College, WyoTech), ITT Technical Institute, American Career Institute, Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute. This is called Borrower Defense Loan Discharge:

If your school misled you or engaged in other misconduct in violation of certain state laws, you may be eligible for “borrower defense to loan repayment,” sometimes shortened to “borrower defense.” This is the discharge of some or all of your federal student loan debt.

Students with total and permanent disability have also had their student loan debt forgiven. Students whose schools closed while they were enrolled may also receive loan forgiveness.

Notably, all student loan forgiveness is also considered tax-free at least through through December 31, 2025.

Even if you don’t work in public service, there are still other income-based repayment plans and forgiveness programs. I’m not an expert on the student loan landscape these days, but I would be careful before re-financing your student loans with a private lender as it is non-reversible. Be sure to understand the benefits (such as a lower interest rate) but also what you are giving up (such as these types of forgiveness options).

(image source)

Filed Under: College & Education, Deals & Offers, Debt

Last updated: November 15, 2021

Best 529 College Savings Plan Rankings 2021 – Morningstar (+ My Top Pick)

October 31, 2021 By Jonathan Ping 4 Comments

Investment research firm Morningstar has released their annual 529 College Savings Plans gold/silver/bronze medalist ratings for 2021. While the full ratings and plan analysis for every individual plan are restricted to paid premium members, the vast majority are mediocre and can be ignored.

If you are among the 50% of the population who either don’t get an in-state tax break or have “tax parity” where you get the same tax break regardless of plan location, then you can open an account at any state plan across the nation. In my opinion, there are two ways to pick a good plan. You can pick the absolute top-rated one right now, or you can pick a consistent “Top 10” plan with a history of good behavior.

Here are the Gold-rated plans for 2021 (no particular order). Morningstar uses a Gold, Silver, or Bronze rating scale for the top plans and Neutral or Negative for the rest.

All three of these plans were also rated as Gold last year.

Here are the consistently top-rated plans from 2011-2021. I’ve been tracking these rankings roughly since my first child was born. The plans below have been rated either Gold or Silver (or equivalent) for every year the rankings were done from 2011 through 2021. No particular order.

T. Rowe Price College Savings Plan, Alaska
Maryland College Investment Plan
Vanguard 529 College Savings Plan, Nevada
CollegeAdvantage 529 Savings Plan, Ohio
My529, formerly the Utah Educational Savings Plan

The “Four P” criteria.

People. Who’s behind the plans? Who are the investment consultants picking the underlying investments?
Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research?
Parent. Does the state trustee and its partners put education savers first?
Price. How are the total fees relative to the competition?

State-specific tax benefits. Now, what if you are in the 50% who do have an in-state tax break that requires you to keep your money with the in-state provider? My general take is that your in-state plan is most likely decent enough these days that if you can max out the tax break, it’s worth it to stay. There may be some edge cases where if you keep a very large balance in a relatively expensive plan, then a cheaper plan might be worth going out-of-state.

Find details on your state-specific tax benefits via the tools from Morningstar, SavingForCollege, or Vanguard. Then compare the tax break benefit with how much better a gold plan is than your in-state plan.

If you change your mind later, you have the ability to roll over balances between different 529 plans. (Watch out for tax-benefit recapture rules if you got a tax break initially.)

My pick. I’ve simplified down to one single pick for my favorite 529 plan – the Utah My529. You’ll notice they are also the only plan on both of my lists above. They have everything that I look for: low costs, high-qualify investment options from Vanguard and DFA, reasonable automatic portfolios for those that want to set-and-forget, and highly-customizable glide paths for DIY investors.

I’ve rolled over all my other 529 holdings to Utah over the years. If you don’t have a tax break to keep you in-state, I recommend this plan. I don’t live in Utah myself, but Utah residents are lucky to get a tax break on top of having one of the top plans in the country. (No disclosure on this one, although I wish they had a referral program!)

Here is a chart showing how Utah keep lowering their fees over time. I like that the cost savings realized as they grow is being shared with customers, just like Vanguard.

Filed Under: College & Education, Investing

Last updated: March 2, 2023

529 College Savings Plan Flexibility: My529 Sends Money To All 50 States

July 25, 2021 By Jonathan Ping 2 Comments

My quarterly statement told me that the My529 plan (formerly Utah Educational Savings Plan) has been around for 25 years now, and included the map above which has dots from all the different places that they have directly sent withdrawals. All 50 states are covered. This is good reminder to examine the flexible options that 529 plans provide, many of which were added relatively recently:

Save and invest using the 529 plan custodian from any state. You don’t need to use the 529 plan from your home state (although you might get a tax break if you do – see below).
Easy to accept outside gifts directly into your 529 balance. Just as people like to use gift cards instead of cash, it can be easier to ask for a gift directly to your child’s 529 plan instead of the latest YouTube-fueled toy. You can often just send a link and the money goes directly into your 529.
Many investment options. You can choose an auto-pilot investment similar to a target-date fund (TDF), or you can mange your own glide path using a mix of active and/or passive index mutual funds. You can even stay super-conservative and invest in stable value funds or bank CDs.
Spend in any state. You don’t need to use the money towards a college in your home state.
Spend at a variety of educational options. 529 funds can be used at universities, colleges, certain overseas/international programs, trade and technical schools, apprenticeships, continuing education for adults, or K-12 private tuition.
Spend beyond tuition. 529 funds can be used toward room, board, fees, books, computers, supplies and equipment that are required by those educational institutions.
Scholarship exemption. If you end up receiving a scholarship, you can withdraw that amount from the 529 without paying the 10% penalty (normal income taxes on gains will still apply if not used towards qualified educational expenses).
Spend on student loans. 529 funds can be used toward the principal or interest on qualified student loans (up to $10,000 lifetime maximum for the designated beneficiary and each of their siblings).
Change beneficiaries. You can easily transfer 529 funds to another beneficiary, for example a sibling, nephew/niece, or even yourself. You can transfer funds from one 529 custodian to another.
Save for the next generation. With any leftover amount, you can even change the beneficiary to the next generation (grandchild), although it would be considered a gift for tax purposes. Still, even a small upfront gift can to a big number if left to grow for decades.

My eldest child is 8 years old, so that means I’ve been contributing to her 529 plan for 8 years, and she’ll be making withdrawals in perhaps only 10 more years! Many fintech startups are offering custodial brokerage accounts now, and while I do think there is a teaching opportunity there when she’s a teenager, until then I only plan on funding the 529 account. The investments grow tax-free, adjust automatically with age, don’t create any tax reporting hassles, and are flexible enough for my expectations. By starting early, the tax-free growth benefit can potentially save thousands of dollars in taxes.

Coursera: Free Courses 2021 New Year Promotion

January 18, 2021 By Jonathan Ping 2 Comments

Online education site Coursera is offering a Learn a New Skill for Free in 2021 promotion with selected courses free until January 31, 2021. Here are a couple that are related to finance:

Financial Planning for Young Adults (50,000+ already enrolled)
Fundamentals of financial and management accounting

For example, you should see the $49 normal price adjusted to zero if you enroll in one of the courses above after visiting the promo link.

Filed Under: College & Education, Deals & Offers

Last updated: January 18, 2021

Best 529 College Savings Plan Rankings 2020 – Morningstar

November 1, 2020 By Jonathan Ping 4 Comments

Investment research firm Morningstar has released their annual 529 College Savings Plans gold/silver/bronze medalist ratings for 2020. While the full ratings and plan analysis for every individual plan are restricted to paid premium members, the vast majority are mediocre and can be ignored. You choices are pretty much either your in-state plan for the tax benefits, or the best overall plan if you don’t have good in-state perks.

Morningstar changed their methodology slightly for 2020. The two changes that caught my eye were (1) the elimination of “Performance” as a standalone judged category, and the elimination of judging advisor-sold plans primarily against each other. Past performance is not a great predictor of future returns, while all fees are.

Here are the Gold-rated plans for 2020 (no particular order). Morningstar uses a Gold, Silver, or Bronze rating scale for the top plans and Neutral or Negative for the rest.

Utah My529 and Illinois Bright Start Direct-Sold were both Gold last year as well. California Scholarshare and Virginia Invest529 were Gold last year but downgraded to Silver for 2020.

Here are the consistently top-rated plans from 2011-2020. I’ve been tracking these rankings roughly since my first child was born. The plans below have been rated either Gold or Silver (or equivalent) for every year the rankings were done from 2011 through 2018. The Virginia CollegeAmerica Advisor-Sold plan was removed from the list as it was downgraded to Bronze in 2020. No particular order.

T. Rowe Price College Savings Plan, Alaska
Maryland College Investment Plan
Vanguard 529 College Savings Plan, Nevada
CollegeAdvantage 529 Savings Plan, Ohio
My529, formerly the Utah Educational Savings Plan

The “~~Five~~ Four P” criteria.

People. Who’s behind the plans? Who are the investment consultants picking the underlying investments?
Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research?
Parent. Does the state trustee and its partners put education savers first?
Price. How are the total fees relative to the competition?

State-specific tax benefits. According to Morningstar, 42% of Americans live in states with no state income tax or state income tax benefit, and 12% receive state income tax benefits regardless of the plan they select. For the rest, remember to first consider your state-specific tax benefits via the tools from Morningstar, SavingForCollege, or Vanguard. Morningstar estimates that an upfront tax break of at least 5% on your contributions can make it worth investing in your in-state plan even if it is not a top plan (assuming that is required to get the tax benefit).

If you don’t have anything compelling available, anyone can open a 529 plan from any state. I would pick from the ones listed above. Also, if you have money in an in-state plan now but your situation changes, you can roll over your funds into another 529 from any state. (Watch out for tax-benefit recapture if you got a tax break initially.)

My picks. Overall, the plans are getting better and most Gold/Silver picks are solid. If your state doesn’t offer a significant tax break, I have recommended these two plans to my friends and family:

Nevada 529 Plan has low costs, solid automated glide paths, a variety of Vanguard investment options, and long-term commitment to consistently lowering costs as their assets grow. (It is not the rock-bottom cheapest, but this is often because other plans don’t offer much international exposure, which usually costs more.) This is only plan that Vanguard puts their name on, and you can manage it within your Vanguard.com account. This is the keep-it-simple option.
Utah 529 plan has low costs, investments from Vanguard and DFA, and has highly-customizable glide paths. Over the last few years, the Utah plan has also shown a consistent effort towards passing on future cost savings to clients. They lowered their fees again in 2020. This is the option for folks that enjoy DIY asset allocation (or simply don’t like all the tinkering done within some all-in-one funds). Since I like to DIY, the vast majority of my family’s college savings is in this plan.

Most 529 plans get better over time, but not always. I agree with M* that a consistent history of consumer-first practices is important, and I’ve experienced it with Nevada and Utah. It feels good to see my current plan just keep getting a little better every year.

Filed Under: College & Education, Investing

Last updated: November 2, 2020

Top 10 College Rankings by Return on Investment (ROI)

November 17, 2019 By Jonathan Ping 10 Comments

When I was applying to college, my parents went to the drugstore, bought a copy of US News & World Report magazine, and said that I could only apply to a school ranked in the Top 5 for my major (Engineering). That was the only out-of-state or private school that they would consider contributing any of their hard-earned money toward. That was their idea of “value” and “return on investment”.

These days, I am much more skeptical of college rankings. I feel that they are often reverse-engineered. If someone comes up with an intelligent algorithm, runs it, and the names of Harvard, Yale, MIT, and Stanford are not at the very top, what do you think happens? US News & World Report would dump it in the trash, in my opinion. Rankings are tweaked until the “name brand” schools end up on top.

That’s why it always grabs my interest when one of these rankings does NOT have a usual suspect on top. A Georgetown University study took some new federal data and ranked 4,500 colleges and universities by their return on investment. They took into account the actual cost of attendance, future earnings, and potential investment returns.

What school came out #1? Albany College of Pharmacy and Health Sciences. You can easily search for any specific school using their tool.

This WaPo article further discusses the results. Here are the top 10 schools based on ROI:

Albany College of Pharmacy and Health Sciences
St. Louis College of Pharmacy
Massachusetts College of Pharmacy and Health Sciences
Massachusetts Institute of Technology
Stanford University
Maine Maritime Academy
Babson College
Harvard University
Georgetown University
United States Merchant Marine Academy

Here’s some more food for thought. For the Albany College of Pharmacy and Health Sciences, the 25th-75th percentile range of SAT scores is 1040-1240 and the acceptance rate is 69%. The average annual cost for a family that earns less than $30k a year is $21,108, while a family earning $110k+ pays $32,700. The median income of former students (who received federal financial aid and were thus in the data) 10 years after entering school is $124,770. Obviously, this is affected by the fact that most students are studying a health science, but it is significantly more accessible to those who didn’t get a perfect SAT score, excel in certain sports, or have alumni connections.

For Harvard University, the 25th-75th percentile range of SAT scores is 1430-1600 and the acceptance rate is 5%. The average annual cost for a family that earns less than $30k a year is zero, while a family earning $110k+ pays $42,123 per year. The median income of former students (who received federal financial aid and were thus in the data) 10 years after entering school is $89,700.

I agree that college isn’t all about your future income, but given the huge impact of student loan debt, it should be one of the factors considered. The outliers noted are the schools focused on pharmacy/health-related fields and maritime academies. If my child had a serious interest in a medical profession and couldn’t get into an elite university, I would certainly take this information into consideration. I hadn’t even heard of these schools before now. Perhaps there are other pockets of “value” a bit further down in the rankings.

Filed Under: College & Education

Last updated: November 17, 2019

Morningstar Top 529 College Savings Plan Rankings 2019

November 12, 2019 By Jonathan Ping 3 Comments

Investment research firm Morningstar has released their annual 529 College Savings Plans analyst ratings for 2019. While the full ratings and plan analysis for every individual plan are restricted to paid premium members, the vast majority are mediocre and can be ignored. You choices are pretty much (1) your in-state plan for the tax benefits or (2) the best overall plan if you don’t have good in-state perks.

Here are the Gold-rated plans for 2019 (no particular order). Morningstar uses a Gold, Silver, or Bronze rating scale for the top plans and Neutral or Negative for the rest.

The top 3 were Gold last year as well. California Scholarshare is a new addition, upgraded from Silver. The Vanguard 529 Plan from Nevada was removed, downgraded to Silver. The reason stated was because their expenses were low, but not as low as the rest of the Gold-rated plans above.

Here are the consistently top-rated plans from 2011-2019. This means they were rated either Gold or Silver (or equivalent) for every year the rankings were done from 2011 through 2018. These were also the same as last year. No particular order.

T. Rowe Price College Savings Plan, Alaska
Maryland College Investment Plan
Vanguard 529 College Savings Plan, Nevada
CollegeAdvantage 529 Savings Plan, Ohio
CollegeAmerica Plan, Virginia (Advisor-sold)
My529, formerly the Utah Educational Savings Plan

The “Five P” criteria.

People. Who’s behind the plans? Who are the investment consultants picking the underlying investments? Who are the mutual fund managers?
Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research? Whether active or passive, how is it implemented?
Parent. How is the quality of the program manager (often an asset-management company or board of trustees which has a main role in the investment choices and pricing)? Also refers to state officials and their policies.
Performance. Has the plan delivered strong risk-adjusted performance, both during the recent volatility and in the long-term?
Price. Includes factors like asset-weighted expense ratios and in-state tax benefits.

State-specific tax benefits. Remember to first consider your state-specific tax benefits via the tools from Morningstar, SavingForCollege, or Vanguard. Morningstar estimates that an upfront tax break of at least 5% can make it worth investing in your in-state plan even if it is not a top plan (assuming that is required to get the tax benefit).

Nevada 529 Plan has low costs, solid automated glide paths, a variety of Vanguard investment options, and long-term commitment to consistently lowering costs as their assets grow. (It is not the rock-bottom cheapest, but this is often because other plans don’t offer much international exposure, which usually costs more.) This is only plan that Vanguard puts their name on, and you can manage it within your Vanguard.com account. This is the keep-it-simple option.
Utah 529 plan has low costs, investments from Vanguard and DFA, and has highly-customizable glide paths. Over the last few years, the Utah plan has also shown a consistent effort towards passing on future cost savings to clients. This is the option for folks that enjoy DIY asset allocation. Since I like to DIY, the vast majority of my family’s college savings is in this plan.

I feel that a consistent history of consumer-first practices is important. Sure, you can move your funds if needed, but wouldn’t you rather watch your current plan just keep getting better every year?

Filed Under: College & Education, Investing

Last updated: November 1, 2020

The Hidden Economics of College Admissions

September 15, 2019 By Jonathan Ping 5 Comments

NY Times Magazine has an interesting longread What College Admissions Offices Really Want by Paul Tough, adapted from his new book The Years That Matter Most: How College Makes or Breaks Us. Angel Pérez and Trinity College allowed an inside look at the admissions process of a small liberal arts college. The entire thing is definitely worth a read, but here are my notes and highlights.

Both public and private universities stress about making their budget numbers balance. Tuition, endowments, and government funds must cover their expenses. Many colleges lose money year, and some of these are eventually forced to shut down.

Tuition revenue, which along with room and board provides about two-thirds of Trinity College’s operating budget, had been falling for several years, and Trinity was running a steep deficit, losing $8 million a year.
This financial stress makes it hard to be truly need-blind and offer every student the aid package they need to afford college.

Enrollment managers know there is no shortage of deserving low-income students applying to good colleges. They know this because they regularly reject them — not because they don’t want to admit these students, but because they can’t afford to.
The simplest way to balance their budget is to admit more students who can afford to pay full tuition, even if they aren’t the best applicants.

“We were taking some students who probably should not have been admitted, but we were taking them because they could pay”

There is a popular and persistent image of college admissions in which diversity-obsessed universities are using affirmative action to deny spaces to academically talented affluent students while admitting low-income students with lower ability in their place. Boeckenstedt says the opposite is closer to the truth. If you’re an enrollment manager, he explains, the easiest category of students for you to admit are below-average students from high-income families.

High-income household have advantages in a few different ways. There are always a certain number of spaces set aside specifically for alumni, big donors, and those who excel at collegiate sports. These all tend to benefit those of high income.

Most of Trinity’s athletes play sports that are popular in prep schools and rare in low-income public schools: field hockey, lacrosse, rowing and, especially, squash. The result is that at Trinity, as at many other Division III schools in the Northeast, the recruited athletes are actually more likely to be white and wealthy than the rest of the freshman class.
SAT and ACT scores also tend to correlate strongly with income.

Boeckenstedt’s chart shows an almost perfect correlation between institutional selectivity and students’ average family income, a steady, unwavering diagonal line slicing through the graph. With only a few exceptions, every American college follows the same pattern.

Even though many of the most elite colleges now tout their “free tuition” for low-income students, the overall numbers haven’t changed much.

The most selective colleges in America were the least socioeconomically diverse. […] At “Ivy plus” colleges (Chetty’s term for the Ivy League plus Stanford, M.I.T., Duke and the University of Chicago), more than two-thirds of undergraduates, on average, came from families in the top income quintile, and fewer than 4 percent of students grew up in the bottom income quintile.
Hardly anyone pays the full “sticker” price at private universities. In fact, on average, students pay half the sticker price.

At private, nonprofit four-year colleges — a category that includes most of the nation’s highly selective institutions — 89 percent of students receive some form of financial aid, meaning that almost no one is paying full price.

In 2018 the average tuition-discount rate for freshmen at private, nonprofit universities hit 50 percent for the first time, meaning that colleges were charging students, on average, less than half of their posted tuition rates.
Colleges use variable pricing based on how badly they want you in their class and how much they think you’ll pay. If you get an admission to a private college with zero “merit” aid, sorry but you’re probably on their low end and they want your money to help pay for lower-income students that they want more. “We’ll take you, but only if you pay full price.”

“Admissions for us is not a matter of turning down students we’d like to admit. It’s a matter of admitting students we’d like to turn down.”

“Everybody wants to have more selectivity and better academic quality and more socioeconomic diversity, and they want more revenue every single year,” he explained. “Part of my job since arriving at Trinity College has been educating this community about the fact that you can’t have it all at the same time. You’ve got to pick which goals you’re going to pursue.”
Capitalism works from the student perspective as well. Parents and students have come to expect such tuition discounts if they are a stronger applicant and have multiple aid offers.

its wealthy admits were demanding steeper and steeper tuition discounts in order to attend, and overall tuition revenue was falling as a result.
Everyone seems to place too much power in “America’s Best Colleges” rankings by U.S. News & World Report.

The U.S. News list is openly loathed by people who work in admissions; in a 2011 poll, the most recent available, only 3 percent of admissions officials nationwide said they thought the “America’s Best Colleges” list accurately reflected the actual best colleges in America, and 87 percent said the list caused universities to take steps that were “counterproductive” to their educational mission in order to improve their ranking.

Perhaps I am too jaded, but I don’t really mind a private college allowing some extra “full price” students in order to offer more low-income students a full scholarship. I found it more interesting that data analytics now optimize exactly how much tuition they can get out of you. Can you really call it “financial aid” when you have a $70k sticker price and “only” charge someone $60k a year? I always hated calling something a “financial aid package” when it was mostly loans.

Filed Under: College & Education

Last updated: September 15, 2019

Can You Teach Your Kid To Be Rich?

July 8, 2019 By Jonathan Ping 5 Comments

There is an ongoing debate about personal finance education in school. It sounds like a good idea, but multiple studies have found that financial literacy classes don’t really improve future behavior. It may be too much to expect an easy fix to such a complex problem.

As a parent, how do you best set up your kids for financial success? In the end, how can you really tell if you made a difference anyway? You can only try your best. My personal philosophy boils down to this famous proverb:

Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.

Some parents plan on giving their kids a big pile of fish. An inheritance. Real estate. A business to take over and run. That’s out of love, and I am not judging that choice. I might leave them something, but I’m going to tell them to expect nothing. Instead, I hope they will see that I put in a lot of effort to help them develop the tools to go out and “fish”, and that as adults it’s up to them to make money for themselves.

To be clear, this is not the only thing that I am teaching them. Good relationships with family and friends are more important than an early retirement. However, I have observed several specific traits useful in navigating the financial world. As a result, I want to help them:

Develop good character traits like self-discipline, gratitude, and perseverance. If they can control their emotions, have empathy for others, and endure hard work, it helps everything else.
Obtain quality formal education. If they are going to solve the world’s problems, they need a strong, wide base of knowledge. A solid education and good teachers can really inspire and change a child’s life.
Experience entry-level hourly work in the retail, construction, and/or food service industries. They should understand how hard it is to make a living without specialized skills.
Create their own business ventures. I plan on helping them start any kind of micro-business that they want. It might be even better as a non-profit, donating the proceeds to the community. Through this, they will learn basic accounting, marketing, and interpersonal skills.
Improve interpersonal skills. Across all of their activities, from school projects to extracurriculars (sports/arts/music) to starting their own business, learning how to work with others is key.
Feel encouraged to take calculated risks. There are many ways to take asymmetrical risks where the upside is huge and the downside is small. This especially true when you are young and without dependents. I want them to take such risks.

None of the factors above require a ton of money, although private schools can be quite expensive. The best option may be maximizing the public school options available. My parents rented a small apartment in a good school district, as they couldn’t afford buying an expensive house with high property taxes. I only realized this recently when I visited our old duplex and found a house down the street listed for nearly $2,000,000 (median price in this city is $370,000).

I do plan to contribute to a 529 plan and minimize student loan debt. Maybe college tuition will be more sane in 15 years, but I think this is the best use of cash right now – keeping them from having to fight the power of compound interest in reverse. (I also classify paying for education as “teaching them to fish”.) I want to show them that we value education and also strive to avoid debt whenever possible.

Bottom line. How does anyone get rich? Most people who got rich quickly had equity in a business venture. This takes a combination of specialized skill, interpersonal skills, risk-taking, and luck. Most people who got rich over decades got there with a steady career, work ethic, patience, self-discipline when it comes to spending, and investing the difference repeatedly. I’d be happy with my kids taking either path, and tried to think up a list of ways to help promote these traits.

Filed Under: College & Education, Entrepreneurial, Family

Last updated: July 8, 2019

Morningstar Top 529 College Savings Plan Rankings 2018

November 9, 2018 By Jonathan Ping 8 Comments

Investment research firm Morningstar has released their annual 529 College Savings Plans analyst ratings for 2018. While the full research paper appears restricted to paid premium members, this is still useful as while there are currently over 60 different 529 plan options nationwide, the majority are mediocre and there is really no reason to put your hard-earned money into them since anyone can invest in any state’s 529 plan.

Here are the Gold-rated plans for 2018 (no particular order). Morningstar uses a Gold, Silver, or Bronze rating scale for the top plans and Neutral or Negative for the rest.

All 4 of these plans were Gold last year as well. There were no new additions or subtractions.

Here are the consistently top-rated plans from 2011-2018. This means they were rated either Gold or Silver (or equivalent) for every year the rankings were done from 2011 through 2018. These were also the same as last year. No particular order.

T. Rowe Price College Savings Plan, Alaska
Maryland College Investment Plan
Vanguard 529 College Savings Plan, Nevada
CollegeAdvantage 529 Savings Plan, Ohio
CollegeAmerica Plan, Virginia (Advisor-sold)
My529, formerly the Utah Educational Savings Plan

The “Five P” criteria.

People. Who’s behind the plans? Who are the investment consultants picking the underlying investments? Who are the mutual fund managers?
Process. Are the asset-allocation glide paths and funds chosen for the age-based options based on solid research? Whether active or passive, how is it implemented?
Parent. How is the quality of the program manager (often an asset-management company or board of trustees which has a main role in the investment choices and pricing)? Also refers to state officials and their policies.
Performance. Has the plan delivered strong risk-adjusted performance, both during the recent volatility and in the long-term?
Price. Includes factors like asset-weighted expense ratios and in-state tax benefits.

My picks. Overall, the plans are getting better and most Gold/Silver picks are solid. If your state doesn’t offer a significant tax break, I would recommend these two plans to my friends and family:

Nevada 529 Plan has low costs, solid automated glide paths, a variety of Vanguard investment options, and long-term commitment to consistently lowering costs as their assets grow. (It is not the rock-bottom cheapest, but this is often because other plans don’t offer much international exposure, which usually costs more.) This is only plan that Vanguard puts their name on, and you can manage it within your Vanguard.com account. This is the keep-it-simple option.
Utah 529 plan has low costs, investments from Vanguard and DFA, and has highly-customizable glide paths. Over the last few years, the Utah plan has also shown a history of passing on future cost savings to clients. This is the option for folks that enjoy DIY asset allocation. Since I like to DIY, I have the majority of my family’s college savings in this plan.

Morningstar offers their own additional insight into the Gold-rated plans. I feel that a consistent history of consumer-first practices is most important. Sure, you can move your funds if needed, but wouldn’t you rather watch your current plan just keep getting better every year?

Filed Under: College & Education, Investing

Last updated: November 9, 2018

How Much Do You Need To Save For College? Vanguard 529 Calculator

May 30, 2018 By Jonathan Ping 5 Comments

Thinking about 529 plans and like playing around with interactive calculators? This Vanguard tool helps you visualize how much you’ll need to save for college and how changing up a specific factor would affect your results. It adjusts for age, contributions, investment returns, tuition inflation, and even looks up the current cost of your favorite university. A formal report is spit out with lots of charts, just like a financial advisor might create for you. Here’s a sample screenshot:

Tuition inflation is something that I think is hard to predict. However, I couldn’t think of anything better than accepting the default assumptions that investment return will only barely outpace tuition inflation.

If you’d rather have a quick, simple scenario, check out this Vanguard article on the power of automatic savings. If you put away $130 a month automatically every month for 18 years, at a 6% return you’d end up with $50,000. Putting away $50 a month reliably would get you to $20,000.

Nearly half of your final amount would be due to investment growth, which thanks to the 529 plan can be tax-free when used towards qualified educational expenses.

I’m still in the camp that retirement should be prioritized over college savings, but I definitely understand the parental instinct to provide the best educational opportunity possible. I’m still pondering the idea of targeting funding college with 1/3rd savings, 1/3rd spending from current income, and 1/3rd grants/scholarships/loans.

Finally, here is another set of handy Vanguard tools, a 529 Plan Interactive Comparison Map and Tax Deduction Calculator.

Filed Under: College & Education, Tools & Calculators

Last updated: May 30, 2018

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