529 Plan Withdrawals

     A 529 plan can be a great way to save for college. These work a little like Roth IRAs in that they are investment vehicles in which you won’t have to pay taxes on your investment’s growth. So, when it comes time to pay for college you can pull all that money out without having to worry about the tax implications.

Well, that’s actually only true to a point. Perhaps the biggest downside to 529 plans is that their monies can only be spent on what the federal government deems as “qualified expenses.” To paint a broad stroke, qualified expenses include tuition, room, board, books, as well as some necessary supplies including technological ones like computers, but it’s a little more complicated than that.

    You can’t just pull however much money you want from your 529 and say “We have a really nice off campus apartment, and the rent is really expensive. All this money is for that.” Every college publishes a detailed cost of attendance. I like to describe this as an all-inclusive price to attend a college and stay alive for a given year as it includes tuition, room and board, supplies, transportation, clothing, personal expenses, and computer and phone. Again, note that not all of these are considered “qualified expenses” for the purposes of 529 plans. For those that are, the amount the individual colleges assign to each category is significant because that is the maximum you are allowed to withdraw from a 529 plan to spend on that category. 

    For example, the University of Florida lists $5,800 as the average annual cost of housing for the upcoming school year. So, even if you’re paying $6,800 a year for your apartment at UF, you won’t be able to withdraw more than $5,800 from your 529 plan to pay for it. Again these numbers are specific to each university. So, at Emory University which is located in a nice area of Atlanta and where you would expect housing costs to be higher, the housing allowance is $9,254.

    Maybe it’s worth mentioning too that as with many other things on your tax return, the IRS doesn’t have an efficient system to verify what you’ve actually spent your 529 withdrawals on. It’s the honor system really. However, were you to be audited, the IRS would certainly want to see concrete documentation of what you spent your 529 withdrawals on and they might reach as far back as 6 years.

    To be sure, you can actually withdraw any amount of money from a 529 plan to spend on anything you want. It’s just that anything that doesn’t fall under the category of a qualified expense counts as income and is subject to a 10% penalty. This is true for the earnings portion of your investment and not the contribution portion. Some states like California, impose additional fees on unqualified withdrawals. So, do your research. Paying these taxes and penalties definitely diminishes the advantages of a 529 plan, therefore it’s best to plan ahead and avoid these when possible. 

High School Science Selection

 When it is time to select a new class for the upcoming school year, selecting a science can be a little tricky. What happens in different science classes is about as diverse and varied as any content area under the same umbrella. After all, in a regular freshman English class you’re reading text, discussing it, and writing a bit. The same is really true for an advanced-level senior English class, right?

However, the things a student is doing in an earth and space science class is completely different from what goes on in an anatomy class. Still, both classes are considered a science and in some places they might even be taught by the same person. There’s just a lot of variety within the curriculum of any school’s science department.

So, with such diversity how do you know which science course to take? To begin, it's obvious that students will need to take any specific science classes that are required of them. For example, in Florida where I counsel, students are required to have three science credits one of which must be biology. So, everyone takes biology, that’s a given, but those other two science credits are up in the air. Determining which ones to take can be easier for some students than for others. A student who is dead set on a career in medicine would do well to focus on courses like biology, chemistry, or anatomy. A future mechanical engineering student will likely benefit from physics.

What about the student who isn’t really going to touch science in the future though? How do they decide what science classes to take? My advice here is to just spend some time thinking about the curriculum offered and make a rational decision about which course has the most potential to be meaningful to you in the future, even if that means reaching for some connections,

For example, perhaps you have a budding writer on your hands. There’s generally not a ton of science involved in that. However, maybe a course like forensic science would be a good choice because there’s a lot of fodder there for storytelling. What about an artist? At some point they might want to draw a human figure, right? So maybe anatomy is a good choice. In fact, courses like anatomy or biology are always a good choice because a student is certainly always going to have a body and any knowledge that might come into play when they are sitting in a doctor’s office one day either to discuss themselves or a family member can be beneficial.

Making a decision about which science course to take can be a little challenging for a student without strong science inclinations. However, science is all around us in our everyday lives so making meaningful connections can be done by anyone. Sometimes, it just takes a little thinking.

How the Pandemic impacted college admissions

 

When the pandemic struck, it had a radical impact on college admissions. This bled into many areas. Potential students couldn’t tour schools. Many weren’t compelled to pay tuition at a school in another town when they were just going to be remoting in their classes anyways. Some students have been challenged to even finish high school while faced with quarantines and different educational formats than they are used to. However, one of the main effects COVID 19 has had on college admissions is seen in the old college admissions staple of standardized testing.

 

When the pandemic started in the spring of 2020, the SAT and ACT canceled all of their upcoming tests. Testing resumed in the fall but many students were not comfortable entering public settings to take a test and many test centers remained closed. Perhaps the testing services would have considered virtual options, but those can be tricky and the cheating scandal that happened the previous year did nothing to promote those. 

 

So, with many students cut off from the ability to take tests, how were so many colleges supposed to require them? The logical approach for many (but not all) colleges was to go test optional. 

 

Prior to the pandemic, this practice had been trending in college admissions. So, it wasn’t unheard of it. Still, there were many schools that previously relied on testing. The tests’ function is to provide a comparative basis for students who come from a variety of high school settings and backgrounds. The SAT and ACT are the national standard for high school students. 

 

Without this information, schools that do not require test scores have seen an uptick in applications. Students who may have felt their scores were a liability for admission are now emboldened to apply. This has proven to be a challenge for colleges. Those who made the switch were used to having test scores as an evaluation tool. They are now forced to evaluate an even larger application pool with less data.

 

I think that colleges are still trying to figure out the best approach to this. This isn’t the first time they’ve evaluated students and their experience is worth a lot, but I would imagine we’ll see college retention rates take small dips as some students struggle to keep up at colleges they might not have previously gotten into. From the student perspective, just because you might be able to get into a certain school, doesn’t necessarily mean you should go there. Success in college is all about finding the right fit. A student and their college are partners in education and if you don’t fit with that partner, the experience will lag. Going to a college that simply exceeds your aptitude could have disastrous life-long consequences, so be honest with yourself in this regard. 

 

I suspect that colleges are using this time to reevaluate their admissions process and the criteria they use for their decisions. Time will tell how their process evolves. In the meantime, students have the opportunity to consider some schools that have been out of reach for them before, but they would do well to keep in mind how the traditional demographics of that school align with their own skill set.

Late Decisions about College

              It’s May and you are likely reading this after May 1st. That is a significant date in the college admissions game as it is known as National Decision Day. This is the date most colleges would like for admitted students to notify them by as to whether or not they plan to enroll. Of course, you have to be admitted first in order to be in position to make that decision. However, what if you didn’t get it together a while back and never ended up applying in the first place? With graduation looming, what are your options if you still want to do something to continue your education?

This late in the game, you’ll have a hard time finding a seat in the summer or fall to a college or university that has competitive admissions. I shouldn’t speak in absolutes though. Some less competitive colleges might have a spot for you. Perhaps the best thing to do is to stop reading this right now and get on the phone. It never hurts to ask if it’s worth applying this late.

When it comes to a competitive schools, your best bet might be to seek admission for the spring semester. School doesn’t have to start in August or September. Many students start back to school in January and this is actually a fairly common occurrence. So, complete the application and just select your desired start date as the following January (Spring semester). Just don’t wait until December. That will be too late again. Do it now.

Another alternative would be to consider starting at a community college. Admission to these schools is usually not competitive, so you’ll likely be able to enroll up until pretty close to when class actually starts. If you start at a community college, most universities would prefer you earn an AA degree there before you seek a transfer. There’s a lot of upside to that though.

Perhaps you didn’t apply earlier because you weren’t sure if college was really right for you. Now, you see a lot of friends heading off to college and you’re only interested in it now, because it just seems like what high school graduates are supposed to do and you don’t want to be left behind. Be honest with yourself about this. College is expensive and if you’re not emotionally ready for it, you might not do well. That would be a waste of money and you could damage your chances of being successful when you are ready. It’s okay to take a little time to see what life after high school is like and if you’re ready to go a year from now, you can. Just make sure you live up to your potential. If you’re worth more than your high school job, don’t let yourself get stuck in it for too long. At some point, invest in learning a skill or the resources you need to make a career for yourself that maximizes what you’re capable of and provides a stable life for yourself.

Deferral vs. Waitlist

               It is spring time and to high school seniors, it is decision time. Of course, their decision on what school to attend next year, henges entirely on the decisions colleges have already made about the senior. Unfortunately, the decision the colleges make isn’t always very clear, so let’s clear up the meaning of a couple of the ambiguous decisions colleges release.

           Waitlisted and deferred are among the more confusing decisions released. Here is what they mean. If a student is deferred it means the college wants to think a little more about the student. Often, they’ll request an additional piece of information from the student like first semester grades or an additional test score. Such a request might be sent to a student who has good numbers in one area, but numbers that miss the college’s mark in another. So, for example, a student who has great grades but a low test score might be given the opportunity by the college to submit another test score.

Sometimes, a deferral can mean a student has been pushed into a different applicant pool. This is somewhat common for students who apply early decision wherein they receive an early admission decision but are obligated to attend if admitted. A deferral here is a college’s way of saying, “We’re not ready to pull the trigger on you this early, but we would like to take a hard look at you along with our regular pool of applicants.”

Students who are waitlisted are essentially caught in a school’s own internal numbers game. Colleges have something akin to quotas in each freshman class. Let’s say a college knows they want their freshman class to be about 5,000 students. They need a certain number of students paying tuition in order to make their budget work. This college might know too they’ll likely have about 12,000 students apply and maybe they’ll end up offering regular admission to about 7000 of those. However, it’s harder to predict how many of those 7000 students will actually choose to attend. For certain, some will decide to attend other schools. In order to make sure they hit that 5000 student mark, the college might choose to waitlist a group of applicants in order to sort of keep them on the line if they need to boost their freshman class or fill in some other gaps in their freshman profile. Of the 7000 admitted students, if 5500 choose to attend, that’s bad news for the waitlisted group. However, if only 4000 of those students commit, the college is going to go back to the waitlist and start offering admission.

           In either case, a waitlist or deferral is better than being out-right denied. A student may be stuck in college admissions purgatory, but they do still have a chance of getting in. This student would be wise to start seriously considering other options though. Waitlists and deferrals are very far from guarantees of admission and failing to put some effort into a plan B could leave the student without admission to any school as colleges often release final decisions on waitlists and deferrals very late in their admissions cycle.

Accepting the Imperfections of Teens

 I work with teenagers for a living. I’m in the adolescence business. These people are a different sort. To excel at my craft, I have to understand that. It is essential to my success that I appreciate and accept the different thought processes they have and consider those as I work with teenagers. In turn, I spend a considerable amount of time helping their parents do the same as well as my colleagues on occasion.

Teenagers are imperfect. The sooner you understand this and accept their inherent shortcomings the easier your experiences with them will be. It has been said that most of the problems people have with other people stem from differences in expectations. If a parent constantly expects a teen to think, behave, and operate like an effective adult, that parent is sure to be disappointed. You wouldn’t expect a toddler to act like an adult and it’s easy to lose sight of the fact that teens are still children. The difference is that they look a lot more like adults, they are capable of adult conversations, and indeed are capable of making adult decisions regarding their actions. However, expecting them to do this on all occasions is a fallacy.

This doesn’t mean that teens should get a free pass. Their teen years can function as a training ground for adulthood. I believe that is how nature designed us. However, as is with training grounds, mistakes will be made and lessons will be learned. The most frustrated parents I work with do not tolerate this. They don’t understand what compelled their child to make such a poor decision. They expect them to be forthright, calculated, and scrupulous. When the teen falters, and they will, these same parents attack instead of scaffolding a learning opportunity. This only works to sour the relationship between parent and child and things can spiral downward from there.

The most effective parents are still disappointed when their children fall down. They know this is an inevitability though and are there to pick their children back up. They don’t condone their childrens’ poor decisions, but are not surprised by them. They impose consequences, calmly talk to their children about how to make better decisions in the future, and move on. The relationship strengthens and the child has a want to improve rather than a feeling of hopelessness in meeting an impossible standard. In other words, the child is able to train as they should on the training ground before they head off to battle on their own.

I truly believe that going into your relationship with teens with an expectation that they aren’t going to do everything right is the secret to successful relationships with them. Understand that they are learning to be better but they aren’t perfect yet. Be willing to help them in their journey towards adulthood and don’t be surprised at the moments they show you they are still kids. Doing so offers the support they need to be capable adults and makes for better outcomes in the future and the relationships you have with them.

The Pandemic's impact on College Admissions

  The global Corona Virus pandemic has had a tremendous impact on many things. College admission tests is among those. Let’s take a moment to review some of those changes and the impact they might have.

I think the highest impact change we’ve seen so far is a move away from the importance of standardized testing. Many colleges and universities have dropped their testing requirement or made it optional since the pandemic began. The testing services canceled test dates in the spring and summer of 2020, and while tests were offered in the fall many students, had reservations about going out to the public. As yet, no at-home testing is available from the SAT or ACT. With that in mind, I think many colleges felt like they didn’t have a choice but to move away from testing. It’s difficult to require test scores if students have limited opportunities to acquire them. Schools that don’t require tests have been around for a long time. I suspect many of those will continue their stance. However, I’m not convinced that others won’t revert back to requiring tests in the future. Their primary function is to serve as a way to compare different students from different backgrounds. A home-schooled student in California, a private school student in Florida, a public school student in Texas, and an international student from Tokyo might all have perfect grades but their educational experiences are very different. Tests serve as a way to put them on the same scale. Without those, colleges are left with a lot of guesswork.

The College Board has announced it will discontinue its Subject Tests and the optional essay on the SAT. Few colleges required the essay as I think they felt like the results were not as meaningful as other information culled from the test. It was also considerably more labor-intensive to grade. The rest of the test is multiple choice and can be machine graded. Essays must be read and graded by humans. I was a little surprised to see the subject tests going away, but as I’ve thought about it it makes sense. The Subject Tests allowed colleges to get a sense of a student’s knowledge in some specific content areas. However, they already had a way to do this in place. The College Board also publishes AP tests which students use to demonstrate what they’ve learned at the completion of AP courses. So, really, these tests largely do the same thing as Subject Tests. For the most part, colleges have told me in the past they don’t consider AP exam scores in the admission process. I think there is a good chance this will begin to shift in the absence of subject tests. That might be especially true for schools that previously required subject tests.