Day: April 19, 2012

Paying for College

Posted onAuthorcahwyguy3 Comments

As you can guess by the picture, the decision has been made regarding which university for Erin. The intent to register goes in this week, followed shortly by the housing application (she likes the mini-suites in Units 1 or 2 best). The next question is: “How do we pay for this?”

Now, I’m not asking “Where do we come up with the money?” That’s a more private question. My question here is: Given the variety of funding sources available, how should we prioritize them and what should we take from where. Here are the funding sources as I see them, excluding any merit scholarship money we might get:

  • Student Savings. Savings accounts of the student, set aside in the student’s name for college.
  • Subsidized Federal Direct Student Loans. Loans where the government pays the interest while the student is in school; student begins repayment of accrued interest and principle six months after graduation. Current rate: 6.8%
  • Unsubsidized Federal Direct Student Loans. Similar to the above, except the student is responsible for all interest.
  • Savings Bonds. Mostly issued in the parents name, payable on death to the student, but can be gifted to the student.
  • California Scholarshare. Money accumulated in a 125(b) 529 account.
  • Parent Savings. Money the parents have in, essentially, cash or near cash accounts.
  • Parent Loans. Usually the Federal Direct Parent Plus Loans. Repayment starts 60 days after final loan disbursement for the year, although payments can be deferred while the student is in school. Interest accrues. Current rate: 7.9%.

Other factors to consider: Interest makes the overall cost of education more expensive, so a loan with a rate of 6.8% means that the school costs are 6.8% more than if you paid cash. If you can’t earn enough to cover that, you may be better off paying cash, if you have it. Further, there are origination fees of 1% for all Federal Direct Loans to students, and 4% for Direct Parent Plus loans. This makes loaned money more expensive.

Some additional factors: I know there is a tax write-off for tuition expenses, but I’m not sure how you get it. I know that student funds are “taxed” at a higher rate in the FAFSA form, so spending those down faster might mean more money in subsequent years. Savings bonds, if gifted, will probably be taxed at a lower rate; if they haven’t maxed out on interest, they are still earning good interest. Doing some level of student loans is a good thing — especially if you pay them off early — for it does wonders for the student’s credit rating. Also, if you pay them off quickly, the overall interest expense is lower (at least I believe student loans are simple interest and not amortized, like home loans). On the other hand, you don’t want to come out of the process saddling the student — or the parent — with excessive loans.

Here’s the ultimate question: given all these factors, what is the best approach to take in terms of what amounts to draw from what accounts. For example, the answer might be: The parent pays the maximum deductable tuition credit, and then turns to subsidized loans, paying them off that year. Scholarshare is used next, followed by Savings Bonds. Next is cash on hand from both parties, followed by unsubsidized loans. Now, that’s just a guess. I’m going to be asking my tax adviser on this, as well as the college planning folks, but I thought I would get your opinion as well. Those who have been recent students: What is the best approach?

 

 

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Rabbi John

Posted onAuthorcahwyguy

Last night, I learned of the passing early Wednesday morning of Rabbi John Sherwood, a dear friend.

I first met Rabbi John through my wife — she had been active at Temple Emet of Woodland Hills, and wanted John to officiate at our wedding. Over the years we talked many times — he was a regular contributor to my mailing list and the FAQ. He named our daughter. He was going to do her bat mitzvah until he got sick.

For the longest time, John’s spiritual home was Temple Emet of Woodland Hills. I don’t think he was the founding rabbi, but he was there for 23 years. Before that, I know he was a rabbi at North Valley Reform, which through mergers became our current congregation, Ahavat Shalom in Northridge. John remained at Emet until the merger with Shir Chadash to form the current congregation Kol Tikvah. At that time he retired and moved off to Ventura.

Retired, however, does not mean inactive. John was active through Ventura and on the web, officiating on cruises and doing all sorts of good work. We had been out of touch the last few years, alas, so I don’t have the latest details on what he had been doing.

The online obituary for John may be found here. I found a better summary of John’s career here:

Dr. John M. Sherwood is Rabbi Emeritus of Temple Emet of Woodland Hills, California, where he served as Senior Rabbi for twenty-two years. Early in his career, he was the first reform rabbi in western Canada, and taught in the religious studies department of the University of British Columbia. For six years he was an adjunct professor of pastoral studies at St. John’s Roman Catholic Seminary in Camarillo, California. A graduate of the Los Angeles Police Academy advanced chaplaincy course, he was a chaplain and crisis intervention counselor for the Department from 1982 to 1997. His colleagues elected him coordinator of the chaplain corps in 1995. He is a past president of the San Fernando Valley Interfaith Council, and the author of a high holy day prayer book and a number of creative haggadahs. He has written many articles on liturgy and the relationship of Jewish and Christian ceremonial observances. One of his favorite community projects was working with the priest-rabbi dialogue committee that is jointly sponsored by the Board of Rabbis of Southern California and the Archdiocese of Southern California. Upon his retirement from the pulpit, he qualified as a personal fitness trainer in order to develop a motivational program bringing mind, body and spirit together. His interest in computers has led him to pursuing intellectual interests all over the world through the Internet. He is a frequent respondent to the Union for Reform Judaism’s “Ask the Rabbi” web site, and that of Jewish.com, and a regular contributor to the Liberal Jewish Newsletter. When not following his academic pursuits, he enjoys travel with his wife, Dolores. These journeys, coupled with his passion for scenic photography, have led to the creation of his slide lecture series entitled “Judaism Around the World, from Budapest to Bangkok and Back.” His biography appears in the Marquis Who’s Who in Religion in America, as well as several other similar publications. Since moving to Oxnard, he has become a chaplain for the Ventura County Fire and Rescue Department, is a member and chairperson of both the Oxnard Clergy Association and the Ventura Interfaith Ministerial Association. He led the two organizations to joint sponsorship of a new program for the west county in interfaith education. He and his wife, Dolores served for three years as chair and vice-chair of the Oxnard City Sea Air Community Council, and as members at-large. He has been active in environmental causes, specifically the Save our Open space and Agricultural Resources (SOAR) movement. He is also a professor for Elderhostel. He has served on the executive committee of a study group created by the Chairman of the Board of Supervisors, Supervisor John Flynn. The group is known as “Society Ecology Economy Ventura County Vision”. The Board of Supervisors also appointed him to the newly created County Election Finance Ethics Commission, of which his colleagues elected him vice chair, in which position he served for two years. He served for five years on the Institutional Review Board of St. John’s Regional Medical Center. In addition, he serves as co-chair of the Oxnard Police-Clergy Council. He is a member of the Oxnard Community Relations Commission. He is a recipient of the California Central Coast Anti-Defamation League Distinguished Community Service Award.

John gave me one piece of advice I’d like to share as part of this brief note. Back when we got married, we visited him at his house. His note with directions reminded us to stop and enjoy his beautiful rose bushes and their fragrance. I think of that note to this day when we walk by roses.

Rest well, John.

 

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