Sunday, February 1, 2004

Early worrying saved financial scurry



By Karen Gutierrez
The Cincinnati Enquirer

[IMAGE] Graig and Jan Smith of Finneytown had a savings plan that enabled their children to attend college without financial aid. Here, they're seen with their children (from left) Ryan, 20, a junior at Ohio State; Lindsay, 16, a junior at Finneytown High School, and Eric, 18, a freshman at Miami University.
(Craig Ruttle photo)
FINNEYTOWN - Start saving early enough and it's possible to send your kids to college without financial aid or scholarships.

Dr. Graig Smith, an obstetrician, began investing at least $100 a month and whatever else he could spare in mutual funds for each of his children when they were 3, 7 and 9. Each now has about $80,000. That's enough to cover Ryan's education at Ohio State University, where he's a junior this year, and Eric's at Miami of Ohio, where he's a freshman.

"It wasn't that we didn't need to worry about (money)," Smith says. "We just started worrying about it really early."

He set up the funds in his kids' names. The advantage: All interest is taxed at their rate instead of the higher adult rate.

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A drawback: Students are less likely to get aid if assets are in their names as opposed to their parents'.

For this reason, some families believe they should save little for college, period.

That's not smart, experts say. Aid packages usually include loans. Better to earn interest now than pay it later.

Besides, colleges do not look kindly on "an affluent family that has lived beyond its means for years and is now looking for the college to support this lifestyle with financial aid," says The Princeton Review in its book, Paying for College Without Going Broke.




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