You’ve Planned Well for College; Now Watch Out For The Fiscal Cliff!

by Todd Weaver on December 3, 2012

Being the good planner you are, you probably took the time and made the effort to prepare your financial strategy for your student’s next step: College.

“Wait!” You ask yourself, how does the Fiscal Cliff affect my planning?

As my father-in-law likes to say, “you can plan all you want, and then God laughs.”

While Federal Financial Aid may be affected by Fiscal Cliff results, it seems that those who hold dividend earning stocks may want to read more about how they may be affected.

The looming Congressional Budget Crisis may very well affect their planning for minimizing income in the base year (for those with students heading off to college in 2013). Fidelity just published this article that talks about how corporations are planning on accelerating dividends to avoid likely tax increases on Dividends and Capital Gains after the first of the new year.

The Bush-era 15% top tax rate on dividends is scheduled to end in January. If Congress takes no action, dividends would be taxed at the same levels as wages and salaries.

It may make sense to be invested in Growth stocks rather than Value stocks during the “college years.”

When planning your family’s financial strategy for paying for college, make sure you take into account taxable events. Some may be within your control while others may not.

Be prepared.

How are you planning for paying for the college years? Do you have your Game Plan in place? Make sure you do before the Base Year for financial aid begins.

 

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