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Podcast#082 – Fundamentals – Interview with Brad Baldridge

Paying for College Expenses with Coverdell, 529s, and hacking the Financial Aid

Brad Baldridge is a late-stage college planning specialist. He helps parents of high school students plan and pay for college using strategies such as merit aid, need based aid, tax planning, savings and investing for college, negotiating with colleges, scholarships and loans. Over the past 10 years Brad has directly helped hundreds of families plan and pay for college. He has provided in-depth college plans resulting in increased financial aid, scholarships, identification of the right schools at the right price, and better loans.

• Coverdell has low contribution limits (2k per year) but the good thing is that it can be used for a wider range of education expenses

• 529 is State sponsored and some states have special breaks based on where you live

• Do the Coverdell first and then the 529 in most cases

• Tuition, fees, computer, room and board, prescribed supplies, and groceries. Up to the cost of what the dorm would be. Sorry no beer

• Need to start before high school or even when a toddler

• You can transfer it to another brother or sister

• Its rare to have too much money in a 529

• Consider making a higher rate of return outside a 529

• A 529 has a menu of choices just like the 401k

• Show that you own nothing so that you don’t make to much money to qualify for financial aid

• The net value is what is important for financial aid

• The look back is two years (prior prior year) but this changes from time to time

• What about putting funds back in the grandparents generation? Gifts from grandparents are reported by income. So time it for the last year of college.

• Can’t use trusts to hide the asset, but can use irrevocable trusts

• There are tax credits but check your taxable income so you don’t

 

Thank you Brad Baldridge for joining us on Simple Passive Cash flow!

2 Comments

  1. Martin
    August 30, 2018

    At the 13-minute mark, the guest said that the Coverdell cannot be self-directed. This is not true. There are trustees out there that will allow you to self-direct your Coverdell. This is the likely the same list of custodians for self-directed IRAs. Personally, I use Goldstar Trust Company and I have invested in tax lien certificates since my kids were born. Their Coverdell accounts have grown substantially.

    Reply
    1. Lane
      August 31, 2018

      Great catch! The power of crowd sourcing tricks and tips from the Hui.

      Reply

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