- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Private School Tuition
Posted on 5/1/19 at 1:42 pm to lsusaint86
Posted on 5/1/19 at 1:42 pm to lsusaint86
Our school arranges for a 2.5% simple interest tuition loan through First Bank and Trust. 10 month amortization period, paid automatically on the 15th, costs me less than $200 per year to keep my liquidity to invest all year for the $10,000 tuition we pay for 2 kids.
Despite the irrational fear of paying interest on the money board, borrowing money (at simple or compound interest) to stay liquid and earn a higher return elsewhere is the better strategy. My $10,000 invested each and every year my kids are in school in the Vanguard 500 Index will earn far more than just about any rate I could borrow their tuition. I'm happy to pay ~$930 per month for 10 months so I can add another $10,000 every year to my investment portfolio and keep it there for the next 20 years.
(The math still works if you use a HELOC or some other low interest financing to pay tuition, provided you're investing in long term assets and retiring the tuition debt over the school year.)
There's no point using an elementary 529 plan due to short term volatility and limited time to accumulate funds. Elementary tuition is a short term expense that should be paid from current income, while you invest for yourself long term at the same time.
For college, I recommend you use the LA Start program for college because you get a huge $2,400 per child state tax credit (very valuable with current $10,000 SALT limitations) a little match bonus and 18-25 years to accumulate and reinvest without worrying about volatility. The Louisiana plan is actually one of the best rated plans nationally and has Vanguard funds with institutional expense ratios (0.02% expense ratio, $2 per $10,000 invested!)
If junior doesn't go to college, you can make yourself the 529 beneficiary and go to golf school or learn to be a sommelier or something else cool. Can't do that with an elementary 529.
Despite the irrational fear of paying interest on the money board, borrowing money (at simple or compound interest) to stay liquid and earn a higher return elsewhere is the better strategy. My $10,000 invested each and every year my kids are in school in the Vanguard 500 Index will earn far more than just about any rate I could borrow their tuition. I'm happy to pay ~$930 per month for 10 months so I can add another $10,000 every year to my investment portfolio and keep it there for the next 20 years.
(The math still works if you use a HELOC or some other low interest financing to pay tuition, provided you're investing in long term assets and retiring the tuition debt over the school year.)
There's no point using an elementary 529 plan due to short term volatility and limited time to accumulate funds. Elementary tuition is a short term expense that should be paid from current income, while you invest for yourself long term at the same time.
For college, I recommend you use the LA Start program for college because you get a huge $2,400 per child state tax credit (very valuable with current $10,000 SALT limitations) a little match bonus and 18-25 years to accumulate and reinvest without worrying about volatility. The Louisiana plan is actually one of the best rated plans nationally and has Vanguard funds with institutional expense ratios (0.02% expense ratio, $2 per $10,000 invested!)
If junior doesn't go to college, you can make yourself the 529 beneficiary and go to golf school or learn to be a sommelier or something else cool. Can't do that with an elementary 529.
This post was edited on 5/1/19 at 2:01 pm
Posted on 5/1/19 at 2:25 pm to GoIrish02
At 2.5% interest rate, I wouldn't pre-pay it either.
The two years I sent my kids to a catholic school, the rate the school offered was like 9.9 percent (they offered it to everyone, no credit qualifying). Maybe we could have used a HELOC or some other financing we got ourselves at a much lower rate, but that seemed to complicated, so we just paid it upfront.
The two years I sent my kids to a catholic school, the rate the school offered was like 9.9 percent (they offered it to everyone, no credit qualifying). Maybe we could have used a HELOC or some other financing we got ourselves at a much lower rate, but that seemed to complicated, so we just paid it upfront.
Posted on 5/1/19 at 2:35 pm to GoIrish02
quote:
Our school arranges for a 2.5% simple interest tuition loan through First Bank and Trust. 10 month amortization period, paid automatically on the 15th, costs me less than $200 per year to keep my liquidity to invest all year for the $10,000 tuition we pay for 2 k
That’s gotta be a parochial school. I don’t know of any private schools (non religious or military under $15k per student.
Most are over $20k
Popular
Back to top
Follow TigerDroppings for LSU Football News