National Commentary
Tax-free college
savings plans still
the best bet
by Jeff Brown
Knight-Ridder Tribune
Tax-free college investing sounds great,
but how does it affect financial aid?
That, in a nutshell, summarizes several
questions I've received from readers after a
couple of recent columns on Section 529
plans.
The short answer: These plans can reduce
a student's eligibility for aid.
But that's not a fatal flaw. After all,
you're not sure how much aid you could get
or how much would be in loans you'd have
to pay off anyway. It's pretty risky to skimp
on college savings in hopes of getting more
aid.
To back up for a second, 529 s allow
parents, grandparents or others to invest for
a student's college education while escaping
federal income and capital gains tax on
profits. Currently, these are state-sponsored
programs, although private colleges are
starting to develop them as well. Most 529 s
are flexible enough that withdrawals can be
used at just about any public or private
school anywhere.
Under the 2001 tax-cut law, withdrawals
made after this Dec. 31 will be free of
federal income or capital gains tax. Previ-
ously, taxes on investment gains were
deferred until withdrawal, and then income
tax was charged on gains at the student's
The new tax rules make little, if any
change, in the financial-aid implications,
says Joseph F. Hurley, an accountant and
author of the leading book on 5295, "The
Best Way to Save for College."
Under the federal aid formula used by
most schools, the two types of 529 s are
treated differently.
The first type, known as prepaid tuition
plans, offers an opportunity to buy credit
hours at current prices, protecting against
future rate hikes. The aid formula considers
assets in these programs to be a "resource"
available to pay the student's college costs.
Every dollar available through a prepaid
plan, therefore, reduces the student's aid
eligibility by a dollar, Hurley says.
Other 529 s offer mutual fund investments
that can produce larger returns if stock and
bond markets do well, but you can lose
money, too. Assets in these "savings-type"
plans are considered the investor's -- the
parents or grandparents -- rather than the
student's.
This is good because the aid formula
assumes that only about 6 percent of the
parents' assets are available for a student's
college costs each year, and it doesn't count
any assets held by grandparents or others. In
contrast, it assumes that all of a student's
assets can be tapped over four years.
But savings-type plans can hurt aid
eligibility nonetheless, because the portion
of any withdrawal attributable to investment
gains is counted as the student's income.
Even though this money is not taxable, it
reduces aid eligibility by raising the
student's income.
On balance, savings plans will probably
hurt the typical participant less than a
prepaid plan would.
Should aid considerations keep you away
from these programs? In most cases, no.
Most other approaches to college saving
have down sides as well.
Parents who save in ordinary taxable
accounts, for instance, can face hefty tax
bills when they draw money out to pay
college bills, even though the financial aid
impact may be small. Custodial accounts, in
which parents or others manage investments
in the student's name, can be easy at tax
time, since income and profits are taxed at
the student's rate. But as student assets, they
count heavily against aid. Moreover, the
student has total control of the account upon
turning 18 or 21 (depending on the state).
Assets in an Education IRA are consid
ered the student's and can have the same
damaging effect on aid as a custodial
account.
But the Education IRA may have one
advantage over the 529, says Kal Chany,
author of the book Paying for College
Without Going Broke. At the end of 2010,
the recent tax-cuts are scheduled to expire
and the old rules will come back into effect.
Education IRA withdrawals were tax
exempt under the old rules, while 529 gains
were taxed as income, at the student's rate.
To some extent, saving for college is a bet
on whether Congress will do the right thing
and make its fine new rules permanent.
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-Need to get something off
of your chest?
Send letters, both positive
behrcoll2@aol.com
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Caught in the
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Jason Snyder
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Two weeks ago,
I was conned into taking photos of
someone who would be speaking on
campus. I've never been a big fan of some
of the speakers who talk here at Behrend,
so I figured I would run up to the Reed
Lecture Hall, take a couple photos and head
back to the Beacon office.
I did that. Only I stayed an hour and a
half longer than I anticipated. The speaker
that night, Katie Koestner, had my attention
from the time she began speaking, until she
ended her speech to a silenced and shocked
audience.
When I entered the lecture hall, I didn't
even know what the speech was going to be
about. I turned around and asked my news
editor what the topic was for the night.
"Something about rape" was her answer.
So I was anticipating a speech filled with
statistics and a message that I have heard
more than a handful of times in my rela
tively young life.
That is not what I got. I got a lesson in
life that I won't ever forget.
Koestner shared a story that made people
Here's a tip..
Seeing that a lot of us are broke
college students, especially after having
to pay the outrageous prices in the
bookstore, I'm sure most of you have
been forced to work at some point in
your college careers.
We Behrend students are employed all
over the city in all sorts of different
jobs, while some of us work right here
on campus. I'd probably be right if I
guessed that many of you hate your jobs
for a variety of reasons. Please feel free
to pick which one is most relevant to
you: a) you hate the mindlessness of
your job, b) you hate the people you
work with, c) you are sick of being paid
minimum wage, d) you just hate work in
general, e) for those of you in customer
service jobs, you despise the general
public whose crap you are definitely not
being paid enough to put up with or, g)
you are a server who is getting really
sick of customers who you gave
excellent or at least darn good service to
tipping you practically nothing!
Personally, I'd have to go with answer
"g", although "e" is running a close
second.
Now don't get me wrong, since I
started serving at a local restaurant
almost six months ago, I have made
quite a bit of money. I have waited on
. •
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and negative,
to the editor!
sad. It made people confused.
And it made people mad. We
watched a woman relive the
most painful night of her life
;^ • in front of our eyes. She
spoke quietly, but her
message was loud and
clear.
Friday, August 24, 2001
1...=•-.....
•,,,.
"Rape is wrong; it's not a joke." She said
this a couple times when her story was
complete. The words really sank in. It's
not a statement that was anything new to
me. I knew that rape wasn't anything to
joke about. And so did the people who
were in attendance that night.
The problem was that the people who
don't understand the seriousness of rape
weren't there. They could care less if there
was a woman talking about how painful
and horrific the act is. Koestner was
speaking to an audience who already
understood her message before she shared
it. But she knew what she was doing.
She told the audience that her story can
only do so much and that her words weren't
loud enough to reach the people that need
to hear it. She asked us, particularly the
men in the audience, to spread the message
that "Rape is wrong; it's not a joke."
If I went to the lecture hall that night and
heard a bunch of statistics about rape, my
concerns probably would have ended there.
Because nowhere in numbers is there the
message that I can make a difference.
countless peop,
who are genero
tipping far moi
than fifteen
percent. This
a wonderful pei
of being a
server. But, if
may, let me
talk briefly
about the
other
extreme
Yes, those dandy customers who make
servers mutter four letter words under
their breath. Quite often, it's women
(but only a particular sector, which I will
get to in a moment) who are these
horrendous tippers, and I know you're
thinking: maybe they can't afford to. Or
maybe they don't feel they should have
to. Or maybe you aren't that great of a
server, and you don't deserve a decent
tip. I'll admit I don't always give the
best or even good service because
sometimes I'm just too busy. I am only
one person with two hands and two legs
and although I'd love to carry twelve
meals out at once, while making change
for table one and two and putting in five
drink orders for tables five, seven, and
ten, I've come to realize all this is not
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Now, let it be known that I have no problem
with stripping. If I had the bod I'd probably do
it myself— you can make some serious cash
doing the little behind shake for the menfolk ..
However, take into consideration that this
girl was a representative of her school. Her
track tea of. ofPiliomia, and
the NCAAltir- ,0.......„ x ~..,,..,
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players, ana thofiellitif.:.'l < „ ,
• -:, , v.ohthatone of their
teammates was takW :4' 6
- ithes, ,off for
money is not exactly a desire decruitment tool
Maybe it isn't right that they do so,
but that is
not the argument.
And to top it off, this girl signed a code of
conduct contract, which should have prevented
this very situation. She violated the rules that
she agreed to. End of story. Now, the guys
who attended the strip club and caught her
should also be held accountable under the same
rules. But that doesn't make her any less guilty
Don't think the reputation of the school is a
legitimate excuse? Just remember the outcry
over the sex fair at University Park earlier this
semester. People argued it wasn't right that
such a controversial and arguably obscene
event be held with the backing of a govern
ment-funded university. Students, faculty, and
administration on our own campus questioned
the legitimacy of the event because of it's
effects on Behrend's funding. Should that
group's funding be cut to salvage our own
reputation and state funding?
Every week, two editors from the staff will debate
encouraged to email suggestions for the h
But one story by Koestner hit me hard. I
don't remember the absolute specifics, but I
remember the message. There was a man
at a party one night who overheard a group
of guys planning on raping a woman who
was passed out drunk in the bedroom. This
man sat with the woman until the night was
through, protecting her from the group of
"men" that had planned on raping her.
When the woman was out of Harm's way,
this man left and never told the woman
what he had done.
"No glory," are the words Koestner used
to describe this man's act. It sounds like
such a simple act. Simply sitting with a
woman who was in harm's way. Such a
small act made a huge difference in that
woman's life.
This editorial is my way to spread
Koestner's message that she only got to
share with 50 concerned students two
weeks ago.
I don't pary much. Chances are, I won't
be the man sitting next to a passed out
woman at the next college party that goes
on at Behrend. I'm calling for the true men
on this campus to keep their eyes open and
their ears listening.
The statistics are enough to tell us that
rape isn't beyond Behrend. Any moment of
any day, a group of guys can be plotting
how to help their buddy have forceful sex
with a woman who can't defend herself.
And if you are in that group and do nothing
humanly possible. But,
overall I try to be
'S
as conscientious,
Point? quick, and
Zuck personable as
possible.
So as you may
have been
thinking, maybe
these women can't
ford to give a decent tip. But I
referring to upper scale
inesswomen with perfectly
icured fingernails, snazzy
, usiness attire, and expensive jewelry
These women are so tight with their
money it's amazing they can get their
wallet open without a crowbar. They
are generally nice, but really picky.
For example, they will say, "can I
have my salad with no tomatoes,
croutons, olives, onions, or cheese?
And can I have my drink in a tall glass
with just a little ice, not too much, and a
water with two br three lemon wedges?
Oh, yes and extra dressing for my salad,
on the side, of course!" This is fine, I
understand that some people do not like
certain vegetables, but why not just
order a bowl of lettuce and a lemon?
But, I digress. So, these women get
their food and drinks in a timely fashion
and sometimes will gush, "Oh, you're
so sweet. You're a really good server!"
So, in my nave beginnings as a server,
Take it off!
4 :11 8 'P'tp.l4:' 9.
Leilani Rios is no different from any other
student on the University of California's college
campus. She attends class, participates heavily in
collegiate athletics, and holds down a job. Her
job as an exotic dancer may not be an admirable
one, but it pays her bills. As a student who has
beer college, she
has cool's track
Since when is the source of a student's
personal cash flow the concern of a track coach?
Sometimes, overly-paid and overly-pompous
collegiate athletic coaches forget that students
aren't raking in big paychecks like they are.
Students study, hence the term similarity. In
Leilani's case, she was able to use her God-given
abilities to earn decent money so she could allot
time to study and participate on the track team.
Personally, I believe it is a violation of her rights.
Apparently she was legally hired at a legal
establishment in California, so what's the
problem?
The other side of the argument will say that
she signed a code of conduct. This code basically
says that a student athlete should represent the
school in good taste outside of the campus. This
may be legitimate, but how come nothing
happened to the other athletic team members who
were attending this strip club that first saw her
performing? I suppose it's okay that they actually
paid money to attend this place.
L. Hayes
a topic that is hot. Students, faculty and staff are
t topic. Send ideas to behrcoll2@aol.corn
you are just as guilty You are just as much
of a coward and rapist. Law might not get
you, but your conscience will.
For too long, we have tried to fluff up the
idea of rape. We've taken it lightly. We've
called victims "liars." We've believed that
rape is rare and overexaggerated. We've
seen leaders of cities, schools and police
departments take rape accusations as a joke.
Again, "rape is wrong; it's not a joke."
Mostly in the past, I have seen women,
and women alone, tackle issues of rape.
For the most part, it's not just the women
who need to hear this message. So I ask the
men who are reading this to continue the
message: it's not difficult to remember and
it's fairly easy to act on. Take a seat next to
a woman in harm's way and take a stand
against anyone who dares to cross the line.
If you are a true man at this college, then
it's time to team up against the men who
Koestner said in her speech that she
dreams of a "night with no rape." She asks
that across the world, people will unite to
put an end to these acts.
It is wrong. It is not a joke. And now, it
is your responsibility to keep this message
going.
Snyder's column originally appeared
April 13, 2001
I would eagerly bring the bill and
anticipate my big tip. But, for some
reason a lot of businesswomen don't
know what a big tip is (less than ten
percent seems to be the only figure they
know). So, for instance when I collect
the bill and money from them, they will
say in a sugary tone, "Oh just keep the
change, you're tip's included."
As I walk away, I count the money
and realize they only gave me $40.00 on
a $37.99 check. After I catered to their
every whim for over two hours, I feel
like marching right back to their table
and saying, " Listen here, sweetie, I've
got a little tip for you. How about you
take your snobby butt out of here pronto
and don't come back until you learn
how to calculate a decent tip!" But of
course I don't. I just keep walking with
a smile pasted on, quietly muttering
choice words under my breath.
So, what's my point in all this? Just
to plead with you to never forget what it
was like to be a broke, struggling
college student working a crappy job
Hopefully when we graduate we will
land good jobs and be prosperous and
successful in our careers. Here's a little
tip for the future: no matter how far we
go or who we get to know, we should
never lose sight of what it means to be
fair and decent to others. Most of us
can testify from experience that being
broke ain't no joke!
The Behrend Beacon
joke'
Page 5
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