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Market Volatility: Paying College Bills Today and Protecting Tomorrow’s Savings

Jan 09, 2019

Market volatility is a problem for those who need to pay a college bill now and for those saving for the future.   What should parents do to weather the storm?  In an Opinion Piece published earlier this week by The Hill, John Hupalo outlines key points to help protect savings and manage current college bills. One tip:  set aside savings at the beginning of a semester to avoid the risk of market downturns during the year.  Read the full article HERE.

The following are other topics discussed in more depth in the article:

Options to Pay the Current Bill

If second semester bills are due and cashing out of a 529 plan right now is not in the cards, parents can pay cash, use other savings or consider a tuition payment plan. For a fee, payment plans spread college payments over the course of a semester permitting parents to use current cash flow to pay a bill over time.  Often overlooked, payment plans are a great way to keep student loan debt in check.  (“Making Dollars and Sense of Your College Bill” webinar can help you sort out other fine details regarding your balance and payment options.)

Student loans are available

For some families, it may make sense to use a private credit loan to cover the balance rather than cash out of a volatile market.  Credit unions, banks, finance companies and some state agencies offer programs, just be sure to take a closer look at the fine print. Since these loans have the student as the primary borrower with the parent often the cosigner, look for a cosigner release option and understand the requirements to qualify so that during future repayment the parent can be removed from the application. Families with good credit histories can often find no-fee private loans with interest rates lower than the Federal PLUS loan. It pays to shop around and compare the options. (Our FREE webinar on Private and Parent PLUS loans can help you compare options).

Protecting 529 plan savings during market volatility

There are strategies to help protect savings against the risks faced currently. As covered in the full article, age-based portfolios may be able to position 529 plan assets in a most favorable way given financial goals. It also helps that no taxes are due on gains during the life of the investment or at withdrawal as long as distributions are made for “Qualified Educational Expenses.”  While there is no silver bullet answer that works best for all families, many families find age-based portfolios offered in 529 Plans to work well for them.

Check out “Protect your college savings amid growing market turmoil” on