Getting Around Coverdell ESA Limits

A friend told me that the contribution limit on Coverdell Education Savings Accounts had been reduced from $2000 to $500 annually.   That seemed strange, so I started searching for articles about it.  Motley Fool reminded me that there is an income limit.  (Hmm, I didn’t know my friend was making that much money in retirement.  Good for her.)

But the Fool has an interesting twist:  the $2000 per year contribution limit is for everyone contributing to the Coverdell, so “gift” the money to someone with lower income….e.g., the kid…and have him contribute it to the Coverdell account.

Great idea, Motley Fool.



January 29, 2013 at 7:20 am Leave a comment

Having Skin in the Game

The Associated Press reports that students who have to earn part of the money for college have higher GPAs:

“Parents who are footing more of the college tuition bill for their children give them a better chance of graduating. But a surprising new study finds they may not be doing them any favors in another area — generous financial support appears to lead to lower grades.

“The study, published in this month’s American Sociological Review, suggests students with some of their own “skin in the game” may work harder, and that students with parents picking up more of the tab are free to take on a more active social and extracurricular life. That may be fun and even worthwhile, but comes at a cost to GPA.”

A gifted student who is receiving scholarships and/or whose parents are wealthy likely won’t qualify for work-study jobs, but there are still on-campus jobs that are awarded based upon “merit”.

My son was asked to be a math tutor.  He works 5 hours a week for $1000 per semester. Why did he get the job?  Probably because he has all As in math, the faculty know he wants to be a math professor so this is developing essential skills, and they would like him to get his Ph.D. there.  The workload isn’t bad and it comes with a few perks.   The first and last weeks of the semester almost no one comes for tutoring, so it becomes study time for him.  And tutoring others on subjects he has studied in previous years became a form of forced review for the GRE, which he needed to take for graduate school.

My daughter has been a Resident Assistant (RA) in the dorms for 2 years. It took an extensive interview and application process to land the job, and the work has some drawbacks:

  • As an enforcer of the rules, you feel like a narc.
  • Therefore, some of your residents resent you.
  • If you don’t follow the rules yourself, you’re a hypocrite and lose credibility, so it’s not a good fit for partiers or rule breakers.
  • For a morning person, like my daughter, having to be “on duty” until midnight or 2 a.m. can be tiring.  Plus, on a night with multiple “incidents”, the reporting process can keep her up long past the scheduled duty hours….even on a school night.

On the other hand, she now has many RA friends.  She’s earning a paltry $400/semester for 5-7 hours a week (and sometimes 10-15 hours per week).  But she gets a free room (worth $6300/year) and it’s a coveted single room.

“Hamilton found grants, scholarships, work-study, student employment and veterans benefits don’t have similar negative effects on GPA, though loans do, along with direct parental aid. She suggests that’s because loans and unconditional parental grants have no immediate strings attached, whereas scholarships and grants often carry GPA requirements. There may also be a psychological effect. With grants, “students feel like they’ve earned them in some way” and want to justify them.”

So don’t feel guilty about encouraging your college students to have a part-time job.  You are helping them boost their GPAs!  And that GPA is important in their search for a permanent job, which will keep them from boomeranging back to your house.

Read the complete AP article here.

January 22, 2013 at 7:15 am 1 comment

Early Birds Win

Pardon me while I brag on my daughter.  She requested an appointment this week with the grad school advisor, even though her application isn’t due for 5 months.  His reaction: “This is why I teach at Clark University, so I can have students like you!”

He says he gets inundated with calls and emails the week before grad school applications are due.  Funny how we worry about our students stressing out about their applications, but never think about what it is like for the people who receive the applications.

I’m betting my early bird daughter gets accepted.

October 29, 2011 at 12:22 pm 1 comment

Buyer Beware on Fifth Year Free

My daughter’s college, Clark University, offers a “fifth year free” program. (My alma mater, Stephens College, used to do this, too, and there are probably other schools that do it to entice their best students to continue on to graduate school.)  No, it doesn’t mean that, if a student fails to graduate in 4 years, he can keep trying to graduate free of charge.  It means that a successful undergraduate may be able to get a Masters degree by staying for one additional year.

But, we’re finding out that there are some tricky requirements.  Sometimes I feel like the admissions department was writing blank checks that the finance office or the faculty don’t want to cash.

  1. You must have a certain (high) undergraduate GPA.  That makes sense as it is an indicator of how well you will do in grad school.
  2. You must major in certain areas for a certain Masters program.  That makes sense, too.   You can’t shorten a Masters program if you don’t have the foundational courses.
  3. You must finish your undergraduate degree in 4 years.  At first blush, that makes sense, too.  If you can’t finish in 4 years, you probably dropped classes you were failing and therefore are not the caliber of student who will do well in the more difficult graduate level courses.  However, here comes the first big caveat:  you also cannot graduate in less than 4 years.  This happened to one of my daughter’s friends.  She came to college with a bunch of Advanced Placement credit and got a full semester of classes waived.  She planned to spend four full years taking undergraduate classes, but she met all the requirements for general education courses and for her first major within 3-1/2 years.   When they found out she wanted to get her fifth year free, they made her graduate in 3-1/2 years, which meant she had not met the requirement of spending 4 years in the undergraduate program, so she couldn’t get the fifth year free.   Ouch!  I could maybe understand if a college said “you chose to graduate early, therefore we didn’t get 4 full years of tuition from you, therefore you can’t get the fifth year free”, but it seems harsh to say we want to make you graduate early so we don’t have to give you the fifth year free.
  4. You must take certain prerequisites for the graduate program, above and beyond the requirements for your major.  In other words, you’re starting the graduate program before you finish the undergraduate program.  This requires good planning in course selection so you can fit everything into 4 years.
  5. You must have a good answer for the question, “What makes you think you can succeed in graduate level courses?”  Luckily, my daughter had been invited by one of her freshman professors to take a Ph.D. level seminar class from her and she took that class in sophomore year.  If she hadn’t taken a graduate level course by fall of her junior year, this would be a tough question to answer convincingly on the grad school application, which is due in spring of junior year, long before most graduate school applications are due.

Her advice:

  • Ask “what if I…” questions about the requirements for the fifth year free program not only of the admissions department but also of the faculty in that department.
  • Don’t fulfill all of your undergraduate requirements until spring of senior year.
  • Take a graduate level course midway through your undergraduate program…and do well in it.

Caveat emptor.  Let the buyer beware.

October 23, 2011 at 7:07 am 1 comment

Don’t Drop Out!

If your student ever flirts with the idea of dropping out, just show him or her this chart of unemployment rates by educational attainment.

Then talk about how much you hate having to rewrite resumes, search job postings, write cover letters, and go on interviews where you have to brag about yourself without seeming to brag about yourself, then wait and wait and wait for someone to decide they like you enough to hire you.   Maybe that will motivate them to stay in school.

February 4, 2011 at 10:14 am Leave a comment

Used Textbooks & Learning Style Differences

“As a random learner, I never buy a new textbook.  I always buy a used textbook that has been underlined by a sequential learner.”

George Betts, Professor of Special Education,

University of Northern Colorado

Most people think of used textbooks as a solution to a budget problem.  Leave it to a random learner to realize that they are a solution to a totally different problem!




January 25, 2011 at 8:54 am Leave a comment

Free Shipping on Textbooks

In pricing out textbooks for second semester, we often found that the best deal was to be had at Amazon.  Now I like giving the little guys my business and saving the environment by buying used books, but the clincher that often got us to buy new from Amazon was usually my son’s Amazon Prime account, which gives him free two-day shipping.

If you have more than one kid in college, only sign one of them up for an Amazon Prime Student Account.  The free shipping offer only lasts one year, after which you can sign the other kids up.  Since they can ship to each other, you can extend the benefit for a year.

January 23, 2011 at 1:02 pm Leave a comment

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