Episode summary
How to Pay for College, From 529 Hacks to $12,000 Tokyo Tuition | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 7 min · Hosts: Carol Massar, Tim Stenovec · Guests: Ann Garcia
Summary
College costs have climbed sharply, with the hosts noting that a four-year degree in the U.S. is up roughly 40% in 20 years and that some elite schools are approaching $100,000 a year before room, board, and other expenses. Ann Garcia argues that many families still have more options than the headline price suggests, especially if they use 529 plans and search broadly for scholarships and aid.
Garcia says 529s are far more flexible than many people assume. She describes them as tax-advantaged education savings accounts that can be used for four-year and two-year colleges, K-12 expenses, apprenticeships, and other post-high-school education costs. She also says the account can be used across states and that the financial-aid hit is usually negligible.
On affordability, Garcia stresses that most students do not pay sticker price. She says about 90% of students receive some form of scholarship or financial aid, and cites a recent study showing an average tuition discount rate above 57%. At the same time, she raises a broader critique of college pricing, arguing that elite schools such as Harvard and Stanford have distorted the national narrative around higher education costs and value.
Key takeaways
- Ann Garcia says 529 plans can fund more than college tuition, including K-12, apprenticeship, books, room and board, and other educational expenses.
- Garcia says the financial-aid impact of a 529 is usually negligible compared with the flexibility it gives families.
- The hosts cite a roughly 40% rise in the cost of a four-year degree over 20 years, with some elite schools nearing $100,000 a year.
- Garcia says about 90% of students receive some form of scholarship or financial aid, and the average tuition discount rate is over 57%.
- Garcia argues that Harvard and Stanford disproportionately shape perceptions of college pricing even though they educate a very small share of students.
Notable quotes
“A 529 is a tax advantaged college savings fund. Although given how over the years uh the rules have changed to allow lots and lots of different uses for them”
“they can be used for four-year colleges. They can be used for two-year colleges. They can be used for almost any post high school um high school savings um ed educational expense”
“for most the the impact of a 529 on your financial aid package tends to be pretty pretty negligible”
“about 90% of students have some form of scholarship or financial aid”
“the average tuition discount rate for the previous school year was over 57%”
How the episode opens
Bloomberg Audio Studios podcasts radio news. — You're listening to Bloomberg Business Week with Carol Masser and Tim Stenc on Bloomberg Radio. — Well, check this out, Emily. I don't know what your college costs. I know what my daughter's college cost. Cost of a four-year degree though in the US has climbed roughly 40% in 20 years. And at some schools, elite schools, cost of attendance alone is closing in on about $100,000
A year. So, we're talking about a full four-year tab at nearly half a million dollars. — And that's just one student. Imagine a family that has, you know, a couple kids that they have to get through college.
Yeah. And figuring it out. Even families earning as much as $300,000 a year can struggle to keep up.
And while financial aid can lower costs for some students and we hear that from a lot of schools, um the reality is many families can fall into an uncomfortable gray area and that is too rich to qualify too middle class to cover skyrocketing bills. It's a really tough spot to be. Um a lot of folks and families though who can use 529 plans and that's what we want to talk a little bit more about.
And Garcia is a certified financial planner. She's a wealth adviser at the Mather Group. She joins us from Portland, Oregon.
I'm just back from Portland. My first trip there and it is beautiful. I'm just going to put that out there.
And good to have you here with Emily and me. Um 529s, a lot of folks in our audience know what they are, but for those who might not, what do we need to know? Some of the basics about them, because they've been around for a while.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- 529 plans
- college savings
- financial aid eligibility
- tax-advantaged accounts
- beneficiary changes
Companies and tickers mentioned
- The Mather Group
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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