503B Inquiry

Sat, Jan 19, 2008

General

I researched ways to pay off my college loan. In my research I found a college savings vehicle called a 503B. What is it? How does it work? Will it help me?

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8 Responses to “503B Inquiry”

  1. sergik12 Says:
    January 21st, 2008 at 6:01 pm

    Are you sure that you found 503B and not 529? 503B is a retirement plan similar to 401K.

    Reply

  2. jboynton Says:
    January 24th, 2008 at 3:47 pm

    A 403(b) is a retirement savings vehicle similar to a 401(k). A 403(b) is a tax sheltered annuity and is mainly used for non-profit and religious organizations, and teachers of public schools; as opposed to a 401(k) which is other types of employers.

    I think Sergik12 is on to the right idea. A 529 plan is a college savings vehicle. This structured fund is usually set up by the parents, benefactor or custodian of a child who will likely attend college in the distant future. Financial professionals usually suggest that 529 plans are set up at least 6 years before the child attends college in order to truly benefit from the compounding feature of the funds.

    Earnings in a 529 plan grow tax free, and withdrawals for qualified higher expenses are free from federal tax. The accumulated funds in a 529 plan should only be used for college/higher education expenses. Otherwise, deductions will be taxed as ordinary income and incur a 10% federal tax penalty on all earnings.

    In your case, a 529 plan is not really the best option. College loans can be paid off in several ways. Like any “debt” situation, the best option is to consult an advisor because debt must be carefully managed. Debt management should be tailored to your individual finances. An analysis of cash flow, ie. income vs. expenses, must be reviewed. It is within this analysis that an advisor will be able to pinpoint how much money can be set aside for loan repayments, and then how best to accumulate interest to expedite the repayments. Depending on your particular “cash flow” situation, you will be advised to repay your debt based on one of several hundred debt management strategies.

    Reply

  3. pbucelwicz Says:
    January 25th, 2008 at 1:46 pm

    This may not work for everyone, but I used a 0% interest credit card to pay my loan in full*. I left college with a loan of only about $3000 dollars. I had up to 6 months after graduation before I had to start making payment. I avoided the 7-9% interest rates they were going to charge me, and I put that money in the bank to gain interest.

    My 0% financing was for 12 months so every month I paid the minimum credit card payment and put in at least $250 dollars to my MMA to “pay” my loan. My loan is now paid off. I did not have to pay any interest on the loan, and made about $150 in interest. If you are interested, I will write an article with more detail on what I did.

    *This method has a very high risk, but I am all about making interest rather than paying it.

    Reply

  4. Alongemnnag Says:
    January 2nd, 2010 at 11:13 pm

    Succour!!!! Anybody know of a respectable lender that YOU as far as one is concerned have occupied in the past? For recommendations fast.

    Reply

  5. Casandra Says:
    February 2nd, 2010 at 4:56 pm

    Hello. Very interesting Post. Not really what i have searched over Google, but thanks for the information. Can you email me back, please. Awaiting your Answer.

    Reply

  6. Earle Sorto Says:
    March 29th, 2010 at 2:54 am

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    Reply

  7. 401k withdrawal requirements Says:
    July 14th, 2010 at 12:01 pm

    401(K) vs IRA Today’s marketplace offers lots of choices in terms of retirement planning vehicles. The 401(k) (or 403(b) for the nonprofit sector) and Individual Retirement Account (IRA) are two of the most common. While they share some similarities, the ….

    Reply

  8. what is a hemroid Says:
    June 2nd, 2011 at 1:04 am

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    Reply


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