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I was doing some research on what colleges and universities cost these days.  A State School in most states seems to fall in the $17-$20,000 per year area, while the Private School seems to between $30,000 and $50,000.  With the costs associated with a college education rising faster than inflation, in 15 years the cost of a public college or university will likely exceed $45,000 and a private school will likely exceed $80,000.

According to National College Funding Strategies, 51% of students take between five and six years to graduate.

As you begin your college savings, first begin early.  Second be sure to be saving in the correct places.  Pre-paid tuition plans as well as college 529 plans, will count against the amount of financial aid you get.  There might be a better way to save.

On Page 2 of the Illinois Free Application For Student Aid (FAFSA) states that investment income counts against the financial aid that you qualify for…

Investments include real estate (do not include the home you live in), trust funds, UGMA and UTMA accounts, money market funds, mutual funds, certificates of deposit, stocks, stock options, bonds, other securities, installment and land sale contracts (including mortgages held), commodities, etc.

Investments also include qualified educational benefits or education savings accounts (e.g., Coverdell savings accounts, 529 college savings plans and the refund value of 529 prepaid tuition plans). For a student who does not report parental information, the accounts owned by the student (and/or the student’s spouse) are reported as student investments in question 41. For a student who must report parental information, the accounts are reported as parental investments in question 89, including all accounts owned by the student and all accounts owned by the parents for any member of the household.

Investments do not include the home you live in, the value of life insurance, retirement plans (401[k] plans, pension funds, annuities, non-education IRAs, Keogh plans, etc.) or cash, savings and checking accounts already reported in questions 40 and 88.

Look closely at what investments do not include. The form clearly states “the value of life insurance” is not included as an investment.  That means if you have any cash building life insurance you can use it for college funding, but not have it count against the aid you may get.  Instead of funding a 529 plan, fund the cash value life insurance, the other benefits of doing that is what if you child does not end up going to college, you have the money invested in a 529 now there is a tax penalty for withdrawal. If you fund your college through a life insurance policy, the cash value is still yours to borrow against if you need to or you can continue to build a retirement fund.

Now let’s look at some of the other values of an indexed universal life plan (IUL).  I am choosing this one as it is safer than a variable life plan, and more flexible and has a larger upside than whole life)

–         Safe, guaranteed growth every year

–         A time tested financial product that has been stable for over 100 years

–         Largely untouched by major market crashes

–         Guaranteed principal

–         Tax-advantage growth (you can access your money without a taxable event)

–         Flexible financial tool allowing you to access money for major purchases such as college funding or buying a car.

Let me show you an example of one of the products.  Assuming a 45 year old male puts $400 per month into his policy.  We set it up with the minimum amount of life insurance by law to avoid tax withdrawal consequences.  That would be a starting death benefit of $98,000.  In ten years you have a cash value of over $55,000 AND a death benefit of over $150,000.  In 20 years you have a cash value of almost $200,000 and a death benefit of near $300,000.  If you starting funding this type of policy when you were thirty years old in the same time period in ten years not a huge difference, but in 20 years, almost $100,000 more.

The reason is compound interest.  If you can just let your money work for you, over time you will “build a million dollars”.

Thanks for reading…

Eric Wilson is President of I Sell Health, Inc. and UnbELIevable BaLANCE company.  He can be reached toll free at 888-448-5370 or online at