A Worthy Investment - Now More Than Ever

“I’m a guy who won a lotta lotteries: the birth lottery, the zip code lottery, the education lottery……I used to think that college and going to college was the great equalizer. In truth, what we've come to find out; college is the great stratifier in this country.”

These are the words of Pete Kadens, a Chicago millionaire with the goal of sending over 30,000 individuals for free to college or trade school in Chicago. 

This article is a MUST read!  Charity Sending Students To College For Free - 60 Minutes

Here’s a quick 4-minute video:  Pete Kadens & Hope Chicago Charity

For many American students, a college education provides the best path for escaping homes filled with violence, drugs, abuse, and dysfunction.  A college degree has proven to be an effective tool to improve one’s career path and enhance lives.  Unfortunately, attaining a college education in this country is simply too expensive. 

The Global Covid Pandemic was yet another lesson on life’s unpredictability.  It is much easier to relocate and find another job if you’re college educated.  Georgetown research shows before the 1980’s two-thirds of jobs required a high school diploma or less!  They predict that by 2027, 70% of all jobs will require some college education.  Let’s face it, life is competitive! 

According to Georgetown University Center on Education and the Workforce (CEW), these are the median lifetime earnings of full-time workers by level of education:

Median Lifetime Earnings By Highest Educational Attainment

College Degree Carries Big Earnings Premium - Forbes

Education And Lifetime Earnings - SSA

Of course, there are other factors to consider with earnings potential such as majors studied, gender, and ethnicity (unfortunately but changing!).

This article lists 10 public universities where earnings can exceed $100K annually within three years.  These Bachelors Degrees From Public College Pay More Than $100K - CNBC

Beyond money, these are a few additional benefits for a college graduate:

  • 47% more likely to have health insurance through employer

  • Employers contribute 74% more to their health coverage

  • Life expectancy is 7 years longer

  • Lower jobless rate, especially in economic downturns

$1.75 TRILLION is the collective amount of student loan debt in our country as of April 2022, according to the Federal Reserve. 

National average costs for a 4-year public university today, vs 10 and 20 years from today (Inflation rate, 4%):

  • $116K in state today ($187K out of state)

  • $165K in state in 10 years ($267K out of state)

  • $244K in state in 20 years ($395K out of state)

National average costs for a 4-year private university:

  • $236K today

  • $337K in 10 years

  • $500K in 20 years

To prepare for the cost of an education, whether that is a private K-12 or beyond, we must save.  We believe the best way to do this is to maximize the 529B college savings plan.  We are happy to run individualized college projections for anyone in your family.

529 College Savings Plan Facts

  • Anyone can contribute to a 529 plan and there are no income limitations.

  • The IRS allows you to give no more than $16K per year ($32K for married couples filing jointly) per child

  • The account owner (parents, grandparents) maintains control over the assets for the life of the account.

  • You can change beneficiaries to another "family member" of the original beneficiary. Thus, if your child gets a scholarship or decides not attend college, you can name another beneficiary.

  • Investments grow tax-deferred.

  • Tax-free withdrawals when used for qualified higher education expenses.

  • Qualified expenses include tuition, room and board, books, supplies, computers, etc.

In our opinion Vanguard 529’s are an attractive option due to their low cost.  We can help you establish a plan for your child, grandchild, niece, nephew, etc, And we do not bill on these assets. Collectively in our office we have eight kids, all of which have 529 college savings plans.

And if you’re inspired by Pete Kadens, consider a donation to Hope Chicago:

Thank you!

Jerry Newman, CFP

The opinions expressed in this newsletter are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Hamilton Wealth, LLC is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Hamilton Wealth, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Hamilton Wealth, LLC unless a client service agreement is in place.