Conference nyoss1::market_investing

    The big variable is the rate of increase in tuition.  You can do an
    analysis of rate of return of stock investments vs rate of increase
    of tuition, and find out whether stocks or Uplan is better.
    
    I made some assumptions before I got the full info - in fact, I think
    the federal tax implications are still uncertain - and it showed that
    if tuition rises much more than 7% annually then Uplan is worth considering.
    I think that assumed historical stock rate of returns in the 8-12%
    range.
    
    I suppose you could also use Uplan as a hedge that 1) your stock
    investments in your kids' college fund rose less than expected or 2)
    college costs rose much more than expected.    

    As an example of what tuition prices can do, the tuition at Johns
    Hopkins University in 1978 was $4500. Over the course of the next ten
    years, it increased at an annual rate of thirteen percent and was over
    $10K. I lost track of it at that point. Then-president Steve Muller
    stated that the increases were in line with those at "Ivy-League schools
    and other universities of Hopkins' caliber."
    
    13% would be an awfully good return in anybody's book. I think the
    increases have moderated lately, though.

    I checked out one more item in UPlan. If you buy a bond worth, say,
    $1000, and that bond today represents, say again, 10% of your ultimate
    school's tuition today, then that bond at maturity would be worth 10%
    of the school's tuition then. So, if tuition changes from $10k to $30k,
    your $1000 bond will be worth the equivalent of $3k then. You are
    still subject to the remaining 90% of the cost as of that future date. 
    
    Summary, the bond does not freeze the tuition rate, only the percentage
    amount of the value of your investment.
    
    If any new schools join the plan, they say, they will try to enforce an
    agreement that makes your investment's comparative percentage effective
    as of the date you enroll in the plan, not the school's participation
    date. So, if you want to attend Harvard (which does not now participate
    in the program), you take out a bond for $2000 (I think this is 10% of
    today's tuition), and in 18 years Harvard joins the program, then your
    $2000 will be worth 10% of whatever Harvard costs then.

With two childred approaching college age, I looked at the
plan  in detail.  

1.  The plan is marketed only by Shawmut Bank.  What's in it
    for Shawmut or they are doing it in the public interest?
2.  Some good schools are NOT in the list: MIT, Harvard, ...
3.  What if your children don't attend a MA school? You get
    back a rate equal to the CPI.
4.  There has been significant focus on college cost. My view
    is that future tuition increases will not be as high as
    it's been.
5.  Over the long term, the SP500 returns would have taken care
    of the increase in college cost.
6.  As noted previously, you are only covered for the %tuition
    you put in.

Given the restrictions and lack of flexibility, thanks but no
thanks,

Gim

> 2.  Some good schools are NOT in the list: MIT, Harvard, ...

      Oh, did the plan mention something about guaranteed admittance
      or did I miss that point ?  :-)

      

      

    Signet Bank has a WEB page about college loans...
    
    -TB