*. the high cost of an education rising cost of college education source: u.s. department of...
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The High Cost of an Education
Rising Cost Of College Education
Source: U.S. Department of Education, 2002.Projected cost upon child's entrance to college for four years at a public or private college. Figures are based upon the 5.10% and 5.18% 10-year average annual increase in public and private college costs respectively as reported by the U.S. Department of Education for the 2001-2002 school year of $9,953 for a four-year public college and $29,120 for a four-year private college.
Public Universities Private Universities
$125,849
$42,965
$110,635
$328,589
Projected Costs for a Four-Year College Education2002 2021
AGENDA
• Higher Education Leads to Opportunities
• Ways to Save for College
• Bringing You One Step Closer—Franklin Templeton 529 College Savings Plan
Education Provides a Lifelong Value
Source: U.S. Census Bureau, Current Population Survey (CPS), March 2002
Higher Education Leads to Opportunities
$2,742
Average Monthly Earnings
$3,415
$4,974
Education Level
High SchoolDiploma
AssociateDegree
Bachelor’sDegree
Master’sDegree
$6,178
Higher Education Leads to Opportunities
Don’t Delay the Inevitable
What do you think Mary and Michael will have to contribute on
a monthly basis to accumulate the same amount as John?
• John – $200/month for 15 years
• Mary –
• Michael –
???
???
$517/month for 8 years
$1,708/month for 3 years
This is a hypothetical illustration to represent the effects of compounding assets monthly assuming an annual rate of return of 8%. It does not reflect an actual investment in Franklin Templeton 529 College Savings Plan or any taxes payable upon withdrawal. A periodic investment in the plan does not assure a profit or protect against a loss in declining markets. Returns are not guaranteed and may be less than or greater than the amounts illustrated.
Higher Education Leads to Opportunities
This is a hypothetical illustration to represent the effects of compounding assets monthly assuming an annual rate of return of 8%. It does not reflect an actual investment in Franklin Templeton 529 College Savings Plan or any taxes payable upon withdrawal. A periodic investment in the plan does not assure a profit or protect against a loss in declining markets. Returns are not guaranteed and may be lessthan or greater than the amounts illustrated.
The Cost of Procrastination
Contributions Earnings
$0 $20,000 $60,000 $80,000$40,000
John
Mary
Michael
Higher Education Leads to Opportunities
The savings example assumes monthly investments over a period of 15 years at an annual return of 8%. The borrowing example assumes an interest rate of 4.06% over a period of 15 years. These examples, however, are not representative of any particular investment.Source: SallieMae.com. Based on Stafford loan issued by Sallie Mae during July 2002–June 2003. Assumes borrower at some point consolidates all federal education loans into a SMART LOAN account which locks in a lower interest rate, and depending on the loan balance, can extend repayments up to 30 years. There is no guarantee of your investment or of any specific rate of return, and you may have a gain or a loss on the amounts invested.
Saving Now vs. Borrowing Later
Save Borrow Save Borrow
$891$160,423
$62,421$347
Ways to Save for College
What is a 529 Plan?
A state-sponsored tuition program designed to provide tax incentives
to encourage families to save for the high cost of a college education.
Ways to Save for College
Qualified Expenses Within 529s
• Tuition
• Room and board • Fees
• Books • Required supplies and equipment
What Are Other Types of College Savings Vehicles?
• UGMA/UTMA
• Coverdell Education Savings Account
Ways to Save for College
529 Plans vs. Other College Savings Vehicles
* Formerly Education IRA** Source: Savingforcollege.com
Tax Deferral
529 Plans
Yes
UGMA/UTMA
No
Coverdell EducationSavings Account*
Yes
MaximumContribution
On average up to$244,000 or moreper beneficiary**
None $2,000 per child underthe age of 18 per year
IncomeLimits
None None Phase out for single filersat $95,000 to $110,000 for joint filers, $190,000 to $220,000
Ways to Save for College
529 Plans vs. Other College Savings Vehicles
* Formerly Education IRA
Who ControlsAssets?
Account Owner Custodian, untilchild reaches 18 or21 (varies by state)
Account Owner
BeneficiaryChanges
Permitted.Can be changed toanother family memberwithout penalty.
Not permitted Permitted.Can be changed to anotherfamily member without penalty.
Estate PlanningFeatures
Assets are generallytransferred out of the donor’s estate, yetthe donor retainscontrol.
Assets are transferredout of the estate anddonor loses control.
Assets are transferredout of the estate anddonor loses control.
529 Plans UGMA/UTMACoverdell Education
Savings Account*
Franklin Templeton 529 College Savings Plan*
Benefits and Advantages
Tax Advantages
• Earnings grow tax deferred
• Qualified withdrawals are federally tax free through 2010
• Contributions receive favorable gifting and estate tax treatment
*Offered and administered by the New Jersey Higher Education Student Assistance Authority (HESAA); managed and distributed by Franklin Templeton Distributors, Inc. an affiliate of Franklin Resources, Inc., which operates as Franklin Templeton Investments.
Franklin Templeton 529 College Savings Plan
Benefits and Advantages
Professional Investment Management
• Distinctive: Combination of specialized investment management groups with a long-standing history.
• Diversified: Full range of specialized investment disciplines.
• Consistent: Seeks superior risk-adjusted returns over the long term.
• Reliable: Dependable account servicing.
Franklin Templeton 529 College Savings Plan
Benefits and Advantages
• No income restrictions
• Full control over assets
• Low contribution requirements
• High contribution limits
• Wide range of colleges and technical programs
Franklin Templeton 529 College Savings Plan
Corefolio™
Risk-Adjusted Portfolios
Franklin Templeton Distributors, Inc. ("FTDI") has retained Franklin Advisers, Inc., a registered investment advisor, to serve as the initialinvestment manager for the Franklin Templeton investment options. Both FTDI and Franklin Advisers, Inc. are affiliates of Franklin Resources, Inc.A 529 plan is not a mutual fund. Investors in the Plan do not hold shares of the underlying Franklin Templeton funds but rather, shares in aportfolio of the plan.
Mutual Shares Fund
Franklin Capital Growth Fund
Templeton Growth Fund
Franklin Growth Fund
25% 25%
25% 25%
Franklin Templeton 529 College Savings Plan
Investors in Franklin Templeton 529 College Savings Plan do not hold shares of the underlying Franklin Templeton funds, but rather shares in a portfolio of the plan. This material is not a recommendation of any particular security, is not based on any particular financial situationor needs, and is not intended to replace the advice of a qualified attorney, tax advisor, investment professional or insurance agent. Beforemaking any financial commitment regarding a Section 529 college savings plan, consult with the appropriate financial advisor.
Growth Portfolio
Risk-Adjusted Portfolios
Growth & Income Portfolio Income Portfolio
International Equity Domestic Equity Income Cash
35%
40%
10%
15%
80%
20%30%
70%
Franklin Templeton 529 College Savings Plan
Investors in Franklin Templeton 529 College Savings Plan do not hold shares of the underlying Franklin Templeton funds, but rather shares in a portfolio of the plan, which is not an investment in a mutual fund. For more information, including charges, expenses and risks of investing, please see the Investor Handbook.
Age-Based Portfolio
International EquityDomestic EquityIncomeCash
Newborn-8 Age 9-12 Age 13-16
Age 21+YearsAge 17-21
30%
70% 22.5%52.5%
5%
20%
35%
40%
10%
15%
80%
20%
60%
15%
17.5%
7.5%
Franklin Templeton 529 College Savings Plan
Investors in Franklin Templeton 529 College Savings Plan do not hold shares of the underlying Franklin Templeton funds,but rather shares in a portfolio of the plan, which is not an investment in a mutual fund. For more information, including charges, expenses and risks of investing, please see the Investor Handbook.
Individual Portfolios
Domestic Equity
• Franklin Capital Growth 529 Portfolio
• Franklin Growth 529 Portfolio
• Franklin Small Cap Value 529 Portfolio
• Franklin Small-Mid Cap Growth 529 Portfolio
• Mutual Shares 529 Portfolio
International Equity
• Mutual Discovery 529 Portfolio
• Templeton Foreign 529 Portfolio
• Templeton Growth 529 Portfolio
Franklin Templeton 529 College Savings Plan
All plan options are managed by affiliates of the publicly traded Franklin Resources, Inc., operating as Franklin Templeton Investments, with the exception of the S&P 500 Index 529 Portfolio, which is managed by UBS Global Asset Management (US) Inc. Investors in Franklin Templeton 529 College Savings Plan do not hold shares of the underlying Franklin Templeton funds, but rather shares in a portfolio of the plan, which is not an investment in a mutual fund. For more information, including charges, expenses and risks of investing, please see the Investor Handbook.
Individual Portfolios
Income
• Franklin Income 529 Portfolio
• Franklin Templeton Stable Value529 Portfolio
• Franklin U.S. Government Securities529 Portfolio
Index
• S&P 500 Index 529 Portfolio
Let’s Review
Higher Education Leads to Opportunities
• Investing in a college education is an expense you can afford.
Ways to Save for College
• 529 Plans offer a wider range of benefits than traditional college
savings vehicles.
Bringing You One Step Closer
• Franklin Templeton 529 College Savings Plan makes it easy
for you to get started and begin saving for college.
Take Action Today
It’s as easy as 1-2-3…
Educate yourself
Benefit from the expertise of an investment professional
Start investing today in a Franklin Templeton 529 College Savings Plan