The myStockOptions Blog

College Funding: Watch Out For The Unexpected Additional Expense Of Mandatory Student Health Insurance

With August comes the approach of the new school year, and many families are now preparing to pay their first big college-tuition bill. At myStockOptions, our section College Funding has articles and FAQs with guidance and insights on how to best use equity compensation to pay for the ever-growing cost of college attendance and the impact that stock grant income can have on financial aid.

Big Surprise College Expense

Via the personal experience of our editor-in-chief Bruce Brumberg, a related issue involving college funding has come to our attention: the often unexpected but significant expense of mandatory student health insurance. Althought this is beyond the usual scope of this blog, what he experienced and discovered has financial-planning implications for anyone who has kids in college or will soon.

Mandatory Student Health Insurance: What Do Colleges Impose And Why?

You probably have solid health insurance for your family. However, even excellent health insurance may not meet the rigorous requirements of the college your child attends. If it does not, you will be forced to buy a separate health insurance policy that the college sells or sponsors. At some colleges, the cost of the policy is over $5,000 for the 2019–2020 academic year.

The way to avoid this charge is to get a waiver from your college by proving you have a health-insurance plan that is comparable to the one it sells. The process to do this for the academic year often occurs in July and August or the month before the tuition bills come out.

Colleges are understandably concerned that students could face debt from medical expenses that dwarfs even their student-loan debt. That is the underlying reason for colleges' mandatory health insurance and its stringent standards. However, the requirement is not completely bad news. While the cost of mandatory student health insurance is often a big surprise for many families, in some situations the college's insurance policy can actually present both savings and a better plan.

In a commentary at his Forbes.com blog, our editor-in-chief Bruce Brumberg discusses his experience and advice for parents and students on handling mandatory student health insurance at colleges: The Big College Expense You Probably Didn't Know About And Save For: Mandatory Health Insurance. The practice has become so widespread at colleges that it should be a factor in your financial planning for college funding.

Podcasts Feature Expert Commentaries On Equity Comp From Contributing Authors At myStockOptions.com

In our effortlessly cool way, at myStockOptions.com we offer podcasts on many topics in equity compensation. To add to our several audio recordings on the basics of equity comp, we have begun a series of podcast interviews with some of our expert contributing authors on a variety of subjects (click on the titles below to listen right now).

Why Restricted Stock And RSUs Are A Good Deal
Compensation expert Richard Friedman explains what makes restricted stock and restricted stock units valuable forms of equity compensation. This audio recording is a companion to Mr. Friedman's article on this topic in the Restricted Stock section of myStockOptions.com, where he also has articles on financial and tax planning for restricted stock and RSUs.

Your Company Stock: The Importance Of Diversification
In a lively interview, CFP Laura Tanner shares her wisdom on investment diversification for employees with holdings of company stock. This audio recording is a companion to Ms. Tanner's article on diversification at myStockOptions.com.

Financial Planning For Stock Compensation
CFP Alan Ungar gives guidance on choosing the optimal time to exercise stock options and expresses his point of view on what employees should do with shares acquired from restricted stock/RSU vesting. This audio recording is a companion to Mr. Ungar's article series on option exercise strategies at myStockOptions.com.

College Funding With Stock Compensation
In this interview, college-funding advisor Troy Onink explains strategies for the use of stock options, restricted stock/RSUs, and other equity awards to pay for the ever-increasing costs of higher education. This audio recording is a companion to Mr. Onink's article series in the College Funding section at myStockOptions.com.

This quartet of podcasts is just the start of a long-running series of author interviews that we plan to publish in the coming months and years. In general, we are continuing to expand our multimedia offerings, which include videos on restricted stock and RSUs.

Interested in using our podcasts or other educational materials at your company? Read about ways to license our independent and unbiased content, and please contact us when you are ready to make inquiries.

Soaring Tuition Raises The Importance Of Stock Grants & Nonqualified Deferred Comp For College Funding

The price of higher education has never been, well, higher. Some private colleges now cost up to $60,000 per year; even at state universities, annual tuition can approach $30,000 for students who aren't state residents. This means smart financial and tax planning for college funding has become more important than ever. However, surprisingly little has been written about paying for college expenses through the use of stock grants and nonqualified deferred compensation (NQDC).

For the millions of US employees who have stock grants or NQDC from their companies, expert guidance on college funding is available in articles written by Troy Onink, a noted college-funding authority and Forbes blogger. Tailored for each website, his article series at myStockOptions.com and myNQDC.com explain the issues and planning involved in using these forms of compensation to meet the costs of university tuition.

On myStockOptions.com, the three-part series Funding Your Child's College Education With Stock Options And Other Stock Grants explains:

• the impact of equity awards on financial aid eligibility
• the basics of gift tax and the tax treatment of stock compensation in the financial planning for higher education
• methods to minimize capital gains at sale, planning for the kiddie tax and education tax credits, and strategies that students can use

Meanwhile, myNQDC.com has the two-part series College Financial Aid & Funding With Nonqualified Deferred Compensation. Contributions to NQDC plans allow participants to defer income to future years and defer taxes on that income until they receive it at the scheduled distribution date(s). Therefore NQDC often has long-term planning considerations. For many NQDC recipients, the expense of their children's higher education, even if it is many years away, can be one of the most important goals for NQDC deferrals. In his NQDC articles, Troy explains:

• NQDC in the context of eligibility for need-based financial aid
• the ways in which NQDC income deferrals and distributions by parents affect a student's eligibility for financial aid
• impact of NQDC on eligibility for the American Opportunity Tax Credit
• financial-planning strategies with NQDC that can help your cash flow for meeting college expenses

For a range of planning ideas with stock comp and NQDC, see the Financial Planning sections of myStockOptions.com and myNQDC.com.