Bill in pipeline would give college students cost relief

Students and parents who are or soon will be coping with college costs may get relief with the College Cost Reduction Act of 2007.

The legislation, approved by a House committee June 25, would boost college financial aid by nearly $20 billion during the next five years.

For families saving for college, it’s a boost for the 529 college savings plan. The act would eliminate plan funds from what is considered student assets and make them the assets of parents, grandparents or whomever contributed. That would help more students qualify for financial aid by not having a pot of 529 money haunting them. Now, 529s are considered in the calculation for financial aid.

The same treatment is true for Coverdell education savings accounts.

The bill would also eliminate distributions from 529s and Coverdells from student income. If the student is the owner of the account, it is included in the student’s assets and income. So it’s important to put the account in a parent’s or grandparent’s name as custodian and the student as beneficiary.

In addition to 529 changes, the bill would also increase Pell Grant amounts, cut interest rates in half on need-based loans, increase federal loan limits, provide tuition assistance for undergraduate students who agree to teach in public schools and forgive loans to graduates who go into government jobs.

The effective date under the bill would be July 1, 2009. If you like the sound of this bill, contact your congressional representative about HR 2669.

BULLY FOR STOCK INVESTORS

The April-June period was prosperous for stock investors, with many market indexes getting a boost. The Dow average grew in the three-month period more than half the amount it grew last year.

The local investment experts I talked with at the beginning of this year were mostly on target in their forecast. (I won’t name names until the end of the year to give those who thought otherwise a chance to redeem themselves in the second half of the year.)

The question is whether the winning streak will continue. The folks at Morningstar.com think so. The independent stock analysis firm this week said the market is still undervalued, albeit slightly.

“We think the S&P 500 Index is trading 4 percent below its fair value,” it said of its valuation calculation. “We arrive at a 6 percent discount for the Dow Jones industrials.”

For the remainder of the year, Morningstar remains high on large-cap stocks.

CONTACT THE WRITER: dan.serra@gazette.com