Give Kids A Chance

Five Facts You Need to Know

Fact #1: The “Have’s” and the “Have Nots”

The gap between the rich and the poor is growing rapidly across the United States. In 1994, for the first time since such records were kept, the richest 20% of U.S. households received a greater share of national income than the middle three-fifths combined. The bottom 40% were worse off in inflation-adjusted terms in 1993 than similarly situated people two decades earlier.

(Source: U.S. Department of Labor)

Fact #2: A College Education is the Difference

Earnings of full-time workers who have a college degree continue to accelerate faster than those with just a high school diploma. In 1979, the average college graduate earned 49% more a year on average than a worker with only a high school diploma. By 1994, the earning gap had widened to 89%. Each year of formal school after high school adds 5% to 15% to annual earnings later in life. (Source: U.S. Department of Labor)

Fact #3: College Costs Are High and Rising

Today, the minimum per year cost for a student attending a four year, in-state university is about $10,000 per year. This cost includes in-state tuition, books, room and board. It now takes an average of five years to graduate. Only about 40% graduate in four years. Here are the minimum cost of a college education based on five years to graduate and college cost rising 5% per year.

Fact 4: You Have Four Choices

1. Pay college cost out of ordinary income. Add 25% to 40% to cost for taxes.

2. Kids work to pay part of costs. Kids take longer to graduate. Higher drop-out rate.

3. Student loans. College graduate starts out in life deeply in debt.

4. Pay college costs out of assets. Buy a rental property that will be free and clear.

Fact #5: The Easiest Way To Pay For A College Education Is By Buying A Rental Property With A 15 Year Loan.

Here is the equity created in a $175,000 rental property
with 20% down payment (15-yr loan).

Now 5 years 10 years 15 years
*$35,000 $68,733 $113,281 $175,000
**$35,000 $95,962 $173,465 $272,642

*Assumes no increase in property value at 6% Interest.
$35,000+ amt. of pmt going toward principle each month=your
proceeds at sale.

** Assumes 3% per year appreciation.
$35,000+ amt. of pmt going toward principle each month+3%
appreciation=your proceeds at sale.

Now 5 years 10 years 15 years
$50,000 $63,814 $81,445 $103,946

Jilann Carlson, REALTOR®
jilann@windermere.com
Cell: 208-755-9181
Office: 208-664-9221
Fax: 208-666-1435

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