Frum.Finance

Vol 6 Levine.pdf

Dr. Aaron Levine's a"h article on tuition.

I'm more or less new here (some of you may know me from other Slack Orgs). I am interested in utilizing a 529 for paying tuition for K-12 in New Jersey.

a) Does a school have to accept a 529 or is it somthing I can do myself? (What is the procedure of paying tution out of such an account?)
b) Assuming I will be using the funds shortly after I deposit them - I beieve it is not a safe bet to invest them, correct?
c) It seems that that the benifits are: 1) NJ Income Tax deducatable 2) Can grow tax free (see b)

b) if your plan is to use the money in the next 10 years, do not do any stock investing in that account. Cash or low risk bonds if you are the wild type :stuck_out_tongue_winking_eye:

<https://frumfinance.slack.com/archives/C04ESL49560/p1675269844880899?thread_ts=1675194747.981249&amp;cid=C04ESL49560>

Pro tip, did you know you can open a 529 with any state regardless of where you live?

I think where you open the 529 might affect the state tax deduction

I'm pretty sure NJ doesn't allow it for K-12. Remember looking into it and then not contributing. Can't remember the details.
Remind me why I live in NJ again? :face_with_rolling_eyes:

I remember someone telling me I should consider a NJ 529 instead of a maryland (my home state) one but i don’t remember why

<https://frumfinance.slack.com/archives/C04EHDK97K8/p1676508665447249?thread_ts=1676498529.380569&amp;cid=C04EHDK97K8>

Nj tax deduction is relatively recent thing. How long ago did you check it out?

Oh, yeah, just found on Google that trump's tax act did that. Forgot the details. Is 529 that valuable? It's just the growth that's tax free?

It has an unforgiving income cap though. No allowances for family size. No phase out

look at my flowchart, but basically you need a lot of money before a 529 benefits make sense in my opinion

I know in maryland I don’t get a state tax deduction bc of income thresholds also, but that is besides the point because the benefit isn’t as good as maxing out all your other accounts

What are the income thresholds for the Maryland state tax deduction. And where are they documented? We've discussed the Maryland 529 at length on this slack and no one ever brought this up.

Also you can get the state tax deduction after tieing up your contribution for only 10 days. It doesn't take away from your ability to max out other accounts. I would think every household in Maryland no matter high or low income would want to funnel as much tuition money as possible through a 529

Sorry I misspoke I was referring to the 529 match not the deduction.

Also for the deduction, definitely don't want to funnel as much as you can since you might not have enough income tax to offset the tax deduction.

right it just reduces your taxable income. Hopefully your tuition isn't higher than your taxable income :slightly_smiling_face:

For many people on parsonage, it definitely can be higher than taxable income!

I would agree with some of the 529 skepticism. Outside of the state tax deduction, which depends on the state and other factors, it doesn't have a big practical benefit. Especially if you're thinking of a short time horizon like k -12 education.

Although this can be used for anyones  K-12 including (future) grand children if you ever want to help your children out in this kind of way…

If I remember correctly, there’s no deduction on your federal income tax so the only benefit would be the deduction for state taxes, which probably doesn’t make the whole process worthwhile. 

In my state it's worth it. Once a year I put 16k in my 529s and take it out as soon as it clears.

State taxes on 16k is significant and the hassle is minimal

Right. I was referring to NJ although I didn’t specify that in my post. 

Saving $500 could be worthwhile, but its also income capped to 200k.

Kal vechomer someone with less than 200k income will care a lot about 500$

Their tax rate will also be lower. But to be fair NJ tax rates are crazy for almost all income levels so its still high

image.png

I looked at Maryland tax rates out of curiosity to compare. What in the world is the government doing over there with these tax bucket amounts??

need to capture the taxes form all those frum people that don't get legally married and try to get benefits and file separately

Starting a new thread. Woah. Why might someone want to do this? Why not? Sounds either pointless or very valuable :)

You wouldn't want to do it if you like the state tax deductions your state offers.

You would want to do it if you find another state that has a benefit they offer that is not residency dependent that you want.

Lots of articles of comparing different states benefits of 529s. Usually your own state will be the best though

The articles I've seen compare investment performance of the different state 529s. Spot checking I've done only offers other benefits to in-state residents. Are there any that offer benefits to out of state residents? Otherwise I can see no reason to invest out of state

Yeah I'm not saying there are a lot of good benefits lol just an interesting fact :joy:

I've seen some states that offer out of state benefits, but they're never better than the benefits that your own state offers that I've seen

this is a more obvious case but if you live in one state and work in another and pay state taxes in that one, you could benefit from a 529 and state tax deduction in the state you work

Thoughts/psakim on using maaser for tuition?

I was told that one can apply for scholarship and inform the tuition committee that you can supplement money from maaser. As long as you are not required to pay the money, it can be counted.
Separately, I was told that if paying full tuition, if the amount of money that _would_ be given as a scholarship if applied for can count as maaser.

maybe share message to <#C04E9F1HAJK|general>? seems like a great broad question. your call

Preface, I think in peoples answers we need to separate out (1) what CAN be counted as maiser lehatchila, (2) what CAN be counted as maiser bedieved, and then (3) whether or not it SHOULD be counted as maiser

<https://frumfinance.slack.com/archives/C04E9F1HAJK/p1677075805778259?thread_ts=1677075535.390449&amp;cid=C04E9F1HAJK|https://frumfinance.slack.com/archives/C04E9F1HAJK/p1677075805778259?thread_ts=1677075535.390449&amp;cid=C04E9F1HAJK>

<@U04HBBEL2RG> main thread here

<@U04HBBEL2RG> I heard the opposite. If it's a chiyuv, it's not maaser. I think I remember R' Moshe having a teshuva about in today's society, the same chiyuv applies to girls. Could be getting that wrong.

Tuition should at least be a massar-able income deduction. If I didn't have to work I could handle my kids' education in house

After 6 years old it's a chiyuv for the boy to learn but optional for the parents to support him. So for the parents it is classified as tsedaka.

Doesn't the father have a chiyuv to teach him Torah? So if we satisfy our chiyuv by hiring a Rebbi...

I’m not sure, you make a good point. That din of tsadaka is about mezonos, not talmud torah.

Screen Shot 2023-02-22 at 9.48.34 AM.png

Screen Shot 2023-02-22 at 9.48.53 AM.png

Here is the teshuva from אגרות משה יו״ד ח״ב סקי״ג

The last paragraph of the Teshuva is important: If you can’t afford Maasar, you aren’t obligated to give since supporting yourself takes precedence [over other Tzedaka].

<@U04HBBEL2RG> Is that last paragraph in the image your posted?

He's saying that the amount of tuition your are able to afford based on your income is a chova and should not come from maser. If they are asking more than that it can come from maser.

Oh i'm sorry, I missed the actual last paragraph at first..

&gt;  The last paragraph of the Teshuva is important: If you can’t afford Maasar, you aren’t obligated to give since supporting yourself takes precedence [over other Tzedaka]. (edited)
Doesn’t Rambam pasken that even aniyim are chayiv in tzedaka?

Source for the Ramah <https://www.sefaria.org/Shulchan_Arukh%2C_Yoreh_De'ah.251.3?lang=bi&amp;with=all&amp;lang2=en>.

<@U04FE4SPVU0> The Mechaber here:

&gt; הנותן לבניו ובנותיו הגדולים שאינו חייב במזונותיהם כדי ללמד את הבנים תורה ולהנהיג הבנות בדרך ישרה וכן הנותן מתנות לאביו והם צריכים להם הרי זה בכלל צדקה


Very interesting - thank you <@U04HBBEL2RG> !

I'm curious where the halachos for maaser kesafim come from. Isn't it a minhag and not halacha to begin with?

Yes, nice discussion with Rabbi Yosef Kushner - <https://www.youtube.com/watch?v=9e1oHV9UhiE>.

Yup. It's a minhag. Which still means it's halachically binding in some sense.

Here he discusses a קולא for a real estate 1031 based on the fact that it’s a minhag:
&gt; Say in front of 3 people: I’m mekabel maaaser on condition that I give 1031 profits when I cash out, not at the time I roll over money into new deal.
<https://youtu.be/9e1oHV9UhiE?t=2265>

<https://agudah.org/action-alert-urge-your-member-of-congress-to-support-the-educational-choice-for-children-act-2/|https://agudah.org/action-alert-urge-your-member-of-congress-to-support-the-educational-choice-for-children-act-2/>

Someone posted this elsewhere, how does this make work? They're saying pay us and we'll pay you back double (assuming the 100 is per child, which is not clear)?

And obviously it's ostensibly there to provide money for tuition, why go this roundabout way of asking people to pay and then giving them money back? 

<https://www.getsefa.org/|https://www.getsefa.org/>

-it's tax deductible like this (not legal advice - but I assume this is what they are counting on)
-I assume they are hoping that people without children in school will join

This sounds like their main source of funding will be people who aren't currently paying tuition, but want to solve the crisis

If I wanted to help the tuition crisis, if I sent $100 a month to a school, I wouldn't feel like it wasnt having an impact. But if I donated $100 a month and was told because I was joining with 10k other people, they were able to reduce tuition for EVERY student, well that feels like an impact

Imo their target audience should not be parents who are currently struggling to pay tuition, and will be sending their $100 to this org and lowering their tax bill. Maybe that would work? But would be much harder to get traction I think

I gotta say when I first saw your post and the site many alarm bells were ringing, but reading it through, it sounds intriguing.

Someone in the slack is starting a similar thing in Baltimore. Looks very promising. I'll see if I can get him to chime in. 

The way I see it, in the extreme ideal of this situation, there is no tuition. Everyone donates to schools to support them, or to a foundation that supports all schools.
I like the idea. Whether or not it's feasible is an entirely different question. I see many implementation problems.

I am working on something similar you can see it at <http://ahavaschinam.org|ahavaschinam.org> - I hope to have a slow roll out after Pesach. Regarding SEFA - if you google it you can see that this was already happening since 2021. There hasn't been any follow up as far as I can tell. More importantly - I tried looking for an EIN number to see the 990  and it doesn't seem to exist. There have been many fraudulent organizations and ideas in the past. Baruch, as I have told you and commend you - transparency is crucial, especially when you are collecting so much from people. I couldn't find any info regarding the financials of SEFA - for me that is a big red flag. With what I am working on - not only are we filing a full 990, but we post our bank statements online for people to see. And offer a money back guarantee. I hope to be able to write more about it after tax season.

R' Kelemen had a similar idea 15 years ago. Non-Jewish religious groups do this and it works. He said the biggest issue would be, unfortunately, internal Jewish politics. Would the Chasidim join to fund misnagdim schools? Where do we draw the line for modern schools? "Out of town" schools? I'm homeschooling my neighbor's kid, is that a "school"? That school expelled my kid, I don't want my funding going to them, etc etc.

I don't see a reason why each group can't have there own org

litvish, chasidish, chabad, and many other groups are big enough by themselves for this

You're saying globally or for a specific area? I definitely don't see that to be the case in Baltimore. If we split orgs up by hashkafa things would likely fail.

It can be either, depends on the size of the location, I was specifically focused on nj and ny

Splitting by hashkafa is so dangerous, especially for the schools that are on the border. I remember the rumblings of conversation about which girls high schools are considered a "bais yaakov" or not

Why does my school's scholarship application ask how much I spend on vacations and cleaning help? If I spend a lot, does that mean I'm poor because I have so much expenses or does it mean I'm rich because I splurge. Why stop at asking about vacations? why not ask how much I spend on my art collection?

That was just an example. I don't actually collect art

Are you using FACTS? I believe it's a default question.

Presumably the latter (rich). Under normal circumstances, one should not be spending $5k on vacations and then asking for a scholarship. 
Vacations are common, and often considered "needed" by many who don't actually "need" it. Same with leasing cars. I was once talking to a guy in Kollel who explained to me that he "must" lease a car because he doesn't have time to take his car to the mechanic.
Unfortunately, some adults confuse needs and wants, just like children.
:man-shrugging:

I agree it's ridiculous. Insane in fact. This means if I am incredible at budgeting so I can save enough for a vacation, I can't go on it even though someone in the same position gets the scholarship without trying to budget well.

It's a broken system. When I build financial plans that argue for tuition assistance for clients, I'll never include vacation spending because it's not relevant. The question I am answering instead is how much do I spend relative to my income, compared to people in a similar financial situation. If one family decides to buy meat and the other one decides to only eat vegetarian and use the extra for the vacation, why should only the meat eater get tuition assistance?

Disagree with anyone saying 5k vacation is out of the question if someone is on assistance. As long as your overall spend makes sense given their income, leave their prioritization alone. It's gross to judge particular expenses. Look at The whole picture.

What you described is an anomaly and one of the reasons I wrote "under normal circumstances." There are also reasons why someone actually needs a vacation. 
However, in my experience speaking to people, the overwhelming majority of the time, this is not the case :man-shrugging: 
<@U04EQ1L14HG>, I presume you speak mostly with people reaching out for financial planning, which is excellent, but also a biased sample. You may have far more anomalies in your sample than in the population

- Anomaly or not, it's better to utilize rules that work in all circumstances when you are doing something as impactful to someone life like determining their tuition obligation

- Many of our clients are people that are asking for tuition assistance and the school says, "hey you should reach out to frum finance and get a financial plan." I definitely wouldn't say that we are exclusively a subset of people that took the initiative. A lot of people are just people that have been pestered enough to join frum finance that they reach out lol. But yes, we are definitely a skewed subset. BUT, that doesn't mean we shouldn't use logic that is for everyone. My formulas work with all spending patterns because they are normalized across the data.

even if you simply did it based off income, it would be far more fair then judging each expense.

Life style inflation shows up in MANY places. It's silly to demonize vacations specifically. Someone buying a $1200 phone would go unchecked.

Here's my problem. Let's say for a moment Yehuda Davis is right. My vacation expense is an indication of financial irresponsibility. What does the school do with this nugget of information. They already know my income and my family size and all other sorts of expenses. They should be capable of calculating what tuition is affordable for me.

Now they learn I'm financially irresponsible.

So they make me pay MORE tuition?
 Do they refer me to frum finance to learn responsibility?

Every school probably handles it differently. In an ideal world, they would mandate financial planning. But I imagine that's rarely the case.

<@U04EQ1L14HG> I don't disagree with your point of view, but I also think it's idealistic, and for a school without your (as yet unimplemented) system, they need some heuristics. I'd also like to think that schools would talk to parents directly before making drastic assumptions, so however it's viewed should ultimately be irrelevant

Seems like both of your arguments end with the system is very broken and can only be saved by frum.finance so I'm happy :blush:

<https://frum.finance/donate|https://frum.finance/donate> lol

<@U04FE4SPVU0> my point is to keep pointing out this issue so it becomes more and more obvious that schools need to implement my proposal, so yes, idealistic but I am offering a potential solution.

I don't disagree that they are doing the best they can without a new system being offered to them.

<@U04EQED6QKU> yes a few schools do refer to frum finance in that situation :muscle::muscle:

At which point you tell the schools that vacations are not an indicator of financial irresponsibility :slightly_smiling_face:

The product I am offering actually means the school wouldn't know that you went on vacations, since frum finance will keep your personal finances confidential and just give a maximum possible tuition payment calculation.

Thoughts about this?
<https://x.com/DBashIdeas/status/1836938547913265368|https://x.com/DBashIdeas/status/1836938547913265368>

Is education not affordable or do we just all have a heaping number of kids, BH?

Frum schools are usually have the price of public school, we just don't have tax money being infused to hide the cost.

I interpreted the tweet as "help people afford it" - seems in line with all the conversations we've had here around helping people afford tuition

Hmm that's definitely a very different thing than education being affordable itself.

Reimagining Tuition: A Bold New Vision for Financial Sustainability in the Frum Community

I guess then I'll agree and insert my idea of how to fix it 


<https://docs.google.com/document/d/1zg4MsHiTu57ZcX8YwgUzWeDWxyfXEaNqLvKz4NCkZ3Y/edit?usp=drivesdk|https://docs.google.com/document/d/1zg4MsHiTu57ZcX8YwgUzWeDWxyfXEaNqLvKz4NCkZ3Y/edit?usp=drivesdk>

It's also coming from an educator so this will probably be high on his radar (though he is also involved in other things besides education)

I feel like he is more advocating for what cooper union used to have.

Massive endowments from philanthropists that are invested smartly, a school focused on covering expenses without making a profit (including admins), and a resulting low tuition / tuition free eco system.

I was told there is a way you can use HSA/FSA money for pre-school tuition. Does anyone know anything about this?

I had a separate Dependent Savings Account from work for this. Is that maybe what you meant?

I think you are thinking of the DCFSA which is an unrelated account

Dcfsa is often just called FSA, so it can be confusing

Fun fact I just recently learned after more than 10 years of using dcfsa:

If you submit a claim for more than the balance of your account, every deposit into the account will be immediately withdrawn and sent to you until the claim is paid

Yes i just had that happen to me as well.

Canvas for <#C04G41ZD725>

<@U04EQED6QKU> can you add that to this channels canvas?

<https://frumfinance.slack.com/canvas/C04G41ZD725|https://frumfinance.slack.com/canvas/C04G41ZD725>

My kids schools are offering this card with tuition rewards - mostly for shopping at local merchants
• <https://bethrivkahtabcard.com/>
• <https://oholeitorah.thetabcard.com/>
Is anyone family with exactly how this works? For example, if my local store gives a 6.5% reward, how much of that is being paid for by the merchant?

Hello can anyone please explain why schools ask me for checks for "extra supplies and projects" at the beginning of the year, and random fees throughout the year, instead of just raising my tuition by $100 and simplifying the process for everyone?

bc they don't have me as a donor that complains loudly

I'll make sure to send you the fundraising campaigns when they come around this year ;)

"If you don't penny pinch me, I won't penny pinch you" is how I said it

I'd rather spend more money but not have the constant asks! They can overcharge me now! Just stop bothering me for it!

Also check books are annoying to replenish

i made a big stink about it when i was asked mid year for fundraising support for a project in addition to the annual campaign. I simply asked the head of school why they can't communicate well enough or are so dysfunctional to not know how much they need from me at the beginning. BH it's been a few years and now i've only ever been asked once a year for money :slightly_smiling_face:

&gt; (Can they please just take Zelle)
This! I don't have $1.50 change on me necessarily!

But I assume the answer is that if you raise tuition some will pay and some won't, if you ask for a few dollars for a trip, you are more likely to get it

<@U04FE7V7V88> I kind of thought it was the other way. If you raise tuition people will just go along with it, especially if they're already paying. A few dollars for a trip they need to collect and remind and remind and remind, and some people will just never send

I think both are true, depending on your income. People that only pay 10% of their tuition still have to pay 100% of these random fees. People that pay 100% of tuition will be like "i don't have time for this nonsense, come at me"

I thought the people who can't pay tuition will be the ones that the teachers fahgin for these fees, but that might involve an awkward conversation to someone outside the tuition board

Because tuition is the same for every child, but supplies and trips can differ by grade and even by class.

I do think it makes it harder for people to get out of though. I can only pay $X for tuition will stay the same if you combine them. Its harder to say I don't have $25 for a trip.

It also might be more likely people *will* have the $25 for the trip. Its kind of like having the pay your taxes at the end of the year or paying it from each paycheck. People bad at long term planning can deal with small expenses better than with large ones.

so instead of tuition, just have people asked for 25$ sporadically and frequently

Every day your kid comes to school you spin a slot machine that decides how much you need to pay for that week.

or parents compete in something like finishing mishnayos or gun range and we pay based on performance

Suggest ParentLocker to your school. My kids' school got it and it handles all payments, most of which are put in at the beginning of the year based on grade. It also handles the random trip here and there, but 2 clicks and it's paid. ACH, cc for a fee, whatever you want

lol yes of course make it easier for them to constantly charge us money, great idea buddy

cause our biggest problem is, "i wish it was easier for my school to charge me money"

But the reason it's separate from tuition is 100% <https://frumfinance.slack.com/archives/C04G41ZD725/p1756836621388999?thread_ts=1756835324.164329&amp;cid=C04G41ZD725|this>

I was replying to <https://frumfinance.slack.com/archives/C04G41ZD725/p1756835421964489?thread_ts=1756835324.164329&amp;cid=C04G41ZD725|this> and other similar sentiments

right but think about what everyone else will say now that you've made it easier to drain my account

They're going to charge regardless. And you'll have to pay regardless. Only difference is, do I need to write out a check and send it in, and then stop check and replace it when it gets lost, or can I log in to the portal and be done with it.

My hierarchy: don't charge me &gt; charge me extra once as part of tuition &gt; ask frequently but let me pay on the cc you have on file &gt; frequently but let me pay in a portal &gt; frequent but let me Zelle &gt; frequent and make me send in a check or cash (ugh)

They also take a second lien on your house

Ok fine so there IS a state that is worse than the current state

they also could be asking for your credit card via google form

My daughter had to go to a nit check yesterday for school and they charge $20 per kid. According to my wife it takes them 2-3 minutes to check each kid. That means they're charging about $400-600/hr to check for nits. Is this the norm and if so why are they getting paid like senior corporate lawyers?

have you seen how expensive tuition is these days? nit checkers have to pay the bills too!

Why is nit checking even a thing? Do they also check for ticks? Or bedbugs?

When it comes to these kind of hourly rates, I remind myself that they're not employed full time at that level. Average it out over the amount of time they're not working and it's not all that impressive.

They can do other stuff in that time. The fact that it's not 9-5 doesn't justify the extortion.

If I had to take a day off work to make $5k for a few hours of work I would do it in a minute. The school could easily pay someone $1-1.5k for the day to do the checking and cut the price to $5/kid. If someone has 5 kids in the school the difference from $100 to $25 could be substantial for such a minor thing. My kids school has 6-700 kids. That's over $10k more being spent between everyone.

How is this such skilled labor that it justifies 1k per day?

Its temp work so I can understand it being paid more than normal. Personally I think that's high as well.

Combined with the fact that there's no option to do the check yourself. That's the definition of extortion. Or a mafia racket.

obama as in insurance should cover nit checking

My guess is that the specialized skill is treatment for nits, and this skill comes with it. The same way I paid my plumber $250 to come look at my sewer pipe and then tighten a cover.

But I can heavily agree that all these extra one time expenses from schools add up so fast

You can Google nit treatment and be done with it

&gt; Why is nit checking even a thing?
<@U08G6J0A44B> Often after school vacations, there are a few kids who come back to school with nits or lice. If it isn't caught right away, it can spread quickly. Checking at the beginning of the school year can nip it in the bud if the few kids with nits/lice are properly cleaned

Also, it sounds like these people are checking for nits, not cleaning for nits

My question was more along the lines of since when does the school take care of health or hygiene concerns?

A similar example - Schools do not allow children to come to school while they are contagious with strep, flu, etc.

similar example, school wipes my 2 year old, that isn't education related.

Does the school charge $10 per wiping session?

Preventing someone from coming is one thing. Performing the service is another

conspiracy theory - what if the school was only paying them $5/kid and keeping the rest as a charge for the convenience of in-house service? :exploding_head:

In my school the charge goes to the nshei and it pays for the monthly nit checking in school and other nshei functions (like rosh chodesh treats, etc). We also pay more than $20 per kid, but depends on how many you have. They actually state this in the nit checking letter when it mentions the fee, it's not hidden.