savings vs loans

I need to pay for college this fall for our fist chld. We have $65,000 in stocks for education for our 3 children. Should we use these savings for tuition, refinance our mortgage, or get student loans?
Do our savings limit the amount of financial aid? This is an IVY giving us limited financial aid?

You pose several issues. You have $65,000 in stocks and three children, presumably all who will go to college. Do you plan to use all of the money for the first child or do you plan to divide it evenly? Are the stocks in your name or in your child's?
Assets held in the child's name are counted more heavily than those held in the parent's name for financial aid purposes.

With elite college costs for tuition, room and board running around $35,000 a year, your savings--assuming you want to save some for your other two children--probably will run out in one year. At that point you'll probably need to address the student loan vs refinancing issue. Much depends on whether you believe your child should share in the cost of his or her education.

The new tax cut offers you a break. You and your spouse could gift your child up to $22,000 a year in stocks and let the child sell them to pay for college. Assuming your child is in the lowest income tax bracket (10%) his or her capital gains rate will be only 5% compared to 15% for you.

I'm writing an article on this subject and would be interested in discussing it with you. Please contact me at mbfranklin@kiplinger.com.

Mary Beth Franklin
Associate Editor
Kiplinger's Personal Finance