Using the case information below, you should create a action plan for the Schmidt family regarding education planning for their children. Your plan needs to explain why you are making the recommendations.

Howard (age 45) and Marsha Schmidt (age 42) have been diligently saving for college for their two children Abby and Dennis.It is July of the current year and Abby (Age 18) will be starting her freshman year at State University, and Dennis (Age 16) will be starting his junior year in high school in one month.The Schmidts have lived in Ohio their entire lives.Howard and Marsha's combined gross income is $85,000, and they itemize deductions on their tax return each year.They are in the 15% marginal tax bracket.Abby worked part-time over the past two summers earning a total of $2,000 each year, but does not plan to work during the school year so that she can focus on her studies.She is living in the dorms at school and does not have a car on campus.Dennis has always wanted to attend Countryside University, a school about 100 miles from home.Because of its rural setting and his desire to travel home to visit frequently, Dennis would like to have a car to take to school with him.They plan to use his UGMA account to purchase the car.The Schmidts also plan to purchase a computer and printer for both Abby and Dennis to have in their rooms at school, the estimated cost for each child is $1,000.They also anticipate another $600 each for items for their dorm rooms.The cost of attendance at State University is currently $9,250 for tuition and $10,100 for room and board.The cost of attendance at Countryside University is currently $10,780 for tuition and $11,160 for room and board.The Schmidts also have $30,000 of home equity available and have excellent credit.Home equity loan rates are currently at 5.75%.Neither Abby nor Dennis anticipates being eligible for any scholarships.Assets owned by Howard and Marsha that are not earmarked for college include their home valued at $175,000, a joint checking account with a balance of $6,000, a joint savings account with a balance of $20,000 and a rollover IRA with a balance of $53,000.Assume no increases in cost of attendance for the next 6 years.

Assets earmarked for college:

1)Joint Brokerage Account (Howard and Marsha) - 230 shares of XYZ stock with current fair market value ( FMV) of $23,000 and a cost basis of $35 per share.The FMV is expected to remain the same for the next several years.

2)Section 529 plan (Howard is the custodian, Abby is the beneficiary) - Current FMV is $12,000

3)Section 529 plan (Howard is the custodian, Dennis is the beneficiary) - Current FMV is $11,000

4)Coverdell ESA (Howard is the custodian, Abby is the beneficiary) - Current FMV is $6,000

5)Coverdell ESA (Howard is the custodian, Dennis is the beneficiary) - Current FMV is $5,500

6)UGMA (Marsha is the custodian, Dennis is the beneficiary) - Large cap mutual fund with current FMV of $8,000 and cost basis of $6,500

7)Bank Savings Account (Abby) - $2,000

8)Series EE savings bonds (Dennis) - $1,600 redemption value; purchased for $1,100.