Education Planning

The process of projecting future costs of higher education and identifying strategies to achieve savings goals.

Saving for College

529 Plan – Educational savings plan designed to help families set aside money for college. Benefits include:

• Investments grow tax-deferred and distributions to pay for the beneficiary’s college come out tax free for required educational expenses.
• Donor retains control of funds meaning you decide when and for what withdrawals will be made and can ultimately reclaim the funds.
• Low maintenance investments, meaning they are handled by the plan and are professionally managed, allowing you a hands-off way to save for college.
• 529 accounts (in the name of the parent) are assessed at a lower rate than assets owned by child in determining the Expected Family Contribution for Financial Aid. Student Aid Index is replacing EFC starting in the 2022-2023 year.

UTMA/UGMA – An irrevocable savings plan that allows minors to own securities by way of a trust without the need of attorney’s and trust documents. Benefits include:

• Minors can “own” securities and other types of property that they would not normally be able to own
• The Donor retains control until a specified age (usually 18 or 21), then the assets are owned and become in control of the beneficiary
• Funds do not have to be distributed and used by the beneficiary only to pay for college, unlike 529 plans (funds still available to be used by beneficiary even if they receive scholarships or do not go to college)

Other Ways to Pay for College and Reduce Costs

Loans – close to two-thirds of undergraduate students use loans to pay for college. There are three different types of loans: Student, Parent and Private:

• Student, most commonly Stafford, loans can be subsidized (govt. pays interest while in college) or unsubsidized (student pays all interest) and have a fixed interest rate.
• Parent (PLUS) loans are the full responsibility of the parent, have no limit and have a slightly higher fixed interest rate than Stafford Loans.
• Private loans are used to provide a need beyond what the govt. allows to be taken out in loans and are usually more expensive

Scholarships – unlike loans, scholarships do not need to be repaid and generally awarded to students with special qualifications. Hundreds of thousands are rewarded each year (FastWeb is a good site to search for different scholarships)

Military Aid – students either interested in enlisting or who have previously enlisted in the military may be eligible for aid that may cover up to three-fifths of the average cost of college

Work-Study Jobs - are federally funded programs that provide part-time jobs for college students with financial need. You will need to complete a FAFSA each year to see if your student qualifies. Even if you don't qualify, there are plenty of off-campus jobs that can provide income, work experience, and professional connections. 

In addition to saving for college, strategies and planning involving the FAFSA (Free Application for Federal Student Aid) are important to maximize the amount of federal aid you receive and therefore reducing the amount you pay.

Be selective with the college and major. While passion and student interest are critical factors, if your student is favoring a lower "return on investment" major, consider starting at a local or community college, which can be less expensive. Then transfer to a more prestigious or larger school to receive the degree.

Get Credit Early and Graduate on Time!

• Check with the guidance counselor to see if your student can earn college credits while in high school through dual enrollment, AP Exams, CLEP Exams, DSST Credit, or other testing.
• The faster you can get an undergraduate degree (or post-grad degree) the more you will save.