Last week, we talked about 529 plans. Now, let’s go through additional resources that can be helpful when planning for — and paying for — college.
Financial Aid: If parents or teenagers are looking for financial aid for college, one important place to visit is the U.S. Department of Education’s Federal Student Aid website (studentaid.gov). It offers categories such as “Understand Financial Aid” (tinyurl.com/597reubt), which includes details on grants and work-study jobs, and “Apply for Financial Aid” (tinyurl.com/yj4yuyd6), which provides information about, and links to, FAFSA (Free Application for Federal Student Aid), a key component of the financial aid process.
Borrowing: If you are looking to borrow money for college, the Consumer Financial Protection Bureau (CFPB), a U.S. government agency, announced last year that it had added a new section, “Managing Your Student Loans,” to its Financial inTuition podcast section (tinyurl.com/vdcb92w5). The topics in the series include “Managing Student Loans and Money while in College” and “Postgraduate Degree Repayment Options.” The new category joins other CFPB podcasts, including sections on “Understanding Your Financial Aid Offer” and “Managing Your Money.”
Saving: Saving for College (tinyurl.com/3cf2d5fx), an independent firm, offers a host of resources, including a College Savings Calculator and an interactive map that details what 529 college savings plans are available in each state, along with what tax benefits (if any) the plans have. Among the articles found on the website is “How to Go to College for Free” (tinyurl.com/vb5ybys), a resource worth reading.
High school students: For high school students seeking more information about SAT testing and AP courses, there is the College Board (tinyurl.com/464sp4eu), a not-for-profit organization focused on helping students prepare for the transition to college.
Employers: When the Coronavirus Aid, Relief and Economic Security (CARES) Act became law in March 2020, one of its provisions allowed employers to make contributions of up to $5,250 per year toward eligible education expenses like tuition and student loan assistance, with the contribution not counting toward an employee’s gross taxable income. That benefit was extended to 2025 by the Consolidated Appropriations Act, 2021.
Loans: The U.S. Department of Education website also provides information on managing federal student loans (tinyurl.com/yks36vmr) for those who are paying them back. Through an additional extension of a relief policy in the CARES Act, principal and interest payments on federally held student loans have been suspended through at least Sept. 30, 2021, along with collections on defaulted loans. However, if you are in a financial position to pay back the loans, it’s a good idea to do so. After all, who wants to start a career with a lot of debt? As reported in 401(k) Specialist magazine (tinyurl.com/3zzs7se4) by Gregory Poulin, the CEO of Goodly, a provider of student loan and college savings employee benefits, 70% of college students who graduate each year begin their career with roughly $40,000 in education debt, which will take 22 years to pay off. That kind of debt can interfere with many other financial goals, including saving for retirement.
Taxes: The IRS provides important details related to the American Opportunity Tax Credit (tinyurl.com/593xabt9) and the Lifetime Learning Credit (tinyurl.com/478d4x52). Note that both higher education tax credits can affect the use of college-related plans like 529s, as you’ll need to avoid “double-dipping.” Saving for College provides insight (tinyurl.com/y29tk7rp and tinyurl.com/395ua35b), but you’ll also want to discuss this with your tax adviser.
The above list offers just some of the many resources available when it comes to paying for college. It’s worth doing some homework.