Sometimes the best gift to our children and grandchildren is the gift of education. Like all good stewards, we want to be smart about our money. The rising costs of tuition and related expenses can be challenging.
What are some options at hand to fund education?
- Scholarships and Grants. There are many organizations and institutions that provide scholarships and grants for students who excel academically, athletically, or in other fields or for specific fields of study. Ask your student to work with you to research and apply for these opportunities to offset costs.
Applying for FAFSA to potentially get a Pell Grant is a must do. For some families there may be tax credits or deductions as well.
Some schools have their own scholarship assistance strategies. Be sure to inquire.
- Educational Savings Plans. 529 plans are popular savings opportunities. The contributions remove assets from your estate, grow tax-deferred, and are distributed tax-free when used for qualified educational expenses. Moreover, if there are remaining funds post-education the beneficiary may be able to move assets from the 529 to a ROTH IRA up to $35,000 in annual conversions equal to 100% of income up to the annual limit.
- Part-Time work/Internships: Older kids may be able to take on part-time positions to help in their education expenses. Internships can also offer income.
Be sure to inquire at your place of employment. Some employers offer tuition assistance for employee’s children. It may be worth the effort.
Some universities offer on campus employment. Ask for the opportunity.
- UTMA/UGMA: These strategies are a great way to gift money into an account for future expenses. However, different from a 529, once a student (or non-student) reaches the age of majority the funds are now under their control.
- Crowdfunding and Community Assistance: Crowdfunding is a newer, and perhaps bold, strategy to invite community to help launch a student’ education. For students who have been present in the community for a long period of time, this strategy may not feel so farfetched. For those students majoring in marketing … this may be their first assignment!
Funding educational goals are best begun at an early age to minimize the stress on cash flow as the student gets closer to college. However, if there wasn’t a financial opportunity to execute early in the student’s life please don’t despair – starting at any time will make a difference in your student’s life.
If you would like to know more on these strategies, or others, call us at 602.923.9800. We are here to educate, strategize, and help you carry out your plans.
Read more articles by Kristin Evans