March College Planning Tip of the Month

Budgeting can be difficult for anyone, and college students are no exception. With the countless opportunities and new experiences at most universities, it might be tempting for your student to indulge in everything campus life has to offer. But helping your student build up good spending and saving habits, rather than rely on you as a financial safety net, will increase their chances of living a more financially stable life in the future.

Here are a few tips to bring up with your current college student:

  • Use an app: Try a money management app like Mint and find the best budgeting app based on your needs. Chances are, after consistently using one of these helpful budgeting tools for just a month, you’ll find new ways to save.

  • Build a saving safety net: Be prepared for unexpected expenses by building up a bit of savings that you can rely on. Once you have your budget, build in a 10 percent cushion, this can help reduce the stress and cost of unplanned expenses.

  • Start paying on student loans immediately: From the moment you begin to accumulate any student debt, start paying it down immediately — not to wait until after graduation.  By beginning to just pay off even just interest, getting into the habit of making regular payments to your student loans will help you pay them off faster.

  • Ask for a student discount: A student ID can get you some valuable student discounts on more than just movie tickets. Great deals can be found on everything from computer software, Amazon Prime, and FedEx shipping to newspapers, food, clothing and much more. The bottom line is you should always ask if a student discount is available.

Laying the groundwork for smart budgeting and spending habits in college enables your student to handle responsibility and learn the value of accountability.
February College Planning Tip of the Month

College is a worthwhile endeavor, but figuring out how to pay for it can feel overwhelming. The cost of a college education includes tuition and fees, room and board, books and supplies, transportation, and other expenses. Fortunately, there are many types of financial aid available to help people pay for college. However, navigating the financial aid process can often be confusing for students and their families. A good starting point is to first learn about the different types of financial aid that is available. There are four main types of financial aid for college students including grants, scholarships, loans, and work-study funds.

Grants are a type of financial aid that does not have to be repaid. Offered by the federal and state government, as well as by some institutions, grants may be merit-based, need-based or student-specific. Examples of student-specific grants might include grants for minorities, women, and students with disabilities. The competition for grants is usually fierce since no repayment is required.

Like grants, scholarships do not require repayment. They are typically offered by individual institutions and private organizations and can be awarded based on a number of factors, such as academic performance, athletic ability, religious affiliation, and race, among others. In order to apply for a scholarship, you will often be asked to write an essay.
Offered by both the federal government and private institutions, loans are money that you borrow to attend college. You must repay your loans with interest. Loans provide students and families with immediate access to funds to help cover the cost of college.
  • Federal Loans: the two main types of federal loans available for college students include:
    • Subsidized Loans– Subsidized student loans are available for students who have demonstrated financial need. They have slightly better terms than unsubsidized student loans, because the US Department of Education pays your interest while you are in school and for a six month grace period after you graduate.
    • Unsubsidized Loans– Unsubsidized loans are available to students regardless of financial need. Students are responsible for repaying interest during all periods.
  • Private Loans
    • Private loans are granted by private banks and may help to bridge the gap between the cost of your education and the amount of financial aid you receive from the government. Eligibility for private loans often depends on your credit score, and private loans tend to have higher interest rates than loans that the government offers. Students are encouraged to pursue all options for federal student aid before entering into a private loan.
Work Study
A work-study program is a work program where you can earn money that helps you pay for school. Work-study programs provide students with federally funded jobs on campus or at other approved locations. The campus facilities at many colleges and universities, including the student center, career center, athletic department, and

residence halls, employ work-study students. However, the positions available and the pay offered vary widely.
The financial aid you receive could make a big difference in the school you attend and the amount of debt you have after graduation. The sooner you start checking out your financial aid opportunities, so that you can capitalize on all of the available resources for funding your college education.
January College Planning Tip of the Month

Need a little more info to decide if 529 plans are right for you? If you have children or grandchildren that you want to save for, this could be a great way to get started! 529 college savings plans provide families with several tax and financial aid advantages. Contributions to a 529 plan are made from after-tax dollars. Earnings accumulate in a 529 plan on a tax-deferred basis. Qualified distributions from a 529 plan are entirely tax-free. In 35 states (including Arizona and Utah), contributions to the state’s 529 plan are eligible for a state income tax deduction or tax credit.

Annual contributions to a 529 plan in excess of the $15,000 annual gift tax exclusion ($30,000 for a couple giving together) are eligible for 5-year gift tax averaging, which treats the contributions as occurring proportionately over a 5-year period. This allows an individual to make a lump sum contribution to a 529 plan of up to $75,000 ($150,000 for a couple) without incurring gift taxes.

You can start a 529 plan at any time. There is no limit on the number of 529 plans you can set up. The account owner controls the account, not the child. The child does not gain control over the account upon reaching the age of majority. The account owner can change the beneficiary if the child does not go to college. Anyone can contribute to a 529 plan. There are no income phase-outs on contributions to a 529 plan. There is no age limit on contributions. So start off the New Year by planning for your child’s or grandchild’s college future!

Contact us if you have any questions!