It’s never too early to start thinking about how you’ll pay for your child’s education. 

According to a study conducted by Nerdwallet, an astonishing $29 billion in free college money was left unclaimed for the 2016-2017 school year. Among those statistics, Utah ranks highest in students who were eligible to receive free money, but missed out on the opportunity simply by neglecting to complete their FAFSA forms. If you or someone you know is preparing to attend college, make sure they know the numerous ways they can receive FREE money to help pay for their educational costs.

FAFSA: First and foremost, it is important to know about the website www.fafsa.gov. It is worth your while to check out the Free Application for Federal Student Aid (FAFSA) and all the financial resources they offer to help students pay for college. You can begin applying for FAFSA as early as October 1st for the upcoming year using your tax information from the previous year. Make sure you fill it out as early as possible as supply is limited, and be sure you update and reapply for FAFSA each year you are attending school. Send your FAFSA to all the schools you are interested in attending so they can send you their financial aid offers. Students must also include parent’s information on their FAFSA until they are 24 years of age; exceptions can be found at https://fafsa.ed.gov/fotw1718/help/fftoc02k.htm.

Employee Tuition Reimbursement: If you or your children are preparing to attend college, ask your employer if they offer any education benefits to students through tuition reimbursement or scholarships.

529 Savings Plan: These are tax advantaged savings plans that allow funds to grow tax free if used for educational purposes. There are 14 different investment choices that range from age-based options to static options, or customized options. These accounts can be opened by anyone for as little as $1 and anyone can contribute to the account at any point before the student withdraws the funds. For more information about this program, visit www.uesp.org.

Individual Development Account: This 3-1 matched savings program allows an individual to save up to $1,500 and receive $4,500 over the course of a 1-to 3-year period. Funds also grow tax free as long as they are withdrawn for use of assistive technology or educational purposes. There are income limitations and eligibility requirements. For more information, visit www.uidan.org.

Grants: Usually offered through FAFSA, grants are often based on an individual’s financial need. Grants are free money you don’t have to pay back, and the most an individual can receive in Federal Pell Grants for the upcoming year is $5,920. Be sure you apply early and often, as supplies for grant money is often limited and is distributed on a first come, first served basis.

Scholarships: Probably the most well-known form of free money, scholarship eligibility can be based on such things as interests, talents, program of study, grades and community involvement. They are usually offered through schools and universities, departments and cultural and religious organizations. Scholarships are also free money that you don’t have to pay back, and you will never have to pay to apply for one. A few helpful and fun scholarship databases include: www.fastweb.com, www.unigo.com, www.chegg.com, www.cappex.com and  https://stepuputah.com.

Work Study: This payment option is received by employment through the student’s college or university. Work study provides students with flexible jobs that allow them to complete school work during their work hours, or provide more hands-on training related to the student’s field of study. Paychecks can be used to pay tuition, fees, student loans, etc. Income received through work study must be claimed on the follow year’s taxes, but does not count against the student on FAFSA the following year. To apply for work study, mark “yes” on question 31 of FAFSA.

Federal Loans: Only borrow what you need for tuition if you choose to take out student loans to fund your education. Federal loans are offered through the government and there are four main types:

•      Subsidized loans – These do not begin building interest until the student has graduated from the college or university. They are typically offered to undergraduate students, and repayment plans can be deferred 6 months after graduation.
•      Unsubsidized loans – These allow interest to begin accruing from the moment the loan is signed. This means students will essentially be paying interest on interest once they graduate from school. These loans are typically only offered to graduate and professional students.
•      Direct Plus loans – These are loans taken out for a student by a parent.
•      Direct Perkins loans – These loans are offered through specific colleges and universities. They are usually based on financial need, and supply is often limited.

Private Loans: Again, only borrow what you need for tuition if you choose to take out student loans to fund your education. Private loans are offered through banks and other financial institutions. They are typically less flexible with repayment options, but offer all the same options as federal loans and do not require the completion of FAFSA.

This article was written by Kirstin Kvam USU Extension Finance Program Coordinator, Salt Lake County

Resources:

https://www.nerdwallet.com/blog/loans/student-loans/fafsa-college-money-left-on-table/

https://www.nerdwallet.com/blog/loans/student-loans-federal-vs-private-loans/

www.fafsa.gov

Bees are critical to our food system, and yet many people still see them as a nuisance. Increase your understanding with these five facts about bees.

1. One in three bites of food are a result of pollination
2. Honeybees pollinate 80% of fruit, nut and vegetable crops
3. One hive can have between 40,000-60,000 bees
4. A queen bee can lay about 800 – 1,200 eggs per day
5. Honeybees can fly up to 15 mph and can forage up to 3 miles away from their hive

Learn More

Are you a beekeeper, or are you interested in being one? Backyard beekeeping is increasing in popularity, and USU Extension has a new series of classes to promote healthy hive management. The classes can be taken individually, or you can complete the whole series and receive a USU Extension Advanced Beekeeping Certificate.

Register for the Thriving Hive Series

As you prepare to send your kids back to school, consider these two options for saving for their future education. 

Does having children worry you about their financial future? You’re not alone. A recent survey by Citi of 1,500 parents found that 56 percent of parents surveyed “are not confident that life for their children’s generation will necessarily be better than it has been for their generation.”

Are you wondering what you can do to help your children now? We’ve put together two Popular Options for Saving for Your Child’s Education.

The first thing families should do is decide where educational savings fits into their overall financial goals. Buying a home, preparing for retirement and providing an education for the children tend to be the three most costly family objectives. Few families have the means to tackle all three at the same time. It’s been said that you can’t get a scholarship for retirement. There are more options to cover the costs of higher education (scholarships among them) beyond having the savings entirely on hand. Given that, I suggest a retirement strategy be in place before establishing a means for college savings.

Here are two currently popular options: a 529 plan and the use of a Roth IRA.

529 Plans

A 529 plan is named after section 529 of the Internal Revenue Code, the provisions of which allowed for their creation in 1996, and each state has at least one. In our state, it is the Utah Educational Savings Plan (UESP) and it is consistently rated among the very best in the nation.

• A 529 savings account is initially set up for a named beneficiary, however, the recipient can be changed to another family member, with a wide range of people who can be named, including a first cousin. The donor to the account is in full control of the assets.
• Beneficiaries can attend qualified schools throughout the nation, not just in the state where the plan is held. This includes most community colleges, universities and even some vocational schools.
• The fees and other maintenance costs associated with 529 plans are generally lower than with other investments. This is especially true for direct purchase plans like UESP. These are self-directed plans.

• Among the UESP options are an FDIC insured account and a range of investment accounts that adjust with the beneficiary’s age. They automatically shift from aggressive investments to more conservative choices as the child draws nearer to college age.
• Contributions to a UESP plan (and other state 529 plans) are not tax deductible, but all earnings from investments in the plan are free from federal taxes. The USEP plan is also free from state taxes. This means that when distributions are made to pay for qualified expenses, there are no taxes due. Current Utah law also allows state residents to claim a tax credit based upon USEP donations.
• If distributions are not used for educational expenses, the earnings on your contributions are taxable and are also subject to a 10 percent penalty.

Roth IRA

A Roth IRA is another savings option that many families are considering for college expense planning. A Roth IRA was developed as a retirement savings program. Contributions to a Roth are not deductible, but earnings grow tax free.

• While contributions to a Roth IRA can be withdrawn anytime, withdrawals of earnings prior to age 59 1⁄2 are subject to taxes and penalties. That is, unless the funds are used for higher education purposes. This provision means that it is possible for families to use a Roth IRA for both retirement and college preparation.
• There are two other benefits of a Roth IRA. First, lower income tax filers may get a federal tax credit for contributions to a Roth IRA. Second, unlike an education savings account, retirement accounts like a Roth IRA are generally not considered when applying for financial aid. On the other hand, there are limits to annual Roth IRA contributions. If you use half of your retirement savings to send your kids to school, you may need to bank on them getting a good enough education and career to support you during retirement.

In summary, here are some issues families should consider:

• Tax considerations are an important aspect, but not the only factor to consider.
• Risk levels, potential rates of return and the range of investment opportunities will be part of any strategy.
• The investor must determine how much or how little professional help they desire.
• Family income levels and the number of children involved are critical components. Well-to-do grandparents with lots of descendants have different challenges and opportunities than newlyweds expecting their first child.

Which will it be? A Roth IRA, a 529 savings plan or some other option? Think about it now because the toddler munching Cheerios on your kitchen floor today will be off to college before you know it.

This article was written by Amanda Christensen, Extension Assistant Professor for Utah State University. Follow her on Twitter: @FamFinPro, Facebook: Fam Fin Pro, Instagram: @FamFinPro.

Republished from 2014.