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Take Advantage of College Savings Day to Boost Your Account

By U.S. News & World Report

If you’ve been thinking about opening a college savings account — or if you already have one — you may be able to win extra money for your 529 plan during the month of May.

That’s because May 29 is 529 College Savings Day, a unified push by states to shine more light on the tax-advantaged college savings plans known as 529s, in reference to the IRS tax code where they are outlined.

Throughout the month, savvy — and lucky — consumers can benefit from promotions, giveaways and drawings, sometimes with big cash prizes.

“The truth is, if you’re somebody who has been thinking about it, I would be using this time to do my research,” says Andrea Feirstein, managing director of the college savings industry consultant AKF Consulting Group. “I would not let the month of May, or May 29 in particular, go by without having some sense of what those additional incentives are.”

The promotions offer incentives for opening new accounts, but can also benefit current account holders. For instance, Ohio is holding a drawing to win one of 10 $2,500 college savings awards; Virginia is offering $2,500 to the winner of a “turning dreams into reality” testimonial contest; and North Carolina is holding a drawing to win $529 in savings, with account holders getting entries based on how many contributions of $25 or more have been made since Jan. 1.

[Take these four steps before opening a 529 plan.]

Experts say sooner is better when it comes to opening a college savings account, but if someone has been considering it, May is a good time to take advantage of bargains. September is another month when states tend to offer deals, Feirstein says .

Some states, such as Washington, will offer a fee waiver. Others will offer matching contributions to new accounts, such as Utah with a $25 match or California with a $50 match. Nebraska is offering a $100 bonus for the first 200 accounts opened for children age 8 and younger.

The prizes can be significant. Virginia is offering a $10,000 giveaway for a new Virginia529 InVEST account opened between May 1 and May 31.

Betty Lochner, chairwoman of the College Savings Plans Network, a consortium of state-run plans, says one of the main missions is to increase awareness and offer information about the plans. Many states will hold local events where families can learn more about their state’s plan and ask questions.

“You ‘ve got to take action,” says Lochner, who is also director of Washington state’s GET program, a prepaid 529 plan. “529 Day is to help people get that kind of urgency and take away some of the barriers so they do take action.”

Lochner says she knows some families get paralyzed by the prospect of doing a lot of research before opening a plan. The accounts allow investors to make contributions that grow tax free and withdrawals are not taxed as long as they are used for qualified educational purposes. Families can open accounts in any state, and m any states have multiple options.

[Learn the do’s and don’ts of choosing an out-of-state college savings plan.]

“It’s just like anything else,” she says. “You have to do a little due diligence, but don’t use that as an excuse for not starting sooner than later. I think some people do. They get a little paralyzed.”

Many of the promotions are targeted at families with new babies to encourage families to start saving early. Giveaways to families with babies born in May — or on May 29 — are offered in Virginia, Idaho, South Carolina, Vermont and Alabama.

“Even though it feels like a lot, the minute the baby is born, that’s when you should be opening these accounts,” Lochner says.

[Get advice on how to kick off college savings before a child is born.]

Cathy and Alan Fitch, who live in Richmond, Virginia, won Virginia529 inVEST plan savings accounts, stocked with $529 each, when their twins were born on May 29, 2009.

Although they likely would have opened college saving accounts for their kids anyway, winning prompted them to start automatic monthly contributions, which they might not have done otherwise.

“We always hoped that we’d start saving and that they would go to college,” says Cathy Motley-Fitch. “Winning really jump-started everything, gave us a head start, and motivated us to start right away. As soon as that happened, then monthly we’ve been contributing.”

When they had another son two years later, they opened a 529 account for him right away.

Trying to save for college? Get tips and more in the U.S. News College Savings 101 center.

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Take Advantage of College Savings Day to Boost Your Account originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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