Last week we offered our first client workshop centered on
college savings plans and understanding the financial aid application
process. We had a good turnout, and a
big thank you for all who attended.As the FAFSA (the required form to apply for federal financial aid) deadline approaches, I thought I would take a moment to review the aid programs that are available, as well as discuss a quick overview of the tax-advantaged savings methods. I think it is important to realize that many of the aid programs are created for those who need it the most. Middle class families are expected to be able to contribute a significant portion toward the cost of tuition when it comes to these programs.
Aid Programs
Pell Grant—the Pell Grant is entirely needs-based. It is free money, meaning that it does not to be paid back in the form of a loan. It is only available to undergraduates.
Stafford Loan—the Stafford comes in two varieties: the Subsidized Stafford loan is entirely needs-based and the interest does not start accruing until schooling is complete. With the Unsubsidized Stafford, loan interest begins accruing at grant. It must be repaid in 10 years, and payment begins within 60 days of final disbursement.
529 Plan—This account allows saving of after-tax assets in a tax-sheltered account. Assets can be withdrawn tax-free if they are for qualified educational expenses. The contributor retains control of the asset if the child decides not to go to college, and can re-assign the account to another beneficiary.





