If college is on the horizon for you or someone you’re supporting, it’s important to understand the financial tools available to help ease the cost. From savings plans to financial aid, there are several options that can help make higher education more affordable and accessible. 

 

With that in mind, here is a breakdown of college savings and support options tailored to both guardians and students. Keep in mind that guardians and parents have more long-term savings vehicles, while students mostly have shorter-term loan options to support educational costs. 

 

 

For Guardians:

 

529 College Savings Plans

A 529 plan allows you to invest money that grows tax-free when used for qualified education expenses like tuition, room and board, books, and more. Many states offer additional tax benefits, such as deductions or credits, for contributing. If the intended recipient doesn’t use the funds, they can typically be transferred to a sibling or another qualifying family member without penalty.

 

Federal Parent PLUS Loans

These are federal loans taken out by a parent or guardian to help pay for a dependent undergraduate student’s education. They’re credit-based and can cover up to the full cost of attendance, minus any other financial aid received. While repayment usually begins shortly after funds are disbursed, parents may defer payments (with accrued interest) while their child is enrolled at least half-time.

 

Custodial Accounts (Uniform Transfers to Minors Act, or UTMA/Uniform Gifts to Minors Act, or UGMA)

These accounts allow a guardian to manage assets on behalf of a minor, which can later be used for education or other expenses. While not limited to college costs, the flexibility makes them appealing for families who want broader options. The funds legally belong to the child and typically transfer to their full control at age 18 or 21, depending on the state. One trade-off to consider is that, because the account is in the student’s name, it may reduce eligibility for need-based financial aid.

 

Coverdell Education Savings Accounts (ESA)

A Coverdell ESA is a tax-advantaged account that allows for up to $2,000 in contributions per year, per beneficiary, for qualified K–12 and college expenses. However, contributors must meet income eligibility requirements. These limits make the ESA more restrictive than 529 plans, which do not have income caps for contributors.

 

 

For Students:

 

Free Application for Federal Student Aid (FAFSA)

This form is the starting point for accessing most types of need-based student aid, including federal grants, loans, and work-study programs. It’s required annually and should be submitted as early as possible to improve access to limited aid. There’s no official income cutoff, and eligibility is based on multiple factors, including non-need-based aid, so students are encouraged to apply regardless of income. 

 

Federal Pell Grants

Pell Grants provide need-based aid that does not need to be repaid unless the recipient drops out of school. They are primarily awarded to first-time undergraduate students and are based on financial need, enrollment status, and the cost of attendance. Award amounts vary each year, and eligibility is determined through the FAFSA. Since Pell Grants are part of federal student aid, students must submit the FAFSA annually by the June 30th federal deadline to be considered for Pell Grants. However, applying early is strongly recommended to maximize access to all available funding.

 

State-Based Financial Aid

In addition to federal aid, many states offer their own grants and scholarships to residents. These programs often have separate applications or deadlines, so it’s important for students to check with their state’s education agency or financial aid office to explore what’s available.

 

Federal Student Loans

These loans are issued in the student’s name and don’t require a credit check or cosigner. Subsidized loans are based on financial need, while unsubsidized loans are available to any eligible student regardless of need. They come with fixed interest rates, various repayment plans, and borrower protections not typically offered by private lenders. However, since these are loans that must be repaid with interest, students should consider the long-term impact on their finances and borrow only what’s necessary to cover essential education costs.

 

Private Student Loans

Private loans are typically considered a last resort for covering college costs after all other aid options have been exhausted. They are credit-based, often require a cosigner, and are issued by banks or private lenders, not the federal government. These loans usually come with higher interest rates, fewer borrower protections, and limited repayment flexibility. As a result, they can carry significant long-term financial consequences, especially for borrowers with weak credit or a lack of a clear repayment strategy. It's essential to review all terms carefully before committing.

 

____

 

Whether you're planning for your own education or supporting someone else’s, having a solid financial strategy can make all the difference. 

 

 

 

 

 

 

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, www.adviserinfo.sec.gov. Past performance is not a guarantee of future results.