On December 23, 2022, Congress passed a $1.7 trillion federal omnibus spending package that included a number of new rules. Section 126 of that bill included a provision that amended the Internal Revenue Code. The change allows for tax- and penalty-free rollovers from 529 plans to Roth IRA accounts starting in 2024. Here’s what you need to know.
By Jeff White
For those who want to stash as much away for college as they possibly can, it's worth noting that the annual gift tax exclusion is increasing to $17,000 in 2023. According to IRS.gov, this new amount is up $1,000 from the $16,000 gift tax exclusion in 2022, and up from the $15,000 gift tax exclusion amount that was in place from 2018 to 2021
By Robert Farrington
A 529 college or education savings plan is an investment account designated solely for education-related spending. The beneficiary of a 529 college savings plan can use the money to pay for a variety of college expenses permitted by federal law.
By Lauren Graves
Many states offer state income tax deductions or credits for contributions to a 529 plan. The amount of your 529 state tax deduction will depend on where you live and how much you contribute to a 529 plan during a given tax year.
By Matthew Toner
A study by Morningstar found that losses particularly affected families with younger children who opted for age-based investments heavily weighted in stocks.
By ANN CARRNS
Which of the two popular college savings accounts is best for you?
When it comes to saving for college, Americans have many possible choices. You can invest money in a brokerage account, save money in a checking, savings, or CD account, or you could even plan to use some of your retirement savings. However, there are two main savings vehicles specifically intended for college savings: the 529 savings plan and the Coverdell Education Savings Account, or Coverdell ESA
You may use a single 529 plan account to save for more than one child as long as you change the beneficiary when it’s time to pay for your next child’s college expenses — at no cost.
In most cases, it makes sense to have a separate 529 for each child, but some parents may prefer to use a single plan. Here are some advantages and disadvantages to consider when determining the best college savings strategy for your children.
By Kathryn Flynn
529 plans offer unique benefits for grandparents, including reducing estate tax exposure, being able to retain control of the assets throughout the life of the account, ease of management and flexibility. 529 plans are one of the best ways for grandparents to save for college because while contributions to a 529 plan are not deductible at the federal level, over 30 states offer a tax deduction or credit for contributions.
Historically, one of the major concerns about grandparent-owned 529 plans was their impact on federal financial aid when withdrawn to pay for a grandchild’s education. Fortunately for grandparents, the FAFSA simplification scheduled to be implemented for the 2024-2025 award year will no longer require their financial support to be reported.
A GROWING NUMBER OF grandparents aren't just interested in saving in their retirement, but are using their finances to support family members – which in some cases includes paying for a grandchild's college expenses.
Grandparent 529 plans are becoming a popular way to save for college and for good reason. With a 529 plan, you can build an educational legacy for your grandchild while taking advantage of tax and estate planning benefits. The new FAFSA is being released over the next two years which provides a 529 grandparent loophole where the contributions won’t count against a grandchild’s ability to get financial aid.
With the pending FAFSA changes set to take place by 2024, now is the time to set up a 529 plan for a grandchild who isn’t currently in school. You can start accumulating assets for them that won’t hurt their financial aid ability when they do enroll. See our best 529 plans available in your state.
By Kathryn Flynn
Many grandparents want to leave an educational legacy by helping fund a grandchild’s college education. Grandparents recognize the value of education, and want to see their children graduate without excessive student loan debt.
Here are 10 different ways a grandparent can help pay for college, and the pros and cons of each:
By Kathryn Flynn
If a 529 plan account owner dies before the beneficiary enters college, will the account be subject to state estate tax or state inheritance tax? In most cases, the answer is no. Each state has its own rules regarding taxes paid by heirs and estates. An inheritor of a 529 plan account may owe inheritance tax, depending on their relationship to the deceased and the account value.
By Kathryn Flynn
Benefits of the NJ-Best plan
Do You Qualify for Free College in NJ
New Jersey residents who attend a New Jersey four-year public institution of higher education and have an annual AGI between $0 and $65,000 will attend tuition-free during their third (60-89 credits) and fourth (90-126 credits) years of study, because the Garden State Guarantee provides a net price of $0 for tuition and fees during those years.
Every year, college-bound families stress about filling out the Free Application for Federal Student Aid, a.k.a the FAFSA. Available on Oct. 1, the FAFSA is the form the U.S. Department of Education uses to determine who’s eligible for federal financial aid to help pay for college.
Sometimes families skip filling out the application because they assume they won’t qualify for aid, or they don’t finish it because they find the process confusing.
By Joanna Nesbit
Asset Protection Allowance on the FAFSA Drops to $0
Some families applying for college financial aid this year may qualify for less help than in the past, thanks to a little-known change to the underlying formula.
Families filling out the Free Application for Federal Student Aid (FAFSA) for the upcoming academic year will see the asset protection allowance drop to $0, capping off a years-long trend of shrinking asset allowances that have reduced aid eligibility for middle-income families.
By Joanna Nesbit
Planning for college is a complex process, and that’s even more true when you’re hoping to be a college athlete. It’s a good idea to start the process as a high school freshman, meaning you’ll need to decide early on if this is truly the path you want to take and what you’re willing to do to achieve your dream.
By DANNIE PHAN
It’s an admissions season unlike any other, with uncertainty for students and their families — and the colleges that want to get them in the door.
By RON LIEBER
Paying for college in the U.S. can be a confusing process. You don't know exactly how much it's going to cost until you receive the financial aid award letter from the school. Even then, you have to decipher a list of grants, scholarships, work-study awards, and loans in order to understand what you owe.
Choosing a college is about more than the name on the diploma. Where students go to school touches numerous aspects of their lives, from academic studies to social activities and beyond. Considering the importance of this decision, prospective students should think carefully about their options. The choice may not be clear for every student, especially if they weren’t accepted into their top choice or face pressure from family to choose a certain school. Follow these 10 steps to help you make a college decision.
By Katy Hopkins & Sarah Wood
15 facts about Financial Aid
If your child is heading to college soon, you’re probably wondering about financial aid eligibility. Each year, more than $120 billion in federal student aid is awarded to more than 15 million students who want help paying for college. Yet the financial aid system is so complicated that many families end up making costly mistakes on their applications.
IT STARTS WITH THE excitement of being accepted to college, and then the admissions packet arrives with the cost of attendance – which can be a hefty amount if the family doesn't qualify for financial aid.
College scholarships and grants allow students to pay for their degrees while avoiding hefty out-of-pocket costs. According to data from Sallie Mae, scholarships and grants covered 25% of students' college costs in 2020-21. That same year, about 7 in 10 families relied on scholarships and grants to fund a student's education.
In this guide, we present an overview of college scholarships and grants, including eligibility requirements and strategies for finding the best opportunities for you.
By Courtney Smith-Kimble
By Abigail Hess
In 2008 - 2009 school year those costs were $38,720 at private colleges and $16,460 at public colleges.
Today, those costs are closer to $48,510 and $21,370, respectively. That means costs increased by roughly 25.3% at private colleges and about 29.8% at public colleges.
Should I Consolidate my Student Loans? Here's When It Makes Sense
Student loan consolidation basics. If you have multiple federal student loans and want to simplify your payments, one option is to consolidate your debt with a Direct Consolidation Loan.When you consolidate your loans, the federal government issues you a new loan for the amount of your old ones.
The COLLEGE DECISION NAVIGATOR is a 58 page PDF document that contains the step by step process for every area of the college planning process.