KEES, Parents, and You

Many young adults do not to seek education beyond high school because many of their family members did not go beyond high school. Many parents and teens do not think they can afford to further their education, especially with the cost of four years of college going up so much every year.

In Kentucky, one way to handle the cost of college is to get good grades in high school. The Kentucky Educational Excellence Scholarship (KEES), funded by Kentucky Lottery proceeds, is available to students who earn at least a 2.5 GPA in high school. If you had a 4.00 grade point average throughout high school, you would have $2,000 toward your first year of school. Keep in mind, however, that continuing to receive additional KEES money beyond your first year is contingent upon maintaining good grades. Failure to keep your grades up can result in your scholarship money being reduced or cut off for the following school year.

In addition to KEES, other scholarships and financial assistance are available. Be sure to find out what options are open to you, as scholarships, fellowships, and other grants can save you a ton of money and keep you out of debt.

Another option is parents or grandparents setting up a 529 saving account. The money that parents and grandparents put in the account will grow tax free and help prepare families for financial impact of college.


READERS, what do you think?

How has your guidance counselor, teacher, or friend affected your decision on whether or not to further your education?



References

Yamamoto, Julie. (2007, September 26). Only 29 Percent of Americans Have a College Degree. The Olympian. Retrieved November 6, 2009, from http://www.theolympian.com/columnists/story/227366.html.

Types of 529 Plans

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This video from ABC News reviews some key details about 529 plans. These plans help families save for students' college education expenses in advance. There are two different types of 529 plans, and both offer their own pros and cons.

College savings plans- These are state-sponsored accounts and you can use funds at any college in the country. If your state does not offer an account, or if another state provides better tax-incentives, you can invest in another state's plan. There is some risk in that these plans involve investing the savings in mutual funds, which can have gains and losses overtime.

Pre-paid tuition plan- This system allows you to purchase tuition at today's in-state college costs. Essentially, parents are locking in a college price now and paying into an account until the time comes for the student to go to college. If the student does not go to a college in your state, then the parent can withdraw the funds to be used at an out of state school. However, parents may not get the full benefits when they use the savings in another state. If the student does not go to college, the money in the account and the tuition guarantee can be given to a close relative, like a younger sibling.

READERS, what do you think?

Which plan sounds best to you?

Reference:

Hobson, M. (2011, January 1). Quick Tip: 529 Plans. [Video file]. ABC News. Retrieved from

http://abcnews.go.com/Video/playerIndex?id=12571145.

 

Parents and Grandparents Giving the Gift of Higher Education

This holiday, do you want a gift that will really help you? Consider asking your parents and grandparents to open or contribute to a 529 savings account on your behalf. A 529 savings account is a state-sponsored account that allows contributions to grow tax-free. Depending on the state you live in, your parents and grandparents could get a tax deduction for adding to the account. (However, Kentucky isn’t one of the states that give a tax deduction.) The savings in the 529 account will grow tax-free until your family withdraws the money later to help pay for qualifying educational expenses such as tuition and textbooks. The more money your family puts into the account while you are in high school, the more money there will be to accrue interest before college.

Grandparents can be especially helpful when saving for college. If your grandparents want to open a 529 account for you instead of getting you gifts, then their account would not have much impact on your family's qualification for financial aid. And remember, it is helpful to have your family withdraw from the account only AFTER you file your financial aid applications during your last year of post-secondary education. Money used to pay for the first year and subsequent years of post-secondary education count as your (the student’s) income, which could reduce or lower the amount of financial aid you will receive.

Getting your family involved in your college saving plan comes with an added benefit. Students who know that their family intends for them to attend college have a much greater likelihood of enrolling. If your family were to add to a 529 account for the holidays, then you will feel more comfortable pursuing college knowing plans are in place. So consider proposing this unique gift idea to your family. You would probably like a college degree a lot more than new clothes they might pick out for you.

References:

College Savings Plans Network (CSPN). (n.d.) Retrieved from http://www.collegesavings.org/index.aspx

Couch, C. (2012). Tax-savvy ways to tap your 529 plan for college. Fox Business. Retrieved from http://www.foxbusiness.com/personal-finance/2012/08/14/tax-savvy-ways-to-tap-your-52-plan-for-college/.