College financial assistance that may help students pay tuition can come from various sources, which are most commonly scholarships, grants, or student loans but there are some opportunities that individuals may have when it comes to saving money for college and using funds to meet a student’s expenses outright rather than relying on sources of financial assistance. There have been indications that more colleges, which are cash-strapped, may be looking to admit students who can pay a higher amount of college tuition costs, rather than relying on financial assistance, as schools may want to offer admittance to students who can pay their college costs up front rather than relying, again, on scholarships, grants, or loans.
However, when it comes to saving for college, many individuals have turned to a 529 college savings plans as these options can help various students better prepare to meet educational costs. These plans can help anyone from traditional college students to mothers, as they offer tax advantages on withdrawals when these funds are used to pay certain college costs, but many parents are the ones who typically begin these plans for their children in the hopes of helping pay for tuition, fees, and other expenses related to attending a college or university.
While, again, there are many men and women who may be able to use these options as an alternative to scholarships, grants, and loans, an article on Bankrate.com stated that, “Some financial advisers urge lower-income families, who are likely to receive a large amount of financial aid, to pass on 529 plans. If you’re likely to qualify for financial aid, the existence of a 529 savings plan may reduce or eliminate the amount of aid you can receive,” so there are some drawbacks that need to be considered. Low income students usually qualify for assistance like Pell Grants, but again, if a substantial amount has been saved over the life of a particular student in one of these 529 college savings plans, they can potentially reduce the amount that a student will get in free funds, but there are some parents who feel that no matter if a student receives less funds or not, simply finding the security to pay college costs is what is most important.
Yet again, there are some adults who are taking advantage of these programs as they can offer the same benefits for individuals who are looking for help paying college costs, but may have entered into the workforce after college and are simply saving money so that they can attend a university in the future. Aside from these tax advantages, SmartMoney.com states, “Another reason 529s might appeal to adults: Because of the weak economy, many companies have eliminated the education-reimbursement programs they used to encourage employee training…Investing in a 529 plan can help ease the burden on employees who choose to pay for that themselves.”
Essentially, individuals who invest in a 529 plan for college will open an account and choose an investment option that fits their personal needs or future goals, and as this account begins to accumulate earnings, there can be withdrawals made to meet educational costs that will, obviously, help lower the financial burden of meeting tuition and fees, but again, there are factors like a potential reduction in scholarship or grant funds that may be associated for individuals who have one of these plans in place. However, this does not mean that students should not look for scholarships or grants to help meet further expenses and costs that a 529 plan may not cover, as there are not only benefits of these particular investment strategies that can be used by traditional and nontraditional students alike, but there are also free sources of financial aid for these specific types of college students as well, and when used together, these sources of financial assistance can possibly erase any financial burden that a student would have otherwise had to meet out-of-pocket.