Tax Debt Help - Education Funding

Additional Ways to Fund Education

Financial aid helps meet the expenses of a college education, including tuition fees, books, housing, food and transportation. Financial aid is available through campus work programs, loans and scholarships. Contact the financial aid office at the college of your choice for more information about university-sponsored programs and scholarships.

Federal grants and loans

Low-interest loans and outright grants are available to help defray the costs of higher education. You and your child can apply for federal loans and grants beginning on January 1 of the year in which your child will start college. After your application has been processed, the college will review the results and inform you of your loan eligibility. But keep in mind that most student loans must be repaid.

Scholarships

Grants and scholarships are forms of financial aid that don't need to be repaid. They are available from a variety of sources, including federal and state governments. They are also available from private sources, such as employers, professional associations and educational institutions. Some grants and scholarships are based on financial needs, but may be based on achievement.

Ask for gifts that last

As you save, enlist all of your available resources. Ask grandparents, godparents, aunts and uncles to give your children dollars for education instead of toys at holidays. Or join an investment club that focuses on saving for higher education. Small steps can make a big difference.

EE savings bonds

You can buy EE government bonds through any bank. EE bonds pay a variable interest rate, equal to 85% of what's offered by 5-year Treasury notes. Their earnings are exempt from state and federal income taxes if you use the withdrawals to meet higher education costs. But your income must fall within certain limits ($55,750 for single parents and $83,650 for joint filers in 2001: $57,600 for single parents and $86,400 for joint filers in 2002) in the year you redeem the bonds, or tax advantage diminishes. The low earnings of EE bonds and potential loss of the tax advantage typically make them an unattractive investment for all but the most conservative investors.

S. Raines, Sr. Financial Advisor/Tax Preparer