College Savings Plan Enrollment Application: Fill & Download for Free

Distributions from a 529 college savings plan are tax-free only if used to pay for qualified higher education expenses at a college or university that is eligible for Title IV federal student aid. Such a college will have a federal school code that can be listed on the Free Application for Federal Student Aid (FAFSA). There are more than 100 foreign colleges that are eligible for federal student aid. You can find a list at the end of http://ifap.ed.gov/fedschcodelist/attachments/1213FedSchoolCodeList.pdf.If the intention is not to enroll in a foreign institution but to participate in a study abroad program, you can use 529 plan funds to pay for it if the study at the foreign institution is eligible for credit at the student's US home institution (and the US institution is eligible for Title IV federal student aid).

Executive SummaryThis research report serves to improve the financial literacy of families who intend to fund the college education of their younger kin. First, it is crucial to explain why it is necessary to develop a financial investment strategy for children at a young age. After discussing the positive effects of early financial planning, the report will reveal free resources that provide financial assistance for higher education. Following, the report will divulge into various financial investment options which, when allocated correctly, can assist families on their mission to send their children to college. In conclusion, the report will offer a final recommendation with the intention of servicing families and improving the future number of students pursuing a higher education.The earlier families begin to save money for college the better. According to the Los Angeles Times, from 2010 through 2012, tuition has increased on average from 7.9%, 8.5% and 4.5% at four-year public colleges (Gordon). College is becoming difficult to afford yet taking the necessary financial precautions can lead to better chances of student success and financial flexibility. Before investing, it is best to examine free resources that invest in your student’s education without having to invest your personal funds. These options include government and community based funding. Also, in the market, there currently exists various financial investment options that are structured specifically for college saving plans. Options to explore include state college saving plans, education saving plans, and saving bonds. Although there are several investment options, the best one is to invest early on in a child’s education.Research shows that students who are not financially prepared will choose not to attend college. For instance, around 77% of Hispanic students cite the cost of tuition as well as the need to work as reasons they do not attend college (Hispanic Access Foundation). In 2013, college enrollment fell by 1.5 percent, according to U.S. news. Several colleges attribute this decline to high tuition prices and rising student debt (New York Times). However, “early college saving accounts offer an alternative to borrowing [student loans] and can improve college access and completion” (Adams). Based on the Assets and Education Initiative at the University of Kansas,“Saving for college builds expectations for students that can impact their attitude toward pursuing higher education. Research findings indicate that college savings of just less than $500 make students three times more likely to attend college and four time more likely to graduate” (Adams)Investing in a child’s education early on gives them the capacity to succeed and the opportunity to go to college without debt.In order to obtain a better understanding of how much money to invest, it is important to first research resources that provide free financial assistance. Resources such as Federal Student Aid provide grants, loans, and work-study funds for college students (FAFSA - Free Application for Federal Student Aid). FAFSA provides financial assistance according to a student’s financial need. Therefore, when making investment decisions, it is important to take into consideration how future monetary returns will affect the student’s financial aid package. If a student reports a high family income or a large number of assets, there is a high probability that they will not receive financial assistance from the government.Fortunately, there are ways to structure and surpass these impediments so students can still gain money for college without any serious repercussions. From my experience, the easiest way to fund a college education is by applying for scholarships. In other words, scholarships are a way to invest in your student’s education without having to invest funds from yourown pocket. In this particular case, for family members that are neither the parent/guardian for the student involved. The best place to start is by getting involved with these chapters (Elk’s, LEO’s, NHS) in order to open more scholarship opportunities. Local chapters of national foundations such as the Elk’s club and the LEO’s club offer scholarships to graduating students in their respective communities. Although some of these awards are open to the public, there are a few select and generous awards for students related to members of these organizations.Therefore, in the best interest of the student, it is best for family members to invest time into researching scholarships that award money via affiliation. For instance, the University of Southern California awards SCions scholarships to students who are descendants of previous USC Alumni (USC Alumni Association). In addition, large corporations offer scholarships to students who are dependents of their employees. Companies such as AT&T collaborate with scholarship foundations such as the Hispanic Scholarship Fund to provide these scholarship awards (HSF/AT&T Foundation Scholarship). This option is highly recommended for families who do not possess immediate disposable income for college saving plans.When structuring financial investments there are many factors to consider. How much money to invest? How much risk does one want to acquire? How much of a return does one want to receive? How much time to maturity or how much time before the investment will provide the final monetary return? Each financial investment plan is structured to each individual’s preferences and capabilities. For the reader’s convenience, this section is divided according to the investor’s level of risk, time, and return.For example:1. Zero risk, Medium Time, Various returns’ScholarshipsRequire no risk and no financial investment. Involves time in researching content and can lead to small or large financial returns.2. Treasury BondsZero risk, Time (10-30 years), Small ReturnGovernment Treasury bondsOf all the investments, treasury bonds are the safest and have zero risk. Treasury bonds are risk free in nature because they are issued by the government, who fortunately cannot go default because the government has the ability to print more money. It is convenient for investors looking to put away money for 10 to 30 years without having to monitor their money. However, the disadvantage is that because this is a risk-free investment, the return is usually really low in comparison to other riskier assets.3. U.S. Savings BondsInterest Rate Risk, Time (varies), return depends on interest rateThe benefits of investing in a U.S. Savings Bond is that the interest earned is free from federal tax. However, there are income limitations. There are income limitations for the interest exclusion portion of this option.4. 529 College Savings PlansLow Risk, Time Varies (convenient), High Return529 College plans are administered via different states which have different features. This option is the most flexible and convenient. Families can contribute up to 12,000 annually and there is no income restriction to open a plan. The growth is tax-deferred and withdrawals are tax free until a specified year. There are no age requirements or limits in order to create a plan or to make withdrawals. This plan is monitored by investors which alleviate risk. And this option provides the ability to change account owners at any time. The disadvantage is that the plan does fall under the asset category and can affect a student’s financial aid.5. Taxable Investmentsa. StocksHigh Risk, Time (sell at your convenience), various returnsSmall stocks have the highest return because they have the highest risk. Large stocks have a varied amount of return depending on the company’s willingness to pay dividends. Either option is risky because in 2008, stocks illustrated their volatility and sensitivity to the market.b. Real EstateRisk according to real estate market, Time N/A, High ReturnParents can choose to purchase real estate and later “gift” the property to students upon graduation. During this time, students can sell the property for profit. Both parent and student would be taxed on the returns.In conclusion, I would recommend the 529 college saving plan and I highly recommend researching scholarships. The student will benefit the most and will receive the most return given that the child has 15 years until maturity.

If you find the idea of opening a financial account intimidating, you’re not alone. Many Americans think specialty financial accounts like brokerage accounts and 529 plans are for the wealthy, but they have low minimums, are inexpensive, and relatively easy to open.Important: Don’t be afraid to call the plan! I sat next to a 529 call center for years. They are there to help, and they know their stuff. If you have any questions be sure they get answered BEFORE opening an account!529 plans are attractive for many reasons, though the biggest is tax-deferred growth and tax-free withdrawals for higher education. I’m going to assume you’ve already decided that a 529 plan is right for you and focus on the actual opening process:Select a College Savings PlanNeed help selecting a plan? Look at your home state first to see if there are any state tax benefits, such as deductions or matching grants. Check out the article referenced below for more help selecting a plan.Visit the Plan Site (Direct-sold only)This link will get you to a list of plans. If you invest through a financial advisor you would contact them for assistance with opening an account.Open the AccountAll direct-sold 529 plans have an online enrollment process. There will be an “Enroll Now” or “Enroll Here” button. If you’re having trouble, find the “Contact Us” section and call the plan for assistance. There is almost always an option to use a traditional paper enrollment where you fill out the forms manually and mail them in, as well. You just need to request an Enrollment Kit from the plan.Select InvestmentsDuring the account opening process you will need to pick investments for your deposit. Typically this would be an individual fund, age-based or target-date portfolio, or target risk portfolio.Submit the Application and Deposit FundsIf you used a paper application, you would mail it to the plan along with a check. If you’re opening online, you can provide a bank account number to authorize a transfer or you can mail in a check after creating the account. If you’re having trouble, call the plan.If you need details on the above steps, the following Forbes article can guide you through the process: 5 Steps To Opening A 529 College Savings Account