A 529 plan is a tax-advantaged account that can be used to pay for qualified education costs, including college, K-12, and apprenticeship programs.

Investor Bulletin: 10 Questions to Consider Before Opening a 529 Account

Topic No. 313 Qualified Tuition Programs (QTPs)

H.R.1994 - Setting Every Community Up for Retirement Enhancement Act of 2019

Table of Contents
What Is a 529 Plan? You may transfer the plan to another family member, defined as:
Son, daughter, stepchild, foster child, adopted child, or a descendant of any of them
Brother, sister, stepbrother, or stepsister
Father or mother or ancestor of either
Stepfather or stepmother
Son or daughter of a brother or sister
Brother or sister of father or mother
Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law
The spouse of any individual listed above
First cousin As with 529 savings plans, prepaid tuition plans grow in value over time, and the money that eventually comes out of the account to pay tuition is not taxable. The two main types of 529 plans—college savings plans and prepaid tuition plans—have some significant differences. The two major types of 529 plans are savings plans and prepaid tuition plans.

529 Plan

Accumulated Income Payments are funds withdrawn from a Canadian Registered Education Savings Plan if the RESP's beneficiary does not attend college.

The following are not included in accumulated income payments:
educational assistance payments
payments to a school within Canada
contribution refunds to the beneficiary or the RESP plan holder
any transfers to a different RESP
repayments under the As mentioned above, if an RESP's beneficiary chooses not to go to an approved university, the plan subscriber doesn't have to forfeit any of the returns accumulated by the account provided the following criteria are met:
The plan holder is a resident of Canada at the time of the withdrawal
The RESP is at least 10 years old Accumulated income payments (AIP) refers to funds withdrawn from a Canadian Registered Education Savings Plan (RESP) if the beneficiary decides not to attend college. If taken as cash, AIPs are taxable income and are subject to the taxpayer's regular income tax rate plus an additional federal penalty tax of 20%, or 12% in Quebec.

Accumulated Income Payments (AIP)

A bursary award is provided to students to help cover college-related expenses in the U.K. and Canada.

A bursary award is a type of financial payment provided to certain students or prospective students to assist with the costs associated with attending a college or university, primarily in the United Kingdom and Canada. A bursary award is a type of financial payment provided to certain students or prospective students to assist with the costs associated with attending a college or university, primarily in the United Kingdom and Canada. A bursary award, or simply a bursary, is a sum of money given to students based on financial need and/or academic performance. Like scholarships in the U.S., bursaries are a way for students in the U.K. and Canada that have financial hardship but excel as students have access to educational resources. A bursary award is a monetary grant given to eligible students or prospective students by an educational institution such as a university.

Bursary Award

Cost of attendance (COA) at a college includes tuition, room and board, fees, and other expenses. The total is used to calculate financial aid needs.

2020-2021 Federal Student Aid Handbook. Chapter 2 Cost of Attendance (Budget)

Beginning Phased Implementation of the FAFSA Simplification Act (EA ID: GENERAL-21-39)

Wondering How the Amount of Your Federal Student Aid is Determined?

The U.S. Department of Education Offers Low-Interest Loans to Eligible Students to Help Cover the Cost of College or Career School.

Private College Tuition Discounting Continued Upward Trend During COVID-19 Pandemic

Cost of attendance (COA) is a college's total estimated expenses for one year including tuition, room and board, books, supplies, transportation, loan fees, and miscellaneous expenses. Similarly, a student whose college has a COA of $16,000 and has received $4,000 in need-based aid and private scholarships would be eligible for a maximum of $12,000 in non-need-based aid, such as unsubsidized student loans and PLUS loans for parents. Some colleges also break their COAs down into billable, or direct, charges (such as tuition and room and board) and indirect expenses that a student would pay for separately (such as transportation or meals off campus).
Cost of attendance is a critical number for students and parents who use the Free Application for Federal Student Aid (FAFSA). In deciding how much financial aid, if any, to offer a student, colleges subtract that student's Expected Family Contribution (EFC) from the school's cost of attendance. Federal loans and other financial aid can't exceed the college's cost of attendance minus the family's EFC.

Cost of Attendance (COA)

A Coverdell education savings account is a tax-deferred trust that assists families with educational expenses.

Topic No. 310 Coverdell Education Savings Accounts

A Coverdell education savings account is a tax-deferred trust account created by the U.S. government to assist families in funding educational expenses for beneficiaries who must be 18 years old or younger when the account is established. A Coverdell education savings account is a tax-deferred trust account created by the U.S. government to assist families in funding educational expenses for beneficiaries who must be 18 years old or younger when the account is established. When the contributions are distributed, they are tax-free assuming they are less than the account holder's annual adjusted qualified education expenses, including tuition, books, equipment, special needs services, and even academic tutoring. In December 2019, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) expanded 529 plan regulations, and now 529 plans can be used to pay off up to $10,000 in student loans and to pay for qualified expenses related to apprenticeship programs approved by the U.S. Department of Labor. Formerly called an education IRA, the ESA allows families to increase investment earnings through tax-deferral as long as the funds are used for educational purposes.

Coverdell Education Savings Account (ESA)

Expected family contribution (EFC) is the amount of money that a student's family is expected to contribute to college costs for one year. 

Expected family contribution (EFC) is the amount of money that a student's family is expected to contribute to college costs for one year. This information is also sent to any schools that the student listed on the FAFSA, whereupon the school's financial aid office will prepare a financial aid package and financial award letter, informing the student and family of the amount of any expected financial aid in terms of grants and loans. Families must submit a free application for federal student aid (FAFSA); following this application, the family will receive a student aid report (SAR) that includes the official EFC value. Generally, the lower the EFC, the higher the financial need, and therefore, the greater the eligibility for federally-sponsored financial aid programs such as Pell Grants, Perkins and Stafford Loans, and Federal Work-Study Programs. FAFSA does not use home values in its calculations but when a college or a university offers its own financial aid or need-based loans, it may count the home value in its calculations.

Expected Family Contribution (EFC)

A grant-in-aid is the transfer of national funding to state, local, private, or individual entities for a project.

A federal grant is financial aid awarded to fund a specific project or program. Parts of a state government, such as its legislative body, might procure and earmark federal grants to support nonprofit organizations that provide aid to its constituents. A federal grant in aid is federal money granted to a recipient to fund a project or program. For instance, a university might make a federal grant in aid to support a program that lowers the tuition rate to make it more affordable for military veterans and their spouses. These grants are not loans; therefore, no repayment is required, but funds must be spent according to the federal government's guidelines for that particular grant.

Grant-in-Aid

The Higher Education Act (HEA) of 1965 is a federal law that created new financial assistance opportunities for post-secondary students.

The _Higher Education Act_ of 1965 (HEA) is a law designed to strengthen the educational resources of the colleges and universities of the United States and to provide financial assistance to post-secondary students. The Higher Education Act of 1965 included six titles:
_Title I:_ Provides funding for extension and continuing education programs.
_Title II:_ Allocates money to enhance library collections.
_Title III:_ Provisions for strengthening developing institutions.
_Title IV:_ Provides student assistance through scholarships, low-interest loans, and work-study programs.
_Title V:_ Provisions for improving the quality of teaching.
_Title VI:_ Provisions for improving undergraduate instruction.
The Higher Education Act of 1965 has undergone multiple reauthorizations and amendments, including the addition of new title initiatives.
The HEA led to the establishment of a variety of financial aid options made available for students attending secondary schools in the U.S. Financial assistance programs such as Pell Grants and Stafford loans were created as a direct result of this legislation being put into effect.
Pell Grants, which do not need to be repaid, come from federal funding and are available to undergraduate students only. The _Higher Education Act_ of 1965 (HEA) is a law designed to strengthen the educational resources of the colleges and universities of the United States and to provide financial assistance to post-secondary students. The HEA, as it is commonly known, increased federal money given to post-secondary institutions, developed scholarship programs, provided low-interest loans to students, and founded a National Teachers Corps.

The Higher Education Act of 1965 (HEA)

A Pell Grant is a non-repayable federal subsidy awarded to students for post-secondary education, based on financial need.

Wondering How the Amount of Your Student Aid is Determined?

Federal Pell Grants Are Usually Awarded Only to Undergraduate Students

Eligibility for Students with Criminal Convictions

A TEACH Grant Can Help You Pay for College if You Plan to Become a Teacher in a High-Need Field in a Low-Income Area

A Pell Grant is a federal subsidy awarded to students for post-secondary education. To bridge the gap between the EFC and the COA, the school may offer the student a combination of Pell Grants, subsidized and unsubsidized federal loans, and paid work-study jobs. In order to continue receiving Pell Grants or other federal financial aid, students and their parents must fill out a new FAFSA every year. The school's calculations consider the difference between the expected family contribution (EFC), as calculated by the FAFSA, and that school's cost of attendance (COA) to calculate the student's financial need. Pell Grants are awarded on the basis of financial need and, unlike student loans, do not have to be repaid except in rare instances.

Pell Grant

From 1958-2017, Perkins loans provided low-interest loans to undergraduate and graduate students who demonstrated exceptional financial need.

Student Loan Debt is Worse Than We Thought

You May Be Eligible To Have All or a Portion of Your Federal Perkins Loan Canceled (Based on Your Employment or Volunteer Service) or Discharged (Under Certain Conditions)

Am I Eligible for Direct Unsubsidized Loan?

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What Was a Perkins Loan? Like Perkins loans, these are low-interest student loans, but these loans are not contingent on specific income, unlike Perkins loans. Begun in 1958, the Perkins Loan Program was providing loans to about 500,000 students and 1,400 schools when it expired in September 2017, and final disbursements of funds happened in June 2018.
The Perkins loan program expired at the end of September 2017 and was not replaced by another form of low-income, need-based loan. The government no longer offers Perkins loans, unlike federal direct subsidized and unsubsidized loans, called Stafford loans. Direct consolidation loans allow borrowers to combine all of their eligible federal student loans into a single loan with a single loan servicer.

Perkins Loan

A prepaid tuition program allows donors to provide all or part of a student's tuition for college education based on today's costs for future tuition.

IRS Offers Guidance on Recent 529 Education Savings Plan Changes

H.R. 1994 -- Setting Every Community Up for Retirement Enhancement Act of 2019

A prepaid tuition program refers to one of two major types of 529 plans. A prepaid tuition program is a type of 529 college savings plan that allows donors to provide all or part of a student's tuition for college or university. So if the cost of tuition at a specific college doubles within three years, then the amount of prepaid tuition will pay a proportionate amount of tuition at the time of payment. The program allows account owners—parents, grandparents, and others—to manage future tuition costs at private and public colleges and universities.﻿﻿ This means it is a way to pay the cost of tomorrow’s inflated college tuition at current costs. Prepaid tuition programs are primarily for students who plan to go to an in-state college or university and only cover the cost of tuition.

Prepaid Tuition Program

A Registered Education Savings Plan - RESP is a government-sponsored program that helps pay for a child's future post-secondary education.

Refund of Contributions to the Subscriber Or the Beneficiary

A Registered Education Savings Plan (RESP), sponsored by the Canadian government, encourages investing in a child's future post-secondary education. If a child doesn't pursue an approved post-secondary education training program, such as college or trade school, within 36 years of opening the account, the government can request the grant money back.﻿﻿ ﻿﻿ Also, any investment earnings that are withdrawn from the RESP that are not used for education-related expenses incur income tax plus an additional 20% penalty. Because parents won't initially pay taxes on the money, they have a dual incentive to save for their child's education; they avoid paying taxes and get bonus money from the government for the child's education in the process. These EAPs count as income for the child (beneficiary).﻿﻿ If the beneficiary doesn't receive payments—either by the choice of the contributor or because the beneficiary does not attend a post-secondary institution—the contributor will receive the amount in the RESP back tax-free.
A A Registered Education Savings Plan (RESP), sponsored by the Canadian government, encourages investing in a child's future post-secondary education.

Registered Education Savings Plan (RESP)

Tuition insurance covers the financial losses associated with a college student dropping out before completing their degree.

Trends In College Pricing and Student Aid 2020

Dropping Out of College With Student Loan Debt

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Tuition insurance provides a financial safety net should a college student take an unexpected pause from school. A tuition insurance policy, which can cost several hundred dollars per year in premium, guarantees a refund for tuition, and on-campus housing and fees if a student withdraws early. Before obtaining tuition refund insurance, families must remember that certain schools will reimburse part or all of a student's tuition if they withdraw by a certain date. For example, if a student has a history of poor health, tuition insurance might be something to consider, because the student might have to drop out of school due to serious illness. Covered financial costs may include eligible funds paid from savings, student loans, college savings plans, or other means for tuition, room and board, and other fees.

Tuition Insurance

The Uniform Gifts to Minors Act (UGMA) allows minors to own property including securities. 

Topic No. 553 Tax on a Child's Investment and Other Unearned Income (Kiddie Tax)

The Uniform Gifts to Minors Act (UGMA), developed in 1956 and revised in 1966, allows individuals to give or transfer assets to underage beneficiaries—traditionally, parents and their children, respectively. if the child’s unearned income, including UGMA earnings, was less than $2,200 in 2020 and they were no older than 19 (or 24 if a full-time student) at the end of the corresponding tax year, parents can elect to report their child’s income on their own tax return If such an election is not made or if the child’s unearned income exceeded $2,200 at the end of the tax year, the minor would have to file a tax return subject to “kiddie tax” rules. For federal tax purposes, the minor or beneficiary is considered the owner of all assets in a UGMA account and the income they generate. Contributions to UGMA accounts are made with after-tax dollars—the donor doesn't receive an income tax deduction for making them.

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