Before Applying for a Student Loan

So, awarded financial aid isn’t enough to cover the full cost of attendance and you know you or your student will need additional student loans to pay for college. Before filling out loan applications, consider future repayment for any loans. Here’s what you need to know.

Federal student loans are limited.

Undergraduate students can take out only so much in federal student loans each year. If additional student loans above that limit are required, you may need to consider private student loans or parent loans.

Undergraduates need adult assistance.

Students need to have a creditworthy cosigner for any private student loans, unless they can meet underwriting criteria on their own. If parents are willing to consider a federal Parent PLUS Loan, the parents will need to borrow that money and be responsible for paying it back themselves.

The debt will need to be repaid.

Student loans are not usually dischargeable for bankruptcy or other financial hardship. When you think about a future repayment amount, remember:

  • The repayment amount will be more than the original loan amount. Student loans accrue interest on a daily basis. At certain times, unpaid accrued interest may be capitalized, or added to the principal balance, and begin accruing interest as well.
  • Payments may come from a limited income. Carefully consider how much a graduate with the same major can realistically expect to make in an entry-level position. Add anticipated student loan payments for all the undergraduate years, including any federal loans in the financial aid package, to anticipated expenses for a realistic budget based on a starting salary. If all your expenses can’t be covered with a realistic starting salary, student loan debt may need to be reconsidered.

Interest and other payments can be made during college.

Most lenders allow early or extra payments on student loans at any time without penalty. In addition, paying interest as it accrues during school can reduce the amount of interest that will need to be repaid after graduation.

Private student loans vary.

Every lender has its own underwriting criteria, qualification requirements, loan terms and repayment schedules. Before you sign for a loan, research your options. Consider:

  • Variable vs. fixed interest rates. A variable rate may go up or down according to market conditions, while a fixed rate remains the same throughout the loan term. A low variable rate is often appealing, but remember that it may change drastically over the loan term.
  • Actual interest rate. Many lenders offer different rates based on the applicants’ and cosigners’ credit. If you are unable to determine your rate upfront, consider the highest rates.
  • Repayment assistance and benefits. Some lenders or loan servicers offer assistance if a borrower is unable to make required monthly payments. Some loans also offer special benefits, such as a reduced interest rate for making automatic electronic payments. Consider these features carefully.
  • Managing repayment. Will additional loans be needed for future years? Should all loans be obtained from a single or limited number of lenders to make repayment easier? Will consolidating multiple loans later be important, and does the lender offer that option?

College choices matter.

If you find that you or your student cannot afford to take on enough debt to pay the full cost of attendance, a new plan might be essential. Some options students have include:

  • Earning more. Increase the ability to pay college costs as they occur by earning more income during school terms and on breaks.
  • Reducing expenses. The full cost of attendance may include expenses that can be cut. Can living off campus without a meal plan save money? Are the book and fees and transportation costs realistic for you or your student?
  • Asking for help. Are relatives willing to help pay for college? Are additional scholarships, either through the school or outside entities, available?
  • Attending a less-expensive school. If the cost of attendance is still not affordable without taking on unmanageable debt, you may need to consider attending a less-expensive school, at least for a year or two.

Visit Student Loan Game Plan for more information and tips.

By: Iowa Student Loan

Contacting a Student Loan Servicer (Infographic)

ContactStudentLoanServicer-inforgraphicDownload this infographic as a PDF.

Once you know who your student loan servicer is, you need to know your servicer is there to help you successfully repay your loans at no additional cost. It’s important contact your student loan servicer for any of the reasons listed below.

1. Your contact information has changed. If you have a new mailing address, phone number or email, or if your name other demographic information has changed, you need to advise your loan servicer. Remember that you are responsible for repaying your student loan debt, even if you don’t receive bills because your servicer does not have your current contact information.

2. You want to make extra or reduced payments. Your ability to pay may change according to your circumstances. Work with your servicer to make sure extra payments are achieving your goal or that you don’t face unnecessary penalties for reduced payments.

3. You want to apply your payments in a specific way. If you have several loans with the same servicer, you may want payments to apply more heavily to certain loans within your account, such as those with higher interest rates. Find out your servicer’s policy for payment application across loans and how to direct payments differently.

4. You don’t understand your billing statement or the way previous payments were applied. If you don’t understand how your payments are being applied to your account, any fees you are charged or have other billing questions, ask your servicer for an explanation as soon as possible. This will help you better understand the most beneficial way to make future payments.

5. You have fallen behind on your payments. Student loan servicers may report late payments to the national consumer reporting agencies, and nonpayment will eventually lead to default. If you are not able to make your full monthly payment, work with your servicer to determine your options and see if you can avoid negative credit reporting or default.

6. You want to understand borrower benefits. You may be eligible for benefits, such as a reduced interest rate for making automatic electronic payments. Talk to your servicer about potential benefits as soon as possible to learn how to maintain eligibility.

7. You want to consolidate your student loans. Your ability to consolidate your loans depends on your servicer and the types of loans you have. You cannot include private student loans in a federal student loan consolidation under federal loan programs, although private lenders may allow you to combine both types of loans in one consolidation. Some private servicers offer consolidation while others don’t. If you’re considering consolidation, work with your servicers to determine your best options. If you are considering consolidating federal loans into a private loan consolidation, be sure you understand what important federal loan benefits you may lose before applying.

8. You want to align your payment dates. If you have several different loans or more than one servicer, your payment due dates may be different as well. If it’s easier for you to manage a single due date, call your servicers for information.

9. You are close to paying your loans in full. Because student loans accrue interest every day, your principal balance does not equal a payoff amount. If you want to pay your loans in full, contact your servicer for an accurate payoff amount and date to avoid any surprises.

10. You have any additional questions. Each borrower’s circumstances are unique, and you may not be able to find accurate, updated information from your specific servicer online. If you have any questions, call your servicer directly. Your servicer is invested in your ability to successfully repay your loan and wants to help you.

By: Iowa Student Loan

How Working Can Help Your College Student

Wking-Help-College-Student

The financial, networking and training benefits of working while in college can seem pretty obvious. Students earn cash that can be used to offset loans, pay college costs and fund other expenses. They learn to value money and to budget. They can connect with professionals who may be able to help them locate and succeed in future jobs. They learn how to navigate the workplace, gain skills they can use in their careers and put classroom lessons into practical use.

What may not be so obvious is how working part-time during the academic year can also boost a student’s grades. Although a student’s first job is performing well in school, working for pay a few hours a week may help the student achieve more academically.

The most recent data available from the National Center for Education Statistics (NCES) backs up earlier research performed by Lauren Dundes and Jeff Marx of McDaniel College in Westminster, Maryland. Dundes’ 2006 study found that the academic performance of students who work 10–19 hours a week was better than all other students’ performance, including those who worked more or less and those who didn’t work at all.

According to 2012 NCES data:

  • The average GPA for all full-time college students is 2.99.
  • Those who worked 10–19 hours per week earned an average GPA of 3.07.
  • Those who worked 1–9 hours per week earned an average GPA of 3.10.
  • Those who did not work earned an average GPA of 2.98.

GPA Per Hours Worked

Estimated Hours Worked Per Week

Average GPA

0–40+ (overall) 2.988
0 2.981
1–9 3.105
10–19 3.065
20–29 2.972
30–39 2.895
40+ 2.971
Source: U.S. Department of Education, National Center for Education Statistics, 2011–2012 National Postsecondary Student Aid Study (NPSAS: 12)

Why Working Works

The reasons for the grade boost may vary widely by student, job and college, but researchers often conclude that the busier schedule forces students to better manage their available time.

Hanna, a graduate of an Iowa high school now attending Kansas State University, agrees. “Having the extra responsibility of a part-time job forces me to study more efficiently,” she said. “I know I won’t have the time to keep procrastinating.”

Another possible reason for the higher average GPA may be that students who work to pay for part of their education expenses are more invested in the outcome. Students who are likely to succeed because of their own goals and motivation may also be more likely to look for and obtain part-time work.

By: Iowa Student Loan

Iowa Families Can Win Cash for Educational Expenses – Register by May 11

Iowa high school students and their families can enter weekly drawings for two $250 awards, and Iowa high school seniors can enter a grand prize drawing for two $1,500 awards by completing a free online tool that helps them estimate the total cost of a four-year undergraduate degree.

Learn more and enter the giveaway today!

Iowa high school students, and their parents or guardians, can enter their information for the drawings after completing the College Funding Forecaster until May 11. The free online tool provided by Iowa Student Loan uses information from students’ freshman year financial aid award packets, as well as outside scholarships and grants and family savings and earnings, to project estimated costs, funding gaps and potential student loan debt over four years.

“We want to help families make the connection between first-year costs and the total financial investment in a college education,” said Steve McCullough, president and CEO of Iowa Student Loan. “This tool helps them see how their costs might increase, what happens when one-year scholarship awards are exhausted, and how the family and student contributions can play a role in reducing overall costs.”

The tool allows families to customize both expenses and available funding to adjust results for changes in students’ situations over the four years. The results show yearly and total estimated costs of attendance, available funding and projected funding gaps. The tool also provides informational tips on how to reduce costs and potential debt.

After viewing their results, users have the opportunity to enter the drawings. Two names will be drawn each week to receive $250 awards for educational expenses. In a grand prize drawing, two names will also be drawn to each receive $1,500 for the students’ college expenses in fall 2017. The grand prizes will be paid directly to the students’ colleges.

For details and complete rules for the giveaway, visit www.IowaStudentLoan.org/Giveaway. Or, to begin the College Funding Forecaster and enter the giveaway, go to www.IowaStudentLoan.org/Forecaster.

By: Iowa Student Loan

The Graduation Checklist for Parents

This milestone for your student can mean a lot of work for you. Use this checklist to bring some order to the chaos.

□ Work with your student to be sure they’ve completed the administrative steps to officially graduate.

  • Remind your student to follow through on these tips for college students and high school graduates.
  • Your student should receive information on how and where to obtain a cap and gown—along with any special stoles, pins, tassels or regalia—for the ceremony.

□ Consider mementos of the occasion.

  • Your student will have the opportunity to order class rings, yearbooks and other products to mark this important milestone. Check for deadlines.
  • Graduation is also a good opportunity for family and individual photos. Many photographers specialize in senior portraits.

□ Make any reservations required.

  • If you will be traveling to a college graduation, you may find that hotel rooms and transportation options are booked quickly and up to a year in advance.
  • Graduation party venues may also become scarce depending on location and number of other graduates on your desired date.
  • If you will order baked goods, catering, tents or other services, be sure to start that process early.

□ Invite friends and family to the party.

  • Work with your student to plan a celebration everyone will enjoy.
  • If guests ask what they can gift to your high school graduate, consider suggesting contributions to a college saving account or a gift card that can be used for textbooks and materials.
  • Don’t forget to have thank-you cards on hand for your student to send shortly after the celebration.

□ Start planning the move.

  • Whether your college student is moving to a new job or returning home for a while, he or she may need assistance. See our moving checklist for college graduates.
  • As your high school graduate prepares to move to campus, keep a copy of the college’s suggested packing list handy. Also see some items you may want to take care of before fall term begins.

By: Iowa Student Loan

Checklist for College Prep

With your student’s final year of high school winding down, the list of things to do may seem limitless. One way to help manage the stress and emotions of the final months before your child goes off to college is to make an organized checklist.

Here are some items to include for each month between now and the start of freshman year of college:

March

□ If your student hasn’t made a final college decision, visit or revisit those that have offered acceptance and your student is still considering.

  • Use these trips to help your student envision what it would be like to attend each school and decide if it’s a good fit.
  • You may wish to help your student set up visits to specific departments or programs or to sit in classes.

□ Compare financial aid offers from the schools that remain on the list. Your student can contact a school’s financial aid office with any questions about the aid offered.

April

□ Work with your student to make a final college selection by the end of the month, as many colleges require a commitment by May 1.

  • Your student should notify the chosen school and make any required deposits.
  • Check for specific forms or actions that need to be completed, and add deadlines to your calendar.
  • Your student should also notify other schools that he or she will not attend and send a thank-you for any special assistance or offers.

□ Help your student understand the full cost of attending college.

  • Have a family conversation about what you will and won’t help with financially.
  • Encourage your student to continue looking for scholarships that can help defray the cost of attendance. You may wish to investigate how the college will apply any outside scholarships to aid already awarded, such as whether outside scholarships would replace institutional scholarships from the college or offset student loans.

□ Help your student set reminders for requesting final transcripts.

  • The high school counseling office may have required forms or processes for this.
  • Check on whether the student needs to make a separate request for transcripts for any college courses already completed, such as dual enrollment classes.

□ Check personal IDs and documents.

  • Have your student renew his or her driver’s license or passport if necessary before going to college.
  • Consider TSA Precheck and Global Entry if your student will be flying frequently or expects to travel internationally.

□ Help your student finish strong.

  • Advanced Placement exams occur at the beginning of May. If your student is enrolled in AP classes, be sure to help them understand if a particular score is needed to obtain credit for courses at the selected college.
  • Encourage your student to try to achieve the best grades possible for second semester of senior year. Disciplinary or academic issues could result in a college rescinding acceptance or scholarships.

May

□ Review the college’s timeline for completing actions and submitting forms and deposits.

  • Your student may need to sign up for orientation to enroll in classes, select a residence hall or roommates, opt in or out of college-sponsored health insurance and take other action.
  • Work with your student to set up access to a student or parent portal offered by the college.
  • Determine whether the college requires a Family Educational Rights and Privacy Act (FERPA) agreement to provide parents with information about a student.

□ Make a four-year plan for coursework.

  • If your student has decided on a major, look for an existing flowchart or plan of required and elective classes available from the school. If none is available, look at the requirements for the major and start to plan out possibilities based on class offerings from previous years’ course catalogs.
  • Even if your student is undecided, you can look together for interesting entry-level classes, prerequisites for a particular academic college and graduation requirements to create a one- to two-year plan.

□ Plan needed transportation and accommodations.

  • Many college towns have limited hotel availability, especially on popular weekends for move-in, parent weekends, breaks and move-out.
  • Watch for deals on airfare, hotels and other accommodations and venues.

June

□ Work on life skills with your student.

  • Ensure your student can carry out the functions of everyday college life, such as waking up on time for early classes, doing laundry, arranging transportation, making appointments and preparing simple meals.
  • Discuss how your student will obtain money, such as from a job or from you, and access it for transactions. Many students use combinations of a credit or debit card, payment apps like Venmo or PayPay, cash withdrawals, and other forms of payment.

□ Encourage contact with future roommates.

  • Whether your student selected or was assigned a roommate, it can be helpful for people who will be sharing a small space for an extended time to have some preliminary conversations about preferences, habits, who is bringing what and any special needs.
  • You may want to encourage a meeting before move-in if the roommate lives nearby or can arrange to attend the same orientation session as your student.

□ Develop a network.

  • The college your child will attend may have parent associations, alumni groups or other organizations you can join.
  • Look for groups on social media, such as Facebook and Twitter. These groups can be a forum for information and support now and throughout college.

July

□ Start exploring the college community with your student.

  • You may wish to find activities to participate in for future visits.
  • Your student may want to investigate student organizations, community service opportunities, events and activities as well.

□ Shop for books and supplies.

  • As soon as the class schedule is finalized, your student can start looking for assigned books. Encourage comparison shopping between the college bookstore, other bookstores and online sites. Also compare rentals to used and new purchases, and compare downloads and ebooks to printed materials.
  • Be aware that many college courses also require an electronic access code, which may not be included with used, rented or electronic versions.
  • Determine what dorm furnishings and supplies are needed and start shopping for those.

□ Talk to your student about common college student issues and how to get help.

  • You may wish to talk about drug and alcohol use, as well as other behaviors.
  • College students often face academic issues when entering college, even if they were excellent high school students. Discuss the advantages and availability of professor office hours, study groups, teaching assistants, help centers, tutoring and other resources.
  • Mental health can often be a concern for college students as well. Most campuses offer counseling and other services; encourage your student to be aware of how to reach out.
  • Your student may have specific physical, dietary, emotional or other needs. If you are unsure about the help available, contact student services or admissions for direction.

□ Consider dorm or renters insurance for lost, damaged or stolen valuable items like laptops, cell phones, bikes and other assets. Homeowners insurance may cover some losses for your student, but an inexpensive dorm policy from a specialized provider may be an option if you have a high deductible.

August

□ Make a communication plan.

  • Sometimes it’s helpful for the parents and the student to know when they will next speak to each other after the move.
  • You may want to set up a regular time and day for a video or phone chat.

□ Get ready for the big move. Be prepared for emotions to run high as your student faces a new situation and leaving behind familiar friends and family.

By: Iowa Student Loan

PLUS Loan Basics: What You Need to Know

The federal Direct PLUS Loan for parents is a common option for families who need more money to pay the full cost of college. It’s often included in colleges’ financial aid award packets to make up the difference between other types of aid and the cost of attendance but, like student loans, you are not required to accept a PLUS Loan.

Before taking out a PLUS Loan, carefully consider its features, benefits and drawbacks.

Features

  • Availability: The PLUS Loan is available to biological and adoptive parents, and in some cases stepparents, who do not have adverse credit history.
  • Limits: A parent can borrow up to the cost of attendance amount determined by the student’s school minus other financial assistance received by the student.
  • Interest Rate: The PLUS Loan has a fixed interest rate, currently at 7.00% for the 2017–2018 school year. The rate for the 2018–2019 year will be set on July 1.
  • Fees: An additional loan fee is calculated as a percentage of the loan amount (currently 4.264% for disbursements on or before Sept. 30, 2018) and is deducted from each disbursement.
  • Repayment: Borrowers may choose from federal repayment plans to repay the loan over 10 to 25 years. Repayment generally begins as soon as the loan is disbursed, but you may defer the payments while the student is enrolled at least half time plus an additional six months.

Benefits

  • Cash flow: Obtaining a PLUS Loan before a college bill is due allows some parents to pay for the entire term without financing fees or late penalties and then make payments on the loan as cash becomes available during the term.
  • Pre- and overpayment: Some parents choose to make extra payments without penalty to pay down PLUS Loans more quickly and to lessen the impact of interest.
  • Federal repayment options: You may choose from among federal repayment plans (not all are available for PLUS Loans). PLUS Loan servicers also offer deferment and forbearance options if you have difficulty making payments, but be aware that interest continues to accrue daily even when payments are not required and unpaid, accumulated interest will be capitalized, or added to the loan balance at the end of the deferment or forbearance period.
  • Death and disability: The loan can be discharged if the parent borrower dies or becomes totally and permanently disabled. In addition, the loan can be discharged if the student dies.
  • Cancellation: If already taken out, you can cancel all or part of the amount before the loan is disbursed. After disbursement you have a little time to cancel all or part by contacting the school financial aid office.

Drawbacks

  • Discharge: Federal PLUS Loans are rarely discharged for financial difficulties resulting from unemployment, age-related or other illnesses and injuries, or bankruptcy.
  • Nontransferable: You cannot transfer the PLUS Loan to your student to repay after your student finishes school. You and your student may be able to work together to refinance the loan in the student’s name through a private lender; doing so will result in the loss of federal repayment options.
  • Timing: Many parents face repayment of heavy loan debt burdens at a time of life when earning power generally decreases and limited income is needed for living or medical expenses. Default on a PLUS Loan can lead to the garnishment of Social Security benefits, tax refunds and wages.

Other Considerations
The following items could be considered a drawback or a benefit, depending on personal and other circumstances.

  • Qualification: Approval for a PLUS Loan does not take into consideration income, other outstanding debt, assets, income or years to retirement, so consider carefully how much you will realistically be able to repay.
  • Interest: The fixed interest rate will not increase during the life of the loan, but you won’t be able to take advantage of lower market rates in the future.

Before taking on a PLUS Loan, you should also compare it to other options, such as our College Family Loan.

By: Iowa Student Loan

Iowa Families Can Win Cash for Educational Expenses

Iowa high school students and their families can enter weekly drawings for two $250 awards, and Iowa high school seniors can enter a grand prize drawing for two $1,500 awards by completing a free online tool that helps them estimate the total cost of a four-year undergraduate degree.

Learn more and enter the giveaway today!

Iowa high school students, and their parents or guardians, can enter their information for the drawings after completing the College Funding Forecaster until May 11. The free online tool provided by Iowa Student Loan uses information from students’ freshman year financial aid award packets, as well as outside scholarships and grants and family savings and earnings, to project estimated costs, funding gaps and potential student loan debt over four years.

“We want to help families make the connection between first-year costs and the total financial investment in a college education,” said Steve McCullough, president and CEO of Iowa Student Loan. “This tool helps them see how their costs might increase, what happens when one-year scholarship awards are exhausted, and how the family and student contributions can play a role in reducing overall costs.”

The tool allows families to customize both expenses and available funding to adjust results for changes in students’ situations over the four years. The results show yearly and total estimated costs of attendance, available funding and projected funding gaps. The tool also provides informational tips on how to reduce costs and potential debt.

After viewing their results, users have the opportunity to enter the drawings. Two names will be drawn each week to receive $250 awards for educational expenses. In a grand prize drawing, two names will also be drawn to each receive $1,500 for the students’ college expenses in fall 2017. The grand prizes will be paid directly to the students’ colleges.

For details and complete rules for the giveaway, visit www.IowaStudentLoan.org/Giveaway. Or, to begin the College Funding Forecaster and enter the giveaway, go to www.IowaStudentLoan.org/Forecaster.

By: Iowa Student Loan

Minimize Your Student Loan Debt: Declining Awarded Student Loans

Colleges sometimes include the maximum available federal student and parent loans on financial aid award letters to bring the amount of awarded financial aid closer to the total cost of attendance. It’s not always clear that students don’t need to accept the full amount of all loans.

Reducing expenses or increasing earnings to offset awarded loans will mean less debt after graduation. Not only would the amount of the student loans need to be repaid, but so will interest that accrues daily on those loans. And, it won’t matter if college doesn’t result in graduation, a job or the anticipated earnings. Once the loan has been accepted, the student (or parents in the case of a federal PLUS Loan for parents) is responsible for repaying it.

If the awarded loan amount seems like more than the student will really need, it’s important to decide exactly how much to borrow.

Need some, but not all, of the awarded federal student loan amount? Students can always accept only the loan amount they need. To take a partial loan amount:

  • Fill in the desired loan amount on the document to be returned to the financial aid office if a paper copy needs to be signed and returned.
  • Choose the electronic option for accepting or declining each applicable loan, or for taking out a partial loan amount, when accepting financial aid online.
  • Contact the financial aid office if it’s not clear how to accept a partial award.

Can all loans be declined? Many students have the goal to attend college loan-free. Even if some loans will eventually be needed, declining all loans for one semester will save capitalized interest later on. To decline the offered loans:

  • Cross out the loan amount or select the “decline” option on the document to be returned to the financial aid office.
  • Choose the electronic option for declining each applicable loan if financial aid is accepted online.
  • Contact the financial aid office if it’s not clear how to decline loans.

Considering PLUS Loans? Although PLUS Loans may appear to be part of the awarded financial aid, they are not automatically paid to the student or institution. Parents need to request these loans. Your family may wish to compare the terms and benefits of a PLUS Loan with those, like our College Family Loan, offered by private lenders. These loans may have different fees or interest rates. Be sure to discuss repayment expectations as a family if parents will be responsible for repaying the PLUS or other loan debt.

By: Iowa Student Loan

11 Benefits of a College Saving Plan

Most states offer college saving plans, or 529 plans, that allow families to invest money that can later be used for qualified higher-education expenses. These plans offer savings and tax benefits over other ways of saving for college. Here are 11 reasons you may want to consider a 529 plan, such as a College Savings Iowa plan.

1. You can choose, and change, your investment strategy.
College saving plans offer a variety of investment tracks to allow you to decide how to invest contributions. You may choose from among recommended investment tracks based on the age of the beneficiary and your comfort level with risk. Or you may wish to choose from among individual portfolios of specific bond and stock funds.

After choosing your initial investment strategy, you can make changes over time. You may make changes to existing contributions twice a year.

2. You receive tax benefits.
Your 529 assets grow deferred from federal and state income taxes as long as the money remains in the plan. Many states also offer additional state tax advantages for in-state residents.

3.Qualified withdrawals are not subject to taxes.
Withdrawals used to pay for qualified higher-education expenses are also tax-free. This means any growth from your principal investments in a 529 plan used for qualified expenses will never be included in your income tax.

4. The assets are less impactful on financial aid.
The formula used to calculate financial aid treats 529 plan assets more favorably than it treats savings or investments owned by the student. According to savingforcollege.com, a maximum of 5.64% of all parental assets, including 529 plans owned by a parent or a dependent student, is counted toward the expected family contribution for college by the federal financial aid formula, compared to 20% of student assets.

5. Anyone can start or contribute to a plan.
You don’t need to be related to the student you name as the beneficiary of a 529 plan you open. This means you can be a parent, grandparent or friend of the student who will use the money, or you can be the student. There are no income limits, age limits or annual contribution limits for account owners.

Someone who would like to make a gift to the student can also make one-time contributions to an existing account.

6. Minimum investments are small.
College Savings Iowa allows initial investments or contributions of $25 or more and a minimum of $15 for employers that offer payroll deduction. Investments in 529 plans can be as large or small as comfortable for families.

7. You are not limited to your state’s plan.
You may choose to use any state’s 529 plan even if you don’t live there or the student doesn’t intend to attend college in that state.

8. The money can be used for attendance and other expenses at a wide variety of institutions.
The student beneficiary can use the money to attend any eligible two- or four-year college, postgraduate program, trade or vocational school, online college and university programs and even some international institutions or study-abroad programs.

Besides tuition, money can be applied to other qualified higher-education expenses like fees, books, housing, meals, supplies, computers and printers, software and internet access.

9. Plans are transferable.
If the student beneficiary named on the plan doesn’t need the money, it can be transferred to an eligible family member of the student, like a sibling, child, parent or spouse.

10. You can always withdraw the money if needed.
If the student earns a scholarship or enrolls in a military academy, you can withdraw up to the amount of the scholarship or the value of the education tax-free. If the student passes away or becomes disabled and is unable to attend college, there is also no penalty for withdrawals.

If you withdraw money for any other reason than these circumstances and the withdrawal is not used for a qualified higher-education expense, a 10% federal tax penalty will may apply to any earnings. (You would receive the full value of your contributions minus any administration fees.) A tax adviser can help you understand tax consequences of non-qualified withdrawals from a 529 plan.

11. A 529 plan may encourage college attendance and graduation.
Researchers have found that when money is set aside for college, families save more. Even when budgets are tight, families with even relatively small amounts of money earmarked for college find creative ways to save more. Additionally, the perceived value of higher education increased and a high percentage of parents felt their children would finish college.

By: Iowa Student Loan

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