When it comes to paying for college, don’t leave money on the table

Grants, scholarships and 529 plans can help reduce the cost of a college education. Here’s where to start.

Most parents will need help paying for their child’s college education, but luckily there are a number of resources available to parents (and students) to help them foot the bill.

Sifting through grants, scholarships, work-study, private loans and savings plans can seem overwhelming, but getting organized is a good first step to stitching together a funding scheme that works.

Wendy Lindsay, director of the New England Board of Higher Education’s tuition-discounting program, said it’s good to start early.

“Certainly by junior year of high school it’s good to start being aware of the different options out there, so parents should start doing their research,” she said. “Then it’s good for parents to establish a calendar to stay on track with what needs to be done.”

This calendar, she said, can be used to keep track of application deadlines for not only the college or colleges your child wants to attend, but also financial aid deadlines and scholarship application deadlines.

As for gathering that research, Lindsay said, there are a number of great places to start including the College Board’s Big Future website.

Here, parents and students can save all their college planning activities by signing into a College Board account. In addition to a function that allows visitors to calculate what they will need to pay for college, help with financial aid and a scholarship database, the site offers visitors a chance to compare colleges and explore majors.

Another resource is the NHHEAF Network, which includes New Hampshire Higher Education Assistance Foundation (NHHEAF), Granite State Management & Resources (GSM&R) and New Hampshire Higher Education Loan Corporation (NHHELCO).

NHHEAF regularly holds information sessions at local high schools but also hosts a website called NH College Club. Here, students and parents can watch the presentations on the NHHEAF YouTube Channel; take virtual campus tours; order free college planning publications for elementary/middle and high school students; watch the “Financially Fit in Fifteen” video series featuring a personal finance management expert discussing financial literacy topics; use college calculators; and access a listing of scholarships available in New Hampshire.

Grants and scholarships FAQ

Getting down to the basics, financial aid is simply money that you either borrow or are given to help pay for college, which means sometimes you have to pay it back and sometimes you don’t.

Grants and scholarships are the types of financial aid that you don’t have to pay back and are typically awarded based on financial need or academic achievement, according to The College Board website. These are always worth applying for, but, as The College Board cautions, they don’t cover the entire cost of college.

“It’s just part of the picture,” according to the College Board site, “a picture that may include loans, family savings and other sources of money.”

While the words “scholarships” and “grants” are often used interchangeably, there are important differences.

According to The College Board, most scholarships are given based on merits that could include academic or athletic excellence and can have rules the student has to follow to continue receiving aid.

Meanwhile, grants are need-based and are often given out based on a family’s financial situation, according to The College Board.

Grants and scholarships can come from state and federal governments as well as colleges. The Pell Grant is federal aid that’s given out and determined by information in a student’s FAFSA application.

The FAFSA — Free Application for Federal Student Aid — is an online form that determines eligibility for financial aid. The FAFSA for the upcoming academic year is released Oct. 1 and can be accessed at www.fafsa.gov.

Locally, the NHHEAF Network offers help with the FAFSA. Even if families don’t think they can qualify for federal aid, Valerie R. Castonguay of the NHHEAF Network said it’s worth filling it out since many grants and scholarships use FAFSA information in their decision-making and application processes.

As for state-level grants, New Hampshire offers one, said Michael Seidel, the Director of the Division of Educator Support and Higher Education for the Department of Education until August 2019.

“We still maintain the Scholarships for Orphans of Veterans,” he said.The program, first established by the state Legislature in 1943, provides $2,500 scholarships to children of New Hampshire service members who died on active duty or of service-connected disabilities.

NH Scholars

The Department of Education is tangentially involved in the New Hampshire Scholars program.

New Hampshire Scholars is a community-based program that encourages students to take a more rigorous core course of study in high school. It is based on a partnership between a community’s local business leaders and its school district, according to their website, www.nhscholars.org. If they complete the course of study, they are recognized as a NH Scholar.

Most New Hampshire colleges offer merit scholarships to NH Scholars. For example, each Community College offers NH Scholars 12, $500 nonrenewable merit-based awards. Several four-year in-state colleges also offer larger scholarships to students who’ve earned the NH Scholar designation.

Colby-Sawyer College offers renewable merit scholarships ranging from $20,000 to $26,000 for which NH Scholars students may be eligible. Franklin Pierce University offers renewable merit scholarships ranging from $15,000 to full-tuition scholarships annually for accepted NH Scholars. Additionally, NH Scholars majoring in biology or health sciences may be eligible for an additional $5,000 Health Sciences Scholarship.

Other schools offer admission fee waivers to NH Scholar students.

Outside scholarships

Companies, foundations, community organizations and clubs also sponsor grants or scholarships. Grants and scholarships from these private organizations are called outside, or private, scholarships.

“The biggest one in New Hampshire is The New Hampshire Charitable Foundation,” said Castonguay. “In order to apply for them, students have to have a FAFSA on file.”

Catonguay said this is one of the many reasons it’s worthwhile to apply for the FAFSA even if it may not result in federal aid.

NHCF is the largest provider of publicly available scholarships in New Hampshire and has awarded more than $6 million to more than 1,500 students each year, according to its website. They do this through 390 scholarship funds created by private donors, which the foundation lists on its website.

These scholarships are typically based on both merit and need, and are awarded to students for professional certificate programs, licensure, two- and four-year undergraduate degrees and graduate school.

Though the Foundation doesn’t accept applications for the individual scholarships — each organization offering a scholarship has its own process — NHCF does offer a single online application that it uses to match students with all scholarships for which they qualify.

Students may also be able to find other scholarship opportunities through other sources, according to The College Board, including parents’ employers or labor unions; the family’s religious center; and, organizations such as NAACP, 4-H and the Boy Scouts of America.

Tuition Break Program

In addition to grants, scholarships and aid, some colleges and universities also offer discounted tuition in some areas of study.

Lindsay with the New England Board of Higher Education said they offer The Tuition Break Program. Through this program, she said, New Hampshire students can get discounted tuition for enrolling in programs in any of the five New England states not offered by the community college or university systems in New Hampshire.

“There are hundreds of programs that are available — associate’s, bachelor’s and graduate — to New Hampshire residents and students save on average about $7,000 a year on their tuition bill through this program. The savings is significant and the program really opens up a lot of opportunities for students.”

Lindsay said there are programs in all areas of study ranging from liberal arts to science, math and engineering. Lindsay said they keep an updated listing of programs on the NEBHE website.

529 plans

Another source of funding for college can come from 529 college savings plans.

“The benefit of these accounts is that the earnings grow tax-deferred,” said Monica Mezzapelle, NH Deputy State Treasurer, “and if they are used for qualified education expenses, they essentially grow tax-free.”

Some states provide tax benefits with these plans as well, Mezzapelle said. For example, in New Hampshire, 529 plans are exempt from the interest and dividends tax. You do not have to be a resident of a state to participate in their 529 plan.

Families can open 529 plans at any time, but the earlier a family opens an account, the more they can set aside for college, Mezzapelle said. Some accounts also don’t have a minimum to open an account so families can get started with a relatively small amount.

As for how much to set aside, Mezzapelle said in addition to using online college calculators to determine how much you will need to save altogether, Fidelity Investments, which administers NH’s Unique 529 plan, designed the “college savings 2K rule of thumb.”

“Simply multiply the child’s current age by $2,000,” Mezzapelle said. “This amount can show whether savings to date are generally on track to cover 50 percent of the cost of attending a four-year public college.”

The funds can be used for a variety of college-related expenses. If it turns out your student chooses not to go to college, the money can be withdrawn, although there is a tax penalty. The money can also be transferred to another family member for education-related expenses.

Mezzapelle said in general, 529 plans are a great vehicle to help families save.

“College is expensive and folks out there are just borrowing so much. …I believe these savings vehicles are a way to do better planning and to avoid all this debt that students are getting into.”

Melanie Plenda is an award-winning freelance journalist and mom based in Keene. Her work has appeared in The Atlantic.com, The Daily Beast, American Baby, and Parents.com among other media outlets. She’s also the project manager for the Granite State News Collaborative.

Categories: Money and finance, Teens