The U.S. Department of Education provides information on choosing, applying, and paying for higher education.

Financial aid for students is available from various sources including federal and state government, directly from the school or university, or from many private or public organizations. Whatever the source, financial aid funds fit four basic categories:

• Scholarships: Gift aid may be awarded by schools, local/community organizations, private institutions or trusts. Recipients are selected based on some specific criteria.

• Loans:  This money is borrowed and must be repaid with interest. Educational loans are typically more favorable than the interest rates of consumer loans.

• Work Study: This is federally funded program in which students are paid to work and attend school. Awarded funds do not have to be repaid.

• Grants: Gift aid which does not need to be repaid and is typically awarded based on financial need.

However, the financial aid received by your student may not be enough to cover all the costs associated with higher education.  I encourage all of my constituents to begin planning early and setting aside money to aid in paying the costs of higher education later on down the road.

The Economic Growth and Tax Relief Reconciliation Act of 2001 created the Qualified Tuition Program, or 529 savings plan.  529 plans are established and administered by your home state. These plans allow you to contribute any amount to your future educational expenses, up to the total cost of your higher education, and usually earn interest returns.  Disbursements from these accounts used to pay for the beneficiary’s higher education expenses are tax exempt up to the total amount of qualified higher education expenses.