All Episodes

August 22, 2023 38 mins

This just in: college is freaking expensive! But pursuing any kind of education after high school – whether a bachelor’s degree, associate’s, or trade certification – can make a huge difference in your career. In this special episode of “Grown-Up Stuff: How to Adult,” sponsored by EdVest of Wisconsin and the Michigan Education Savings Program, Matt and Molly speak with college savings experts Robin Lott and Jackie James about the best ways to save and pay for higher education as a parent or student. (Spoiler alert: start saving now.) If you have children – or plan on it down the road – it’s never too early or too late to start saving for college. 

Learn about the best student loan options, how often you can reapply for financial aid, and the many benefits to opening a 529 college savings plan. 

Sources Cited: 

See omnystudio.com/listener for privacy information.

Mark as Played
Transcript

Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Finishing high school is a huge moment in a person's life.
For some, it marks the end of childhood and the
first step into adulthood. And for some it means sweet
sweet freedom from the doul drums of a classroom setting.
But for many others, it's the closing of one academic
chapter and the opening of another. I'm talking about college.

(00:25):
In twenty twenty one, two point seven million people completed
high school. That's according to data from the National Center
for Education Statistics. Out of those high school graduates, roughly
sixty two percent of those students had enrolled in college
for the fall of twenty twenty one. That's roughly one
point seven million people who were new students at a
two or four year academic institution. College is such an

(00:48):
exciting time. It's where we get the chance to reinvent ourselves,
and for many it's the first time we can realistically
start thinking about what we want to be when we
grow up. We get the chance to specify our interests
and zero in on what we want to learn and know.
But here in the US, that journey can also be
very expensive. Based on data collected by US News and

(01:11):
World Report in twenty twenty two, in the last twenty years,
tuition and fees increased by one hundred and thirty four
percent at private universities, out of state tuition and fees
at public universities rows one hundred and forty one percent,
and in state tuition and fees at public universities went
up by one hundred seventy five percent. The price of

(01:32):
higher education and how one pays for it has been
a hotly debated topic in the US for many years now,
but until major legislation passes to change our current system,
students and parents are on their own to figure out
the best way to save and pay for college. While
there's always the option of taking out a loan or
applying for grants or scholarships, there are also a number

(01:52):
of savings plans designated to help people grow their money
specifically for the purpose of paying for higher education. But
what are these and what benefits do they offer? Plus,
can someone please tell me the difference between a grant
and a scholarship? Start taking notes because this is we Stuff. Hello,

(02:13):
and welcome to another episode of Grown Up Stuff How
to Adult the podcast will regraduate from curfews and after
school jobs and enroll in the school of credit scores
and weddings. As always, I am Molly, one of your
hosts of the show, and I am joined by my
affable and very talented co host Matt. Today on the show,
we're working with our partners at Edvest in Wisconsin and

(02:35):
the Michigan Education Savings Program to dig into saving and
paying for college.

Speaker 2 (02:40):
Now, Matt, you.

Speaker 1 (02:40):
And I have since finished college and am now working adults.
But you are married, and I know that you and
I have talked about you and your wife at some
point starting a family. Do any of these stats around
the cost of college scare you? Like, do you have
a plan for when those future children might say to you,
Papa Mets, I have yees and that dream is to

(03:02):
go to college and get a liberal arts degree.

Speaker 2 (03:06):
Okay, so, first of all, we have talked about having children,
but I am nowhere near ready to hear Papa Mat,
So let's never ever say that again. I have not
started saving for any future family, but it feels like
we gotta, right. I mean, when you look at a
cost of college, I mean in state tuition, out of
state tuition, like in private universities, Like somebody, these private

(03:26):
universities are like sixty sixty five thousand dollars a year ago.
That's on the super high end of the spectrum. But
it is really great to know that there are tax
advantage savings accounts that you can use to invest in
higher education. Think about your paycheck and then think about
it before taxes are taken out. Sometimes it's like twice
as high, right.

Speaker 1 (03:46):
Like, oh yeah, it makes me cry sometimes.

Speaker 2 (03:48):
Imagine you can keep all that money and use it
to invest in something so that that larger paycheck is
actually going and growing and being invested, and then when
you take it out, you don't have to pay any
tax on any income the investments have earned. So it's like,
I love that. When I put it in perspective that way,
it makes so much more sense to me that like vehicles,
like you know what we're going to learn about today

(04:10):
are huge.

Speaker 1 (04:11):
Yeah, I also want a family someday, but you know,
I also want to be able to help my kids
the same way that my parents were able to help me.
And I'd be lying if I said that like college
was not a major obstacle or concern more accurately when
it comes to kind of this plan of being able
to help them the same way that I was helped.

Speaker 3 (04:29):
You know.

Speaker 1 (04:30):
I went to a private university years ago, and I
was lucky enough that I had a few scholarships under
my belt when I went, but I remember being shocked
at how expensive it was then. So I am really
looking forward to diving into the ways that we can
manage this cost with our guests today.

Speaker 2 (04:49):
Me too, and to help us explore what our options
are when it comes to financing higher education. We're joined
by not one, but two experts today.

Speaker 4 (04:59):
Hi, Lott, I'm.

Speaker 5 (05:01):
The Bureau Director for the Office of post Secondary Financial
Planning within the Michigan Department of Treasury.

Speaker 3 (05:07):
My name is Jackie James, and I am the senior
marketing manager of the ed VEST five to nine College
Savings Plan in Wisconsin.

Speaker 1 (05:17):
As the executive director, Robin works closely with the Chief
Deputy State Treasurer and the State Treasurer for the State
of Michigan on financial wellness and other higher education related issues.

Speaker 2 (05:28):
And Jackie works closely with the State of Wisconsin on EDVEST,
which is the state's only direct sold five twenty nine
college savings plan that offers tax benefits when used to
pay for education expenses for designated beneficiaries.

Speaker 1 (05:41):
Robin and Jackie, thank you so much for being here today.
I want to start at the very beginning, and I
think I might know the answer to this. But when
is the best time to start thinking about saving for
higher education from different perspectives, from the parents, perspective, from
adults looking to continue their education, and if you're a
high school student looking at college.

Speaker 3 (06:03):
So this is not going to come to any surprise,
I would say as early as possible. The reason is
is because of compound earnings. The sooner you get your
money into an investment vehicle like a five to nine plan,
the sooner those funds can start working for you in
the form of potential earnings and compound earnings. Over time,

(06:26):
your earnings are invested back into your five too nine account,
and so the earnings keep building on your principle or
the original amount you invest.

Speaker 5 (06:36):
Absolutely, the earlier you start, even from the five to
nine prepaid perspective, the sooner you can lock in at
whatever rate is in existence at that time or in
play at that time, so that you're still going to
lock in at a lower rate than you would if
you were going to actually be ready to attend college.
So absolutely, I always say as soon as that child

(06:57):
is born. From a parent perspective art saving, if you're
a student going to college, you're a little bit late
to the game, but if you can save anything, tuition
still goals up while you're in college, and so your
senior year of college is going to be your most
expensive year. So even if you had to start saving late,
it's better to start saving late than never.

Speaker 2 (07:18):
It's really funny the more we talk about stuff on
grown up stuff, it's just like budget, budget, budget, budget.
So with budget in mind, is there like a recommended
amount to save every month?

Speaker 3 (07:32):
That's a really good question, but it kind of depends
on what your goal is.

Speaker 5 (07:36):
And your budget. So your first do need you need
to identify those goals, but then you have to realistically
look at what can you afford to save so that
you can still put food on your table and meet
your other expenses.

Speaker 3 (07:47):
Something I would recommend people doing. There are tons of
online calculators that you can use to project the amount
that someone needs to save. So you know, okay, I
need X amount of dollars tuition at a four year
college in eighteen years, or I need X amount of
dollars for housing expenses, and that sort of thing in

(08:10):
five years. So literally, just google online calculator college savings
and a bunch will come up, and that could really
help you set your budget and your savings.

Speaker 4 (08:21):
Schools you need to sacrifice too.

Speaker 5 (08:24):
I know my parents and grandparents did a lot of
sacrificing to help where they could based on the value
of higher education.

Speaker 4 (08:32):
So the family really values higher education.

Speaker 5 (08:34):
They're going to put a little bit of skin in
the game and sacrifice a little bit to make sure
they're saving something.

Speaker 3 (08:39):
Any money saved is better than no money saved, is
what I say. And you can really just reduce the
amount of money that you're going to maybe potentially take
out in student loans. So anything is better than nothing.

Speaker 1 (08:54):
So both you and Robin have mentioned five twenty nine
savings plan. Can you tell me a little bit about
what a five two nine savings plan is and how
it differs from other savings accounts.

Speaker 3 (09:04):
Five two nine's are kind of like retirement accounts, but
for higher education savings. Just like retirement accounts, the money
placed in a five two nine can actively work for you.
These funds that are saved are invested in stocks, bonds, cash,
a mixture of portfolios in order to to have the

(09:26):
objective to grow your money over time with standard savings accounts. Obviously,
any money you save towards higher education is wonderful, we
love it. But with standard savings accounts, most of the
time you don't have the potential to earn investment returns.
And all earnings in a five to nine are tax free,

(09:47):
meaning the gains on your college savings will not be
subject to taxes as long as you use the money
for qualified education purposes like tuition, room and board, books, supplies,
and that sort of thing. So it is a tax
advantage way to say for college. There are so many

(10:07):
tax advantages of a five to nine that I feel
like a lot of people don't know about. First of all,
like I said before, the tax deferred growth of earnings,
which is not standard to other investment accounts. It's not
you normally get taxed on growth in the account. Also,
some states offer a tax deduction on your state income taxes,

(10:32):
so make sure to check with your home state to
see if they offer that. A lot of states do.

Speaker 2 (10:38):
Robin, you had mentioned that there are these two major
different types of five twenty nine plans. There's this educational
plan and a prepaid plan. Could you break down a
little bit the differences between the two plans for us.

Speaker 5 (10:50):
Sure, they're both under section five to nine, and we
keep saying section five to nine. Section five to nine
is the number of the Internal Revenue cod that gives
us the tax exempt status as college savings. Okay, So
five to nine of the Internal Revenue Code says any state,
as long as they're actively involved, can set up either
a prepaid plan, which basically means you're buying college tuition

(11:12):
or whatever at a set rate, and the plan itself
is pooling those funds together for investment purposes and making
it available to pay out whatever they promise to pay
in the future. So I call it our most conservative
savings option, Okay. In Michigan it's called Michigan Education Trust.
It's prepaid. You're buying a met contract based on the

(11:34):
actual tuition today, and when your child is ready to
attend college, it's worth the number of credits you purchased
at whatever institution you attend, if it's a Michigan public
college at that time. So that's the prepaid concept of
how it works in Michigan. Some states, such as Florida,
offer a prepaid concept for even a room and board component,

(11:54):
so they price it out based on current cost of
either room and board or tuition, and then they make
a promise to pay a certain value in the future,
whereby we don't come and ask you for more money now.
Then folks say, oh, wellll but it's for Michigan colleges.
But there's a refund portion or a refundable option under
met so that if the student does go to Wisconsin,

(12:16):
there is a refund value that follows that student, so
they don't lose their money just because they go out
of state or they go to a Michigan private college.
We just put a refund value, and the refund value
is always tied to a tuition figure. So if they
go to Wisconsin, it's average tuition of the Michigan public
colleges might be lower than the actual tuition if they
were going to use it in credit hour form. If

(12:37):
they go to a Michigan private college Kalamazoo College, then
it's weighted average tuition, which is a slightly higher figure
than average. It gets paid directly to the private college,
so it's never where they're losing the money. It's always
that it's just a different value based on the decision
the student makes when they're ready to attend, and so
I look at that as our most conservative option of

(12:58):
You know, you talk to financial planners, what do they say?
They always say, diversify. Diversify. You don't want all your
eggs in one basket. You want some in cash, you
want some in bonds, you want something in conservative but
then you also want that offset in the market where
you have that earning potential. So think of our MASP
and our MAP as those vehicles that give you investment

(13:20):
options to choose from, as opposed to this guaranteed option,
which is what I like to call it. The prepaid
plans give you more of that guaranteed or secured option.

Speaker 2 (13:29):
I should say, how much can we expect these plans
to vary from state to state?

Speaker 5 (13:34):
They're very similar, but each state has a unique little
difference depending on their setup. So the primary reasons they're
all there are the same, right, They're all in common
in terms of why they're there and what they allow
you to do save for college, but they all have
uniquely different aspects to them. Some have the state deduction,

(13:55):
some don't. Some will allow a state deduction. Regardless of
the state you're saving in some don't those types of things.
They all might have a little bit different investment options
they're offering you. So some of them might run through
the TIAA Creft platform, some might run through t row
Price or other companies. So in that regard you may

(14:15):
have slightly different investment options to choose from, as in
the advisor program you have to go through a broker
to actually open it an account and where they can
customize an account for you, whereas in the direct plans
you're doing it on your own. So they all have
a little bit different twist, which is why you want
to do your homework.

Speaker 2 (14:35):
Well, we can definitely expect these tax advantages though, so
that where the money is growing tax free and we
can take it out tax free if we are using
an unqualified expenses, Yes, that's amazing. And so what are
some of the best ways that we can maximize our
funds in these accounts?

Speaker 3 (14:52):
First of all, easypsy thing that you can do. If
you have a five to nine account, you should start early,
as we've discussed, but contribute regularly. There are options on
state websites and direct soul plans that you can set
it and forget it, and so you can do just
regular contributions every month from your payroll, direct deposit or

(15:17):
every fifth of the month. It takes out fifty dollars
and you don't even have to worry about it. Second
of all, make sure that when you get a bonus
or a tax refund or a raise, that you consider
increasing your contributions because obviously the more that you fund,
the greater possibility it is for it to grow. And also,

(15:41):
some employers will match your five to nine contributions up
to a certain amount, which is awesome, and so make
sure to check with your HR department to see if
this benefit is available. For sure, ask friends and family
to contribute to your five to nine plan. In advest
and for MASP, we have a platform called you Gift,

(16:02):
and you literally can set up a code. Let's say
I'm a parent, which i am not, but let's say
I am a parrot and I have a five to
nine for a child. That child has a unique gift code,
and Matt, you can go and just enter that code
and say, here's fifty dollars for your birthday. Happy birthday,
little Jackie. And also depending on your state, because again

(16:26):
at very state to state, the gift contributors may also
be eligible for state tax deductions themselves. And lastly, there
are programs that partner with major retailers, local restaurants, and
other businesses like you promise to give their members cash
back or other rewards on their purchases, which then can

(16:49):
be rolled into a five to nine account.

Speaker 4 (16:51):
I was going to bring that up, Jackie, family and friends.

Speaker 5 (16:54):
You don't have to be related to someone to even
open up an account and say for that child yourself.
Have some folks come up to me, I don't have children,
but I want to help someone. Well, pick a child
at Sunday school or someone in your neighborhood or in
your community, and you can open up an account in
their name. You'll just need their Social Security numbers. So
you want to talk to the parents, of course, but

(17:15):
you can also contribute to existing accounts regardless of your
relationship to those children.

Speaker 4 (17:21):
But guess what.

Speaker 5 (17:22):
You can open up an account in your own name
and start saving right now, and when you have a child,
you can transfer that account to the child, put the
child's name on it, Okay, so.

Speaker 2 (17:33):
You can change the beneficiary that's of any account.

Speaker 3 (17:37):
That's interesting, But also you can save for yourself for
your future education expenses. If you would plan on going
to grad school or want to take a community college class,
you could absolutely do that. I have accounts for my
nieces and nephews and a lot of gen zers, and
like the later generations are looking at not having kids,

(17:59):
but there's always a child in your life that you
can save for.

Speaker 5 (18:03):
Absolutely. Okay, I'm just gonna say this last thing, then
you can change a topic. But literally, I am a
parent who has two children that are college graduates. But
now i'm a grandparent. My name is Gigi, you guys,
and Gigi opened up accounts for her grandchildren each time
they were born, and so I tease them and tell
them they get paid before me because they get twenty

(18:25):
five dollars every two weeks. I'm on payroll deduction. Yeah,
and I keep remembering I got to go out there
and stop it, because my goal is not to buy
their whole college education. I'm just trying to buy one
year for them to use on their senior year. And
if they give full scholarships, I keep telling them we're
going on a trip together.

Speaker 4 (18:43):
Amazing.

Speaker 5 (18:44):
So just saying all that to say, yeah, payroll deduction
works fantastic.

Speaker 1 (18:50):
Now does it matter what type of school you're using
it on, private versus public, state, in state versus out
of state, does it matter at all?

Speaker 3 (18:58):
Absolutely not. Can be used at any eligible higher education
institution in state, out of state, and even some abroad.
So if you want to know if the University of
Maryland is accredited, spoiler alert, it is, just google the

(19:20):
Federal School Code List on the US Department of Education's
website and then you can just search for University of Maryland,
University of Michigan, et cetera, et cetera, and you can
see if they're accredited or not. And if they are accredited,
a five to nine covers them.

Speaker 1 (19:37):
Okay, So it's really just that accreditation that we need
to be looking up, and if if they're credited, we're
good to use our five twenty nine.

Speaker 3 (19:45):
Also, we haven't even gotten into the part of technical
schools and apprenticeships and that sort of thing. But if
you are looking into alternatives to college or community colleges,
which is a okay, absolutely, you can also use that
Federal School Code list as well.

Speaker 1 (20:09):
The money in your five twenty nine account can be
used for a number of different educational institutions public, private,
in state, out of state as long as they are credited.
And this is great. It makes me feel incredibly hopeful
for the future. But can a five twenty nine impact
how much we receive from other sources. Let's say we've
done exactly what Robin and Jackie recommend, and we started
saving in a five to twenty nine account. This second

(20:30):
a child was born, and now we have a good
amount of money in that account. How does the money
in that account impact a student's financial aid application? According
to Federal Student Aid data, the federal government received more
than seventy point eight million FAFTA submissions during the twenty
twenty to twenty twenty one application cycle, with roughly half

(20:50):
of those applicants seeking their first bachelor's degree. With these
millions and millions of applicants each year, does the government
look at somebody with a five to twenty nine plan
and think you're what, are off than others and therefore
don't need financial aid? I'm curious, though, what about financial
aid if we have a five twenty nine and it's

(21:10):
in a really good place, but we still need a
little bit of help. Are we going to miss out
on any financial aid?

Speaker 5 (21:16):
You're not going to miss out because only five point
six four percent of your savings is going to count
toward your eligibility for.

Speaker 4 (21:24):
Need based aid.

Speaker 5 (21:25):
Remember, financial aid is just not only scholarships based on academics,
but there's need based aid which are grants, there's academic
based aid which is considered a scholarship, and then you
have student loans, which we really don't want you go
on there.

Speaker 4 (21:43):
So that's why we want you to save.

Speaker 3 (21:45):
Yeah, when the Department of Education calculates the Expected Family
Contribution or EFC if you're seeing it on Google, parent
owned five two nine plans are counted as a parental asset,
And so what does that mean. It means it's not
counted as a student asset, which means it has a
lower impact on aid eligibility compared to what student owned

(22:08):
assets have. So long story short, your five to nine
balance has very little impact on a student's consideration for
financial aid, unlike other savings vehicles.

Speaker 1 (22:20):
You know, we mentioned a couple of the different types
of financial aids. Robin, I want to dig in that
into that a bit more and really find out what
kind of financial aid is available to us when we're
looking to pay for college or even grad school. Does
it differ at all. What are the things that we
can kind of start with.

Speaker 5 (22:36):
So depending on where you're at, of course, you're first
going to have that student fill out a FASTPA and
the parents as well are going to fill out the
free application for Federal student aid. That's really the driver
in most of this, because all colleges are going to
look for that in determining whether or not they're going
to offer institutional grants or scholarships as well. The FASTPASA

(23:02):
dot gov, they'll want to go there and complete that.
But when it comes to financial aid, it is comprised
of scholarships, grants, your savings obviously they're going to take
a little of that in consideration, and then your student loans.
So if you have a cost of attendance that the
college is going to calculate for you, and you have

(23:24):
some money that has been allocated to all of those buckets,
but at the end of the day you have a
balance left over, then they're going to say, hey, there's
a loan for that that you can take. Maybe you
don't have enough money to cover the entire cost, they're
going to allow you to take out a loan. The
student may be able to take out a loan. The
student is only going to be allowed to borrow so
much before then they say the parent can take out

(23:47):
a loan, but they will offer you a loan to
fill that gap.

Speaker 2 (23:51):
So we mentioned FASA. Is there any other options outside
of FASA for loans to help pay for education? And
if so, where might we go look for those?

Speaker 4 (24:01):
Oh? Boy, there's a lot of loans.

Speaker 5 (24:02):
So I always direct folks to their financial aid advisor
because there's federal loans, there's state loans, there's private loans,
and the best loans out there are going to be
the federal loans because the loan doesn't start to accrue
interest until the child graduates college, whereas an unsubsidized loan
the interest is starting to accrue as they're in college. Wow,

(24:24):
so there's a little bit better repayment options with those
federal loans that it is with the state loans. If
there are state loans that you can take, and then
you have the private loans where you're just going to
a credit union or a bank, and the problem with
those is just the fact that the interest rates could
be higher, and again, your interest rate could be accruing
while you're in school. So you want to be very
careful and do your homework. Some of them were going

(24:47):
to have some credit rating requirements also, so the lower
your credit score is, the higher the interest rate is
going to be that they're going to give you that
loan for which what does that mean?

Speaker 4 (24:59):
The more money to pay back.

Speaker 1 (25:04):
We'll be right back with more grown up stuff how
to adult. After a quick break, and we're back with
more grown up stuff how to adults. We've been talking
a lot about these different types of financial aid, grants, scholarships, loans. Now,

(25:27):
I think we can all kind of safely say we
understand the concept of a loan. It's money that is
lent to you that you have to pay back with interest.
But what is the difference between a grant and a scholarship?
Is there any difference?

Speaker 4 (25:39):
There is a difference.

Speaker 5 (25:40):
A grant, it's need based, it's given to the student.
The student does not have to pay that back. The
most popular grant is the Pyal grant. It's federal funded.
It's given to a student based on their financial need
and nothing else, okay, and their desire to go to college.
A scholarship usually takes into consideration a merit based system.

(26:03):
Some of those scholarships also have a need based, but
the main thing is the merit based. If it's scholarship,
it's merit based. So you want to incourase those young
people to study hard and get great grades because they
could be eligible for merit based scholarships.

Speaker 1 (26:18):
The other thing I want to add to that is
for anybody who's in college too, right now, scholarships do
not mean only when you're first going into school. I
applied every year I was in college for merit based
scholarships and would get some money from something each year
just to kind of help absolutely keep the cost down.
And so there's always something and it does not only

(26:41):
allow freshmen or incoming freshmen to apply.

Speaker 2 (26:43):
Can I apply for one now?

Speaker 5 (26:45):
And you probably could, I mean depending. There is so
many different types of scholarships out and they're.

Speaker 2 (26:50):
Really great at being an adult. You guys, I just
feel like you should fund this operation over.

Speaker 3 (26:54):
Here that helped me fund help me be a scholarship.

Speaker 1 (27:00):
Right we're at the Academy of it's helping other people
here and does not mean that we're professors at the
Academy of grown up stuff. Yes, two of you, Matt
and I are students.

Speaker 5 (27:16):
But really on that same topic, you do want to
reapply for that fast for every year too, So you're
you're reapplying for all this stuff every single year that
you're in college. Okay, because your financial situation could have changed,
your grades could have went from a two point to
a three point, right, you might qualify for other stuff
that you didn't qualify for the year before. So absolutely

(27:36):
keep that in mind. You want to apply for everything
every year that you're in college.

Speaker 1 (27:40):
And I want to kind of look at, now, something
else that I feel like sometimes is lumped in with
scholarships or grants or kind of some sort of financial
aid is work study. Oh yeah, what exactly is that?
How does it work towards our tuition? Tell me a
little bit about that.

Speaker 5 (27:55):
Work study is a federal program, although I think some
states offer funding for it. Is well, it is a
need based program, so we're talking about a grant. The
primary concept is that you're attending school, you have some
more need. They offer you a job to work there
part time. Usually you have to carry a certain number
of credit hours to qualify for it. But the concept

(28:16):
is that you're able to earn money to then help
support your college expenses. So maybe you need money to
fill that gap for women board or books or supplies,
and the money you use there, the intent is that
you're going to use that money to help put towards
those college expenses.

Speaker 2 (28:32):
Can you recommend like resources where students can go and
find out about grants that are available to them at
the state level or the national level, or any type
of grant or scholarship out there that they could apply for.

Speaker 5 (28:46):
In Michigan, go to Michigan dot gov slash my student
aid that's student aid. You'll see all of the student
scholarships and grants that we offer at the state level.
And then there's also I believe a link out there
that allows students to further search for loans. So can
I just say a real quick plug, do not pay
somebody to search for your loans. There are so many

(29:08):
people out there that pay someone because they've been approached,
Oh we can get you all this money. They're not
doing anything you can't do yourself. And so I do
believe we have a link out on the my student
Aid website that allows you to do just that. So
if any of the scholarships that we're offering at the
state level, maybe you don't qualify for any of them.
Do your own search. You know, you'll be amazed at

(29:30):
some of the community based organizations that offer scholarships that
they give away all the time because you live in
the community, because of whatever, maybe you volunteered at a
certain organization and you didn't even know they were given scholarships.
But those types of scholarships exist as well.

Speaker 1 (29:48):
Yeah, and even at your own university. I mean that's
what I did every year, is I just search within
my university to what were the scholarships that were available
that I qualified for.

Speaker 4 (29:57):
Thank you I.

Speaker 5 (29:57):
Keep forgetting to pour our der institution give great scholarships.
You also they should be talking to their financial aid
office and going on their college's website because those colleges
offer some great scholarships as well.

Speaker 1 (30:16):
So to break it all down, loans are borrowed money
that you need to pay back with interests after you
finish college. Grants our need based money that you do
not have to pay back, and scholarships can be need
or merit based monetary awards for education. Federal work study
consists of often community based, part time jobs given to
students with financial need and that helps them pay for
expenses like tuition, room, and board or.

Speaker 4 (30:38):
Other educational costs.

Speaker 1 (30:39):
With all of these different forms of financial aid. What
happens when we find ourselves not needing everything we saved
away in our five twenty nine account. What if our
beneficiary gets a sizeable scholarship and there's still money left
over but no more educational expenses to spend it on.
Is that money just lost us? Or are we left
waiting for the next generation of college students to pay

(31:00):
it along to I want to come circle back to
a very important point that you made earlier, Robin of
if your grandchildren get full rides, then you'll take them
on a trip. Oh yeah, what happens if I don't
need everything in my five twenty nine What are my options? So?

Speaker 5 (31:19):
The five to nine code says, first of all, if
my child gets a full scholarship, I can withdraw the
value of that. Let's say they tuition is ten thousand dollars,
it's a full scholarship. I withdraw ten thousand dollars and
I just give it to the low rascal because hey,
I'm so happy for you. I'll pay tax on the
earnings of the withdrawal, but I won't pay the penalty

(31:41):
tax that I would have paid for a non qualified
withdraw got it?

Speaker 4 (31:44):
Okay?

Speaker 5 (31:45):
But I'm only paying tax on an earnings portion my
principal upon I put in there is never taxed. So
that's the other sweet thing about five to nine, because
it was after tax dollars going in. I'll never pay
tax on that, but the earnings portion of it only.
I'll just include that in my tax earnings and then
I will not pay the additional ten percent penalty tax
because it was a full scholarship.

Speaker 2 (32:07):
Is there anything Robin or Jackie that we missed completely
about the five twenty nine or student loans that either
of you want to take the time to talk about.

Speaker 5 (32:16):
I just would like to encourage parents to tell their
young people that they're saving for them. We did a
couple of workshops for some students that had saved in
the MET program years ago. We went on campus, we
identified them, told them we were going to be on campus.

Speaker 4 (32:30):
We'll explain to you how to use your account now.

Speaker 5 (32:32):
And do you know about half of the students in
that room said they didn't know they had it until
they showed up at the college door. Wow. And I'm thinking, well,
how did the heck that that family motivate you. I know,
I told my children at age three, y'all going to college.
I'm saving for you to go to college. Don't mess
it up, And so they knew that the expectation was there, right,
But I would encourage families to talk to their students

(32:54):
about the fact that, A, yes, I'm saving. So therefore
the expectation is that you are going to participate in
some type of higher education. You get to choose, how
about that, But we want you to choose something beyond
high school, and we're going to help you get there.
We may not be able to afford the whole thing,
but we're going to help you get there and help
you figure it out. And I think the more conversations

(33:15):
that families are having with their young people and teaching
them those saving skills, that's going to help them along
the way. Get them to a bank or credit union
that offers some type of child savings club, if you will,
to teach them about money. It's so vitally important. So
that would be my parting advice is just talk to

(33:36):
your children and motivate them, but teach them about money.

Speaker 3 (33:40):
Okay, Gigi kind of nailed it. I love that you
said talking to your children about their college savings or
higher education savings. And I would emphasize the point of
talking to your children or others. Again, it does not
have to be children. Children in your life, my nieces.

(34:01):
I have four nieces. I talk to them as often
as I can. That for your college is not for everyone, right.
Trades and technical schools are absolutely okay, and I would
say as equally as important. And associate's degrees are awesome too.
If we didn't have associate programs, we wouldn't have CNAs

(34:24):
or graphic design or like early childhood education. That's so
important and vital to our society. So if I could
hammer anything into anybody's head is talk about the alternatives
as well, and talk about the opportunity cost.

Speaker 4 (34:39):
Of the alternatives.

Speaker 3 (34:40):
If you just plan it out, you use the calculators,
you budget, all options after higher education are good options.
And also workforce. I know that that's not the intent
of this podcast.

Speaker 4 (34:53):
But oh it's always part of it.

Speaker 3 (34:55):
Going into workforce from the military is wonderful too.

Speaker 1 (34:59):
Yeah, and Jackie, that is a great point which we
are going to anyone listening. We are going to dive
into that exactly in Part two of this kind of
saving for college or looking at continuing education. Jackie, hopefully
you will be there to join us as well to
talk further about that, because you're absolutely right.

Speaker 3 (35:18):
Being an adult it's really fun.

Speaker 4 (35:25):
So I love it.

Speaker 3 (35:26):
I love it.

Speaker 1 (35:27):
I love it.

Speaker 2 (35:28):
I said, I'm going to autune it, and that's the
new one.

Speaker 1 (35:33):
Thank you so much for joining us today. This has
been amazing, and yeah, I feel so much smarter and
maybe I'll start that five two nine for future mollies.

Speaker 2 (35:42):
You can do it more time.

Speaker 5 (35:45):
We're here to help you. Thank you guys so much.
This was fantastic. Appreciate it.

Speaker 3 (35:49):
Yeah, this was lovely.

Speaker 2 (35:51):
Thank you. This was so much fun.

Speaker 1 (35:58):
Jackie and Robin have shared an enormous amount of information
with us today, and I want to thank them for
all of their insights. Here's what I've personally learned from
our conversation. Start saving now. Both Jackie and Robin recommend
saving as soon as you can for a child. And
if you're a graduating high school student, start saving and
keep saving because if you're going to a four year college,
your tuition will likely increase every year. Start a savings

(36:19):
plan now. It can only help you prepare for those
adjustments each year. A five twenty nine account is usually
associated with the state you live in, as five twenty
nine is a tax exempt coding with the IRS, but
it can be used towards in state, public, out of state,
or private universities, and even some vocational schools. Just make
sure that you check the US Department of Education's website

(36:40):
to make sure that whatever institution you're going to is accredited.
If they're accredited, you can use a five twenty nine.
Ask your company's HR to see if your employer will
match your five twenty nine contributions. When it comes to
special occasions that often result in gift giving, ask family
and friends to contribute to your five twenty nine instead.
You can create a nine account for anyone, and you

(37:02):
can change the beneficiary of your five to two nine
account at any time. You just need to make sure
that the new beneficiary is a family member of the
former beneficiary. If you're going to take out a loan
to pay for college, Robin recommends exploring federal loans first.
Don't forget to reapply for financial aid every year you
are in school. Most importantly, if you don't use everything

(37:23):
in your five twenty nine, that's Okay, there are a
few options to get that money out. That's it for
today's episode. Matt, how do you feel about saving for
your future?

Speaker 2 (37:32):
Bibet, Nope, still don't like that plic It's still a
little scary given how expensive school will be by that point.
But I'd also say it'd be lying if I'm not
going to strongly encourage them to explore in state public
universities for real.

Speaker 1 (37:48):
But let's talk about where this grown Up Stuff train
is heading next.

Speaker 2 (37:52):
The train is actually not stopping. We're continuing on talking
about education. Jackie and Robin will join us again for
the next episode, but this time we're going to look
at all of your post high school options, from vocational
schools to graduate schools, everything in between, and we'll find
out how the five twenty nine savings account can help
finance them all.

Speaker 1 (38:11):
Amazing, But I got to say something tells me I'm
gonna be upset and really wish that I knew about
the five twenty nine plan before I went to grad school.

Speaker 2 (38:18):
Spoiler alert, you will. But we'll talk about it all
and more in two weeks on the next episode of
Grown Up Stuff. How do adult?

Speaker 1 (38:27):
And remember you might not be a graded in life,
but it never hurts to do your homework. This is
a production from Ruby Studios from iHeartMedia.

Speaker 2 (38:35):
Our executive producers are Mally Soshia.

Speaker 1 (38:37):
And Matt Stillo. This episode was engineered by Matt Stillo.

Speaker 2 (38:40):
And written by Malli Sooshia. Special thanks to the Ruby
team including Eden Fixel, Rachel Swan, Krasnov, Ambry Smith, Nikkia Swinton,
Sierra Kaiser, Sierra Spreen, and Andy Kelly.
Advertise With Us

Popular Podcasts

I Do, Part 2

I Do, Part 2

From Executive Producers Jennie Garth, Jana Kramer, Amy Robach, and T.J. Holmes. Did you think you met the love of your life and marry him, only to realize it was actually “thank you, next?" Did this jerk cheat on you and leave you feeling alone and hopeless? Don’t make the same mistake twice... Get it right THIS time! Is it time to find true love…again?! If you loved the Golden Bachelor, SILVER just might be your color. Older and wiser, 50 and Fabulous, and ready for a little sex in the city. Everyone has baggage, but you’re not bringing it on this trip. Second Times The Charm. I Do, Part Two. An iHeartRadio podcast...where finding love is the main objective.

Dateline NBC

Dateline NBC

Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com

The Bobby Bones Show

The Bobby Bones Show

Listen to 'The Bobby Bones Show' by downloading the daily full replay.

Music, radio and podcasts, all free. Listen online or download the iHeart App.

Connect

© 2025 iHeartMedia, Inc.