The Effect of Alternative Savings Approaches on College Aid

Brief

The Effect of Alternative Savings Approaches on College Aid

August 24, 2009

Abstract

To pay for college, many low- and moderate-income students and their families rely on financial aid and savings. But how students and families saveand in whose nameaffects both the tax consequences and the impact of savings on financial aid. Not saving in a tax-preferred account can raise the out-of-pocket costs of college by thousands of dollars. Alternately, saving for college can result in tax penalties if families do not use tax-preferred savings for education.

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