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1. Free Money

Free money is the best type of money for education.  Free money consists of scholarships, grants, and tax savings that do not need to be paid back.


Scholarships are generally based on scholastic ability.  Encourage your children to keep their grades high and to apply for as many scholarships as they can.  This is money that does not need to be paid back.  Remind them that every dollar they receive in scholarships is a dollar that they do not need to earn themselves.


Grants are resources given which are generally based on need. Encourage your children to apply for grants and scholarships even if they don’t think they have a chance—they may be surprised!

Pell Grants are federal grants that are awarded based on need; the amount students receive can vary from $400 to $4,310 per year (as reported in 2007). In order to apply for a Pell Grant, students must fill out a FAFSA (Free Application for Federal Student Aid) form at www.fafsa.ed.gov. Applying online streamlines the application process considerably. Before they can sign the FAFSA electronically, students must first request a personal identification number (PIN). The PIN website is www.pin.ed.gov.

Students who are eligible for the Pell Grant may also apply for an ACG grant (Academic Competitiveness Grant), or the National Science and Mathematics Access to Retain Talent Grant (SMART).

ACG Grants of $750 or $1,300 are awarded to undergraduate freshmen and sophomores taking at least 12 credit hours per semester if they completed a high school education as defined by the US Department of Education at http://www.ed.gov/admins/finaid/about/ac-smart/state-programs06.html. Your college financial aid office will have additional forms and details to help you apply.

SMART Grants of up to $4000 per academic year are offered to undergraduate juniors and seniors who are enrolled in specific academic majors of strategic importance to the federal government. The federal government periodically revises the list of qualified majors, which includes some sciences, engineering, computers, foreign languages and related areas. For an updated list of qualified majors, access your college financial aid website or speak with a financial aid counselor.

To receive scholarships from schools and private sources, students must complete an additional application. The application may either be an online form or a hard copy form. Find out which scholarships and grants your children are eligible for on a scholarship search engine and apply for each scholarship or grant individually.

High school students should check locally with their high school’s counseling/administration offices for local scholarship opportunities.  Many local institutions offer scholarships which are only available to residents of the local communities.

Inquire at local recruiting offices about how to obtain armed forces scholarships. Information on other scholarships and grants is available on the Internet. Do not pay for scholarship information—reliable sources which offer this information free of charge are available later in this section.

Tax Savings

Free money also refers to tax savings given by states to encourage investment in education.  For example, some states, such as Utah, allow parents to deduct their contributions to the state’s 529 Savings Plan from their state taxes.  If parents sign up for the Utah 529 Savings plan before their child turns 19, parents, grandparents or other relatives (the account owners) can deduct $3,240 (if married filing jointly) in annual contributions to their children’s or grandchildren’s education accounts from their state taxes.  If parents and grandparents contribute $3,240 a year, at a 7% marginal state tax rate, that equates to $227 in free money ($3,240 times 7%) to save for your children’s or grandchildren’s education.  529 Plans will be discussed later in this section.  Parents may contribute more, but only a certain amount of annual contributions can be deducted each year from your state taxes.


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