College education funding

The rising costs of a college education show no sign of slowing down. The good news is that there are a variety of ways to pay for it. Whether you plan to save for it, borrow, or a combination of both, we can help you develop a strategy that fits your personal needs.

Saving for college

Saving early is saving smart. Thanks to the benefits of compounding interest, saving even small amounts while your children are young can translate into big returns by high school graduation. For example, if you save $200 a month in an account that earns an average annual return of 6 percent, you'll accrue more than $77,000 in 18 years. Even if you're children are a bit older, you may still want to consider saving.

Available savings plans include:

  • 529 plans
    In these accounts, contributions grow tax-free, and withdrawals for eligible college expenses are tax-free. Some states also offer matching grants or other benefits. However, if this money isn't used for college, you'll generally pay income tax and a 10 percent penalty on earnings when you withdraw it for other purposes. Investment options are limited to those offered by the plan sponsor, similar to employer-sponsored retirement plans.
  • Coverdell Education Savings Accounts (ESAs)
    Contributions to these accounts grow tax-free and are tax-free when withdrawn for K-12 or college education expenses. ESAs also offer increased flexibility as you can choose the investments in the account. Contributions are limited to $2,000 a year per child and you'll be subject to the same taxes and penalties as a 529 plan if the funds aren't used for eligible expenses.
  • Custodial accounts
    These accounts, managed by a parent or guardian, offer minor tax advantages. However, there are no limits on contributions, investment options or how the money can be spent. Because the money belongs to the child, it can be used for anything the child wishes at the age of maturity - whether it's a diploma or a new car - and may affect his or her financial aid eligibility.

Borrowing for college

Applying for the Department of Education's federal student aid (FAFSA) helps the government, states, and some colleges to determine the amount of aid a student will receive. After you know the amount of aid you'll receive, have received scholarships, or been awarded grants, you may find you still have a funding gap. Think offers higher education loans to help cover this gap through iHelp.

iHelp loans are available for the total of education expenses as certified by the school, less other aid awarded. They feature no loan origination, application, or prepayment fees. Interest that accrues while the student is in school will be added to the loan only once, when the loan enters repayment, but no payments are required while the student is in school. An interest rate reduction may be available if the first 24 payments are made on time and as long as payments continue to be made on time. Learn more about iHelp eligibility and other benefits.

We can help

There are many options for funding a college education and it's important to work with someone who takes the time to understand your needs and situation, and provides the options that make the most sense for you. Visit one of our branches or call us at 1-800-288-3425 to determine an approach that is best for you.

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