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Higher education is one of the largest investments in a person’s life. Unsurprisingly, most American’s don’t have thousands of dollars set aside for college tuition. So, how do we prepare ourselves and our children for the exorbitant costs of higher education?

Every family’s circumstances vary, but paying for college is usually tackled in one of three ways: Student Loans, Scholarships/Grants, and Cash Savings.  No matter what method, applying for FAFSA needs to be the first step in planning for college expenses.


Free Application for Federal Student Aid (FAFSA) is a government funded program that provides financial aid to students.  A common assumption is that FAFSA only assists students with the most financial need.  While Pell Grants and subsidized loans are reserved for this purpose, opportunities for unsubsidized loans are available without a financial need requirement. Obtaining loans through FAFSA often provides better rates and more payment flexibility than private loans through your bank or credit union. Be sure to utilize FAFSA funding before taking out private loans. Other benefits include: no required credit check, and payments aren’t required until after graduation. Also, if the government decides to forbear or forgive student loans, federal loans will likely be the ones to receive relief first.

Private loans may provide additional funding when federal loans have been maximized. However, keep in mind that private loans often have higher interest rates and typically require  payments while the student is still in school. Only take advantage of this type of funding as a last resort.


While student loans are popular in today’s society, college grads are left with the heavy financial burden of repayment. Paying cash for college will alleviate this stress. Fortunately, there are several “Savings Vehicles” available to optimize growth. A few of the most popular and advantageous include a 529 Plan, custodial account or personal brokerage account.

A 529 account is a state-sponsored plan that allows tax-free growth on savings, as long as the funds are used for higher education. A disadvantage is that the funds will be considered when determining a student’s financial need for scholarships or loans. This may be avoided by having a grandparent or other relative open the account instead of the parent or child. Also, 529 accounts have limited investment options. If the funds are not used for education costs, a penalty is incurred.

 A custodial account, such as a Uniform Transfer/Gift to Minors Account (UTMA/UTGA), is a vehicle used to transfer ownership of assets to a child without giving them full control. Income is taxable to the child, and when age of majority is met (age 21 in Utah), there are no limitations on what the funds may be used for. Like a 529, assets in a UTMA are also factored into financial need calculations.

The most flexible way to save for your child’s education is through a taxable brokerage account. While tax benefits associated with a 529 or custodial accounts are forfeited, more control over the funds is achieved. What if your child decides to take a different route after high school that doesn’t involve the traditional 4-year degree? Whether it’s trade school, starting a business or purchasing real estate, a taxable brokerage account is an easy way to maintain control over the investing and spending of the funds.

Contact the Financial Aid Office 

Financial aid counselors are available at colleges and universities to provide guidance and resources. Information about tuition assistance, scholarships,  FAFSA, and more is available through the school counselors. We recommend meeting with a financial aid counselor annually to ensure all opportunities are being maximized.

– Jaeden May, Financial Planning Associate & Client Service Specialist

To learn more about the author of this article Jaeden May, visit: Or connect with her on LinkedIn:


Adams Wealth Management is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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