This Month's Highlights:

National College Decision Day

Wisdom and Wooing

Returning Students Aid Packages

Tell Me About Loans

Financial Aid Insider: 529-to-Roth IRA Rollovers

Celebrate the gorgeous month of May! May is known as a month of transition. In the northern hemisphere, the fresh cold winds are gone, as are the rains of early Spring. By the time May comes around, the spring flowers are blooming, birds are chirping, and life is starting to seem a little more joyful day by day!

National College Decision Day

May 1st is traditionally the last day high school seniors have to decide which college they will enroll at and send in their deposit.

After the letter of acceptance and deposit have been delivered to their final choice college, there are a few things students should plan on:

There may be a bit of a wait for the college to send any further materials, including information on when to sign up for orientation, classes, housing, and more. Details regarding move-in day and the first day of classes will also be forthcoming.

Make sure your student checks into their college's student portal regularly, and always keep on the lookout for emails!

College orientation is an important part of preparing for campus. Sign up as soon as the dates are announced. The best

orientation slots fill up quickly, so getting a jump on it ASAP will give the best options that work for you. Orientation is also vital to making friends, and this may also be when to select courses, pick a dorm room, take placement exams, and more.

Tidbits of Wisdom I've Gained Over the Years

If your student didn't get in or you couldn't afford to send them to their "dream school", I urge parents to not be swept up in the emotion of it all. Because, in a matter of days and perhaps a few weeks, reality will have sunk in, and students (and parents) are relieved that the admissions process is FINALLY over, and everyone is happy to move on.

After a year and a half, most students can't imagine having gone anywhere else. It's funny that no matter how blue the student becomes during their first semester, they can't wait to come home for Thanksgiving, and then go back to school looking forward to coming home again for Christmas. But, something miracles happen and right after New Year's Day, they are champing-- an old term for chewing/grinding-- at the bit to get back to campus.

Some Colleges Continue to Woo Students Who Have Declined Admission

While May 1st is the national deposit deadline, institutions may increase awards to boost lagging yields or convert Waitlisted applicants into enrolled students. Colleges-- particularly private, non-competitive ones missing enrollment targets-- may offer additional, unsolicited, or increased merit aid after May 1st to students who initially declined, as they scramble to fill spots.

For schools that need students, one strategy is to wait about a week before May 1st and ask for more money, or you're moving on. This puts the pressure on them, and sometimes a student can get a few thousand dollars more.

Some institutions, like Syracuse University (NY) and others, have been known to increase merit aid to students who haven't yet accepted offers-- even increasing existing awards to boost enrollment. Some schools like Biola University (CA) have reached out to students asking, "What do you need?"

Returning Students Aid Packages

Parents of first-year college students naturally assume that their next year's aid award would arrive around the same time as when they received the first award package. Even though some financial aid deadlines may be similar to those of first-year students, many are as late as May 20th. Returning students will receive their aid notices sometime in June.

Unfortunately, merit awards are static and don't increase to compensate for the higher tuition. Grants, meanwhile, won't change as long as the parents' and students' financial situations

remain stable. A grant, however, could be increased or even offered if the family's finances take a significant hit.

What's The Deal With Loans?

Of course, it would be ideal for parents to already have a plan to pay for college. Now that the college has been selected, parents often ask what the best way is to pay for it.

There is the proverbial rich uncle, but most students don't have one, and even if they did, you wouldn't want to count on him because let's face it, he didn't get rich by sharing his money with poor relatives (I haven't found comparisons for rich aunts).

How to meet the bill? Some parents will use a monthly tuition plan that most colleges offer. Tuition management plans provide

families with a way to spread out tuition payments over time, reducing the need to borrow.

Other than what can be paid out of current income and savings, there are federal loans for students and parents. There are also private loans available from banks, credit unions, student lending companies, and the like. Now that the Parent Loans To Undergraduate Students (PLUS Loans) have lower borrowing limits, some colleges may soon be offering to lend money to finance college educations.

A PLUS loan allows parents to borrow up to $16,250 per year for four years. Another option is to use home equity or use a line of credit.

Keep in mind that student and parent loans are not financial aid. Neither is Federal Work-Study (FWS), which is not offered to everyone. FWS is a job that pays the student directly for 10-15 hours per week. It's meant to cover the indirect costs of college, including personal expenses.

Colleges often over-promise the number of FWS positions they have available, and they are not guaranteed. Students planning on taking a job need to be very aggressive in getting an FWS position before they are all taken.

Here are a few highlights of student and parent loans:

 Fixed rates cover the life of the loans. Many students receive Subsidized Loans. That means the government is paying the interest while the student is in school at least half-time. There is a six-month grace period as well. Unsubsidized loans begin accruing interest at the time of disbursement.

 PLUS loans are not subsidized, but repayment can be deferred until six months after the student graduates.

 Interest rates are set on the yield of the 10-Year Treasury note. Each year in mid-May, a new yield is announced, and that rate, combined with an add-on or origination fee (not really a fee as that would indicate a one-time payment), will be the rate for the life of the loan. No matter how high the 10-Year interest rate goes, the loan and add-on rate cannot exceed 8.25% for undergraduate loans, and 10.5% for parent loans.

 Repayment options are changing for all federal loan

types. The one we know that will remain is the Public Service Loan Forgiveness program. This applies to those working for the public good.

 Federal loans can consolidated without additional fees.

 These loans can be canceled upon the permanent disability or death of the borrower or the student; however, this is not automatic.

Students who qualify for a Federal Direct Subsidized Loan should consider taking it, because no interest will be charged for the four years (or five or six) the student is in college.

Each month, we provide you with tips on your best ways to pay for college regardless of your financial situation.

Newest college funding techniques are increasingly focused on reducing long-term debt through alternative financing, employer partnerships, and maximizing tax-advantaged savings, particularly with recent FAFSA changes.

One key innovative strategy is 529-to-Roth IRA Rollovers. Under the SECURE 2.0 Act, beneficiaries can roll over up to a lifetime limit of $35,000 of unused 529 plan funds into their own Roth IRA tax-- and penalty-free, effective as of 2024. This provision allows families to reduce the risk of overfunding 529 accounts and provides a head start on retirement savings.

Key Requirements and Limitations

Lifetime Limit: A maximum of $35,000 per beneficiary can be rolled over.

Account Age: The 529 account must have been open for at least 15 years.

Funds Aging: Contributions and earnings on those contributions made within the last 5 years are ineligible to be rolled over.

Beneficiary Ownership: The Roth IRA must be in the name of the 529 beneficiary, not the account owner (if they are different).

Annual Limits: Rollovers are subject to annual Roth IRA contribution limits (e.g., $7,500 in 2026 for those under 50), meaning the total $35,000 must be moved over several years.

Earned Income: The beneficiary must have earned income at least equal to the amount of the rollover.

This rule serves as a "relief valve" for excess funds, ensuring that money saved for education does not face a 10% penalty if the beneficiary does not use all of it for school, such as in the case of scholarships or skipping college.

Until next month...

Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer's official statement and should be read carefully before investing.

Investors should also consider whether the investor's or beneficiary's home state offers any state tax or other benefits available only from that state's 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investing in any state's 529 Plan.

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