Other Financial Considerations

If you plan ahead, you can save money to pay for school. You can save money in any standard savings or investment account, or in a special account for educational expenses called a 529 College Savings Plan.

The 529 plans let you or your parents save money without paying taxes on the interest, which means that your money will grow more quickly than in a standard bank or investment account. The College Savings Plans Network (CSPN) has a lot more information about 529 plans nationwide. Missouri’s 529 plan is called MOST. Read more about MOST.

The disadvantages of a 529 plan are that you have to use the money saved in it for educational expenses, and if you get Supplemental Security Income (SSI), the money in your 529 plan will count against the SSI resource limit.

Regardless of whether you choose to use a standard savings account or a 529 plan, you and your family should try to save some money each month for your education expenses. By learning to save now, you will be practicing a habit you will need for the rest of your life.

Saving strategically

When you apply for financial aid, savings and other investments, like 529 plans, are all counted by the federal government and financial aid offices. They look at how much you and your family have in resources and then decide how much you can use to pay for college.

It’s important to understand that they evaluate your savings differently than your parents’ savings. If you save money in your own account, they will figure that you should spend about 35% of your savings on college expenses each year. They only expect your parents to spend about 5% of their savings on college expenses. So if you and your family save money in your parents’ accounts instead of your own, you will probably get more financial aid from your college.

Impact on Benefits

Different types of financial aid — especially grants and scholarships — can impact disability benefits, like SSI. They may raise your countable income or put your resources over the resource limit, causing your benefits to be lowered or stopped. To learn more about what you can do in this situation, talk to a Benefits Specialist.

Student Earned Income Exclusion

If you are in school, under age 22, on SSI, and working part-time, the Student Earned Income Exclusion (SEIE) can help you. The SEIE lets you earn up to $1,820 per month (with a limit of $7,350 per year) without having those wages counted as income by SSI. So if you get a part-time job and don’t exceed those limits, your SSI benefits amount won’t go down at all.

You can read more about the SEIE in the DB101 article about Benefits for Young People. You should also talk to a Benefits Specialist.

Saving While You’re on SSI

If you’re on SSI and save too much money, you’ll go over the resource limit and lose your benefits.

Yet there are ways to save money for school without jeopardizing your SSI benefits: