Higher Education Funding

A 529 plan is a powerful financial tool designed to help families save for future education costs. It functions as a tax-advantaged savings account, allowing contributions to grow tax-deferred. This means that the earnings on your investments accumulate without being taxed annually.

When the time comes to use the funds, withdrawals for qualified education expenses, such as tuition, fees, books, and room and board, are typically tax-free. This can significantly reduce the overall cost of higher education.

One of the key benefits of a 529 plan is its flexibility. Contributions can be made in various amounts, from small regular deposits to larger lump sums. Additionally, the plan offers a range of investment options, allowing you to tailor your strategy to your risk tolerance and time horizon.

By starting early and making consistent contributions, a 529 plan can help you accumulate a substantial sum to cover college expenses. 

NextGen 529 is Maine’s 529 plan. Many Maine families use it to help save for education after high school. Even better? There are matching grants available for opening an account and making contributions — hundreds of dollars each year. 

Want to learn more about saving? Our friends at FAME (the Finance Authority of Maine) do a great job of explaining the ways you and your family can set aside funds for education after high school.

The Alfond Scholarship Foundation is not an authorized distributor of NextGen 529. For more information, please read our full disclaimer.

You can look for scholarships through places such as your school, local community organizations, faith-based organizations, and employers. You can also find scholarships through online databases. Some websites to check include:

• Fastweb. Fastweb is a free scholarship search platform that connects students to college scholarships, trade school scholarships, and financial aid news and resources. 
• Scholarships.com. Scholarships.com helps students find money for college and learn about the entire financial aid process.
• College Board’s Scholarship Search. College Board’s Scholarship Search is a free online tool that helps students find and apply for scholarships based on their interests, demographics, and academic achievements. 
• Maine Scholarship Search. For Maine-based scholarships, visit the Finance Authority of Maine’s scholarship information page. Be sure to download their Scholarship Tracking Spreadsheet to help you stay organized.

And, of course, don’t forget the Alfond Grant!  This is the $500 that is awarded to children born as Maine residents.  The money is invested, so it may grow over time.  Some Alfond Grants are now worth over $2,000!  If you were born a Maine resident in 2013 or later, the Alfond Grant was automatically awarded to you.  If you were born a Maine resident between 2008-2012, the Alfond Grant was awarded in more limited circumstances.  Learn more about eligibility and see what the value of your Alfond Grant could be here.

The Maine State Grant Program is a need-based grant program that provides financial assistance to undergraduate Maine residents attending eligible colleges and universities within the state. To be eligible, students must file the Free Application for Federal Student Aid (FAFSA) by the specified deadline. The grant amount is determined by the student’s financial need and enrollment status.

Federal student loans are a type of financial aid that the U.S. government provides to help students pay for college or career school. Unlike scholarships or grants, which don’t need to be repaid, federal student loans must be repaid with interest.  

There are several types of federal student loans, each with its own terms and conditions. Some of the most common types include:  

• Direct Subsidized Loans: These loans are based on financial need and typically have lower interest rates.  
• Direct Unsubsidized Loans: These loans are not based on financial need, and interest accrues while you’re in school.  
• Direct PLUS Loans: These loans are available to graduate and professional students, as well as parents of undergraduate students.  

It’s important to borrow responsibly and only borrow what you need. Federal student loans offer several repayment plans, including income-driven repayment plans, which can help make your payments more affordable.

Another way to bridge the gap when awards, scholarships, grants, and financial aid don’t meet the costs of higher education is with The Maine Loan—Maine’s alternative student loan. The Maine Loan offers fixed interest rates with no up-front/guarantee fees, so graduate and undergraduate students can borrow funds up to the full cost of education less other financial aid.

Private student loans are loans offered by private lenders, such as banks, credit unions, and online lenders. Unlike federal student loans, private loans are not backed by the U.S. government. This means they often have less favorable terms, including higher interest rates and fewer repayment options. 

It’s generally recommended to exhaust federal student loan options before considering private loans. Federal loans often offer more flexible repayment plans and potential forgiveness programs. However, if you still have a gap in funding after maximizing federal aid, private loans can be an option to consider.