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.

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 has a lot more information about 529 plans.

The disadvantages of a 529 plan are that you have to use the money saved in it for educational expenses, and if the plan owner (usually the student’s parent or grandparent) gets Supplemental Security Income (SSI), the money in the 529 plan will count against the SSI resource limit.

Note: You may be able to work around these disadvantages if you rollover money from a 529 account into an ABLE account. Or, you could just open up an ABLE account instead of a 529. Learn more about ABLE accounts on DB101.

Regardless of the type of account you choose, 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.

Impact on Benefits

Different types of financial aid — especially grants and scholarships — can impact disability benefits like SSI. They may increase your countable income or put your assets over the assets limit, causing your benefits to be reduced or eliminated. To learn more about what you can do in this situation,talk to a benefits planner.

Saving if You’re on SSI

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

There are ways to save money for school without jeopardizing your SSI though:

• A Plan to Achieve Self-Support (PASS) lets you set aside income in a separate account to help you reach a career goal, including getting a higher education. Money saved in a PASS account will not be counted by SSI. To learn more, read DB101’s PASS section or contact a PASS Cadre.
• Individual Development Accounts (IDAs) are similar to PASS plans, but have the added benefit that financial institutions will actually match your own contributions to your IDA. Not all IDAs let you go over the SSI asset limit though, so research them carefully before you set one up. Read the DB101 page on IDAs to learn more or talk to a benefits planner.
• ABLE accounts let you save up to $100,000 without impacting SSI benefits. You can use money in an ABLE account for many types of expenses. Learn more about ABLE accounts in DB101's Building Your Assets and Wealth article.