Tax Credits, Savings Plans and Deferred Payment Plans

Besides our financial aid program, a number of options are available to help families manage the cost of a UC education. These may be of assistance, especially for those who do not qualify for need-based aid.

Federal Tax Credits

Congress recently increased the amount of federal tax credits and expanded the number of families that can qualify for them.

Under the American Opportunity Tax Credit, your parents can claim a reduction in their tax bill of up to $2,500 for each child they have enrolled in college at least half time in 2009 and 2010.

The amount of the credit depends on two factors: how much you spend on what the IRS calls "qualified educational expenses" and adjusted gross income.

If your qualified expenses — tuition, fees and books minus any grants or scholarships you receive — exceed $4,000 and your parents' income is less than $160,000 ($80,000 for single tax filers), they'll get the full credit. If expenses are less than that, or your parents' income is more than $160,000, the credit will be reduced. It's phased out completely for couples whose income is more than $180,000 ($90,000 for single filers). Families that owe no taxes but have qualifying expenses will receive a refund from the government of up to $1,000.

If your family doesn't qualify for the American Opportunity Tax Credit, you or your parents may be able to claim the Lifetime Learning Credit of up to $2,000. In addition, taxpayers may withdraw funds from traditional Individual Retirement Accounts without penalty for their own higher education expenses or those of their spouse, child or grandchild.

For more information about tax credits, visit a tax professional or see the IRS's Tax Benefits for Education.

Tax-advantaged Savings Plans

California has a 529 college-savings plan: the Golden State ScholarShare Trust. Under a 529 plan such as ScholarShare, an investor may establish an account on behalf of a designated beneficiary (e.g., child, grandchild, niece, nephew, friend — even himself or herself). The money contributed to the account is placed in a trust, which will invest in portfolios designed to meet the needs of beneficiaries of different ages, and different kinds of investors.

Currently, earnings and qualified withdrawals from 529 savings plans are tax free at both the state and federal level. Also, 529 plans may be used by individuals at any income level.

For more information about ScholarShare, visit www.scholarshare.com.

To learn more about 529 savings plans, visit www.savingforcollege.com.

Deferred Payment Plans

Many campuses offer deferred payment plans to help make payment of fees, tuition and on-campus housing costs more manageable. Under one of these plans, you can spread payments over a period of months, rather than paying all at once at the beginning of the term. Some campuses accept credit cards too.

You have to submit a simple application and may have to pay a small fee to participate in a payment plan. The plans don't charge interest, but you may be assessed a late fee if your payments are overdue.

If you would like more information about deferred payment plans, contact the financial aid office at the campus you wish to attend.

Berkeley | Financial Aid and Scholarships
Davis| Financial Aid and Scholarships
Irvine | Office of Financial Aid and Scholarships
Los Angeles | Financial Aid Office
Merced | Office of Financial Aid and Scholarships
Riverside | Financial Assistance
San Diego | UCSD Financial Aid
Santa Barbara | Financial Aid Office
Santa Cruz | Financial Aid Office

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