SCHOLARS SAVINGS PROGRAM

FAQ (FREQUENTLY ASKED QUESTIONS)

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What is a 529 plan?

A 529 plan is a special savings program authorized by the United States Congress in 1996. These types of savings accounts save money specifically for college and post-secondary education.

 

You can save money in multiple types of accounts, such as regular savings or checking accounts. However, 529 plans have certain advantages that regular savings and checking accounts do not typically offer.

 

For more information on 529 plans we recommend that you visit the College Savings Plans Network.

 

Do only specific students qualify to have a Scholars Savings Account?


The Scholars Savings Program is open and available to families who want to start a college savings for their children. You may open a Scholars Savings Account for your child and take advantage of the benefits offered by a 529 plan regardless of the grade level, or the school your child attends.

 

However,  the benefits of the Scholars Savings Program are applied only to a specific set of schools within El Monte City School District and Mountain View School District.

If your child does not qualify for the benefits offered by the Scholars Savings Account, your child may still have a Scholars Savings Account to take advantage of the benefits of a 529 plan.

 

Can I open more than one Scholars Savings Account?

Yes, you may open one and only one Scholars Savings Account for each child or beneficiary you want to enroll in Scholars Savings Program.

 

If your child already has a Scholars Savings Account, he or she can still have more than one 529 plan. However, you will need to open the additional 529 plan with a different 529 provider per account policy with the Utah Educational Savings Plan.

 

The Utah Educational Savings Plan is the non-profit 529 provider of the state of Utah. This plan is in partnership with the El Monte Promise Foundation to provide 529 plans for the Scholars Savings Program.

 

Do I need to pay a fee to open a Scholars Savings Account?

No, there is no fee to open a Scholars Savings Account.

 

Each Scholars Savings Account has an administrative fee, BUT the interest a Scholars Savings Account gains will balance out any fees of having an Scholars Savings Account.

 

When you open a Scholars Savings Account, you will receive your child's bank statements via email by default. Email statements are part of the El Monte Promise Foundation's agreement to minimize unnecessary fees for the Scholars Savings Program. If you wish to receive bank statements from the Utah Educational Savings Plan via mail, you may incur additional fees.

 

What am I investing in?

By default, when you set up a Scholars Savings Account with the Scholars Savings Program the investment plan on your child's Scholars Savings Account is set as an FDIC-insured savings account. "FDIC-insured savings account" means that the principal (your savings) is protected up to $250,000. The 529 plans offered through Scholars Savings Program allow you to choose from a portfolio of investments offered by the Utah Educational Savings Plan.

 

Importantly, when you enroll in the Scholar Savings Program, you may only change the investment option after the first 30 days following enrollment.

 

However, El Monte Promise Foundation does not provide investment or tax advice. If you wish to change the investment options on your child's Scholars Savings Account,  we recommend that you consult with a financial advisor to review your options.

 

Please note, changing the type of investment on a Scholars Savings Account to an option other than the FDIC-insured regular savings account may increase your investment return, but at the same time expose the investment to higher fees and the risk of loss.

 

Who can enroll in the program?

When you enroll in the Scholars Savings Program, you are opening a 529 plan with the Utah Educational Savings Plan for your child, or a beneficiary. The El Monte Promise Foundation and Utah Educational Savings Plan are collaborating together to provide you with the 529 plans.

 

As you enroll, you will check off a box on the enrollment screen; checking this box confirms that you provide your electronic signature and agree to the terms and conditions set forth by both Utah Educational Savings Plan and the El Monte Promise Foundation.

 

The terms and conditions documents are two separate documents. The terms and conditions documents were created independently by each entity and are available online at each website, respectively.

We urge you to review these documents and contact us if you need clarification. The terms and conditions set forth in Scholars Savings Program are typical in almost all savings programs that offer financial incentives to program participants.

 

What am I agreeing to by opening a Scholars Savings Account?

By opening a Scholars Savings Account for your child, you are agreeing to the following terms and conditions set forth by the Scholars Savings Program and the Utah Educational Savings Plan.

 

For the full terms and conditions please visit the Scholars Savings Program Terms and Conditions.

 

The Utah Educational Savings Plan:

  • Administers the 529 plans (Scholars Savings Accounts)
  • Sends you a monthly bank statement to let you know how your account is doing via EMAIL

The El Monte Promise Foundation:

  • Gives you support if you need assistance navigating your Scholars Savings Account
  • Sends you a quarterly or bi-annual (every 3 or 6 months) statement to let you know how much you have saved plus any benefits your child has received from the Scholars Savings Program via MAIL or EMAIL
  • Invites you to participate in programs and workshops specifically related to the Scholars Savings Program throughout the year.

You, as the account owner of your child's Scholars Savings Account, are responsible for:

  • Keeping track of your account information and anything related to UESP's online account. The El Monte Promise Foundation does not have a record of your login information, or bank information related to your account.
  • Monitoring the activity on your child's Scholars Savings Account periodically and contacting El Monte Promise or UESP if you need assistance.
  • Keeping the El Monte Promise Foundation and UESP updated on your contact information. Notifying if you move or change phone numbers. We need to keep in touch to make sure you receive your child's statements through the mail.

 

How long does it take to open a Scholars Savings Account?

Opening a Scholars Savings Account typically takes between 20 and 45 minutes. At this time, enrollment in Scholars Savings Program is only available online and in English.

 

If you need assistance enrolling in Scholars Savings Program please contact us. Our staff is available to assist and translate the enrollment process in Spanish.

 

What can I do if I (or my child) do not have a Social Security Number?

If you or your child do not have a Social Security Number you may use an ITIN (Individual Taxpayer Identification Number) to set up a Scholars Savings Account.

 

If you do not have a Social Security Number or an ITIN, you may obtain an ITIN by completing and submitting IRS Form W-7. More information about applying for ITINs is available on the IRS website. Information on ITINs is available in English and Spanish.

 

To apply for an ITIN :

  • Complete IRS Form W-7
  • Attach the required documents to the application
  • Submit all documentation to the nearest IRS office

Please note new IRS instructions state ITINs are valid only for five years; you will need to renew your ITIN once every five years. If you are applying for an ITIN to specifically open a Scholars Savings Account, you will most likely need to check off Box (h), under Reason for Submitting Form W-7 and put "Exception 1, Passive Income: Opening a college savings account" in the box in front of it.

 

The El Monte local IRS office is located:
9350 East Flair Dr., El Monte, CA 91731

 

Why do I need an email address to open a Scholars Savings Account?

Bank statements from the Scholars Savings Accounts with the Utah Educational Savings Plan are received by email in order to minimize fees for families.

 

You may choose to have the Utah Educational Savings Plan mail you an account statement for your child's Scholars Savings Account, BUT you will incur a monthly mailing fee not to exceed the maximum annual mailing fee.

 

Our goal in regards to the Scholars Savings Account is to shield you and other account holders from unnecessary fees. The Utah Educational Savings Plan also suggests requiring a functional email account in order to ensure active communication between the Utah Educational Savings Plan and you.

 

 

How do I manage my child's Scholars Savings Account?

When you set up a Scholars Savings Account, you must set up online access for the account. You may then log into and manage your child's account from the Utah Educational Savings Plan (UESP) account portal.

 

You can log into and manage your child's Scholars Savings Account at: https://login.uesp.org

 

If you need to change or update your child's account, UESP has a number of forms that allow you to make changes to your account without needing a computer.

 

You may contact El Monte Promise Foundation staff if you need access to a computer and internet, or assistance connecting to your child's Scholars Savings Account.

 

How can I make a deposit into my child's Scholars Savings Account?

There are two common options for depositing into your child's Scholars Savings Account. You can mail a deposit to your child's account, or you can deposit online if you have a bank account.

 

There is no minimum deposit for your child's Scholars Savings Account. You can deposit $1, $10, $100, or any amount you wish.

 

Do not mail your deposits to the El Monte Promise Foundation

 

When you make a deposit into your child's account via mail, you can mail either a check or money order.

 

To mail deposits:

  • Make the check or money order out to the "Utah Educational Savings Plan."
  • Write your child's name, then his or her UESP account number in the memo section of the check. The UESP account number is the number given to you during the enrollment process.
  • Mail deposits to
    Utah Educational Savings Plan
    PO Box 145100
    Salt Lake City, UT 84114-5100

You can make a deposit from bank-to-bank either online or by making arrangements with your own bank. Through the Utah Educational Savings Plan, you may link your bank information to your child's Scholars Savings Account. This information allows you to make deposits directly from your bank into your child's account.

 

You will need your bank account number and routing number to set up online deposits directly from the UESP account portal.

 

If I need to mail a deposit, where do I send my child's deposit?

When you mail a deposit for your child's Scholars Savings Account, you must send it to the Utah Educational Savings Plan.

 

Do not mail your deposits to the El Monte Promise Foundation.

 

Send mailed deposits to the address listed below. When you mail a deposit, write down the child's name and their UESP account number in the 'memo' section of a check, or in the 'pay to order of' section of the money order.

 

Utah Educational Savings Plan
PO Box 145100
Salt Lake City, UT 84114-5100

 

Is there a way for family and friends to deposit into my child's Scholars Savings Account?

Yes! If your family and friends want to help save for your child's  future, you have a few options. If someone wants to send a check or money order on behalf of your child's Scholars Savings Account, the person must know the:

  • Name of the account owner (the person who opened your child's Scholars Savings Account, usually you)
  • Name of the child the Scholars Savings Account is for
  • The child's UESP account number

If you do not wish to share your child's UESP account number, you must share the address listed on your child's account.

 

You can also set up a gift link so people can give your child donations through the Utah Educational Savings Plan account portal.

 

Do I need to have a checking or a savings account to have a Scholars Savings Account?

No, you do not need to have a checking or savings account to open a Scholars Savings Account.

 

If you wish to make deposits online, the Utah Educational Savings Plan account portal offers the option of adding your bank information to your child's Scholars Savings Account.

 

To add your bank information, you will need the bank account number and routing number of a checking or savings account you own. Please keep in mind transactions made from within your child's Scholars Savings Account can take up to three business days to process.

 

How can I make updates or corrections to my child's Scholars Savings Account?

If you have set up online access to your child's Scholars Savings Account, you may log into your child's account via the Utah Educational Savings Plan portal and make changes inside the account.

 

Also, you may contact the Utah Educational Savings Plan during their regular office hours and ask for your options.

 

Additionally, if you need Spanish assistance to contact the Utah Educational Savings Plan, you are more than welcome to contact the El Monte Promise Foundation to assist you.

 

What happens to my child's Scholars Savings Account if we move away?

Your account will not be affected if your child changes schools, or if you move to a new city, state, or even a different country.

 

Your child's Scholars Savings Account will not close unless you as the account owner directly communicate with the Utah Educational Savings Plan that you want to close your child's account. It is important to note that you as the account owner are fully responsible for your child's Scholars Savings Account and the El Monte Promise Foundation does not retain any control over your child's Scholars Savings Account.

 

Every time your contact information changes, we highly recommend you update any changes to your child's Scholars Savings Account through the Utah Educational Savings Plan account portal.

 

What benefits does a 529 plan offer differently than a regular savings account?

The IRS outlines the benefits to having a 529 plan here. Some of the highlights include:

We highly encourage you visit the links above for more information.

 

What are Scholar Dollars and how do they work?

Please visit the Scholar Dollars page for full details.

 

Scholar Dollars are monetary donations made to the El Monte Promise Foundation for the Scholars Savings Program. Scholar Dollars are specifically for families who are saving for college. The Scholars Savings Program occasionally holds promotions to offer Scholar Dollars.

 

The Utah Educational Savings Plan is not responsible to offer or provide the Scholar Dollars as outlined in the Scholars Savings Program terms and conditions. Scholar Dollars are strictly offered from the El Monte Promise Foundation for the Scholars Savings Program.

 

The goal of offering the Scholar Dollars is to encourage families to set up a college savings and save for their children's future.

 

The requirements to claim and redeem Scholar Dollars are subject to the terms of conditions of the Scholars Savings Program.

 

What can I do if my child does not qualify for the Scholar Dollars?

If your child does not qualify for the Scholar Dollars offered through the Scholars Savings Program you can still open a Scholars Savings Account for your child and take advantage of the benefits offered by a 529 plan.

 

The Scholars Savings Program may occasionally offer promotions that are open and available to all participants of the program in order to earn Scholar Dollars.

 

Scholar Dollars offered through promotions are subject to the terms and conditions of the Scholars Savings Program.

 

What happens if my child doesn't want to go to college?

If your child decides not to pursue college, the money saved in your child's Scholars Savings Account can help pay for a broad range of post-secondary schools. Post-secondary schools include accredited vocational schools.

 

If your child chooses not to pursue their education beyond high school, you may withdraw your savings from the child's Scholars Savings Account. You also have the option of moving the funds from one child's Scholars Savings Account into another child's Scholars Savings Account.

 

Please note, any Scholar Dollars earned from the Scholars Savings Program will be forfeited should you withdraw the funds and close your child's Scholars Savings Account as outlined in the Scholars Savings Program terms and conditions.

 

You may also be assessed taxes and penalties applied to any gains earned on your child's Scholars Savings Account for unqualified withdrawals. So, the money you put into your child's account (the principal) will not be affected by the penalties and taxes, but the earnings gained on the account (interest and dividends) will be subject to the penalties and taxes.

 

For more information on penalties and taxes for unqualified withdrawals please visit the Utah Educational Savings Plan website.

 

What if I need to withdraw the money early?

You can withdraw the savings in your child's Scholars Savings Account at any time. You can do so online or by submitting the appropriate form from the Utah Educational Savings Plan website.

 

If you choose to withdraw a portion of your child's savings, you must pay a penalty and tax on the earnings portion of your investment. The taxes and penalties do not apply on the principal (your savings). For more information we highly recommend you visit the Utah Educational Savings Plan's page on unqualified withdrawals.

 

If you choose to withdraw the entire amount in your child's Scholars Savings Account, you may close the account or keep it open and continue saving in the future.

 

We strongly recommend you do not use a Scholars Savings Account as a general purpose savings account. If you think you need an account to save for a rainy day please feel to contact us to discuss options.

 

Please note if you choose to close your child's Scholars Savings Account you forfeit any Scholar Dollars the account has earned through the Scholars Savings Program. For more information please see the terms and conditions of the Scholars Savings Program.

 

What is a qualified withdrawal?

A qualified withdrawal for a 529 plan (your child's Scholars Savings Account)  refers to money you take out of your child's 529 plan to help pay their educational expenses. Note, these expenses must follow a set of rules.

 

The Utah Educational Savings Plan and the IRS generally define what a qualified withdrawal means. However, in order to not have to pay taxes on the withdrawal, you must prove that the money withdrawn from a Scholars Savings Account can be considered a qualified withdrawal.

 

We recommend that you save any receipts that reflect your withdrawal from your child's Scholars Savings Account.

 

When money is withdrawn from a Scholars Savings Account, you or your child may need to pay a penalty and tax on the earnings portion of the money withdrawn. You will not need to pay a penalty or tax on the principal (your savings) if the money is considered an unqualified withdrawal.

 

Why are the Scholars Savings Accounts set up with a bank in Utah?

The El Monte Promise Foundation is in partnership with the Utah Educational Savings Plan (UESP for short) to offer 529 plans through the Scholars Savings Program. For example, UESP provides the savings account for your child's Scholars Savings Account, and the El Monte Promise Foundation supports you and families who need assistance with the Scholars Savings Program.

 

Almost every state in the United States of America provides a type of  529 plan. Each 529 plan has its own requirements and conditions, but many share the same general 529 plan benefits.

 

The Utah Educational Savings Plan is a direct provider established and sponsored by the State of Utah. Also, UESP is  consistently ranked as one of the top 529 plan providers in the country.

 

Although the El Monte Promise Foundation is based in the State of California, the El Monte Promise Foundation chose to work with UESP because UESP agreed to meet our program requirements, including:

  • No initial deposit requirement (you don't need to deposit money in order to open an account)
  • No minimum deposit requirement (you can deposit any amount into the account, be it $1, $10, $100, etc.)
  • A customized enrollment portal for the Scholars Savings Program
  • Reports essential to help make the Scholars Savings Program possible

Without receiving regular reports, the Scholars Savings Program would not be able to keep families updated on program development and/or changes over time.

 

Does saving money in a Scholars Savings Account reduce my child's eligibility for financial aid and scholarships?

Saving in a Scholars Savings Account will generally not affect your child's eligibility to receive financial aid.

 

Scholarships vary in selection and granting student's scholarships. The best way to find out if your savings will affect your child's scholarship opportunity is to read that scholarship's application.

 

The FAFSA (Free Application for Federal Student Aid) offers financial aid based on need, not merit. Each school varies in how they calculate financial aid.

 

Financial aid is partially calculated using a formula that includes an “Expected Family Contribution” or EFC for short. Savings in bank accounts or 529 plans may increase EFC and therefore lower the amount of financial aid. However, for eligible low-income students, EFC is completely excluded from the calculations and therefore 529 savings will have no impact on financial aid.

 

For families with higher incomes, 529 plans are favorable over regular savings.  Only 5.64% of the value of savings in a 529 plan is applied toward EFC ($56.4 for every $1,000 saved in the 529 plan).

 

Additionally, if a 529 plan investment generates earnings, earnings are excluded in the calculation of family income when determining eligibility for student financial aid.

 

For more information on the FAFSA and EFC calculations we highly recommend you run a search online to learn how the EFC calculation and savings play a role in financial aid.

 

Will saving in a Scholars Savings Account disqualify my child and my family from receiving public assistance (CalWORKs, SNAP, etc.)?

WIC 11322.5 does not allow savings in a 529 plan to reduce or disqualify for your child for services offered through CalWORKs.

 

If you have doubts, we encourage you to speak with your case worker. You can ask your case worker how a 529 plan may affect other specific public assistance programs.

 

Do I really need to save for my child's education? Isn't financial aid enough to pay for my child's higher education?

The quick answer is yes for the first question. Best practice is to save right now, while your child is younger. Starting to save early will help your family pay for the small costs of college that catch many families off-guard later in time.

 

Currently, financial aid greatly helps many students pay for their education. Unfortunately, students are also simultaneously incurring large amounts of student loan debt in increasing numbers to help pay for their education.

 

For example, parents can examine College Board data from the 2012-2013 academic year.  The total grants and tax benefits received per student were on average only enough to cover 63% of tuition and fees. Surprisingly, these numbers don't even factor in costs besides tuition and fees. If most families don't take action today, children will be burdened by heavy college loans tomorrow.

 

Did you know that almost half of 25-year-olds in our country have student loans to pay off? The average loan balance as of 2012 was over $20,000. These numbers become more alarming if you look at known historical trends. In 2002, both the percentage of young adults with students loans, and the amount of student loans were almost half of what they are today.

 

Student loans are relatively easy to borrow, but they remain hard to payoff. Student loan default rates are high and collection rules remain harsh.

 

Numbers don’t lie. Without saving money from an early age, financing a college education can be a burden for most families. Saving definitely pays off. According to the CSPN report, assuming a 10-year repayment period, students with a $20,000 loan will end up paying $29,119 to pay off their debt. However, had their parents saved money in an investment type account with an 8% average annual rate of return, they would have accumulated the same $20,000 by only contributing $13,119 to their college savings account.

 

The difference between starting to save today and not saving at all is simply too great to ignore.