March 24, 2019

Paying for a Gap Year

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(This is our second post in a series on the economics of taking gap time.)

Paying for a gap year depends on what you choose to do, as we outlined in our first post in this series entitled “What Does a Gap Year Cost?”

We were contacted recently by Kathryn Flynn, a financial writer for Savingforcollege.com. Center for Interim Programs’ Vice President, Jason Sarouhan, is among her interviewees and her article (and website) is a good resource for families starting to explore and fund the gap year option. 

From a strictly financial point of view, here are several things to consider beyond family resources:

  1. Financial aid and scholarships for those with fewer family resources
  2. Working and saving money before embarking on a gap year
  3. A question frequently asked about gap year financing, "Can we use our 529 savings to pay for our child's gap year?"

First, financial aid is offered by a number of quality programs. We at Interim can assist you in locating programs offering financial aid while helping you identify your program goals.

Second, we strongly recommend that once a student plans to take a gap year, he or she find employment for the summer before embarking on the gap year, and possibly even earlier if one’s budget is tight and work can be integrated with school demands. Saving as much as possible during this time of employment can often cover travel expenses to and from gap year programs as well as some program costs.

Third, the 529 question is worthy of a lengthier address. A 529 plan is a tax-advantaged education savings plan designed to help families save money for college. Savings can be used for tuition, books, and other education-related expenses at most accredited colleges. Here is a more thorough introduction to the 529 from the U.S. Securities and Exchange Commission website, and here is a helpful list of questions and answers from the IRS. The current language from the IRS states: "An eligible educational institution is generally any college, university, vocational school, or other post secondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education." Currently, and unfortunately, this leaves out many gap year experiences which are not classically academic in nature or do not offer academic credit. However, there are a number of gap year programs that offer credit through various US colleges and these are often eligible for 529 savings. And important caveat: colleges that defer your admission may request that you not submit any academic credit garnered during a gap year. So, you may be able to use the 529 funds but you may not get the credit.

For more questions about how to pay for a gap year, take a look at our More FAQ page.

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