Are there any federal tax breaks available related to college savings?

Depending on your modified adjusted gross income, you may be eligible for:

The American Opportunity Tax Credit of the first 100 percent of $2,000 of qualified higher education expenses, plus 25 percent of the next $2,000 of qualified expenses for the first four years. See www.irs.gov/uac/American-Opportunity-Tax-Credit:-Questions-and-Answers.

The Lifetime Learning Credit of up to $2,000 for the combined expenses paid by an individual for all eligible students, including the individual, the individual’s spouse and the individuals named as dependents. See www.irs.gov/Individuals/LLC.

The Tuition and Fees Deduction (also known as the Higher Education Expense Deduction) of up to $4,000 of the amount paid for qualified higher education expenses; see Publication 970 at www.irs.gov.

The Student Loan Interest Deduction of up to $2,500 of interest paid on qualified education loans for college or vocational school expenses as an adjustment to income. See www.irs.gov/taxtopics/tc456.html.

General information is at www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center

 

Are there any scholarship programs especially for federal employees and their families?

Yes, although awards generally are few in number and of only limited amounts. Check each sponsor for eligibility rules, application periods and other details.

American Foreign Service Association Merit Awards and Financial Aid Scholarship, for dependents of Foreign Service employees, http://www.afsa.org – select “For Students”

American Postal Workers Union, scholarships open to high school students, www.apwu.org/pay-benefits#Scholarships.

Federal Employee Education & Assistance Fund, need-based awards, www.feea.org.

Federally Employed Women, scholarships available for members and their children, www.few.org/training-education/scholarship-applications

National Association of Letter Carriers, scholarships available for members and their children, www.nalc.org/member-benefits/benefits-for-members/scholarships.

In addition, a federal program, the Federal Cyber Service–Scholarship for Service, provides annual stipends for students preparing for careers in information security, https://www.sfs.opm.gov