We’ve covered things like grants, scholarships, and loans that PA residents can take advantage of to this point. Fortunately, there are a few other miscellaneous sources of financial aid available to Pennsylvania residents. In this post, we’ll discuss three significant sources of financial aid: military benefits, employer tuition assistance programs, and tax credits and deductions. While there are numerous posts for ways to pay for PA residents, this guide will provide some details on other sources of financial aid for PA residents.

Military Benefits

PA National Guard

This is an option that’s available to many either PA National Guard members or family. It’s a great benefit that can be utilized for those who have chosen the path of service. In summary, you can have a state-owned university’s tuition covered! I highly recommend you check out the post on PA state grants available, as this will cover the program in more detail.

PA Educational Gratuity for Dependent Children of Veterans

I believe in the idea that heroes of our country should be rewarded. Thankfully, the state of PA has a program to make sure that is honored as well. Personally, I wish that this program funded a higher level of assistance, but it’s still an amount to take advantage of. The Educational Gratuity Program provides assistance to the children of these heroes. Specifically, you must meet the following criteria:

1. Must be a child of an honorably discharge from the US Armed Forces.
2. Served during a period of war or armed conflict by the US Dept. of Veteran Affairs.
3. Parent must have passed away or be considered 100% permanent disability rating by the US Dept. of Veteran Affairs.
4. Child must be within the ages of 16 to 23 and must have resided in PA for at least 5 years.
5. Applicant must have financial need and payment is not to exceed $500 per semester per each qualified child.

If you’re eligible, it’s worth looking here to apply.

Employer Tuition Assistance Programs

Tuition reimbursement can be an incredible benefit to both the employee working, and the employer. While there are a few boxes to check off, it can be a great tool to help pay for schooling and save on taxes. Simply put, it’s an arrangement in which the employer offers to reimburse the tuition costs that an employee incurs. It isn’t available to everyone, but can be one of the other sources of financial aid for PA residents.

Federal Rules on Tuition Reimbursement

The IRS provides a pretty clear answer to some of the basic questions you may have. But specifically, there’s an amount of $5250 that an employee can earn as a tuition reimbursement and not have to pay tax on. Section 127 of the tax code gives some guidance. These requirements must be met:

1. The employer must have a written educational assistance plan
2. The plan must not offer other taxable benefits or remuneration that can be chosen instead of educational assistance (cash or noncash).
3. The plan must not discriminate in favor of highly compensated employees.
4. An employee may not receive more than $5250 from all employers combined.
5. Eligible employees must be reasonably notified of the plan

Employers can also cash in on this benefit. A tax break is eligible for employers and they can deduct the $5250 per employee from their taxes each year. That said, the money must go toward tuition, fees, and school supplies.

PA State Rules on Tuition Reimbursement

It’s important to note that we have this great system of federalism. You may remember that in your high school social studies classes. Where federal law and state law can seem to get messy at times? This could be one of those times.

Taken from the PA Dept. of Revenue Page, here is the way to determine the state taxability of tuition assistance:

It is taxable:

“If employer reimburses employees for education cost, then the reimbursement is fully taxable and the employee may deduct only those amounts directly related to business expenses allowed on PA-40 Schedule UE, Allowable Employee Business Expenses, to determine taxable compensation.”

It is not taxable if:

“Employees of an institution of higher learning that receive free or low–cost education receive the tuition assistance tax free for Pennsylvania personal income tax purposes unless they receive cash grants (for themselves or their children) as reimbursements for the tuition paid at their institution of employment or any other institution of higher learning.

“Since Pennsylvania personal income tax has no distinction regarding taxability with respect to the amount of the benefits received for highly compensated employees, these benefits would also be considered tax free for Pennsylvania personal income tax purposes unless a cash grant is received.”

Needless to say, if you utilize this benefit, having a tax professional walk you through the costs owed are important to consider.

Tax Credits and Deductions

Tax Credits

One of the great benefits of tax credits is that they are, for all intents and purposes, a way to recapture expenses and save massively on taxes. I’ve previously done a post on tax items to know about. In it, there are two pretty great tax credits: The American Opportunity Tax Credit & the Lifetime Learning Tax Credit.

Be sure to check out the post – it has some great insight on how to qualify and the way the credits work. To be clear, these are credits at the federal level.

Tax Deductions

In the US, there’s a great thing called the 529 plan. More on the specifics of the plans in another post. That said, you can receive a PA state tax deduction for contributions to a 529 plan. The cool part? PA is a state that allows you to invest in any state’s plan to get the deduction. Some states require that you invest in that state specific plan to receive the deduction – but not PA. Where this can be helpful is if you like another state’s plan, you’re eligible to contribute to it. It could be for fees, investment choices, or ease of use. The great news is that you have the flexibility to choose whichever plan and still get that state tax deduction.

Conclusion

As we’ve covered, there are many ways to pay for college. There’s definitely the top level priority of “free money” aka grants & scholarships. But before you take out those private loans, exhaust all options. Military benefits, employer tuition assistance programs, and tax credits and deductions are three significant sources of financial aid available to eligible Pennsylvania residents. Rest assured, besides loans, there are other sources of financial aid for PA residents. Students and their families should explore all of their options and determine which sources of financial aid are best suited to their needs. Your future retirement and child’s start into adulthood depend on it!