You can earn points good for a free airline flight. You can earn rewards for using your debit and credit cards. You can even earn rewards simply for shopping at some of your favorite stores. But, what if you could earn tuition rewards just for being a good saver?
One company, called SAGE Scholars, is making the latter possible. As the company’s website puts it, earning SAGE Scholars rewards points is a lot like earning frequent flier points. Except that in the case of SAGE Scholars, each point you earn is the equivalent of $1 that can be put towards the costs of a college student’s tuition.
The way you earn points on your SAGE Scholars account is simply by saving and investing your money, and not necessarily in accounts allocated for college costs. You can earn points by investing in vehicles that include 529 savings plans, CDs, mutual funds, 401(k)s, IRAs and other retirement accounts. You can even earn points on reverse mortgage products if you choose.
Through the SAGE Scholars program, points are earned annually at a rate of 5% on the value of the financial asset, meaning that if you had a 401(k) holding $15,000 then you’d earn $750 annually (or, 750 points) if there were no changes to the value of your 401(k) account. The longer you invest in your particular account, the more points you’ll have the ability to earn.
Once you’ve earned points for either yourself or a relative you’ve sponsored, you’ll then have until Aug. 31 of the year the student becomes a senior to to transfer those points to them. To date, the maximum amount of points each school will accept ranges from currently ranges from between 10,500 to 40,905—meaning you could earn up to roughly $41,000 towards your student’s education.
SAGE Scholars: Rewarding Families That Save
The SAGE Scholars program was formed back in 1995 by an individual named Dr. Jim Johnston, a former admissions and financial aid officer for University of Pennsylvania’s business school, says Robert Savett, a spokesman for the company. According to Savett, Johnston saw a need for families to be encouraged to save for college.
“There’s the widespread perception that the family that spends its resources on vacations or a new kitchen winds up with more financial aid than the family that diligently saves” said Savett in an email. “So, Jim saw a need for a program that rewarded families for saving.” Johnston also saw a need to identify families with an interest and the means to attend private colleges, said Savett.
SAGE Scholars exclusively targets the private sector because both public and very selective private universities only award need-based scholarships, with the exception of athletic scholarships, said Savett. In comparison, there are about 1,490 private colleges that award what Savett called “tuition discounts.”
To date, more than 250,000 families with over $6 billion in saved assets participate in the program, while the average assets earning tuition rewards stands at roughly $51,000. The program has also seen close to 3,200 students earn a total of $29 million tuition rewards points between the beginning of 2008 and the end of last year. Meanwhile, the average number of points earned by students last year stood at 9,535.
Is SAGE Scholars Right for You?
Sounds too good to be true, right? Well, there are some drawbacks to the program. As you would guess, just 278 private colleges and universities participate in the program, which offers little in terms of selection. Also, the points can’t be used towards a graduate program, nor can they be applied towards books, fees, or room and board. If you’re one or more years out of high school and wanted to go back to school for your bachelor’s degree, you also won’t be able to participate in the program.
Still, the pros of participating in the SAGE Scholars program definitely outweigh the costs. For one, the program is free to join, which means there’s essentially zero risk involved. Let’s say you’ve saved up 40,000 points over the years (equivalent to $40,000) and your child instead decides to not to go to one of the participating schools. You may lose your mind, but you at least won’t have lost any of your hard earned money.
Another attractive aspect of this program is that points are transferable within a family. Let’s say you have three children, and it was your oldest that decided pass up attending one of the colleges that participates in the program. You can simply transfer those points to your younger children, and allocated them however you choose. In addition, grandparents, aunts, uncles and even godparents can also set up SAGE Scholars programs for their college-bound relatives.
All in all, the SAGE Scholars program just makes sense if you’ve got a college-bound child in your family. With the costs of education rising faster than most families can keep up with, it’s at least good to know that there’s a company out there that rewards families for saving.
Carolyn Okomo is a financial journalist and the Tuesday columnist covering financial literacy and all other things money-related for MyBankTracker.com. Follow her tweets @CarolynMBT, and continue stay up-to-date on her daily reports with MyBankTracker.com.