Tuition rewards programs are like the frequent flyer miles of the college tuition world—another useful financial tool in the larger college funding picture.
How can you cash in? It's pretty simple. Parents, grandparents and other family members earn reward points that can later be exchanged for lower tuition at select universities and colleges. It's what the SAGE Scholars program calls a "guaranteed scholarship."
How does it work?
To get started, you’ll need to sign up with a rewards program and link it to your intended financial account so that points can begin to accrue.
Currently the only tuition rewards program widely available is the SAGE Scholars Tuition Rewards program.
With SAGE Scholars, parents earn rewards points for investing or saving through participating banks and organizations. Each reward point earned is equal to a $1.00 "scholarship" that is guaranteed to be redeemable at any school that participates in the program.
Any money deposited, not only in a traditional savings account or 529 savings plan, but also investment accounts like mutual funds, retirement accounts, reverse mortgages and other financial tools, is eligible for rewards points.
To sign up, you must register with your account information from your banking institution, professional organization or, insurance provider by August 31st of the student’s junior year of high school.
By signing up for the program, you also agree to allow the schools that participate in the SAGE program to send marketing materials to you or your family.
How can I use the rewards?
When your child goes to college, those funds can be accessed and used to reduce your tuition bill.
In order to send the money to your school and collect your rewards, you must submit your rewards statement to the school within 10 days of your student submitting their actual college application.
With the SAGE Scholars program, you can’t earn more than one year’s worth of tuition spread out over four years. In other words, your rewards can, at a maximum, pay 25% of your total tuition bill each year for four years.
That means you couldn’t use these funds, for example, to get a reimbursement from your school to buy a laptop or pay for travel to and from school.
Still, a quarter of your tuition bill or even 10% is nothing to sneeze at. Rewards programs can be useful as one piece of a larger strategy to get that tuition bill paid.
What's in the fine print?
Of course, it isn’t as simple as saving up, getting points, and exchanging them when the bill comes due.
Only savings and investment accounts with certain financial institutions and employers are eligible for these rewards programs. You’ll need to verify that the company you’re doing business with participates.
If they don’t, you’ll need to do your saving or investing with another institution that does in order to get the rewards.
Another big downside: not all schools accept rewards in exchange for tuition.
The SAGE program, for example, only participates with a list of more than 380 private, four-year colleges and universities such as Drexel University, Savannah College of Art and Design, and DePauw University. See the full list of participating schools.
Small liberal arts colleges, religiously-affiliated schools, and art and design schools are abundant, but if your child isn’t accepted at any of the participating schools or if they’re determined to go to a state school, you won’t be able to use those reward points unless you have another family member attending college in the future.
You'll also want to contact the school at which you are hoping to use your rewards to see if there are any restrictions.
Individual schools can put their own limits on how many rewards points you can use towards your bill. If you’re saving and investing to accrue rewards for a school that limits rewards to a certain number of points, there’s no point in investing over the school’s limit unless you are already planning to do so.
Furthermore, schools reserve the right to alter your financial awards package or include the rewards in your package with other forms of aid, so make sure you thoroughly review and understand your financial aid award letter before your student commits to a school.
Is a tuition rewards program right for you?
Before you sign up, you’ll want to go through the list of schools that participate in this rewards program and determine whether they are a good and realistic fit for you and your student.
You’ll also want to make sure either your current financial institutions participate in the program or you are willing to shift your savings and investment funds to new banks that do participate.
Some employers and professional organizations include a tuition rewards program with other more traditional benefit programs like insurance and retirement savings, so check with your HR representative to see what’s available.
If a program is already established, it will be that much easier to set aside a chunk of savings and earn those rewards at the same time.
Bottom line: If you're confident your child wants to attend and can get accepted to a participating school AND you’re willing to work with an eligible financial institution, why not use that to your advantage and accrue additional tuition savings in the process?
Learn more about How to Pay for College.