FAQs

How the Alfond Grant Works

What You Can Do


What is the Alfond Grant?

The $500 Alfond Grant is a legacy gift from Harold Alfond to benefit future generations of Maine children.  The Harold Alfond College Challenge is the name of the program.  The Alfond Scholarship Foundation operates the Harold Alfond College Challenge.  The Finance Authority of Maine (FAME) assists the Alfond Scholarship Foundation in administering the Alfond Grants.

For every baby born a Maine resident1 since 2013, the Alfond Scholarship Foundation invests a $500 Alfond Grant for his or her future qualified higher education expenses.  The Alfond Scholarship Foundation invests these funds until the child is ready to use them.

The Alfond Grant can be used to pay for qualified higher education expenses at eligible higher education institutions2. The Alfond Grant must be used by the child’s 28th birthday.

Who was Harold Alfond?

Harold Alfond was the late business entrepreneur, founder of Dexter Shoe Company, and Maine philanthropist who established the Harold Alfond Foundation, the first private foundation in Maine, in 1950. He had a lifelong commitment to the people of Maine and was deeply committed to his charitable causes.

Mr. Alfond believed that all children deserved the opportunity to achieve higher education and recognized that one of the biggest barriers to attending college is cost. So he created this gift as a great start to help families prepare for college early. He believed that you could transform individual families and the State’s future prosperity by helping all Maine’s children aspire to higher education.

The Harold Alfond College Challenge is his legacy gift to every Maine baby. Learn more about Harold Alfond at HaroldAlfondFoundation.org.

What is the Alfond Scholarship Foundation?

The Alfond Scholarship Foundation (ASF) is the non-profit organization that operates the Harold Alfond College Challenge. The Harold Alfond College Challenge is a statewide program that awards a $500 Alfond Grant to every Maine resident baby to help pay for education post-high school.  LEARN MORE. The Alfond Scholarship Foundation is just one of many legacy gifts to Maine from late philanthropist, Harold Alfond.

What are 500ForBaby.org and MyAlfondGrant.org?

500ForBaby is the site developed for new parents to share information about the $500 Alfond Grant, how it works and what parents can do if they want to also contribute to their child’s future education. It is intended primarily for parents of young children. This site is operated by the Finance Authority of Maine (FAME) which administers the Alfond Grant and the NextGen College Investing Plan.

MyAlfondGrant provides information to parents as their children grow, so that they can track the value of the Alfond Grant over time, and see it on-line. The website also grows with the child and offers information, tips and resources for kids and parents alike starting in preschool and carrying through high school.  This site is operated by the Alfond Scholarship Foundation.

In general, parents and kids transition from the 500ForBaby site to the MyAlfondGrant site at around age five.


How the Alfond Grant Works

Who can get an Alfond Grant and how?

For every baby born a Maine resident since 2013, the Alfond Scholarship Foundation invests a $500 Alfond Grant for his or her future qualified higher education expenses. The Alfond Scholarship Foundation invests these funds until the child is ready to use them. The Alfond Grant can be used to pay for higher education expenses at eligible higher education institutions and must be used by the child’s 28th birthday. LEARN MORE

Maine babies born between 2009 and 2012 (and 2008 Maine General-born babies) receive the Alfond Grant if a NextGen account was opened prior to the child’s first birthday. Children born before 2013 for whom a NextGen account was not opened by the first birthday deadline are no longer eligible for the Alfond Grant.

Eligibility is initially determined by reports from the Maine Bureau of Vital Records (BVR). Children born on or after January 1, 2013 whose births were not reported by the Maine BVR can prove Maine residency at birth with documentation acceptable to FAME and ASF. A child who was not born a Maine resident may be eligible for and Alfond Grant if he or she is listed as the beneficiary of a NextGen account that is opened on or before the child’s first birthday, and the child is a Maine resident at the time the account is opened. The Alfond Grant will then be linked to the NextGen account established for the child. LEARN MORE

For purposes of the Alfond Grant, parents don’t need to do a thing until the child is ready to pursue qualified college, trade school or other education after high school, unless they want to open their own college savings account. When the time comes, the student can request a withdrawal of the Alfond Grant and any earnings to apply to qualified higher education expenses. The money will be sent directly to the institution the child is attending.

Parents who want to also invest for their child’s qualified higher education expenses may want to open a NextGen account. Once a NextGen account is opened for an eligible child the Alfond Grant can be viewed on the account statements.

What can an Alfond Grant be used for?

Alfond Grants can be used at eligible higher education institutions².  These include all accredited post-secondary institutions that are eligible to participate in Federal student aid programs – public universities, private college, graduate schools and vocational schools – even some schools that are outside the United States.  The funds do not need to be used at a school in Maine.

Generally, you can use these funds to pay for the big ticket items like tuition, room & board – even books and supplies – including computers!

What happens to the Alfond Grant if my child doesn’t go to college?

Your child has until age 28 to use the Alfond Grant.  If your child does not use the Alfond Grant by age 28, then the $500 Alfond Grant (and any gains/losses incurred in the market while invested) will be forfeited and revert back to the Alfond Scholarship Foundation to be used for other Alfond Grant recipients.

What if we move out of state, or he/she goes to college out of state?

The Alfond Grant and any contributions you may have made to your own NextGen account can be used whether or not the participating student lives in Maine or goes to college in Maine.

How does the Alfond Grant affect TANF or other benefits?

Currently, the Alfond Grant does not count as an asset for those individuals who receive TANF benefits.

Will the $500 Alfond Grant make a difference?

Since the $500 Alfond Grant is invested at an early age, it has at least 18 years to have the potential to grow3 .

While we can’t predict just how much the Alfond Grant will be worth when a child goes on to higher education, we do know any money you have on hand is money you or your child won’t have to borrow!

In addition to the practical benefit of real money invested for Maine children, we hope that the Alfond Grant has the added benefit of helping to raise aspirations for Maine children and encouraging parents and children alike by demonstrating our belief in every child’s potential.

How do I know how much the $500 Alfond Grant is worth now?

Every quarter, starting at about 9 months, parents receive an Alfond Grant Update, which shows the current value of the $500 Alfond Grant and also shares age-appropriate tips for parents.  That Update is sent via the mail, or via MyAlfondGrant.org which can be a starting point to a web site administered by FAME where it can be viewed online.

If a family has also opened their own NextGen account to make their own contributions, then FAME sends a Quarterly Summary, which shows the value of the Alfond Grant as well as any contributions made and any matching grants earned, if applicable.  Like the Alfond Grant Updates, the Quarterly Summaries also share age-appropriate tips for parents.  The Quarterly Summary is sent via the mail, or via MyAlfondGrant.org which can be a starting point to a website administered by FAME where it can be viewed online.

What if my child does not have an Alfond Grant?

You can open a NextGen account to save for your child’s or even your own future higher education. FAME offers grants to eligible Maine accounts4 for account opening and ongoing contributions.  See “Who can open a NextGen Account“.

 


What You Can Do

How can someone add to the Alfond Grant?

Contributions by parents, extended family or friends cannot be made directly to the Alfond Grant.  To invest for a child’s qualified higher education expenses, family and friends will need to open or contribute to their own account and may want to consider opening a NextGen account.

When a NextGen College Investing account is opened, the account owner will receive Alfond Grant Quarterly Summaries that show the total value of the Alfond Grant, as well as any contributions and even matching grants the account has qualified for.

Once a NextGen account is opened for an eligible child, the Alfond Grant can also be viewed on account statements and online if the account owner chooses to manage the NextGen account online.

Alfond Grant recipients may use the grant to open a NextGen account without the required initial contribution.

What is NextGen and how is it connected to the Alfond Grant?

NextGen is Maine’s Section 529 college savings plan.  Section 529 refers to the section of the Internal Revenue Code that provides unique tax advantages and other special features to encourage families to invest for college. College savings plans, such as NextGen, are referred to as 529 plans.  Please see “If I open a NextGen account, how is my money invested” for more information about investing.

Since the Alfond Grants are invested in an account owned by the Alfond Scholarship Foundation, if families want to also invest they need to have their own account. Typically, there is a minimum contribution required to open a NextGen account, but for a child with an Alfond Grant, the minimum contribution needed to open a NextGen account is waived.

With a NextGen account, anyone, including parents, grandparents, family and friends, can invest in their child’s future. And, NextGen accounts can be linked to the child’s Alfond Grant to show the total value as well as any matching grants awarded to the account by FAME. FAME administers NextGen and helps to administer the Alfond Grants.

After a NextGen account is opened for an Alfond Grant recipient, the account owner will receive Alfond Grant Quarterly Summaries that show the total value of the Alfond Grant, as well as any contributions and other Maine resident grants that the account has qualified for.  In addition, the Alfond Grant can also be viewed on account statements and online if the account owner chooses to manage the NextGen account online.

Who can open a NextGen account?

Anyone that resides in the United States aged 18 or older with a valid social security number or US taxpayer identification (ID) number can open a NextGen account.  There are no income restrictions.  You can open an account for your child, grandchild or any loved one.  You can also open an account to save and invest for your own higher education expenses.  Family members and friends can open accounts for your child or contribute to one you’ve opened. The social security number of the person for whom the account is opened is also required.

The account owner, also called the participant, is the person who retains control of the account.  The designated beneficiary is the student on whose behalf the account has been opened.

If I open a NextGen account, how is my money invested?

With NextGen, you may choose from many investment options designed with your college savings goals in mind.  There are age-based options that will automatically reallocate as your child grows, as well as diversified and single fund portfolios.  The Principal Plus or NextGen Savings Portfolios may be a great choice to consider if you have a low risk tolerance or your child is near college age.  NextGen does not guarantee your investment at any specific rate of return.  The value of your account may increase or decrease based on the investment performance of the investment(s) which you select.

Funds you add to your NextGen account are after-tax. Contributions are not deductible for federal or Maine state income tax purposes.

Any investment earnings have the opportunity to grow free from federal (and possibly state) income tax.  This means you do not have to pay any federal taxes on the money when it is withdrawn and used to pay for qualified higher education expenses2.

How can NextGen account funds be used?

529 account funds can be used at eligible higher education institutions.  These include all accredited post-secondary institutions that are eligible to participate in Federal student aid programs – public universities, private college, graduate schools and vocational schools – even some schools that are outside the United States.  The funds do not need to be used at a school in Maine.

You can use these funds to pay for qualified higher education expenses which include the big ticket items like tuition, room & board – even books and supplies – including computers2!

How do I find help opening a NextGen account?

An online application can be accessed at Merrill Edge via the 500ForBaby website or at NextGenforME.com.  Help is available within the online applications via chat from Merrill Edge.

You can also call Merrill Lynch at (877) 463-9843 or the Finance Authority of Maine at (207) 623-3263, TTY: 207-626-2717.

For more information about investment options, visit NextGenforME.com/investment-options.  There you will find program highlights and links to download the Program Descriptions for the Client Direct and Client Select Series.

How do I contribute?

Contributions can be made online, by check or by transferring or rolling over funds from another 529 account.

Make it easy by setting up automatic contributions from your checking or savings account, or by using payroll deduction.  Visit NextGenforME.com/make-contributions for more information.

What happens to funds in my NextGen account if my child doesn’t go to college or other education beyond high school?

If your child doesn’t attend college, you may change the designated beneficiary on your NextGen account to an eligible family member of your child without federal income tax consequences.  Family members can include parents, siblings, and even first cousins.  The Alfond Grant, the Initial Matching Grant and the NextStep Matching Grant are not transferrable.

If your child isn’t going to attend college and you won’t be designating a new beneficiary on the account, you may make a withdrawal.  However, the earnings portion of a non-qualified withdrawal is subject to federal and state income tax and, in most cases, a 10% additional federal tax on earnings.

Are other grants available?

Yes!  FAME offers various grants for eligible Maine accounts4. The NextStep Matching Grant provides a 50% match on contributions, up to a $300 match per year per beneficiary, to eligible Maine accounts.  There is no lifetime maximum.  The Automated Funding Grant is a one-time $100 grant for eligible Maine accounts that make at least six consecutive contributions (no less frequently than quarterly) through an automated funding option such as payroll deduction or a checking or savings account.

What are other things I can do as a parent to support my child’s future?

Every parent wants a bright future for their child.  See 500ForBaby.org and MyAlfondGrant.org for tips and resources as your child grows!


1Children born as Maine residents since January 1, 2013 or who are Maine residents at account opening and under the age of one are eligible for the Alfond Grant. Visit 500ForBaby.org for eligibility guidelines.

2To be eligible for favorable tax treatment afforded to any earnings portion of withdrawals from Section 529 accounts, such withdrawals must be used for “qualified higher education expenses,” as defined in the Internal Revenue Code. Any earnings withdrawn that are not used for such expenses are subject to federal income tax and may be subject to a 10% additional federal tax as well as state and local income taxes.

3Investment performance is not guaranteed. Investments may lose value.

4 A Maine account is a NextGen account with either a participant or beneficiary who is a Maine resident. Grants are linked to eligible Maine accounts. See Terms and Conditions for Maine Grant Programs offered by FAME for other conditions and restrictions that apply at NextGenForME.com