Remove the Guesswork From Your College Planning!

1. Remove the Guesswork From Your College Planning! Securities offered through Securities America, Inc., a Registered Broker/Dealer, Member FINRA/SIPC.Advisory services offered through Securities America Advisors, Inc., an SEC Registered Investment Advisor. Integrity Wealth Advisors and Securities America are unaffiliated. Facebook.com/ integritywealthadvisors www.linkedin.com/in/ grangerhoneywellplanning Presented by Billy Vail Financial Advisor Integrity Wealth Advisors 574-703-3987 www.integritywa.net

2. Have you had the “financial reality” discussion with your student yet?

3. The 3 WHY Questions? 1. Why do you want to go to college? 2. What college do you want to attend and why? 3. What career do you want to attain and why? If the student cannot answer these questions with some kind of an intelligent answer, then more work needs to be done before the family makes a major investment into college. 1. Why do you want to go to college? • My friends are going. • Mom & Dad want me to go. • To get away from Mom & Dad. 2 What college do you want to attend and Why? • That’s where all my friends are going. • That’s where my Mom & Dad went. • It’s the furthest away from home. 3 What career do you want to attain and why? • I haven’t thought about it much • I don’t know • People tell me that I’d be good at this profession

4. Student Positioning • Biggest Source of Reducing College Costs! • Good student profile • Good GPA, Honors, AP curriculum • Strong Standardized Test Scores • Eprep.com, Naviance • Resume of consistent extra-curricular activities and community service • Diligently study majors/careers and schools that fit academically, socially and financially • https://collegeboard.roadtripnation.com/, Princetonreview.com , Bigfuture.collegeboard.com, Naviance • Visit the schools! Have your student spend the night and attend a class! • Stay on Track! • “Real” Job Shadow- email me if you want a template of questions

5. Student Positioning- focus on outcome vs. admission • The Best way to save money is to graduate on time! • 4 yr. graduates 38% • 6 yr. graduates 58% • 35% transfer rates • When evaluating prospective schools look at retention rates and graduation rates! • Do your due diligence on career choice. • More and more careers are requiring post-graduate degrees

6. Financial Aid • Types of financial aid • Work Study and Subsidized Loans (self-help) • Unsubsidized Loans • Federal and State Aid (need based gift aid) • Merit Aid for Academics, special talent (need blind gift aid) • Gift-aid is aid that doesn’t have to be paid back! This is where student positioning and financial positioning comes into play. • Most financial aid from public schools is in the form of “debt!”

7. Merit Aid • Scholarships/Grants from the Institution based on talent • Private Scholarships • Tuition discounts to fill seats • https://www.cappex.com/scholarships/ Listing of Merit Aid by institution along with private scholarship searches • Create competition for the child • Apply to 6-8 schools • Make sure many are competing with each other (Princeton Review) • Colleges desire diversity • Apply to private schools outside of the region. (Everyone from Indiana is a farmer!)

8. Merit Aid • Research what institutional “free money” is available • Scour school websites for merit based aid in the forms of grants/scholarships • Ask the FA office to clearly delineate the criteria for each • Cumulative GPA, Standardized Test Scores, Class Rank etc. • It is extremely important to understand if the aid is renewable and what the renewal requirements are. Typically GPA and credit hours related. Don’t get caught assuming every year will look like the freshman year award… • If GPA is not “weighted” which could have adverse effect on class rank ask if they may “weight” them

9. Merit Aid/Tuition Discounts • Trend is schools with ‘yield rates” >50% have highest discounts • Notice spread between freshman and all undergraduates…

10. Private Scholarship Search • Harvest School Resources- Questions to ask the school counselor: • Does our school have a specific scholarship coordinator? • What local scholarships have students from our school won? • Are there any local students who have won scholarships that you recommend talking to? • If a student must be nominated for a scholarship by our school, what is the procedure for getting a nomination? • Are there any other schools in the area that have good scholarship resources? • Google Search City+ Community Foundation. http://cfgfw.org/grants/scholarships/ Ft. Wayne http://www.cfsjc.org/scholarships/ St Joe County • http://threewishescollegestrategies.com/ • Impressive merit aid and private scholarship service

11. Scholarship Search Websites • www.finaid.com • www.fastweb.com • www.fastaid.com • www.petersons.com • www.collegenet.com • www.scholarshipmonkey.com • www.chegg.com • www.collegeboard.org • www.unigo.com

12. FSA ID- student and parent! https://studentaid.ed.gov/sa/fafsa/filling-out/fsaid • Once you conclude you will be able to use your e-mail address • and password to access the various sites. • If you have multiple children parents do not need separate ID’s.

13. FAFSA Filing Dates- new as of 10-16

14. Graphic Comparing Old Timeline to New

15. Financial Aid Forms • FAFSA (www.fafsa.ed.gov) • Required by all public & private colleges • PROFILE (www.collegeboard.com) • Has always been October 1st • Required by some private colleges • 300-400 schools require FAFSA and CSS Profile • Examples: Boston College, all IVY’s, Duke, Michigan, U of Chicago, Depauw, Holy Cross, Notre Dame, Valpo, Wabash, St. Mary’s

16. IRS Data Retrieval Tool (DRT) • Data transferred to the FAFSA will now be encrypted to improve security and privacy • DRT System will require FSA ID and 1040 information match as before • Dollar amounts of the data transferred will not be displayed on the FAFSA or Student Aid Report (SAR) • Consumer will not be able to change their DRT data submissions • If filing Married and Joint, individual earnings will need to be inputted manually • If DRT is used and a number is changed, a Code 400 or 401 will appear on the college submission report • IRA rollover will require additional FAFSA questions that needs to be answered and inputted

17. If you are a parent or student and need information on how to obtain financial aid for college, check out College Goal Sunday • Get free on-site professional assistance filling out the Free Application for Federal Student Aid (FAFSA) form • Talk to financial aid professionals about financial aid resources and how to apply • Get information regarding state-wide student services, admissions • November 5, 2017 & February 25, 2018 • More Info: collegegoalsunday.org South Bend-IUSB

18. Verification • Don’t be concerned if you are chosen for verification • Verification is mandated by the federal government at about 30% • Some privates will verify all financial aid submissions • Photocopies of tax returns are no longer accepted • Must use irs.gov  tools menu  “get transcript online”

20. Expected Family Contribution Formula The sum of the column “Total” is your expected family contribution Fafsa4caster.ed.gov, bigfuture.collegeboard.org (tools and calculators)

21. Non-Assessable Assets for EFC/FAFSA • Annuities • Life insurance cash values • Retirement accounts ( 401k, IRA, 403b, 457,ISTRF, PERF, etc) • Unexpected financial aid • Personal items • Restricted bank accounts • Personal residence (IM will assess) • Second or vacation residences are assessed • Family farm (IM will assess) • Family farm corporations, partnerships, etc. are not assessed • Investment farms are assessed • Business with less than 100 employees with 50% ownership • Siblings’ assets (IM will assess) • 529 plan assets assessed as a “parent asset”

22. Asset Protection Allowance for Parents

23. Income Protection Allowance for Parents

24. Estimated EFC https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s49 Two Parent Income, 5 in household,$2,000 student income, student $250 savings, no asset contribution from parents, no retirement plan contributions

25. Net Price Calculators • It is prudent to use them to start getting better understanding of what “total cost” and “net cost/price” is all about. • Use them as a budgeting tool to make sure the school is “in the ballpark” for your student. • When a net price calculator says you’ll get grants or merit aid, remember that it’s an estimate, not a promise. • Be aware of “gapping.” This is sometimes done freshman year since the available direct student loan amount is lower. More “gift aid will be awarded only to “disappear in years 2 and beyond when loan amounts are higher. • Remember- the award letter is the bottom line!

26. Public versus Private http://www.collegedata.com/cs/search/college/college_match_tmpl.jhtml

27. Simplified and Zero EFC • Simplified EFC means that “no assets” have to be reported • AGI is $49,999 or less AND • Parents were not required to file an IRS 1040 or any tax return • Anyone in the household received “means tested” federal benefits during the previous 24 months • Dislocated worker- “he or she has been laid off or received notice of layoff. He/she is receiving unemployment benefits due to layoff or loss of job and is unlikely to return to previous occupation or self-employed but unemployed due to economic conditions or natural disaster.” • Zero EFC • If the combined household AGI is $25,000 or less • the parents were not required to file an IRS 1040 • Or anyone in the household received “Means tested” Federal Benefits during the previous 24 months. (see above)

28. Federal Financial Aid-Gift • Pell Grants • $606 min to $5,920 for 2017-2018. 12 semester limit • EFC range from $0 - $5,328 • Federal Supplemental Opportunity Grant (FSEOG) • Exceptional Financial Need • $400 to $4,000 a year • TEACH Grant • Up to $3,736 per year for 12 semesters • Must be in 75% percentile of admissions exam and/or 3.25% cum GPA. (talk to schools financial aid office) • Not financial need based • Teach grant agreement to teach for a minimum of four academic years

29. Indiana State Aid • Frank O’Bannon Grants • Need Based- primarily Pell Grant Eligibility • “On-Time vs. Full Time.” On-time is freshman year and ensuing years that you completed 30 credit hrs. and a 3.0 GPA. Full time is 24-29 credit hours. • *EFC=0 Max Private $9,000 Public $4,500 • EFC=$1,000 Max Private $7,750 Public $3,250 • EFC=$2,000 Max Private $6,750 Public $2,250 • EFC=$6,500 Max Private $2,250 • * assumes “On-Time” grants

30. State Aid - continued • 21st Century Scholar • Qualify and apply in 7th, and 8th grade • Family Income Qualifications • 3: $37,296 4: $44,955 5: $52,614 • Class of 2015 and beyond must maintain a cum GPA of 2.5 • Those enrolling who do not qualify for any state need based aid (e.g. Frank O’Bannon Grant) when entering college will receive a one time amount of $2,500 or less. • 30 credit hours per year • Private school attendance will receive award that is comparable to public school

31. State Aid - continued • Mitch Daniels Early Graduation Grant • One time grant of $4,000 • Must graduate one year early • Grant is NOT need based • Core 40 Minimum Diploma • Within 5 months of graduation becomes student at accredited institution • Unique application required

32. Indiana State Aid • Website: https://www.in.gov/che/index.htm • Register for ScholarTrack (replaced E-Student 2-17) • Students and parents create account. Parents link to student account • Will indicate if there are any issues with your FAFSA that could prevent you from receiving aid • Allows you to see any grant awards • Allows you to see grant history • Your grant application includes information from your FAFSA, your diploma status, your 21st Century Scholar status, National Guard status, and your school of choice. • Allows you to update your school of choice. ( make sure the school you are attending is listed with SFA as they will only send your grant information to that school!)

33. Comparing Award Letters • Not all award letters are created equal • Identify Total COA • EFC- make sure value used by the school matches your Student Aid Report (SAR) • Out of Pocket or “True Cost” • Grants and Scholarships- Renewable? Criteria? • Loans • Deadlines • Our blog, Remove the Guesswork: • https://www.removetheguesswork.com/2016/04/22/financial-aid-awards-comparing-award-letters/ • https://www.removetheguesswork.com/2016/03/21/financial-aid-awards-understanding-your-award/

34. Special Circumstances Appeals • Professional judgment is the authority given to a FAO to change the family’s data elements (income and assets) to accurately measure the family’s ability to pay. • Special circumstances • Tuition payments to an elementary/high school • Unusual medical or dental expenses not covered by insurance • Care of elder parents in or out of a nursing home • A family member recently unemployed or • Other circumstances impacting income or assets that might affect eligibility for financial aid • Use of 2016 income data for two years and beyond. If there are significant changes…APPEAL! • Blog Post: http://www.removetheguesswork.com/2016/05/24/how-to-appeal-for-more-financial-aid-due-to-a-crisis/

35. Competitive Appeal • Apply to schools that naturally compete with one another for great students. • Princeton Review will identify schools that others have applied to • e.g.: Boston College, Boston U, ND, Stanford • Depauw, U of Miami, Vanderbilt, Butler • Butler- Valparaiso, Hanover, U of Miami • Nice video from US News and World report: http://www.collegetuitionsolutions.com/studentleveraging.html • Write to the attention of the FAO referenced on your estimated award letter. • Document, Document, Document • Be willing to visit and discuss in person • The Golden Rule of Appeals is that if you do not appeal, there is a 100% chance that you will not receive a better aid award!

36. Federal Tax Credits • The American Opportunity Credit • This is now a permanent credit_2017 • Modified the prior credits with a new cap of $2,500 per student! Can be claimed for up to four years • Up to 40% or $1,000 refundable • Full credit available with MAGI, single filer up to $80,000 • Full credit available with MAGI, MFJ to $160,000 • Qualified expenses includes books! • 1098-t plus books. Keep receipts. • Lifetime Learning Credit (cap $2,000) can apply to any post secondary education at an accredited school for anyone! • Single phase out at AGI of $56k and married phase out is $112k

37. Reduce the Cost of College by Earning Free Tuition Credits • IB, AP, and CLEP exams can reduce your total cost of college by hundreds or thousands of dollars! • When considering potential schools review if they accept tuition credits • Ask the admissions offices what their policies are • AP classes are college level classes you take while in high school • There are more than 30 AP exams from which you can earn tuition credit • Go to www.collegeboard.com for details • https://professionals.collegeboard.com/profdownload/pdf/ap-program-guide.pdf • You do not have to take an AP class to take an exam • You can have a combination of IB and AP. • See your AP teacher or school AP coordinator to inquire about exams in May 2018

38. https://modernstates.org/ “On-ramp to college.” • “Freshman Year for Free.” Modern States Education Alliance • Non-profit dedicated to make a high-quality education free of cost and accessible to any person who seeks one • Partnering with edX- online learning platform founded by Harvard and MIT • 30 high quality freshman college courses • Taught online. Lectures, books and material are online for free • Preparation for AP and CLEP exams • College Board AP exams are $92, CLEP $85

39. Reduce The Cost of College by Earning Free Tuition Credits, cont’d • What does it mean? • Example of earning 3 or 5 tuition credits • Purdue savings • Credit hour is $350 • 3 credits $1,050 • 5 credits $1,750 • Valparaiso University savings • Credit hour is $1,350 • 3 credits $4,050 • 5 credits $6,750 • Wow! We are talking about REAL MONEY NOW!

40. Federal Loans Federal Subsidized and Unsubsidized Stafford • Subsidized means interest is being paid by the Government prior to repayment. • Unsubsidized means interest is accruing prior to repayment • By virtue of submitting a FAFSA you are eligible for Direct Loans • School will conduct entrance counseling and provide student with a promissory note to sign. • 50% of value will be credited to students account each semester • 1st Year $5,500 (No more than $3,500 can be subsidized) • 2nd Year $6,500 (No more than $4,500 can be subsidized) • 3rd & 4th Year $7,500 (No more than $5,500 subsidized) • Interest Rates • 2017 Unsubsidized and Subsidized Direct Loans are 4.45%

41. Federal Loans- continued • Federal Perkins Loans- fixed interest rate of 5% ($5,500 max loan) • Perkins loans are administered by the school and normally offered for those receiving need-based aid • Federal Plus Loan (Parent loan for undergraduate students) Direct Loans from US Department of Education are 7% • Interest is charged from initial disbursement until payoff • It is possible to defer repayment until 6 months after the student ceases to attend at least half-time • Private Loans- student will need co-signer • Rates are underwritten. Fixed start @~5%+, variable ~3.5%+ • https://studentaid.ed.gov/types/loans • Very good resource

42. 529 Plans & Coverdell Education Savings Accounts • 529 provider in Indiana is “College Choice” offered by the Indiana Education Savings Authority and the plan administrator is UPromise. • Provides for a 20% tax credit up to a $5,000 contribution or a maximum annual credit of $1,000! • Computers and software ARE qualifying expenses • Earnings usually tax-free • Coverdell (CESA) • Maximum annual contribution $2,000 • Contributions are non-deductible • Income Phase out limits • Earnings usually tax-free • Must be fully distributed by “beneficiary” age 30 • Can be used for K-12! (need a computer and want to buy it with tax free earnings…) "Investments in 529 plans involve risks to principal and may involve additional fees such as enrollment charges and annual maintenance fees. 529 plans offer no guarantees. Depending on your state of residence and the state of residence of the beneficiary, the plan may or may not be eligible for state tax benefits. There are exceptions to the gift tax and estate tax exemptions; please contact a qualified tax, legal or financial advisor for more information prior to investing."

43. Grandparents want to help? • Grandparents make contributions to their own Indiana College Choice 529 plan • They control the asset. Value removed from their estate. Not an irrevocable gift. Can take it back… • They qualify for their own 20% tax credit on contributions up to $5,000. • Not “assessed” as a financial aid asset Consult a tax advisor

44. Asset Usage Per School Year

45. Tax Scholarships - Income Shifting • Hiring Your Child • Not subject to social security tax if under 18 (21 for household services) • Must withhold payroll taxes if paid from corporation or partnership (Tip: Pay child from outside consulting business) • Earned income not subject to “Kiddie Tax” • Utilize the child’s full standard deduction • Eligible to contribute to an IRA. Roth? Use basis. • Employment Opportunities • Family Business • Family Rental Property CONSULT YOUR TAX ADVISOR!!

46. Tax Scholarships - Gifting Appreciated Assets • Parent or Grandparent has appreciated assets in a non- retirement account • “Gift” the shares “in-kind” to the student in a UTMA account • Student sells the asset once it is in their account • MFJ $75.9k taxable and Single $37.9k is top of 15% • Long-term capital gains rate in 25% and higher brackets is 15%. (Highest bracket is 20% + ACA surcharge 3.8%) • Long-term capital gains rate in 15% bracket and below is…..0! • Keep total gain < $2,100 to avoid kiddie tax • $2,100 x 15% = $315 tax savings per year • CONSULT YOUR FINANCIAL AND TAX ADVISOR

47. Tax Credit Phaseout Strategy • A credit is a terrible thing to waste… • High income taxpayers can benefit by simply not claiming the child as a dependent if they are phased out of the credit. • Full credit available with MAGI, MFJ to $160,000 • Give up exemption, create taxable income in students return by income shifting strategies and take the American Opportunity Credit in the student’s tax return to offset any tax liability. • The credit will generally yield more tax benefit than the dependency exemption deduction. • If the parents income is at a level where deduction for dependency exemptions is phased out ($262k-$314k MFJ) there is no impact on tax liability. • Parents must check the provisions of their health insurance coverage! Some policies require the child to be claimed as a dependent to be covered. Consult your tax advisor

48. How college really gets paid for! Depauw COA $61,000 Freshman year • Student Income $2,500 • Student Assets $1,000 • Gift Aid $38,000 • Stafford Loan $5,500 • Outside Scholarships $1,000 • Total $48,000 • Parents $13,000 • American Opportunity Credit ($2,500) • Net to Parents $10,500 Do you feel better?

49. How college really gets paid for! Purdue COA $24,000 Freshman year • Student Income $2,500 • Student Assets $1,000 • Gift Aid $2,500 • Outside Scholarship $1,000 • Stafford Loan $5,500 • Total $12,500 • Parents $11,500 • American Opp Tax Credit ($2,500) • Net to Parents $9,000 Do you feel better?

50. How college really gets paid for! Purdue COA $24,000 Freshman year • Student Income $2,500 • Indiana State Aid $2,500 • Pell Grant $5,000 • Outside Scholarship $1,000 • Perkins Loan $5,000 • Total $16,000 • Parents $8,000 • Tax Credit $2,500 • Total Net to parents $5,500 Do you feel better?