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Financing Your Dreams

Financing Your Dreams. Juanita E. Harvin Educational Liaison – US Africa Command http://planningforlifeafterhighschool.info. Trends. College costs rising faster than the rate of inflation Less gift financial aid, more loans Normal distribution of student support:

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Financing Your Dreams

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  1. Financing Your Dreams Juanita E. Harvin Educational Liaison – US Africa Command http://planningforlifeafterhighschool.info

  2. Trends • College costs rising faster than the rate of inflation • Less gift financial aid, more loans • Normal distribution of student support: • 2/3rd savings/current income/loans • 1/3rd gift aid/scholarships • Average student loan debt at graduation is $20,000 • Average credit card debt at graduation is $5,000

  3. Sources of Financing your Dream • Savings and current income of parents and student • Federal grants, loans and workstudy • Civic/community organizations • Religious organizations • Business and professional groups in field of interest • Military organizations • ROTC/National Guard • AmeriCorps • State reciprocal agreements

  4. Free Application for Federal Student Aid (FAFSA) • Required for federal assistance: grants, loans, workstudy • Can be completed and submitted online • May submit as of 1 Jan for following school year • Information from current tax forms required

  5. FAFSA TIPS • Read form and instructions carefully • Specific definitions for terms • Apply early • ASAP after 1 Jan for following school year • Electronic filling quicker • Tax forms need to be completed, not filed • Can “estimate” on FAFSA but file correction as soon as possible

  6. FAFSA Tips (cont.) • Provide accurate and truthful information on the FAFSA • School, state and US Dept of Ed can request your tax forms • Aid based on inaccurate info must be paid back, sometimes with penalties • Could be considered “fraudulent”

  7. Federal Aid Process • Complete and submit FAFSA • Information evaluated and Student Aid Report (SAR) issued to student and schools indicated by student • SAR indicates Expected Family Contribution (EFC) • School cost of attendance – EFC = financial need • Data Release Number (DRN) found in lower left corner of SAR

  8. Federal Grants • $100 - $4050 awards that don’t have to be paid back • Two types: • Pell Grant • Supplemental Educational Opportunity Grants

  9. Federal Loans • Direct or Federal Family Education Loan (FFEL) • Subsidized or unsubsidized • Subsidized no interest charges while student • Variable rate interest <8.25%, currently 4-5% • Stafford or Perkins • Stafford has loan origination fees • PLUS • Loans to parents

  10. Work study • Assistance received in exchange for student work • Part of financial package offered to cover financial need may include work study • Jobs offered often provide good experience and develop job skills

  11. Savings Programs • Coverdale • State 529 plans • Savings Bonds for Education Program • Pre-Pay Program • Credit Union Plans

  12. State 529 Plans • Vary greatly among states • Savings and prepaid tuition programs • Can save more than in Coverdale and no income limits • Tax benefits • Donor controls account • No investment decisions, managed by plan • Tax and FSSA treatment tricky

  13. Pre-Pay • Pay now attend later • State by state variations • Can be utilized at a Jr. College, Vocational or 4 year • Money can be refunded • Some plans may be transferred out of state. (Small penalties)

  14. GPA Scholarships • Florida “Bright Futures” 2.5 – 4 gpa3.5 = 75% of tuition paid3.0 = 50% of tuition paid • NJ 3.5 gpa and above 50% of tuition paid • Georgia “Hope Scholarship”2.5 gpa and above pay up to 100% tuition

  15. Savings Bonds for Education Program • Eligible bonds cashed for qualified higher education expenses may be completely or partially excluded from federal income tax • Series EE issued on or after January 1990 and Series I

  16. Consumer Decision-Making • Do research and comparison shop • Be open-minded • Visit school campuses if possible • Junior year • Consider community college for first year or two • Much less expensive • Some students not ready academically or socially

  17. Financial Education • Money management skills critical • Easy to get credit cards • Making big financial decisions • Realistic expectations • “needs vs. wants” • Develop budget

  18. “A Good Financial Plan Distinguishes Between Needs and Wants” SMART Goals • Specific:“I want to save for tuition and fees for the first year of college” Not “I should start saving for college” • Measurable: “I need have $300 for books for my first semester” Not “I need some money for books” • Adjustable:“I’ll save $25 every week until next year” Not “ I’ll win a weekly radio call-in contest to get the money to pay” • Realistic: “ I plan to have $1200 by one year” Not “ I would like to have $5000 by one year” • Time-Oriented: “I’ll have $300 every three months” Not “I should have half of the money saved by summer time”

  19. Writing down you goals make them REAL!

  20. Warnings! • Be wary of organizations that charge fees “to find money for college” • Don’t jeopardize your retirement • Avoid tapping into retirement plans • Continue current retirement contributions • Avoid refinancing your home • School loans available, but not retirement loans!

  21. For Further Information: • FAFSA form • www.fafsa.ed.gov • U.S.Dept of Education • www.studentaid.ed.gov • www.students.gov • Existing student loan information • www.nslds.ed.gov • Information on 529 plans • www.savingforcollege.com • Americorps program information • www.cns.gov

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