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College Bound Personal Finance for College

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College Bound Personal Finance for College. Take Stock. Where are you now? How long before college? How much have you saved? What is your current plan? What resources are available?. Set Goals. Characteristics of goals Specific, measurable, reasonable and realistic Time-frame

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College Bound

Personal Finance for College

take stock
Take Stock
  • Where are you now?
    • How long before college?
    • How much have you saved?
    • What is your current plan?
    • What resources are available?
set goals
Set Goals
  • Characteristics of goals
    • Specific, measurable, reasonable and realistic
  • Time-frame
    • Short-, medium-, long-term
  • Examples for this life stage
    • Save “x” dollars
    • Get a summer job
    • Design a budget
    • Fill out FAFSA
create a budget income
Create a Budget - Income
  • Allowance
  • My job or business
  • Odd jobs
  • Grants
  • Scholarships
  • Gifts
  • Loans
create a budget expenses
Money I owe

Savings

College savings

Giving

Gifts

Transportation

Food

Clothing

Personal care

School supplies

Telephone

Recreation

Vacations

Create a Budget - Expenses
college costs continue to rise
College Costs Continue to Rise
  • In 2008-09, total expenses for private 4-year college
    • $33,301
    • 439 percent increase from 1982 to 2007
  • In 2008-09, total expenses for public 4-year college
    • $16,357 – In-State
    • $26,304 – Out of State
choices impacting college costs
Choices Impacting College Costs
  • In-state vs. out of state school
  • Resident vs. commuter student
  • Part-time vs. full-time enrollment
  • 2 year vs. 4 year college
  • Private vs. public school
  • Dependent vs. independent status
options to pay for college
Grants

Loans

Campus based aid programs

Scholarships

529 plans

Pre-paid tuition plans

Coverdell plans

Roth IRA

Military coverage

Options to Pay for College
you are dependent unless you
Were born before 1/1/85

Are married

Graduate or doctoral student

Have children that you pay more than ½ support for

Have dependents other than children

Are an orphan or ward of the court till age 18

Are a military veteran

You Are Dependent Unless You:
fill out your fafsa
Fill Out Your FAFSA
  • Determine if you are a dependent
  • Get your PIN
  • Gather tax, income and asset information
  • Keep copies of everything
expected family contribution
Expected Family Contribution
  • Your EFC is calculated according to a formula based on income and some of the family’s assets
  • This amount is what your family is expected to pay
  • Any changes in income or assets can be discussed with the Financial Aid office at your school of choice
federal pell grant
Federal Pell Grant
  • Does not need to be repaid
  • Maximum award for 2008-2009 is $4,731
  • Grants depend on need, school costs and full- vs. part-time status
  • For undergraduates only
federal stafford loans
Federal Stafford Loans
  • Subsidized
    • Based on financial need
    • Government pays interest until student is out of school for 6 months
  • Unsubsidized
    • Not need based
    • Interest can be paid or capitalized while borrower is in school
stafford loan limits
Stafford Loan Limits
  • Dependent full-time students can borrow:
    • $5,500 first year
    • $6,500 second year
    • $7,500 thereafter
  • Independent full-time students can borrow:
    • $9,500 first year
    • $10,500 second year
    • $12,500 thereafter
parent loans to undergraduate students plus
Parents can borrow for child’s education

Eligibility determined by credit check

Limit is costs minus other aid sources

Interest is variable, can’t exceed 9%

Repayment begins 60 days after funds disbursed

Any remaining money must be used for education

Parent Loans to Undergraduate Students (PLUS)
campus based aid programs
Supplemental Educational Opportunity Grant

Work-study

Perkins Loans

Administered by each campus, not the government

School receives flat amount of funds

When they run out, they are out, so apply early

Campus Based Aid Programs
supplemental educational opportunity grants
Supplemental Educational Opportunity Grants
  • Pell grant recipients with lowest EFCs will be first recipients
  • No repayment of grants
  • $100 - $4,000 per year based on need, application date and funds available
  • For undergraduates only
work study
Work-Study
  • Provides part-time jobs to students with financial need, allowing them to earn money to pay educational expenses
  • Can provide work experience in community service or course of study, as well as other types of jobs
perkins loans
Perkins Loans
  • Low interest (can’t exceed 5%) for exceptional need
  • $4,000 per year limits
  • Repayment begins 9 months after student is no longer full-time student
  • Loan can be forgiven in some post-college work programs
scholarships
Scholarships
  • Apply through your high school or college offices
  • Use library references
  • Be wary of internet sites that charge fees to search for you
529 college savings plans
529 College Savings Plans
  • Offered through all states
  • Some states allow you to deduct all or part of your contribution from state taxes
  • Contributions are not deductible from your federal taxes
  • Earnings grow tax-free, and withdrawals are tax-free if used for college
529 college savings plans1
529 College Savings Plans
  • You have control – beneficiary has no right to funds without your authorization
  • Plan assets are managed, and you can auto-debit your contributions
  • Anyone eligible and contribution limits are very high ($300,000) in some states
pre paid tuition plans
Pre-Paid Tuition Plans
  • Vary state to state
  • Allow you to contribute a flat amount now to cover tomorrow’s tuition costs
  • Gains are tax-free, and some are state-deductible
  • Most plans limited to state residents and offered for state colleges and universities, not private schools
coverdell education savings account
Coverdell Education Savings Account
  • Contributions aren’t deductible
  • Earnings and distribution are tax-free if used for education expenses
  • Contribution limits of $2,000 per year per student
  • Money can be used for primary and secondary private school tuition and college expenses
  • Some high-income families ineligible to contribute
roth ira
Roth IRA
  • You can decide how to invest the money
  • If your child doesn’t need the money, you can save it for retirement
  • No IRS penalty if withdraw used for education
military options for aid
Military Options for Aid
  • Montgomery GI Bill
    • 36 months education benefits to eligible service people
  • Veterans Educational Assistance Program
    • Government matches 2/1 per dollar contributed to this program
military options for aid1
Military Options for Aid
  • Survivors and Dependents Educational Assistance Program
    • Benefits for children of veterans who have died or become disabled during service
  • ROTC
    • Provides scholarships for tuition in exchange for military service after graduation
    • Provides living stipend and book allowance
strategies for getting more aid
Strategies for Getting More Aid
  • Limit savings in the student’s name
    • Will assume 35% available for education
  • Avoid lump sum income in student’s junior year of high school
  • Shift assets
    • 401(k), IRAs, cash value life insurance, home equity
reduce the costs of college
Tax credits

Community college for 2 years

Choose in-state school

Live at home during college

AmeriCorps programs

Military options

Tuition remission for full-time school staff and dependents

Resident Assistant jobs for housing

Reduce the Costs of College
be credit wise
Be Credit Wise
  • Over 75% of college students have credit cards
  • Over 30% of college students have 4 or more credit cards
  • 3 out of 5 students with credit cards maxed them out in their freshman year
  • Over 60% of college students don’t have a budget
be credit wise1
Be Credit Wise
  • How to establish credit
  • The “C’s” of credit
  • The costs of credit
  • Your credit report
  • From SAT to credit score
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