Preparing for College Finances in Middle School

1. 1 Preparing for College Finances in Middle School Presented by James Madison University December 6, 2008

2. 2 Before We Get Started This PowerPoint Presentation will be available to download on the JMU Office of Financial Aid & Scholarships website www.jmu.edu/finaid (under the �Prospective Students� link)

3. 3 ECONOMIC ISSUES Before we dive into the financial aid presentation, do you have any questions/issues you would like to discuss based on anything you have seen in the news regarding the current economic issues as they relate to college costs and aid (e.g., student loans & credit crisis, scholarship availability, etc.)?

4. 4 Objectives Review those involved in paying for college Understand college costs Discuss options to pay for college Answer questions

5. 5 Consult with Appropriate Stakeholders Determine who will be involved in paying for the student�s education Those parties should begin discussions now and develop a plan together Keep the lines of communication open If you use a financial planner or consultant, talk with him/her about college savings

6. 6 Learn More About Schools Now Understand the costs of schools Examine the types of schools Try not to let cost be a large deterrent at this point, you have some time to save and plan Many colleges are willing to work with students

7. 7 What Does College Cost Now? Example at JMU in 2008-09 (full-time in-state undergraduate student) $6,964 � tuition $7,292 � on campus room/board/internet fee $14,256 � direct (billable) costs Tuition has been rising around 4% - 8% per year for the past several years Room/Board has been rising around 4% - 6% per year for the past several years

8. 8 What Will College Cost Later? There is no way to accurately predict what college will cost in the next 4 to 5 years For planning purposes, you may want to use an annual tuition increase of 7% and room/board increase of 4%, 5 years out in the 2013-2014 school year costs could be: Tuition = $9,767 Room/Board = $8,872 Direct (billable) Costs = $18,639

9. 9 How Am I Going To Pay For College Five primary sources of financial aid are: Federal State Institutional Private Self/Family

10. 10 Federal Assistance Pell Grant Supplemental Educational Opportunity Grant (FSEOG) Academic Competitiveness Grant (ACG) National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) Federal Workstudy Federal Perkins Loan Federal Stafford Loan Federal Parent PLUS Loan

11. 11 More information on Federal Aid

12. 12 State Assistance Virginia Guaranteed Assistance Program Commonwealth Award Tuition Assistance Grant Program (private colleges only) College Scholarship Assistance Program Two Year College Transfer Grant Higher Education Teacher Assistance Program And many more

13. 13 More information on State Aid

14. 14 Institutional Assistance Need-based grants Need-based scholarships Merit-based scholarships Combination Need/Merit-based scholarships Institutional Employment

15. 15 How Do I Apply For These? At most schools the Free Application for Federal Student Aid (FAFSA) is the primary application for these funds Some schools may require additional applications, specifically for scholarships Need to ask the school All schools do NOT work the same when it comes to this Years away from applying right now

16. 16 Financial aid from private resources can be the most elusive of all aid programs Available From: Local businesses Civic groups Churches Private benefactors National organizations Where to Look: High school counselors Write, call, or visit businesses, civic groups, churches, etc. Public libraries Internet (free ones only)

17. 17 Avoid Being Scammed To check legitimacy of scholarship search services or individuals, for information about financial aid scams, & tips to avoid being scammed visit these Web sites: Better Business Bureau: http://www.bbb.com U.S. Department of Education: http://studentaid.ed.gov/students/publications/lsa/index.html

18. 18 How Do I Apply For These? Start the research now It can be time consuming May find you are close to being eligible for an award, and you have the time to bring yourself up to the eligibility standards before the application date It is possible to be awarded scholarships now for college expenses in the future

19. 19 What Can I Do Now? SAVE, SAVE, SAVE! If you have not started, you should do so immediately If you have started, evaluate your current savings plan and see if you can afford to increase it if necessary There are many savings options

20. 20 Education Savings Account (ESA) Also called the Coverdell ESA Money invested for college that is tax-free if used for college Generally, allowed to invest up to $2,000 per year Website to research this program: http://www.savingforcollege.com/coverdell_esas/

21. 21 529�s Two Types: Prepaid Tuition Plans Education Savings Plans Website to research this program: http://www.savingforcollege.com/college_savings_201/

22. 22 Prepaid Tuition Plan Called VPEP in Virginia Locks in �tomorrow�s� tuition at �today�s� prices Guaranteed to pay tuition based on your contract Has become progressively more expensive over the years Information available at www.virginia529.com

23. 23 Education Savings Plans Virginia has three such plans: VEST (oldest of the 3) College America College Wealth (newest of the 3) Can also use independent brokers for these 529 plans Money is invested to grow tax free for college Can be used for qualified college expenses such as tuition/fees and room/board Flexibility in investment options and contribution amounts Information available at www.virginia529.com

24. 24 Other Options Personal savings Reducing debt or expenses prior to college to make paying for college more affordable Investments (e.g., Mutual Funds, CD�s, bonds, etc.) Payment plans offered through the college Part-time employment Federal, state, and institutional financial aid Private Loans (last resort)

25. 25 Budget! Often overlooked If you begin using a zero-based budget, you may find you are spending money on things you do not need now Can incorporate college savings into your budget Get control of your money! Generally, will spend less in life if you budget

26. 26 Zero-Based Budget Income minus expenses each month equals zero This means you have told every dollar of income you have to do something very specific If you stick with this for each category, you will not overspend and will likely avoid unnecessary debt and expenditures

27. 27 Financial Literacy Assistance http://www.jmu.edu/finaid/finliteracy.shtml On and Off Campus Student budget case studies worksheets PowerPoint on financial information Other information and tools Listen to a 23 minute podcast discussing issues pertaining to paying for college and financial literacy

28. 28 Questions Office of Financial Aid & Scholarships Contact Information: 3rd floor counter in Warren Hall Phone: (540) 568-7820 E-mail: fin_aid@jmu.edu Web: www.jmu.edu/finaid