Don’t Let Your Reality CheckBounce! What Parents and Students Need to Know About Saving and Financial Aid for College A Presentation of the Indiana Student Financial Aid Association
Careers of the Future • Increasingly high-skilled, information-based. • More diverse, smaller workforce. • Average worker will hold 9 different positions by age 34. • Technology provides less traditional work environments. U.S. Dept. of Labor
Potential Returns on Postsecondary Education! • Understand and appreciate more • Achieve higher earning potential • Expand your talents and abilities • Create greater job security • Make more informed decisions • Cope with change • Become a Lifetime Learner
Invest in yourself • Even with rising costs, college is still a good investment. • Studies show college graduates can earn an average of 75% more than high school grads. • Postsecondary education pays off over a lifetime.
Career Earnings by Education Level Data is from an analysis by the Employment Policy Foundation of data from the Bureau of Labor Statistics. The complete press release is available at http://www.epf.org/media/newsreleases/2001/nr20011219.htm
Expect a Financial Return on Your Investment! • Unemployment Trends (2000 Bureau of Labor) • No HS Diploma 7.9% • HS Diploma 3.8% • Some College 3.0% • College Degree 1.5%
After High School, Then What? • Employment • Apprenticeships • On-the-job training • Military • Training/experience • Saving for college • Postsecondary Education • Vocational/Technical • Associate Degree • Baccalaureate
Postsecondary Education • Degrees/Certificates • 9 to 18 month certificate programs • Two-year associate degrees • Four to five-year baccalaureate (bachelor’s) degrees • Postgraduate degrees • Institutional Types • Public, private, and career schools
What can my child do to gain a competitive edge? • Set goals. • Make school attendance a priority. • Review and improve scholastic standing. • Take the right classes. (Core 40) • Develop talents and expand interests. • Become involved in school and community activities. • Explore Advanced Placement classes. • Limit hours worked while in school.
Paying for College:A Combination of Strategies • Savings (never too early/late to start) • Parents • Student • Current Income (while in college) • Parents • Student (summer job, on/off campus jobs) • Future Income (after college) • Parent Loans • Student Loans • Scholarships, Grants, and Fee Waivers • Merit based: academic, talent, other criteria • Need based: must apply for financial aid
Savings Strategies • Estimate the cost of postsecondary education. • Establish goals for savings. • Save systematically and regularly. • Diversify. • Explore plans with educational benefits resulting from purchases. • Invest windfalls rather than spend them.
Estimating College Costs Example of budget for Indiana resident, living on campus at a public college: 9-month academic year Tuition/fees $4,100 Room/board $5,600 ----------------------------------------- Books/supplies $ 790 Transportation $ 750 Personal expense $1,643
Coverdell Education Savings Account (ESA)formerly known as Educational IRA (EIRA) • Contributions are not excludable from AGI • Earnings accumulate tax-free • Distributions are not taxable • Maximum contribution of $2000/year until beneficiary reaches age 18 • Interest and tax-free withdrawal must be used or transferred by beneficiary’s 30th birthday • Cannot use with Hope/Lifetime tax credits.
College Choice 529 Investment Plan • Tax-deferred growth • Qualified withdrawals tax-free for Federal and may be tax-free for Indiana residents. • No income limits • No age limit on beneficiary • Investment options include age-based and custom portfolios • Anyone over 18 can open account regardless of state of residency • Minimum initial contribution: $50 • Additional contributions: $25 or more • Monthly ACH deductions from your bank account are available Call 1-866-400-7526 for enrollment kit. www.collegechoiceplan.com
Investment Guidelines • Start as early as possible. (But it is never too late!) • Begin with an aggressive strategy. • Become more conservative as college enrollment approaches. • Choose investments according to number of years until enrollment and risk tolerance.
Be Aware of Risks • Extremely high risk • Stock options • Futures • High risk investments • Individual stocks • Some mutual funds • Low risk investments include • Some mutual funds • Bonds • U.S. Savings bonds, state savings plans, EIRA • Money market and certificate of deposit
Options for your student • Consider college payment plans. • Investigate two-year college options. • Work in exchange for housing/etc. • Plan to complete in four years. • Attend part-time. • Consider employment. • Explore Military. • ROTC. • Montgomery G.I. Bill. • Investigate co-operative education. • Consider internships.
Financial Aid: One of Many Strategies • Sources • Federal Student Aid Programs • Indiana Student Aid Programs • College/University Funds • Private Organizations, Business, and Industry • Types • Scholarships, grants, and fee waivers (fee remission) • Student Loans (for students and parents) • Student Employment or Work Study Note: Some scholarships have strings attached and may become loans if conditions of the award are not met.
Indiana Funding for Higher Education • Twenty-First Century Scholars Program • Students enroll in 7th or 8th grade. • Receive tuition assistance (up to 30 semester hours per year) at eligible Indiana colleges or universities for 4 years. • Need-based Grant Programs • Frank O’Bannon Grant Program (formerly the Indiana Higher Education Grant Program) • Higher Education Award • Freedom of Choice Award • Minority Teachers and Special Education Scholarship • Nursing Scholarship (tuition/fee specific)
Other Indiana Assistance • Hoosiers Scholars • One to three scholarships awarded by each eligible high school to academically talented college-bound seniors. • One-time $500 award at eligible Indiana institution. • Fee Remission at State Colleges/Universities • Child of Veteran & Public Safety Officers ICPAC Career & Education Hotline 1-800-992-2076 http://icpac.indiana Indiana funding for higher education: http://www.in.gov/ssaci
Federal Student Financial Aid • Federal Pell Grant • Campus-Based Programs • Federal Supplemental Educational Opportunity Grants • Federal Work Study • Federal Perkins Loans • Direct and FFEL Stafford Loans (for students) • Direct and FFEL PLUS Loans (for parents) 1-800-4-FED-AID (1-800-433-3243) http://www.ed.gov/index.jhtml
Steps To Remember • Review your scholastic standing. • Be aware of Core 40 courses. • Develop interests/skills. • Estimate cost of education. • Estimate savings needed and begin savings program. • Start scholarship search NOW! • Estimate the amount of cost to be covered by current income (student and parent income). • Estimate the amount of cost to covered by student loans. • Know all application deadlines and procedures.
Web Browser Bookmarks • Scholarship search • Financial Aid Information Page http://www.finaid.org Allows access to FastWeb and other scholarship databases • College Board www.collegeboard.org/ • College and career planning • Indiana Career and Postsecondary Advancement Center - http://icpac.indiana.edu • Mapping Your Future http://mapping-your-future.org/