Saving for College: A Critical Step Toward College Affordability

1. Saving for College: A Critical Step Toward College Affordability

2. Agenda • College Savings Landscape and Current Research • Our college savings work • What have we done as individual organizations? • Our collaboration • What has collaborating allowed us to do? • Best practices • Q&A

3. Student Loans in the Headlines • “Student-loan debt tops $1 trillion” – WSJ, 3/22/12 • “Over 60 and still paying student loans” – Money MSN, 4/5/12 • “A generation hobbled by the soaring cost of college” – NYT, 5/12/12 • “Student loans have basically ruined my life” – Yahoo, 6/27/12 • “Student loan debt is worse than it seems” – CBS News, 9/5/12 • “Student loan debt hits record high, study shows” –NBC News, 10/18/12

4. Facts and Figures • Of the private, not-for-profit 4 year colleges with the highest tuition costs – 70 percent are in New England and the Mid-Atlantic area • Of the private, not-for-profit 4 year colleges with the highest net prices – 55 percent are in New England and the Mid-Atlantic area • Of the 13 states with the highest average student debt, half are the 6 states in New England Sources: US Department of Education, Project on Student Debt, 2012

5. States with the highest average student debt Source: Project on Student Debt, 2012

6. College Savings Landscape Participation in states’ college savings plans has increased rapidly. BUT • Government Accountability Office Report on 529 college savings plans found that a small percentage of families nationwide save in 529 plans. The families who save in 529 plans have median income 3 times that of non savers and most of these parents have gone to college • Fidelity College Savings Indicator Study 2012 found that parents overestimate the starting salaries of their students. • How America Saves for College (2013) Sallie Mae Study found that parents’ anticipated savings don’t match actual savings nor meet with reality of college costs

7. Research that Motivates • “Youth who expect to graduate from a four-year college and have a (college savings) account are about 7 times more likely to attend college than youth who expect to go to college but do not have an account.” Elliot, W. and Beverly, S. (2011) • While assets are positively related to college attendance, completion, and success, account ownership alone seems to be a very large predictor of success. • Behaviorally there is evidence that saving for college may focus attention of parents and children on postsecondary education affecting outlook, orientations, course selection, and discipline.

8. About MEFA • MEFA is a not-for-profit state authority that works to make higher education more accessible and affordable through community education programs, college savings plans and low-cost financing options. • Created the U.Fund® and the U.Plan® college savings plans and has offered affordable and fixed interest rates college loans for 30 years. • MEFA has assisted hundreds of thousands of families to finance a college education.

9. The Early Years: Outreach Initiatives • MEFA reaches families of young children in a number of ways to emphasize the importance of saving for college early. • Start U.Reading • Art Competition • Dreams Tour • Museums and Road Races Mayor Menino at a Start U Reading Event

10. MEFA U.Fund College Investing Plan • How it works: • Save for qualified higher education expenses such astuition, fees, room, board, books, supplies and equipment. • Savings can be used at any accredited college or university nation wide • Minimum Initial Investment - $50 lump sum or $15/ monthly automatic investments • Combined Account Maximum - $300,000 • Annual Account Maintenance Fee - No Fee • Multiple investment options (active management; indexed portfolio; individual allocation portfolios) • FDIC insured option • Enroll online at www.fidelity.com/ufund or by calling 1.800.544.2776 to get started. Established in 1999

11. MEFA U.Plan Prepaid Tuition Program • How it works: • Prepay up to 100% of college tuition and mandatory fees 80 Massachusetts public and private colleges and universities • Minimum to get started is $300 to purchase a tuition certificate. Established in 1995 • Money saved in the U.Plan grows tax free for Massachusetts residents. • If a family does not use the money saved towards school, they could always get it back with interest accrued at CPI over the years. • U.Plan Tuition Certificates represent interest in Commonwealth General Obligation Bonds and are backed by the full faith and credit of the Commonwealth of Massachusetts; not subject to market fluctuation. • Account owner has full control of the account and over the beneficiary assignment • Annual enrollment period begins May 1st - June 30th each year. Enrollment kit may be accessed online at www.mefa.org/uplan during the enrollment period or by calling 1.800.449.MEFA (6332)

12. Our Work: FUEL Families United in Educational Leadership • Boston – based private nonprofit • College planning and saving program for parents • Reach parents through collaborations with community organizations • Boston, Chelsea, and Lynn

13. FUEL families $362,425 Lynn Chelsea Boston

14. Our Work: uAspire’s Mission & Vision uAspire works to ensure that all young people have the financial information and resources necessary to find an affordable path to – and through – a postsecondary education College cost is a barrier that every college-ready young person from a low and moderate income family must overcome.

15. Our Work: uAspire Program Model SUCCEED College Support students throughout their postsecondary career, helping them reach their goal of college graduation AFFORD Guide students through the financial aid process, securing financial aid and enabling good decision-making 12th Grade PREPARE Fight the misperceptions of college costs that derail students early in their high school careers 7th-11thGrade

16. Collaborative Work: MEFA & uAspire EARLY COLLEGE PLANNING INITIATIVE (ECPI)* • U.S. Department of Education College Savings Research Project (3 year study) • Working with parents of low and moderate income 8th and 9th graders within the Boston Public Schools • Core question: How can we support families to prepare for college financing earlier? Provide general info AND introduce the 529 plan? Provide general info AND introduce the 529 plan AND provide the $50 Provide general college planning info? uAspire uAspire+MEFA uAspire+MEFA *Project funded through grants from the United States Department of Education and the Bill and Melinda Gates Foundation

17. Collaborative Work: Compass, MEFA & FUEL

18. Best Practices • Early messaging to students and families • Integrate savings into current access/success programming • Collaborate: partner with your state’s 529 provider • Make savings automatic and provide incentives • Optimize other savings opportunities • Walk through process step-by-step • Simplify the overall process • Build trust and strong relationships with families • Provide ongoing coaching support

19. Best Practices: Early messaging • Age level: elementary and middle school audiences • Content: combine savings information for parents with college cost information • Sticker price • Scholarship information • Benefits: early messaging allows you to break down myths and misconceptions early

20. Best Practices: Integrate savings • uAspireprogram model evolution • Where and when we integrate savings

21. Best Practices: Collaborate • Partner with your state’s 529 provider • Widespread agreement about the importance of financial education about 529 plans and about college savings in general as it relates to receiving financial aid and paying for college. • States have generally structured the investment options to benefit participants from all economic backgrounds within their state. • Low contributions; less risky investments • Convenient enrollment procedures and contribution options-payroll deduction, electronic fund transfers, and online contributions and enrollment. • Local college access organizations; schools • Visits, panel discussions, college fairs • Financial aid nights • Access personnel, guidance counselors

22. Best Practices: Make Savings “Automatic” & Use Incentives Q: Which aspect of the workshop had the biggest impact on your decision to open an account? (Choose one) Source: Inspire Compass Working Capital Survey, n=31

23. Best Practices: Optimize Other Resources • Individual Development Account (IDA) programs - matched savings accounts for working, low-income families (www.idanetwork.org) • Family Self-Sufficiency Programs – an employment and savings program for families in Section 8 or public housing. • Tax-Time – encourage families to save part of their Earned Income Tax Credit (EITC)

24. Best Practices: Walk through paperwork • Example - FUEL formats application for uploading personal information, and adds helpful hints

25. Best Practices: Provide Ongoing Support Regardless of how you promote saving for college, if you are successful and parents begin saving, you can encourage them to keep it going through financial coaching strategies. • Fielding questions, referring to the appropriate agency • Navigating account statements • Workshops • Strategies • Vocabulary • Using funds • Applying for financial aid Rosa and Kassandra

26. Best Practices: Your Turn • What have you and/or your institution done to outreach about savings? • Collaborated with other schools? Community Based Organization? • What’s worked for you? • If you have not incorporated savings into outreach or financial aid work, how could you include this? • What key messages (about savings) have not been mentioned today that you would like your applicants/enrollees to know?

27. Question & Answer For more information: • Julie Shields-Rutyna MEFAjshields-rutyna@mefa.org • Michelle Murphy FUELm.murphy@fuelaccounts.org • Claire Dennison uAspireclaired@uaspireusa.org