don’t let your reality check bounce!
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Don’t Let Your Reality Check Bounce!. 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. - PowerPoint PPT PresentationTRANSCRIPT
Don’t Let Your Reality CheckBounce!
A Presentation of the Indiana StudentFinancial Aid Association
What Parents and Students Need to KnowAbout Saving and Financial Aid for College
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 Potential Returns on Postsecondary Education!Postsecondary Education!
• Understand and appreciate moreUnderstand and appreciate more• Achieve higher earning potentialAchieve higher earning potential• Expand your talents and abilitiesExpand your talents and abilities• Create greater job securityCreate greater job security• Make more informed decisionsMake more informed decisions• Cope with changeCope with change• Become a Lifetime LearnerBecome 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
$21,314$30,560
$38,118
$49,344$57,676
$71,573
No highschool
diploma
High schooldiploma
Two-yearcollegedegree
Bachelor'sdegree
Master'sdegree
Professionalor doctorate
degree
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 Expect a Financial Return on Your Investment!Your Investment!
• Unemployment Trends (2000 Bureau of Unemployment Trends (2000 Bureau of Labor)Labor)
– No HS DiplomaNo HS Diploma 7.9%7.9%– HS DiplomaHS Diploma 3.8%3.8%– Some CollegeSome College 3.0%3.0%– College DegreeCollege Degree 1.5%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 What can my child do to gain a competitive edge? gain a competitive edge?
• Set goals.Set goals.• Make school attendance a priority.Make school attendance a priority.• Review and improve scholastic standing.Review and improve scholastic standing.• Take the right classes. (Core 40)Take the right classes. (Core 40)• Develop talents and expand interests.Develop talents and expand interests.• Become involved in school and Become involved in school and
community activities.community activities.• Explore Advanced Placement classes. Explore Advanced Placement classes. • Limit hours worked while in school.Limit hours worked while in school.
Paying for College:Paying for College:A Combination of StrategiesA Combination of Strategies
• Savings (never too early/late to start)Savings (never too early/late to start)– ParentsParents– StudentStudent
• Current Income (while in college)Current Income (while in college)– ParentsParents– Student (summer job, on/off campus jobs)Student (summer job, on/off campus jobs)
• Future Income (after college)Future Income (after college)– Parent LoansParent Loans– Student LoansStudent Loans
• Scholarships, Grants, and Fee WaiversScholarships, Grants, and Fee Waivers– Merit based: academic, talent, other Merit based: academic, talent, other
criteriacriteria– Need based: must apply for financial aidNeed based: must apply for financial aid
Savings StrategiesSavings Strategies• Estimate the cost of Estimate the cost of
postsecondary education.postsecondary education.• Establish goals for savings.Establish goals for savings.• Save systematically and Save systematically and
regularly.regularly.• Diversify.Diversify.• Explore plans with educational
benefits resulting from purchases.• Invest windfalls rather than spend
them.
Estimating College Costs Estimating College Costs Example of budget for Indiana resident, Example of budget for Indiana resident, living on campus at a public college:living on campus at a public college:
9-month academic year9-month academic year
Tuition/feesTuition/fees $4,100$4,100
Room/boardRoom/board $5,600$5,600
----------------------------------------------------------------------------------
Books/suppliesBooks/supplies $ 790$ 790
TransportationTransportation $ 750$ 750
Personal expensePersonal expense $1,643 $1,643
Coverdell Education Savings Account Coverdell Education Savings Account (ESA)(ESA)
formerly known as Educational IRA (EIRA)formerly known as Educational IRA (EIRA)
• Contributions are not excludable from AGIContributions are not excludable from AGI• Earnings accumulate tax-freeEarnings accumulate tax-free• Distributions are not taxableDistributions are not taxable• Maximum contribution of $2000/year until Maximum contribution of $2000/year until
beneficiary reaches age 18beneficiary reaches age 18• Interest and tax-free withdrawal must be Interest and tax-free withdrawal must be
used or transferred by beneficiary’s 30th used or transferred by beneficiary’s 30th birthdaybirthday
• Cannot use with Hope/Lifetime tax credits.Cannot use with Hope/Lifetime tax credits.
College Choice 529 Investment College Choice 529 Investment PlanPlan
• Tax-deferred growthTax-deferred growth• Qualified withdrawals tax-free for Federal Qualified withdrawals tax-free for Federal
and may be tax-free for Indiana residents.and may be tax-free for Indiana residents.• No income limitsNo income limits• No age limit on beneficiaryNo age limit on beneficiary• Investment options include age-based and Investment options include age-based and
custom portfolioscustom portfolios• Anyone over 18 can open account Anyone over 18 can open account
regardless of state of residencyregardless of state of residency• Minimum initial contribution: $50Minimum initial contribution: $50• Additional contributions: $25 or moreAdditional contributions: $25 or more• Monthly ACH deductions from your bank Monthly ACH deductions from your bank
account are availableaccount 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 studentOptions for your student• Consider college payment plans.Consider college payment plans.• Investigate two-year college Investigate two-year college
options.options.• Work in exchange for housing/etc.Work in exchange for housing/etc.• Plan to complete in four years.Plan to complete in four years.• Attend part-time.Attend part-time.• Consider employment.Consider employment.• Explore Military.Explore Military.
– ROTC.ROTC.– Montgomery G.I. Bill.Montgomery G.I. Bill.
• Investigate co-operative education.Investigate co-operative education.• Consider internships.Consider internships.
Financial Aid: One of Many Financial Aid: One of Many StrategiesStrategies
• SourcesSources– Federal Student Aid ProgramsFederal Student Aid Programs– Indiana Student Aid ProgramsIndiana Student Aid Programs– College/University FundsCollege/University Funds– Private Organizations, Business, and IndustryPrivate Organizations, Business, and Industry
• TypesTypes– Scholarships, grants, and fee waivers (fee Scholarships, grants, and fee waivers (fee
remission)remission)– Student Loans (for students and parents)Student Loans (for students and parents)– Student Employment or Work Study Student Employment or Work Study
Note: Some scholarships have strings Note: Some scholarships have strings attached and attached and may become loans if conditions of may become loans if conditions of the award are not the award are not met. met.
Indiana Funding for Higher Indiana Funding for Higher Education Education
• Twenty-First Century Scholars ProgramTwenty-First Century Scholars Program– Students enroll in 7Students enroll in 7thth or 8 or 8thth grade. grade.– Receive tuition assistance (up to 30 Receive tuition assistance (up to 30
semester hours per year) at eligible semester hours per year) at eligible Indiana colleges or universities for 4 years. Indiana colleges or universities for 4 years.
• Need-based Grant ProgramsNeed-based Grant Programs– Frank O’Bannon Grant Program Frank O’Bannon Grant Program (formerly (formerly
the Indiana Higher Education Grant Program)the Indiana Higher Education Grant Program)• Higher Education AwardHigher Education Award• Freedom of Choice AwardFreedom of Choice Award
– Minority Teachers and Special Education Minority Teachers and Special Education ScholarshipScholarship
– Nursing Scholarship (tuition/fee specific)Nursing Scholarship (tuition/fee specific)
Other Indiana Assistance Other Indiana Assistance • Hoosiers Scholars Hoosiers Scholars
– One to three scholarships awarded by One to three scholarships awarded by each eligible high school to academically each eligible high school to academically talented college-bound seniors.talented college-bound seniors.
– One-time $500 award at eligible Indiana One-time $500 award at eligible Indiana institution.institution.
• Fee Remission at State Fee Remission at State Colleges/UniversitiesColleges/Universities– Child of Veteran & Public Safety Officers Child of Veteran & Public Safety Officers
ICPAC Career & Education Hotline 1-800-ICPAC Career & Education Hotline 1-800-992-2076992-2076 http://icpac.indianahttp://icpac.indiana
Indiana funding for higher education:Indiana funding for higher education:http://www.in.gov/ssacihttp://www.in.gov/ssaci
Federal Student Financial Aid Federal Student Financial Aid • Federal Pell GrantFederal Pell Grant• Campus-Based ProgramsCampus-Based Programs
– Federal Supplemental Educational Opportunity Federal Supplemental Educational Opportunity GrantsGrants
– Federal Work StudyFederal Work Study– Federal Perkins LoansFederal Perkins Loans
• Direct and FFEL Stafford Loans (for students)Direct and FFEL Stafford Loans (for students)• Direct and FFEL PLUS Loans (for parents)Direct and FFEL PLUS Loans (for parents)
1-800-4-1-800-4-FED-AID (1-800-433-3243)FED-AID (1-800-433-3243)http://www.ed.gov/index.jhtml 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 Pagehttp://www.finaid.org
Allows access to FastWeb and other scholarship databases
– College Boardwww.collegeboard.org/
• College and career planning– Indiana Career and Postsecondary
Advancement Center - http://icpac.indiana.edu
– Mapping Your Future
http://mapping-your-future.org/