Education and Training are Productive Assets

• Education or training after high school may lead to more job opportunities.

• Education or training after high school is likely to lead to higher paying job opportunities, too.

• An income is necessary to build financial and physical assets.

• Investing in education or training is also about keeping your asset building portfolio in balance.

It provides you with a productive asset as well as the capacity to get and keep other assets.

Visual Aid 4.1

Allowable Use for the Opportunity Passport™ Matched Savings

• You can use the Opportunity Passport™ Matched Savings to invest it: – Tuition, registration and required fees– Text books and required equipment– Computer

• You cannot use the Opportunity Passport™ Matched Savings for: – Supplies (notebooks, pens, pencils, backpacks, etc.)– Transportation expenses– Driver’s education– Job search expenses

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Median

• It’s the middle number. • In looking at a group, it means that half of the

group is below that number and the other half is above that number.

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More on Median• This is the annual salary of 9 people in a room.

– $15,000– $18,000– $18,500– $26,000– $29,000– $31,000– $40,000– $70,000– $400,000

• In this example, the median is $29,000.

• The average, however, is $72,000.

• The average does not really represent the group very well, because only one person makes $72,000 and that person actually makes more than that$400,000.

Visual Aid 4.4

Middle number when numbers are lined up

smallest to largest

The Biggest Risk in Investing in Education and Training

• Not finishing IF you take on debt to go to school.

• If you take student loans and do not earn your certificate or degree, you have created a liability (and in some cases a big liability) but you do not have the productive asset to balance it out.

• And you still have to pay back the loans.

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Goal of Getting more Education or Training

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• While personal fulfillment or pursuing interests are big reasons for getting more education or training, for most people the goal is having a career or the opportunity to get a better paying job.

Career, Education and Training Planning Process

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• Step 1: Set education, training and career goals• Step 2: Research careers/jobs• Step 3: Develop plan to achieve career goal• Step 4: Evaluate whether career or job in your

chosen career will lead to financial independence• Step 5: Get financial resources together for

education and training• Step 6: Create budget for time during which

enrolled in education or training program• Step 7: Implement your plan

SMART Career, Education and Training Goals SMART Not SMART

I will become a nurse.

Not specificNot measurableNot achievableNot results-orientedNot timebound

I will become an oil field welder by May 2013.

X

Not specificNot measurableNot achievableNot results-orientedNot timebound

I will go to college.

Not specificNot measurableNot achievableNot results-orientedNot timebound

I will complete high school and earn a high school diploma by June 2014.

X

Not specificNot measurableNot achievableNot results-orientedNot timebound

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Return on Investment from Education and Training

• You are investing– time – money and other

resources for training or education after high school

– you may also be taking on debt (and obligating future income)

– you may have also given up other opportunities to be in school--the chance to take a job or more time with friends

• Your are getting a better chance – to get to a job, – keep a job,– avoid unemployment, and– earn more money relative

to someone with less education or training.

These are your returns on investment from education or training.

Visual Aid 4.9

Benefits of Career Research

• Researching careers helps ensure the time and money you invest in education or training is not wasted based on the best information you have today.

• You will have a realistic sense of the kinds of jobs (known now) are in your career and what they earn—to start and the median wage or salary.

• You will understand your working conditions.• You will understand the job outlook.

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Career Planning—Goals and Benchmarks

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To complete become a licensed practical nurse by July 2015. Goal 1: Graduate from high school in June 2013. Benchmark 1: Complete all required credits for graduation by January 2013. Goal 2: Graduate from Community College in May 2015. Benchmark 1: Complete application for community college by February 2013. Benchmark 2: Complete and submit Chafee Grant Application, the Free Application for Student Aid (FAFSA), and Chafee Need Analysis Report (NAR) by June 30, 2013. Benchmark 3: Enroll in Community College as by August 2013. Benchmark 4: Get books and equipment required for courses by August 2013. Benchmark 5: Complete plan for courses with academic advisor in August 2013. Goal 3: Pass LPN examination by June 30, 2015.

Career Planning—Resources

• Resources—things you will need to reach your benchmarks and ultimately your goals.

• Money, time, the expertise of other people, information, books, computer, equipment, transportation, and childcare are example of resources you may need to be successful with your education, training and career plan.

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Financial Independence and Career Goals

• Financial independence is often a goal of having a career or getting more education and training—so you can get a better paying job.

• Researching careers and projecting whether your likely wages will cover your living expenses is a key skill in both financial and contingency planning.

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Budget Categories

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Housing

Includes all utilities except phone and cable.

Actual standard is based on fair market rents. The rent is based on payment at in the 40th percentile and provides for a residence that is minimally decent.

Child Care

Assumes children under three are in full-time home based child care, children 3 – 5 (preschoolers) are in center-based child care, and children 6 – 12 are in before and after school care. Actual standard is based on the Child Care Rate Market Survey and based on payment at the 75th percentile.

Food Based on the USDA Low Cost Food Plan, which is 25% greater than the Thrift Food Plan.

Transportation Assumes the cost of owning and operating an average car unless adequate public transportation is available.

Health CareIncludes the employee’s share of premium payments and all out of pocket expenses—co-payments, non covered expenses, dental, etc.

Miscellaneous

Includes clothing, shoes, all household products (cleaning supplies), household items, personal hygiene (including diapers) and phone. DOES NOT include recreation, entertainment or savings. The actual standard is based on 10% of all of the other costs.

Taxes Includes state sales tax, federal and state income tax and payroll taxes.

Natasha’s Budget

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Budget Category Amount

Housing $722

Child Care $0

Food $255

Transportation $287

Health Care $127

Miscellaneous $263

Taxes $0

Total $1,654

Total X 12 months = Annual Wage Needed to Support Budget $19,848

Annual Wage (above line) / 2080 = Hourly Wage $9.54/hour

Drew’s BudgetBudget Category Amount

Housing $613

Child Care $412

Food $336

Transportation $232

Health Care $319

Miscellaneous $298

Taxes 0 (because of tax credits)

Total

$2,210

Total X 12 months = Annual Wage Needed to Support Budget

$26,520

Annual Wage (above line) / 2080 = Hourly Wage

$12.75/hour

Visual Aid 4.16

Allocation of Income for Natasha

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Note: Net pay of $1,858 calculated using gross to net pay converter. Total amount to cover basics was subtracted from this amount to identify amount left over the pay for other expenses and goals, which was $204/month.

Allocation of Income for Drew

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Note: Net pay of $2,028 calculated using gross to net pay converter. Total amount to cover basics was subtracted from this amount to identify amount left over the pay for other expenses and goals, which was $182.

Strategies if Starting Wages Do Not Support Basic Needs

• Determine whether with time and persistence, you will earn more.

• Determine whether you can reduce any basic expenses.

• Identify work supports or public benefits:– SNAP—Supplemental Nutrition Assistance Program commonly called Food

Stamps. Check to see if you are eligible: http://www.snap-step1.usda.gov/fns/

– Public Housing– Child Care Support—this applies only if you have children– Energy Assistance Programs—you can apply for these to help pay for utilities

(To check to see what benefits you may be eligible for visit: http://www.benefits.gov/.)

• Consider looking at additional careers or the value of more education within your career

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Paying for Post-Secondary Education• If it must be paid back under any circumstance, it is a loan.

• If it never has to be repaid, it is a grant or a scholarship.

– Grants come in the form of federal aid and state grants. They are generally given to students that have financial need. As a young person in foster care, there is a specific program just for you to help you pay for postsecondary education or training—the Chafee Education and Training Voucher (ETV) Program.

– Scholarships are like a contest. You are competing against other students to win funding based on

your special accomplishments or traits.

• You should always apply for aid and ETV funds.

• To do this, you have to complete the Free Application for Federal Student Aid (FAFSA). This form can be overwhelming. Get help completing it, and make sure you get it done before the deadline in the state where you are applying for schools.

• Not every young person who is eligible for Chafee ETV funding will get it. Because of funding limitations, there is a chance that demand for the funds may be greater than the available funding in any given year. – http://www.fafsa.ed.gov/– http://www.fafsa.ed.gov/deadlines.htm Visual Aid 4.20

Federal Loans• Federal loans—To qualify for federal loans, you must complete the FASFA. There

are several different kinds of federal loans, but the one you will likely use as an undergraduate is the Stafford Loan. There are two kinds of Stafford loans:

– Subsidized Stafford Loans—the interest is subsidized by U.S. government on the basis of need

at 4.5% 2010/2011 and 3.4% 2012/2013. Right now, the rate is expected to increase to 6.8% after the 2012/2013 school year.

– Unsubsidized Stafford Loans—the interest is charged right away at fixed 6.8%; if the interest

is not paid interest it gets capitalized. This means you will start paying interest on your interest.

• One federal loan, the Perkins Loans, goes to colleges and universities. These loans are for any student with low income or economic hardship. While the funds are federal, the university or college is the lender.

• If you do need loans, as a young person in, or formerly in, care you will most likely qualify for a Subsidized Stafford Loan and a Perkins Loan through the college or university you attend.

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Private Loans• Private loans—Private loans do not require a

FASFA. But your credit report and credit scores will be considered. Private loans generally cost more—they have higher interest rates--and fewer repayment options than federal loans.

As a young person in, or formerly in, care, only consider private loans if you have exhausted all federal, state or college-/university-based sources of funding.

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Chafee ETV

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• As a young person who has been in or is currently in foster care, the first source of funding you can count on is the Chafee ETV (Education and Training Voucher) Program.

• You can get up to $5,000 for 5 years until you are 23 years old as long as you are enrolled in

the program before you are 21.

• This money can be used for a broad range of expenses. The funds are generally applied as follows starting with the top of the list:1. Tuition2. Balances due at the school3. On-campus room and board4. One computer package5. Federal student loans6. Study abroad through qualifying schools7. Rent8. Food 9. Transportation10. Health Insurance Premiums11. Dependent childcare expenses

Resources for Finding Scholarships

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• Foster Care to Success (www.fc2success.org) runs two scholarship program for young people who have been in care—The Sponsored Scholar Program and the Casey Family Scholars Program.

• FastWeb (www.fastweb.com) is considered the most comprehensive online scholarship search engine.

• Horatio Alger Foundation (www.horatioalger.org/scholarships/index.cfm) provides scholarships to young people who have financial aid and want to use their college education to help others.

• Finally, your public library can also be a good place to find scholarship information especially if they have a Foundation Center Cooperating Collection. The Foundation Center has the largest database of grants for individuals and organizations. As someone seeking a scholarship, you are an individual grant seeker. Check this website http://foundationcenter.org/collections/ to find the Foundation Center Cooperating Collection closest to you. If you live in New York City, Atlanta, Cleveland, San Francisco or Washington, DC you can visit a branch of the Foundation Center.

How to Spot a Scholarship Scam

• Requires a lot of personal information up front. (“We need your Social Security Number to process these requests.”)

• Pressures you to act. (“If you don’t act by midnight tonight, the money will be gone.”)

• Does not have a phone number.• Has a mail drop or residential

address for return forms.• Is filled with typos and spelling

errors.• Has material that looks like they

are from the federal government but are not.

• Is vague with the specifics.

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• Seems too good to be true.• Requires money from you

upfront for information—application fees, loan fees, information fees, etc.

• Claims guaranteed winnings.• Make overly positive claims. (“We

have access to millions of dollars in secret scholarships!”)

• Claims that most scholarship money goes unclaimed—this is not true.

• Offers to apply on your behalf.

Matching Sources and Uses for Peter Tuition

discount Pell Chafee ETVOpportunity Passport™

Matched Savings

Work Study Income Scholarship Other

Total Resources

Budget

School Tuition

School Fees

Books

Computer & software

Housing & Utilities

Phone and Data Plan

Food and Household Supplies

Transportation

Miscellaneous

TOTAL BUDGET

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Three Kinds for Post-Secondary Institutions

• Public institutions—this means they get funding from the federal and state government to operate. They are nonprofit.

• Private, nonprofit institutions—this means they get private support from individuals, businesses and foundations to operate. They are nonprofit.

• For profit institutions—this means they get funding from shareholders to operate. They are for profit. Their goal is to earn returns for their shareholders. Most can accept Federal Aid (Pell grants and federal student loans, for example), which makes it hard to tell they are for profit.

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The Costs of SchoolsCosts For profit

institutions2-year public

colleges4-year public

colleges4-year private

nonprofit colleges

Federal loans per student

$11,415 $759 $3,512 $5,769

Pell Grant per student

$2,370 $773 $738 $632

In-state tuition per

student

$13,103 $2,510 $5,096 $24,470

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