Financing Your DreamsFinancing Your Dreams

Juanita E. HarvinEducational Liaison – US Africa Command

http://planningforlifeafterhighschool.info

Trends

College costs rising faster than the rate of inflation

Less gift financial aid, more loans Normal distribution of student support:

2/3rd savings/current income/loans1/3rd gift aid/scholarships

Average student loan debt at graduation is $20,000

Average credit card debt at graduation is $5,000

Sources of Financing your Sources of Financing your DreamDream

• Savings and current income of parents and student

• Federal grants, loans and workstudy• Civic/community organizations• Religious organizations• Business and professional groups in

field of interest• Military organizations• ROTC/National Guard• AmeriCorps• State reciprocal agreements

Free Application for Federal Student Aid (FAFSA)

Required for federal assistance: grants, loans, workstudy

Can be completed and submitted online

May submit as of 1 Jan for following school year

Information from current tax forms required

FAFSA TIPS

Read form and instructions carefullySpecific definitions for terms

Apply earlyASAP after 1 Jan for following school yearElectronic filling quickerTax forms need to be completed, not filedCan “estimate” on FAFSA but file correction

as soon as possible

FAFSA Tips (cont.)

Provide accurate and truthful information on the FAFSASchool, state and US Dept of Ed can

request your tax formsAid based on inaccurate info must be paid

back, sometimes with penaltiesCould be considered “fraudulent”

Federal Aid Process

Complete and submit FAFSA Information evaluated and Student Aid

Report (SAR) issued to student and schools indicated by student

SAR indicates Expected Family Contribution (EFC)

School cost of attendance – EFC = financial need

Data Release Number (DRN) found in lower left corner of SAR

Federal Grants

$100 - $4050 awards that don’t have to be paid back

Two types:Pell GrantSupplemental Educational Opportunity

Grants

Federal Loans

Direct or Federal Family Education Loan (FFEL)

Subsidized or unsubsidized Subsidized no interest charges while student Variable rate interest <8.25%, currently 4-5%

Stafford or Perkins Stafford has loan origination fees

PLUS Loans to parents

Work studyWork study

• Assistance received in exchange for student work

• Part of financial package offered to cover financial need may include work study

• Jobs offered often provide good experience and develop job skills

Savings ProgramsSavings Programs

• Coverdale • State 529 plans• Savings Bonds for Education Program• Pre-Pay Program• Credit Union Plans

State 529 PlansState 529 Plans

• Vary greatly among states• Savings and prepaid tuition programs• Can save more than in Coverdale and

no income limits• Tax benefits• Donor controls account• No investment decisions, managed by

plan• Tax and FSSA treatment tricky

Pre-PayPre-Pay

• Pay now attend later• State by state variations• Can be utilized at a Jr. College,

Vocational or 4 year• Money can be refunded• Some plans may be transferred out of

state. (Small penalties)

GPA Scholarships

Florida “Bright Futures” 2.5 – 4 gpa3.5 = 75% of tuition paid3.0 = 50% of tuition paid

NJ 3.5 gpa and above 50% of tuition paid

Georgia “Hope Scholarship”2.5 gpa and above pay up to 100% tuition

Savings Bonds for Savings Bonds for Education ProgramEducation Program

• Eligible bonds cashed for qualified higher education expenses may be completely or partially excluded from federal income tax

• Series EE issued on or after January 1990 and Series I

Consumer Decision-MakingConsumer Decision-Making

• Do research and comparison shop

•Be open-minded• Visit school campuses if possible

– Junior year

• Consider community college for first year or two– Much less expensive– Some students not ready academically or

socially

Financial EducationFinancial Education

• Money management skills critical– Easy to get credit cards– Making big financial decisions

• Realistic expectations– “needs vs. wants”– Develop budget

“A Good Financial Plan Distinguishes Between

Needs and Wants” SMART Goals

Specific:“I want to save for tuition and fees for the first year of college” Not “I should start saving for college”

Measurable: “I need have $300 for books for my first semester” Not “I need some money for books”

Adjustable:“I’ll save $25 every week until next year” Not “ I’ll win a weekly radio call-in contest to get the money to pay”

Realistic: “ I plan to have $1200 by one year” Not “ I would like to have $5000 by one year”

Time-Oriented: “I’ll have $300 every three months” Not “I should have half of the money saved by summer time”

Writing down you goals make them REAL!

Warnings!Warnings!

• Be wary of organizations that charge fees “to find money for college”

• Don’t jeopardize your retirement– Avoid tapping into retirement plans– Continue current retirement contributions– Avoid refinancing your home– School loans available, but not retirement

loans!

For Further Information:

FAFSA form www.fafsa.ed.gov

U.S.Dept of Education www.studentaid.ed.gov www.students.gov

Existing student loan information www.nslds.ed.gov

Information on 529 plans www.savingforcollege.com

Americorps program information www.cns.gov