vuefolio seminar for oracle owl sc may 13 2015
TRANSCRIPT
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SAVING and PAYING for COLLEGE COSTS
IMPACT
on FINANCIAL AID and your RETIREMENT
Oracle, Santa Clara
May 13, 2015
Oindrila Ray
Vuefolio is a SEC Registered Investment Adviser
Do not distribute without permission
www.vuefolio.com Do not distribute without permission
Vuefolio is a SEC Registered Investment Adviser
SAVING and PAYING for COLLEGE COSTS
IMPACT
on FINANCIAL AID and your RETIREMENT
Oracle, Santa Clara
May 13, 2015
Oindrila Ray [email protected]
www.vuefolio.com
Disclaimers
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• All materials, graphs and analysis are solely for educational purposes.
• This is not a pitch for any investment product.
• Please do not consider this as financial or investment advice.
• We are not tax lawyers or accountants.
• We do not represent nor endorse any college, educational institution or any funds that may be mentioned in the presentation.
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As PARENTS,
we try to SUPPORT our CHILD’s
ASPIRATIONS and EFFORTS
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The College Pyramid
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Other
Private
Colleges
Need/Merit Aid Acceptance Rates
Need Sensitivity
Alumni Network
College Rankings
Initial Placement
Elite
Private Colleges
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Public
Flagship Public
Private
Elite Private
20,000 30,000 40,000 50,000 60,000 70,000 80,000
Out-of-State …
Cost of Attendance Every Year
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UCs $34,000
CalStates $22,000
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NET PRICE
“personalized prices”
Families pay
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Your Price Tag for College
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Family Income # of kids attending college
Non Retirement Assets
Financial Aid available
Your “Actual Cost of College” or NET PRICE depends on:
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Ex: Harvard vs. UC Berkeley estimated 2014-15 cost
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Net Cost: Harvard
Aid: Harvard
Net Cost: UC Berkeley
Aid: UC Berkeley
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000 E
sti
mate
d C
ost/
Aid
Family Annual Income
Typical California family with one child in college.
Besides income, the cost of attendance will also depend upon the asset level of the family.
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Paying for NET PRICE
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Source: Sallie Mae “How America pays for College 2014
PARENTS
FINANCIAL AID
STUDENT LOANS
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FINANCIAL AID: NEED and MERIT
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Financial Aid
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Need based Aid
• Income
• Assets (non retirement assets)
• Family profile
• Home equity (most private colleges)
Merit Aid
• GPA
• Leadership
• Sports
• Extracurricular
• Diversity
• Others…
Athletic Scholarships
• NCAA Div I & II
• Few sports
• Low Odds: 2% of HS seniors
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Financial Aid
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Federal Grants:
Pell Grants
State Grants:
Cal Grants Institutional Aid
Federal Student Loans
Sources of Need based Aid
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College vs Financial Aid
Source: College Board “Trends in Student Aid” 2014
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First Year Merit Aid: Private Colleges
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Carnegie-Mellon, 40%
Boston College, 32%
NYU, 32%
Wellesley, 29%
USC, 20%
Harvey Mudd, 19%
Johns Hopkins, 17%
Rice, 17%
Georgetown, 17%
Northwestern, 15%
Vanderbilt, 13%
Average Merit Aid Cost of Attendance College, Admission Rate
MERIT AID: Only 10-20% of student population
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Merit Aid : Private Colleges
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Source: College Board “Trends in Student Aid” 2014
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How can families in Bay Area get Financial Aid?
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• Demonstrate need based on income
• Multiple kids in college at the same time
• Private Colleges which offer Merit Aid
• Out of State Public Colleges with Merit Aid
• UC: Regent’s scholarship. CalState: Trustee’s award etc
• Many colleges will send offers even before application based on SAT and other
scores
• External Scholarships
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PAYING
for
COLLEGE
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Savings
Bay Area Parents Pay for College…
Student
&
Other
Loans Relatives
Savings
Savings Income
Savings
Student Loans
Income
Income
Loans,
Retire-
ment
Home Equity
Student Loans
Income
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Key to paying for college
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PAY FOR COLLEGE
WITHOUT HURTING
your RETIREMENT or FINANCIAL AID
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The strategic way to pay for college
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Financial Aid Eligibility
Aid beyond first year
Tax efficient Investments
Sufficient Income
Student Loans
Siblings Retirement
Savings status
Home Equity
Parental Loan Impact
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Paying for College
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529 Plans Investment/
Savings Accounts
Custodial Accounts
ESPP
Roth IRA
Federal Student Loans
Parent Plus Loans
Home Equity Loan/ Line of Credit
Private Education Loans
Loans against 401k accounts
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Worst way to pay for college
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Dipping into your 401k, IRA,
or other retirement savings
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Paying for College: Roth IRA
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Pros
Penalty free for education
Assets not counted on financial aid forms.
Contribution amount can be withdrawn tax free
Cons
Pay income tax on the earnings if withdrawing before 59½ yrs
Withdrawal counted as income on next years financial aid form
Using up your retirement money
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Paying for College: 529 Plans
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Pros
Earnings grow tax free
Only 5.64% of assets are counted against aid
Not counted as income on next years aid forms
Cons
Non education purposes, 10% penalty and tax on
earnings
Cannot claim Education tax credits
Not all plans are the same!
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Late to the game?
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How much
college will cost
you: NET PRICE
Any chance of
FINANCIAL AID?
Get your 529 tax
breaks
Status of non
retirement
investments
Withdrawal
reduce financial
aid? Be
defensive
Loans vs choice
of college or both
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College
Metrics/
Statistics
Family College
Savings
Smart Financial Planning for College
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Smart Financial Planning for College
+
Hyper Local Cohorts
Your Plan
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Online Resources
Information on saving and paying:
https://www.vuefolio.com/
https://www.edvisors.com/
Information on private loans:
https://www.sofi.com/
https://www.tuition.io/
https://www.edvisors.com/
Information on net price/aid/loans:
http://www.ed.gov/
https://fafsa.ed.gov/
https://studentaid.ed.gov/
http://www.cde.ca.gov/
https://www.collegeboard.org/
https://collegeabacus.org/
https://www.meritaid.com/
https://www.scholarships.com/
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Thank you for your time.
To learn more, check out our website
https://www.vuefolio.com
Disclaimer: Vuefolio does not render legal, accounting, or tax advice. This presentation is solely for informational purposes and is not a
solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Vuefolio is not responsible for any
college costs, financial aid, student or any other kinds of loans, investment performance of the 529 state plans. Any data quoted
represents historical information. Any past performance quoted is no guarantee of future results. Vuefolio is a SEC registered Investment
Adviser.