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Welcome to the Woonsocket Harris Public Library

How to Fund a College Education

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1 Don’t Become a Statistic

2 College Selection Process and Website map

3 Financial Resources Guide & Federal Loans . . . . . . . . . . . . . . . . p 41

4 State Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p 42

5 Federal Loan Forgiveness Programs & Repayment Plans . . . . . p 43

6 Loan consolidation, Refinancing and Scams . . . . . . . . . . . . . . . . p 45

7 Tax Credits and Deductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . p 47

8 FAFSA Rules of the Game EFC Formula. . . . . . . . . . .. . . . . . . . . p 48

9 Mary Data Collection Sheet for EFC and FAFSA . . . . . . . . . . . . p 49

Open Excel Financial Resources Worksheet

EFC Data Collection & Funding Worksheet

Open website to Financial Resources

Net Price Calculator, EFC 4Caster & Student Loan Calculator

10 Practical Solutions to Reduce Cost . . . . . . . . . . . . . . . . . . . . . . . p 16

11 22 colleges within commuting distance of Woonsocket

12 Printable forms: College Funding Worksheet &

EFC/FAFSA Data Collection Sheet

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Don’t Become a Statistic

Colleges Average

Debt Direct Loan

5.05% PLUS Loan

7.6%

Private 11%

RIC 25,791 274.18 307.49 355.37

URI 33,335 354.38 397.43 459.19

U. Maine 34,741 369.33 414.20 478.56

UNH 33,013 350.96 393.60 454.75

45 Million students owe 1.52 Trillion dollars

4.7 Million students have defaulted

2.5 Million student Loans are in Forbearance (payments on hold) Source: www.studentaid.ed.gov

Federal laws prevent student loans from being discharged through

bankruptcy

Federal Government expects to earn 127 billion in profit over the next

ten years

Smallest student loan debt upon graduation:5,632 (Bethel College)

Largest student loan debt upon graduation 77,353

(New School College of Performing Arts)

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Website Map survivingthecostofcollege.com

HOME PLANNING FINANCIAL SELECTION APPPLICATIONS ALERTS

Get Organized College-major

search Gifted Income: Mary Smith SAT website link COLUMNS

PLANNING College Search Federal Grants Comparisons

worksheet ACT website link

BOOK Resources

FINANCIAL Top-ten schools State grants Comparisons

directions Test optional

schools

SELECTION Services for disabilities

College Scholarships

Scholarships website

APPLICATION Taking gap year Private

scholarships Collegefactual

website FAFSA description

ALERTS Study Overseas Tax benefits Net Price Calculator

FAFSA student ID

COLUMNS Transferring Loan forgiveness College visit

checklist Federal college

codes

Off-campus

housing Earned income:

College selection checklist

FAFSA registration website link

Internship interview

Employment FAFSA Application

PDF

Best places to

work Savings + 529 plans

Wills and trusts Fed, state & private loans

CSS Profile description

Who are you, who, who

Loan Servicing Companies

CSS Profile guide

Learning style Calculations: CSS Profile school

list

Grit survey Net price calculator

CSS Profile

website link

Career cluster survey online

EFC Calculator Profile application

PDF

Student Loan

Calculator

Loan payment

Records

Common Application

EFC Data

Collection form

EFC Formula Form A & B

Student Debt

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Financial Resources Guide to Funding a College Education

The way you pay for college, like a pie, can be sliced in many ways, but dividing these options into the two

categories of (1) what is Given to you (gifts and discounts) and (2) what you Earn provides a

manageable framework of solutions that will help you plan a college funding program.

Gifts and Discounts Earned Income

1 GRANTS 1a Federal Grants based on need Pell Grants $6,095 FSEOG Supplemental Education Opportunity $4,000

Iraq/Afghanistan $6,095 TEACH Teacher Education Assistance $4,000

Federal Work Study Program 1b State Grants based on need Federal and state grants require filling

out FAFSA which asks for parent and

student income and savings as

reported on a 1040 tax form

2 SCHOLARSHIPS

2a College Scholarships are based on the

student's GPA and SAT scores and/ or a

set of skills, either athletic, musical,

artistic, etc. These scholarships are

tuition discounts anywhere from 20 to

100 percent. Most of these discounts

come from private nonprofit schools

that require filling out the CSS PROFILE.

2b Private Scholarships also look at the

student’s academic achievement but

then veer off into very specific

parameter including skills, interests,

gender, culture, religion parent's

employment, and where you live.

3 Tax Benefits and Loan Forgiveness. A

portion of the cost of college can be

deducted from your taxes and federal loans

can be forgiven based on employment and

loan repayment plan.

1 EMPLOYMENT

Private employment part or full time

Cooperative Education

Work Study Programs based on need

Military pays you for joining up

2 SAVINGS

Savings accounts, CD's, bonds, IRAs

And 529 accounts.

3 FEDERAL LOANS

Direct Subsidized 5.05% based on need

Direct unsubsidized 5.05%

PLUS loans 7.6%

4 STATE SPONSORED LOANS 3.99 -7%

5 PRIVATE LOANS

Bank loans for college

Home Equity Loans

SallieMae and other high interest

rate financial institutions.

Remember this

Federal and state grants and loans are

based on financial need. The less you earn

the more you receive, theoretically.

College scholarships are based on merit,

(GPA and SAT scores) or a set of skills. The

higher the achievement, the more you

receive, theoretically.

Of course, your scholarship depends on

where you apply and your competition.

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State Sponsored Student Loans

While the college’s financial aid package will most likely include the option to receive a federal loan,

subsidized or unsubsidized, at 5.05 percent interest, don’t neglect the loan options offered by your state’s

higher education loan authority at competitive rates. Rhode Island starts at 3.99 percent interest compared to

the federal government’s rate of 5.05%. Is this too good to be true? Could be.

Just remember, when you borrow money from the state or a private financial institution, you lose the

protection of federal loan forgiveness and adjusted repayment plans.

Below are three New England state’s programs. A complete list of all states is on our website.

Connecticut Higher Education Supplemental Loan Authority (CHESLA)

Website: www.chesla.org

Student Loan Interest Rate: 4.95 %

Refinance Rate: 4.75%

Massachusetts Department of Higher Education (OSFA)

Website: www.mass.edu/osfa

Massachusetts No Interest Loan Program (NIL)

Maximum amount per academic year: $4,000

Rhode Island Student Loan Authority (RISLA)

Website: www.risla.com go online to apply for a loan

Student loan interest rate varies between “3.99% to 6.24%”

3.99% rate if payments begin at time of loan and paid by automatic withdrawal. Max.

Refinance Rate: 3.49%

For college planning assistance in Rhode Island, contact:

RISLA College Planning Center

go online to make an appointment

400 Bald Hill Rd. (Rte2) Warwick Mall

Next to Liberty Travel 401-736-3170

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Federal Loan Forgiveness Programs

Program Links Requirements Action Application Links

Public Service Loan

Forgiveness Program

Full time employment at a federal, state or local government or a 501(c)(3) non-profit.

Forgives Federal Direct student loans after 120 payments

Employment Certification Form

Teacher Loan

Forgiveness Program

Teach five years in low income school. (Title I),

or teach in a high need area, math, science, special education.

Forgives Federal Direct student loans

up to $17,500

Teacher Loan

Forgiveness Application

NURSE Corps Loan

Repayment Program

Work two years in a designated critical shortage facility

Forgive Federal Direct student loans up to 60 percent. Many individual states also

have forgiveness plans.

Application and Program Guide

Military

Programs are for newly enlisted personnel

Each branch of the military has its own forgiveness plan.

Student Loan Repayment Program

Unique

Circumstances

School closed or made false representations.

Student became disabled or deceased.

Loans are forgiven 100 percent

School Closure

Federal Loan Repayment Plans

Standard repayment plans are designed to be paid back in ten years. If your income is not great

enough to meet that obligation, there are other repayment plans you may use.

Repayment Plan Description

Pay As You Earn Repayment (PAYE)

Caps payment at 10 percent of discretionary income for 20

years. Any balance left over is forgiven. Good for Direct Loans and Direct Consolidated loans only.

Revised Pay as You Earn (REPAYE )

Revised to include 25 year loans for graduate or professional students.

Income Based Repayment (IBR)

Caps payment at 10 percent for borrowers after 2014 and 15 percent for borrowers before 2014.

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Loan Consolidation, Refinancing and Scams

If you’re desperately in debt with student loans, it is understandable that you would look for a miracle, and

there are plenty of charlatans who would have you believe they can turn water into wine. Student loan scams

are a thriving industry. Remember anytime someone tells you they can provide a service for a fee, you can

do it for free.

Refinancing is taking out a loan with one bank to pay off a loan(s) from the same or another financial

institution. The advantage to the debtor (you) is that a new loan may reduce your monthly payments but

lengthens the payment period unless your loan carries a lower interest rate. The value to the creditor (bank) is

the fees they will collect for processing and carrying your loan. These fees add up to millions of dollars a

year, which makes bank presidents very happy and very rich, or maybe it’s the other way around.

How to lose your federal protection. If you refinance your federal loans into a private loan, you lose all of

the federal protection including loan forgiveness and adjusted repayment plans.

Scams, Cons and Medicine Men. There are more than 300 private “Debt Relief” companies claiming they

can save you thousands of dollars if you sign up for their services charging fees from $600 to $1,500 for their

service. With 45 million adults shouldering 1.52 trillion in student Debt Relief is a lucrative business. Many

of these companies are being investigated or on a “watch list”.

Here are some of the lies they will tell you get your business:

1 They work with Department of Education. No they don’t.

2 Your student loan qualifies to be forgiven. Maybe reduced, but never forgiven.

3 They can put your payments on hold with no penalty. Nothing is free.

4 Your will reduce your monthly payment. Maybe, but the total cost will go up.

5 They talk about the “Presidents New Student Loan Forgiveness Program”.

Ask to be put through to the president to learn the details.

The worst-case scenario experienced by hundreds of students is being sold into making a lower monthly

payment to a company that claims it will pay off the student debt. The company keeps the money for

themselves leaving you holding the bag. Six months later, you receive a letter from the loan servicing

company asking why they haven’t made a payment. The company you’ve been sending your money to, tells

you it is bookkeeping error and not to worry. Another few months go by and you learn the company

receiving your money no longer exists, your increased student loan debt is burying you, and that’s not the

worst of it. Your credit rating has been destroyed and you will never be able to buy car, a home or anything

on credit until you somehow pay off all your debt and re-establish your credit.

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Need a break from making loan payments? there is a way, but it’s not pretty. It’s called Forbearance.

You will pay a fee for entering into this program, and although this allows you to skip a few months of

payment, the interest builds up and is added to your total debt. Thus, you end up owing more money than

when you started the process.

Variable and Fixed Rates. You know this, right? Variable rates are lower than fixed rates at the time of the

loan, but variable rates usually go up later and could eventually exceed the original fixed rate. Stay away

from them unless you’re in for the short term.

Should you default on a student loan, this is what you are up against. Congress gave the industry the

power to attach your wages, tax return, Social Security, and Disability income. There is no limit to the extra

fees they can charge, and state usury laws do not apply. There is simply no greater power in Washington than

the banking industry. If you do walk away, it won’t be long before you feel the noose around your neck. And

now in true Washington fashion, they have added insult to injury by authorizing collection agencies to

charge an additional 16 percent to the value of the loan, which is why, a student’s debt can double and triple

almost overnight.

Protect yourself, organize early. From day one, keep track of your loans, the name of loan, loan servicing

Company, the amount of loan, interest rate and payment due dates while in college to pay interest and

payment date upon graduation that will include interest and principle. I like simple spreadsheets that add up

totals automatically. Use anything you want but keep the information available and up to date.

Lost your records? If at any time you get lost and forgot what loans you signed your life away for, go to the

National Student Loan Data System (NSLDS). Create an account and log in. You will find a list of all your

loans and a whole bunch of personal information you may have forgotten. Keeping track of you is what our

government.

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Tax Benefits There are four tax benefits designed to reduce the cost of college for families and independent students that

are part of the Federal Higher Education Student Aid program and are touted to provide an estimated 36

billion dollars in relief to parents and the independent students attending college. By way of comparison, in

case you are interested, the federal government provides 775 billion in subsidies to the fossil fuel industry.

Now you know where our children stand compared to a gallon of oil and a lump of coal.

Tax Benefit Summary

Tax Deduction Formula. MAGI* - Deduction = Reduced Taxable Income

1 Tuition and Fees Deduction. Maximum amount is $4,000 a year.

Phase out: MAGI $65,000 single, $130,000 Joint return

2 Federal Education Loan Interest Deduction. Maximum amount is $2,500 a year

Phase out: MAGI $65,000 single, $130,000 Joint return

Tax Credit Formula. Taxes owed - Tax Credit = Taxes Paid

3 American Opportunity Tax Credit (AOTC). Up to $2,5000 for 4 Years

Phase outs: MAGI $90,000 single, $180,000 Joint return

4 Life Learning Tax Credit. Up to $2,000 a year for Life

Phase outs: MAGI $66,000 single, $132,000 Joint return

*Modified Adjusted Gross Income MAGI = AGI + pre-tax deductions. Retirement plans, etc.

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FAFSA Rules of the Game

The Free Application for Federal Student Aid (FAFSA) formula to calculate the Expected

Family Contribution (EFC) for each child in college is based on four components.

1 Parent Income 2 Parent assets 3 Student Income 4 Student assets

Each component is weighted differently in the formula. The most notable difference being

parents’ assets assessed at 4.75 percent, while student’s assets are assessed at 20%. This

knowledge alone, once acted upon, will decrease your EFC.

Think of your EFC as zero, then take steps to keep that number as low as possible. Begin

with your income which may not survive a significant adjustment, unless you own a

business, in which case you can reduce your salary and increase your benefits or retirement

plan or purchase equipment, or you can employ your son or daughter and keep those funds

in a separate account (Roth IRA, for example) that does not count against you in the federal

formula. Next, parent’s assets can be reduced if they are contained within an insurance

policy or a retirement plan. Also, ownership of household items. vehicles, boats, valuable

paintings, etc. are not counted in the formula. A second home, however, is counted against

you.

Student income should not be an issue unless they earn over $6,000 and college work-study

programs do not count in the formula. If they earn significantly more, put it into a Roth IRA.

Student assets should be zero because you have removed all money from their name.

Right?

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EFC and FAFSA Four Year Data Collection Sheet Record data below tofill out FAFSA online for Dependent Students Questions listed in order of FAFSA online Numbers in left hand column refer to EFC Worksheet

Student Demographics / Eligibility / School Selection

Student Social Security Number 036-72-111

Student driver license number RI 456789

Highest school grade completed by parent 1 college

Highest school grade completed by parent 2 college

College Selection Summary Record On back:

Name & address of school, and Federal School Code

Parent Demographic Information

Month and year parents were married 9/1/95

Parent 1 Social Security Number 036-38-4444

Parent 1 date of birth 1/1/72

Parent 2 Social Security Number 036-67-5555

Parent 2 date of birth 7/6/73

Parent email address happydaze33

Record and Track Four Years of Data Below Year 1 Year 2 Year 3 Year 4

Number of people in household 4

Number in household attending college 1

EFC Parent Tax and Financial Information

Tax filing status (Filed single, jointly, etc.) Joint

Type of income tax return (1040, 1040A or 1040EZ) 1040

1 Parent(s) Adjusted Gross Income AGI 95,000

2a Parent 1 income earned from work 65,000

2b Parent 2 income earned from work 30,000

8 U.S. income tax paid 9,720

Number of claimed exemptions 4

6 Education tax credits (AOTC or LLTC) 0

6 Taxable student grant and scholarship awards 0

4 Total untaxed income 0

16 Total of cash, checking, savings 11,000

17 Net worth investments (stocks, bonds, trusts) 0

18 Net worth business 0

Student Tax and Financial Information

29 Student Adjusted Gross Income AGI 3,500

30 Income earned from work, salaries, tips, etc. 3,500

34 Taxable earnings: grants and scholarships 0

34 Taxable earnings from work study programs 0

32 Untaxed income and benefits 0

36 U.S. income tax paid (not social security tax) o

45 Total of cash, savings and checking 6,000

46 Net worth investments (stocks, bonds, trusts) 0

47 Net worth of business 0

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Practical Solutions to Reduce the Cost of College

There are many ways to reduce the cost of college; the easiest is to attend a less expensive school. There are a hundred across the country.

1. Appeal. When All Else Fails.

"It's not fair," you say. You may be right. Who am I to judge? If you cannot afford to send

your son or daughter to college without additional federal or college aid and have unusual

circumstances that you can document, e.g. high medical bills or caring for indigent parents,

you may have a point. Most schools have the appeal form on their website that you can

download and fill out. g freshman. The financial aid officer can adjust the input information

to help you, but they cannot monkey with the formula.

2. Commute to School See list of 22 colleges within commuting distance of Woonsocket

Living at home and commuting can cut your college bill almost in half. The only drawback

is the limitation this plays in college selection, but if you have public transportation, an hour

and a half ride is perfect for completing class assignments.

3. College Choice, A and B Schools

Rating colleges A and B is a method that allows parents to look at college selection within

the framework of the student’s educational goals and their own financial situation. If the

educational goals can be reached with a bachelor's degree or less, the undergraduate college

should have a good-to-excellent reputation in the student's major field. If your college-bound

requires graduate school to become a professional, only the graduate school needs to be an

"A" school, the one with a reputation for excellence. The undergraduate school can be a "B"

school, which is often a state college or university.

4. Cooperative Education

Some universities offer cooperative education programs where students alternate between

classes and a job site. Students work off campus for a salary in an area of interest where two

or more students swap roles.

5. Technical Colleges

For some students, technical colleges are the way to go. Most programs are completed in two

years because you only take courses related to a career choice. There are many well-paid

professions to choose from. Be wary during your search. Ask lots of questions.

7. Community College

Community colleges are an excellent and inexpensive approach to completing the first two

years of a four-year degree and is the best financial deal in town. Many states are now

beginning to offer tuition free enrollment. Talk to the school before you begin to make sure

your plan and course of studies will get you to your goal.

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Colleges Within Commuting Distance of Woonsocket RI

School Enrolled Tuition Aid* GPA SAT

G Rate

1 Brown University 10,095 53,418 20,000 3.80 1995 86%

2 Bryant University 3,751 42,109 19,000 3.45 1631 72%

3 Community College of RI 15,758 4,564 3.10

4 Johnson and Wales 8,563 38,508 16,000 3.31 1418 51%

5 New England Institute of Tech 2,793 28,656 2,000 3.15 1440

6 Providence College 4,646 48,764 20,000 3.57 1160 80%

7 Rhode Island College 8,171 8,776 4,000 3.27 880 19%

8 Rhode Island School of Design 2,440 48,370 8,000 3.53 1130 66%

9 Roger Williams University 5,024 33,336 13,000 3.43 1620 55%

10 Salve Regina University 2,823 38,986 19,000 3.47 1606 64%

11 University of Rhode Island 18,089 13,792 8,000 3.44 1617 47%

12 Anna Maria College 1,445 37,130 21,000 3.15 1432 32%

13 Assumption College 2,481 39,598 19,000 3.41 1580 68%

14 Becker College 1,892 38,250 17,000 3.32 1511 28%

15 Clarke University 3,153 44,400 20,000 3.54 1702 77%

16 Dean College 1,301 38,090 18,000 3.08 1394 26%

17 Fisher College 1,923 30,499 11,000 3.15 1374 21%

18 Holy Cross, College of 2,855 50,630 15,000 3.64 1785 91%

19 Quinsigamond Community C. 7,368 5,538 3.12 1444

20 Wheaton College 1,688 50,850 14,000 3.72 1933 74%

21 Worcester Polytechnic Institute 6,642 48,628 18,000 3.69 1848 82%

22 Worcester State University 6,434 9,532 1,000 3.30 1485 36%

* Institutional aid only. Does not include federal grants, workstudy or loans

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Funding Resources Notes

Annual Income: Monthly

Parent

Student

Savings/ Trust Funds

Parent

Student

Other Money

Parent Loan

Total:

Financial Aid

Grants

Scholarships

Work-Study

Student Loan 5.05%

Total:

Total Funding Resources

Cost of College

Tuition

Fees

Books

Lab Material

Room /Rent & Utilities

Food

Personal

Travel

Other

Total Cost of

College

Variance:

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EFC and FAFSA Four Year Data Collection Sheet Record data below tofill out FAFSA online for Dependent Students Questions listed in order of FAFSA online Numbers in left hand column refer to EFC Worksheet

Student Demographics / Eligibility / School Selection

Student Social Security Number

Student driver license number

Highest school grade completed by parent 1

Highest school grade completed by parent 2

College Selection Summary Record On back:

Name & address of school, and Federal School Code

Parent Demographic Information

Month and year parents were married

Parent 1 Social Security Number

Parent 1 date of birth

Parent 2 Social Security Number

Parent 2 date of birth

Parent email address

Record and Track Four Years of Data Below Year 1 Year 2 Year 3 Year 4

Number of people in household

Number in household attending college

EFC Parent Tax and Financial Information

Tax filing status (Filed single, jointly, etc.)

Type of income tax return (1040, 1040A or 1040EZ)

1 Parent(s) Adjusted Gross Income AGI

2a Parent 1 income earned from work

2b Parent 2 income earned from work

8 U.S. income tax paid

Number of claimed exemptions

6 Education tax credits (AOTC or LLTC)

6 Taxable student grant and scholarship awards

4 Total untaxed income

16 Total of cash, checking, savings

17 Net worth investments (stocks, bonds, trusts)

18 Net worth business

Student Tax and Financial Information

29 Student Adjusted Gross Income AGI

30 Income earned from work, salaries, tips, etc.

34 Taxable earnings: grants and scholarships

34 Taxable earnings from work study programs

32 Untaxed income and benefits

36 U.S. income tax paid (not social security tax)

45 Total of cash, savings and checking

46 Net worth investments (stocks, bonds, trusts)

47 Net worth of business