of Dallas, El Paso Branch Paying for College How do I pay for college? Lupe Mares Federal Reserve Bank of Dallas, El Paso Branch The views expressed in this presentation are strictly those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Dallas or of the Federal Reserve System.

2 years for their masters 5 more years (average) for a Ph.D How do I pay for college? Some individuals begin saving early in life but may not have saved all the money they will need to pay for their college 4 years bachelor degree 2 years for their masters 5 more years (average) for a Ph.D = a total of 11 Years

Early college high school Get to know your counselors Different types of schools Ask Questions???

Saving for College Savings account 529 Plan Many of you may have already started saving for your education or your child’s education. Even saving a small amount can make a difference in your ability to afford college for yourself or your child. A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996.

types of financial aid: There are three main types of financial aid: Many of you may have already started saving for your education or your child’s education. Even saving a small amount can make a difference in your ability to afford college for yourself or your child. Work Study Gift Aid Student Loans

Gift Aid Gift aid is money that does not have to be repaid. It can be in the form of either grants or scholarships.

Grants are based on financial need and they can come from: Gift Aid Grants are based on financial need and they can come from: Federal government State government College or career school Private or nonprofit organization FAFSA (Free Application for Federal Student Aid) is the application for all federal grants fafsa.ed.gov You must follow the grant’s requirements in order not to have to pay back part or all of the grant.

Gift Aid FAFSA More than 70% of students receive some type of aid. It begins by filling out the FAFSA and it’s FREE to fill out! More than 70% of students get some type of help to pay for college. This help is called financial aid. To receive most types of financial aid for yourself or your child, you will have to fill out the Free Application for Financial Aid (FAFSA). For your child this will have to be done their senior year in high school . In the FAFSA you will provide information about your finances, like income, savings, debts and assets.

Scholarships come in many forms: Gift Aid Scholarships come in many forms: Merit based (grades, volunteer work, community involvement, athletics, music etc.) Other criteria (military service, where you live, ethnicity) Scholarships come from many sources: College Companies Non-profits Religious groups Clubs and organizations

Gift Aid A scholarship might pay the entire tuition cost or it may be a one ̶ time award of a few hundred dollars. Many times scholarships are not awarded because no one applies for them. Any scholarship will help with the cost of your education or your child’s education.

Work Study Work-Study programs is part-time work while enrolled in school, determined by FAFSA. The Federal Work Study program is a federally funded program in the United States that assists students with the costs of post-secondary education. The Federal Work Study Program helps students earn financial funding through a part-time work program.

Student Loans Unlike gift-aid and work-study, student loans have to be repaid with interest. It is important to understand: Who is making the loan Terms and conditions of the loan

It’s important to compare the interest rate, grace period, and fees Student Loans Government loans offer borrowers: Lower interest rates Flexible repayment options Private loans: Offered by banks or credit unions It’s important to compare the interest rate, grace period, and fees Flexible repayment options means that you can defer payments until the student graduates from college, however it’s very important to stress that if students stop going to school, they will have to start paying the loan immediately.

Important definitions Student Loans Important definitions Defer: Some federal loans allow you to pay back the loan after graduation. Interest rate: Fee you pay for borrowing the money. Need-based: The federal government offers loans to students who cannot afford the cost of college. (FAFSA) Subsidized: The government pays the interest on the loan while in college. Flexible repayment options means that you can defer payments until the student graduates from college, however it’s very important to stress that if students stop going to school, they will have to start paying the loan immediately.

Student Loans Types of Loans Need-based Loans: Federal Perkins Loans – awarded by colleges to students with the highest need. Federal Direct Subsidized Loans – borrowing limit, increases for every year of school completed. Non-Need-based Loans: Federal Direct Unsubsidized Loans – interest fees are added to amount borrowed to be paid after graduation. Federal parent PLUS Loans – parents borrow the total cost of college, minus any financial aid received. Flexible repayment options means that you can defer payments until the student graduates from college, however it’s very important to stress that if students stop going to school, they will have to start paying the loan immediately.

Student Loans State Loans: The U.S. Department of Education’s list of state higher-education agencies shows what state loans are available. Not need-based or subsidized. Private Loans: Not need-based or subsidized. Commitment to repay (parent in case student fails to pay) Financial institutions (may have higher interest rates) Private organizations & foundations (lower interest rates) Some colleges offer loans (lower rates than federal loans) Flexible repayment options means that you can defer payments until the student graduates from college, however it’s very important to stress that if students stop going to school, they will have to start paying the loan immediately.

Usually higher than federal rates; variable Loan Need-Based? Subsidized? Sponsor Borrower Interest Rate Loan Origination Fees Direct Subsidized Yes Federal government Student 3/4% (fixed) 1.051% (after 3/1/13) Direct Unsubsidized Loan No 6.8% Perkins 5% None Parent PLUS Parent 7.9% 4.204% (after 3/1/13) Private (Alternative) and State Banks, colleges, foundations state agencies Student with credit-worthy cosigner Usually higher than federal rates; variable Varies

bigfuture.org Visit BigFuture.org. Great information to help with paying for college.

3 Steps to financial aid Step 1: Submit the FAFSA Step 2: Find out if other financial aid forms are required Step 3: Search and apply for private scholarships Why it’s important Completing the FAFSA allows you to be considered for the greatest amount of financial aid from federal, state and college sources — and it’s free to fill out. Many colleges also award aid from their own funds — money from donations and gifts from alumni. Not all colleges require extra forms, so be sure to find out if yours does. While many private scholarships may only award a few hundred dollars, this money can help you pay for books or living expenses. What types of aid this step could get you The FAFSA is the key to being considered for the most types of aid, including: -Grants -Scholarships -Work-study jobs -Loans Aid from colleges can include: -Grants -Scholarships -Loans Aid typically consists of: -Grants -Scholarships -Internships

3 Steps to financial aid Step 1: Submit the FAFSA Step 2: Find out if other financial aid forms are required Step 3: Search and apply for private scholarships When you can begin applying The FAFSA is available online Jan. 1. CSS/Financial Aid PROFILE®: Available online Oct. 1. Your college’s own forms: Ask the financial aid office or check the college’s website Check with specific organizations. When to submit application Check college and state grant deadlines and submit the form by the earliest date to receive the most aid possible. You can request your FAFSA be sent to several colleges. And remember to reapply every year. Each college sets its own deadline. Be sure to meet the priority deadline to be eligible for the most aid possible. Each scholarship program sets its own deadline. Remember to read applications carefully and follow the instructions.

3 Steps to financial aid Step 1: Submit the FAFSA Step 2: Find out if other financial aid forms are required Step 3: Search and apply for private scholarships Where you can find applications FAFSA Website fafsa.ed.gov College Scholarship Service (CSS)/Financial Aid PROFILE website student.collegeboard.org/css-financial-aid-profile Your college’s financial aid office or website Contact specific organizations directly, or use a search tool, such as scholarship search bigfuture.collegeboard.org/scholarship-search Where you can find helpful resources How to Complete the FAFSA Free Webinar: Completing the FAFSA How to Complete the CSS/Financial Aid PROFILE Free Webinar: Completing the PROFILE How to Apply for a Scholarship

Questions?