Ways to Pay Personal Contributions 8th Grade Advisory Activity Opening: 3 minutes – The advisor explains that over the next two advisories students will learn about ways to pay for college. Most college students pay for college from a combination of sources. Today they will talk about two types of personal contributions to help pay for college expenses. Students and families can save money and there are special plans to help do that, and when students begin attending college, they can take out loans if needed.

Personal Contributions Save for College Now! Savings: Minnesota 529 College Savings Plan Activity: 23 minutes – Slide 2: The advisor says they will start the discussion on savings, since that is something they can start doing now. Ask if any of the students have savings accounts, and whether they are informal savings accounts parents might maintain or formal bank or credit union savings accounts. State that there are multiple ways to save money, which is always a good financial practice, and there are special ways to save money for college. One of the best savings plans for college is the Minnesota 529 College Savings Plan. (Note: The ‘529’ refers to a provision of the tax laws.) Any funds a student and family deposit in a savings account now for 8th graders can grow over the next 4 years.

Video: 529 College Savings Plan Listen for: What are some advantages of saving money for college using the 529 Savings Plan? When parents use a 529 Savings Plan, does the amount of money they pay in taxes go down? (Click on picture to play video) Slide 3: The advisor clicks on the picture in the slide to show the video about 529 Savings Plans and asks students to listen for answers to the following questions: • What are some advantages of saving money for college using the 529 Savings Plan? • When parents use a 529 Savings Plan, does the amount of money they pay in taxes go down? Facilitate a short classroom discussion on these two questions.

Minnesota 529 Savings Plan Save for College Now! Affordable Can contribute as low as $25 per student Flexibility in how much and how often money is deposited Tax Advantages Can lower parent’s taxes when they contribute to the 529 College Savings Plan Interest earned is not taxed When students withdraw money for college, it is not taxed Money Can Grow The money will earn interest and may grow every year Slide 4: The advisor emphasizes some important points about 529 College Savings Plans. First, they are affordable, as contributions can start as low as $25 per student. Second, there is flexibility in how much and how often money can be deposited. Third, there are tax advantages which can lower a parent’s taxes when they contribute to the 529 College Savings Plan. The interest earned is not taxed, and when students withdraw money for college, it is not taxed. Finally, the money can grow because it will earn interest.

Student Loans College Loans: 3 common types Stafford (Federal): Very low fixed interest rate PLUS (Federal): Higher interest rate, used by parents Private (Usually from banks): Often highest interest rates Slide 5: The advisor explains that often students need to take out loans during college to cover all costs. Loans need to be repaid. There are three common types of college loans: Stafford, federal loans with a very low fixed interest rate; PLUS, federal loans with a higher interest rate, used by parents; and private loans, usually from banks, often with the highest interest rates.

Video: Federal vs. Private Student Loans Listen for: Do federal or private loans usually have better interest rates? Students sometimes do not have to pay back part of their federal loans if they go into the _________, ________, and ________ career fields. (Click on picture to play video) Slide 6: The advisor says they will watch a video to get a few more details. Click on the picture in the slide to show the video about college loans and asks students listen for answers to the following items: • Do federal or private loans usually have better interest rates?
• Students sometimes do not have to pay back part of their federal loans if they go into the _________, ________, and ________ career fields.
Facilitate a short classroom discussion on these two items.

Federal and Private Student Loans Federal Student Loans From the government, lower interest rates Do not need to pay interest on loan while in college May not have to pay back the entire loan when going into Public Service, Health Care, and Education fields Private Loans Help if students need more money than their federal loans Make payments while in college, have higher interest rates Try to limit your amount of college debt Want to have lower monthly payments as a young adult Slide 7: The advisor emphasizes some important points about federal and private college loans, as discussed in the video. Federal student loans are funded by the United States government and disturbed by colleges, and have lower interest rates. In addition, students do not need to pay interest on the loan while they are still in college. The advisor emphasizes that in certain circumstances students may not have to pay back the entire loan if they go into the public service, health care, and education fields after graduation. Private loans are an alternative if students need more money than their federal loans. Private loans require students to make payments while still in college, and have higher interest rates. Encourage students to limit their amount of college debt because they will want to avoid high monthly payments as a young adult.

Interview Your Partner Do you want to save money for college? What can 8th graders and high school students do to save money for college? Will you tell your parents about the Minnesota 529 College Savings Plan? Why or why not? What are the biggest federal college loan advantages? What can students do to limit the amount of their college debt? Slide 8: The advisor asks students to interview a partner on the following questions: Do you want to save money for college?
2) What can 8th graders and high school students do to save money for college?
3) Will you tell your parents about the Minnesota 529 College Savings Plan? Why or why not? 4) What are the biggest federal college loan advantages?
5) What can students do to limit the amount of their college debt? Closure: 2 minutes – The advisor explains that personal contributions are an important way college students cover postsecondary costs. Students will learn ways to get money from outside sources during the next advisory. These outside sources include grants, scholarships, and work studies.