Financing Your Dreams Juanita E. Harvin Educational Liaison – US Africa Command

Trends College costs rising faster than the rate of inflation Less gift financial aid, more loans Normal distribution of student support: 2/3 rd savings/current income/loans 1/3 rd 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 Dream 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 carefully Specific definitions for terms Apply early ASAP after 1 Jan for following school year Electronic filling quicker Tax forms need to be completed, not filed Can “estimate” on FAFSA but file correction as soon as possible

FAFSA Tips (cont.) Provide accurate and truthful information on the FAFSA School, state and US Dept of Ed can request your tax forms Aid based on inaccurate info must be paid back, sometimes with penalties Could 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 Grant Supplemental 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 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 Programs Coverdale State 529 plans Savings Bonds for Education Program Pre-Pay Program Credit Union Plans

State 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-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 gpa 3.5 = 75% of tuition paid 3.0 = 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 Education 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-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 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 S pecific: “I want to save for tuition and fees for the first year of college” Not “I should start saving for college” M easurable: “I need have $300 for books for my first semester” Not “I need some money for books” A djustable: “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” R ealistic: “ I plan to have $1200 by one year” Not “ I would like to have $5000 by one year” T ime-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! 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 U.S.Dept of Education Existing student loan information Information on 529 plans Americorps program information