1 Preparing for College Finances in Middle School Presented by James Madison University December 8, 2007

2 Before We Get Started This PowerPoint Presentation will be available to download on the JMU Office of Financial Aid & Scholarships website (under the “Prospective Students” link)

3 Objectives Review those involved in paying for college Understand college costs Discuss options to pay for college Answer questions

4 Consult with Appropriate Stakeholders Determine who will be involved in paying for the student’s education Those parties should begin discussions now and develop a plan together Keep the lines of communication open If you use a financial planner or consultant, talk with him/her about college savings

5 Learn More About Schools Now Understand the costs of schools Examine the types of schools Try not to let cost be a large deterrent at this point, you have some time to save and plan Many colleges are willing to work with students

6 What Does College Cost Now? Example at JMU in (full-time in-state undergraduate student)  $6,666 – tuition  $6,836 – on campus room/board  $13,502 – direct (billable) costs Tuition has been rising around 6% - 8% per year for the past several years Room/Board has been rising around 2% - 6% per year for the past several years

7 What Will College Cost Later? There is no way to accurately predict what college will cost in the next 4 to 5 years For planning purposes, you may want to use an annual tuition increase of 7% and room/board increase of 4%, 5 years out in the school year costs could be:  Tuition = $9,349  Room/Board = $8,317  Direct (billable) Costs = $17,666 *Figures provided for demonstration and planning purposes only and are no guarantee of what costs will be in the future.

8 How Am I Going To Pay For College Five primary sources of financial aid are: Federal State Institutional Private Self/Family

9 Federal Assistance Pell Grant Supplemental Educational Opportunity Grant (FSEOG) Academic Competitiveness Grant (ACG) National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) Federal Workstudy Federal Perkins Loan Federal Stafford Loan Federal Parent PLUS Loan *Aid programs are subject to change

10 More information on Federal Aid

11 State Assistance Virginia Guaranteed Assistance Program Commonwealth Award Tuition Assistance Grant Program (private colleges only) College Scholarship Assistance Program Virginia Transfer Grant (new for ) Higher Education Teacher Assistance Program And many more *Aid programs are subject to change

12 More information on State Aid

13 Institutional Assistance Need-based grants Need-based scholarships Merit-based scholarships Combination Need/Merit-based scholarships Institutional Employment *Aid programs are subject to change

14 How Do I Apply For These? At most schools the Free Application for Federal Student Aid (FAFSA) is the primary application for these funds Some schools may require additional applications, specifically for scholarships Need to ask the school All schools do NOT work the same when it comes to this Years away from applying right now

15 Financial aid from private resources can be the most elusive of all aid programs Available From: Local businesses Civic groups Churches Private benefactors National organizations Where to Look: High school guidance counselors Write, call, or visit businesses, civic groups, churches, etc. Public libraries Internet (free ones only)

16 Avoid Being Scammed To check legitimacy of scholarship search services or individuals, for information about financial aid scams, & tips to avoid being scammed visit these Web sites: Better Business Bureau: U.S. Department of Education: html Federal Trade Commission:

17 How Do I Apply For These? Start the research now It can be time consuming May find you are close to being eligible for an award, and you have the time to bring yourself up to the eligibility standards before the application date It is possible to be awarded scholarships now for college expenses in the future

18 What Can I Do Now? SAVE, SAVE, SAVE! If you have not started, you should do so immediately If you have started, evaluate your current savings plan and see if you can afford to increase it if necessary There are many savings options

19 Education Savings Account (ESA) Also called the Coverdell ESA Money invested for college that is tax-free if used for college Generally, allowed to invest up to $2,000 per year Website to research this program:

20 529’s Two Types: –Prepaid Tuition Plans –Education Savings Plans Website to research this program:

21 Prepaid Tuition Plan Called VPEP in Virginia Locks in “tomorrow’s” tuition at “today’s” prices Guaranteed to pay tuition based on your contract Has become progressively more expensive over the years Information available at

22 Education Savings Plans Virginia has three such plans: VEST (oldest of the 3) College America College Wealth (newest of the 3) Can also use independent brokers for these 529 plans Money is invested to grow tax free for college Can be used for qualified college expenses such as tuition/fees and room/board Flexibility in investment options and contribution amounts Information available at

23 ESA or 529 Growth Example based on an average annual return of 10% –First semester of college will be August 2012 –Begin investing in January 2008, starting with zero saved before this point –Stop in July 2012 –Investing for 4 ½ years

24 Average Growth of Example $100/month Total of $5,400 invested Grows on average to $6,785 $300/month Total of $16,200 invested Grows on average to $20,354 The longer you save, the more you can earn –Example, $200/month over 10 years would grow to around $40,969 (on average) This is no guaranty of future growth or value Growth is subject to the economy Consult an expert before investing

25 Other Options Personal savings Investments (e.g., Mutual Funds, CD’s, bonds, etc.) Payment plans offered through the college Part-time employment Private Loans (last resort) Reducing debt or expenses prior to college to make paying for college more affordable

26 Budget! Often overlooked If you begin using a zero-based budget, you may find you are spending money on things you do not need now Can incorporate college savings into your budget Get control of your money! Generally, will spend less in life if you budget

27 Zero-Based Budget Income minus expenses each month equals zero This means you have told every dollar of income you have to do something very specific If you stick with this for each category, you will not overspend and will likely avoid unnecessary debt and expenditures

28 Financial Literacy Assistance –Budget worksheet –PowerPoint on financial information –Other information and tools Listen to a 23 minute podcast discussing issues pertaining to paying for college and financial literacy

29 Questions Office of Financial Aid & Scholarships Contact Information: –3 rd floor counter in Warren Hall –Phone: (540) – –Web: