College An investment in human capital

Why is college an investment? Getting a long-term benefit for short term spending Lifetime earnings are much higher for people with some kind of college degree than for people without a college degree.

Can I afford this Investment? YES!

Financial Aid There are many different ways to pay for college including… –Grants –Scholarships –Work Study –Student Loans

Grants “Free” money that does not have to be repaid These are most often given by the colleges or government –Pell Grants – Minnesota Grants Most grants are based on financial need

Pell Grant Federal grant for students with demonstrated financial need If you qualify for free or reduced lunch, you probably qualify for a Pell grant Up to $5,500 per year

Scholarships “Free” money that does not need to repaid Most often offered by private foundations, civic organizations and corporations Many are not based on financial need (anyone can get them) Competitive – not guaranteed

Scholarships Local, regional and national Check Naviance and Fastweb.com Examples: –Wallin Education Partners –Rotary Club –Young Cancer Survivor

Athletic Scholarships Awarded to students to encourage them to attend a school and play a sport for that school. Not all colleges offer athletic scholarships (Some schools in the NCAA Division I and II) but that doesn’t mean you can’t play a competitive sport in college. –Only 2% of high school athletes get athletic scholarships

Work Study Jobs paid for through work study money can only go to students with work study awards making it easier to find a job to help pay for college. Since the money is paid directly to you for the work you do, these awards are very helpful in paying for living expenses.

Federal Loans The Federal government loans money to students to pay for the cost of college. Depending on your situation and needs you can qualify for up to $20,500 per year.

Subsidized Loan interest The interest rate on a government loan based on financial need is currently 3.86%currently 3.86% If the expected rate of inflation is 1.5% what is the “real” cost of borrowing money to go to school? On average, will a person with a college degree be making at least 3% more than a person without a college degree?

Private Loans Students and families can get these to help pay for costs that are more than the financial aid package. These are not subsidized. –This means you pay interest while you are in college Banks offer them, not the government. Interest rates tend to be higher.

Free Application for Federal Student Aid Fill this out in your senior year and then again each year you are in college Need your family’s tax returns Used by colleges and the federal government to determine your financial need.

Tuition The cost of taking classes at a college. Examples for full time students – per year: –2 year public colleges - $4,000 - $5,000 –4 year public - $6,600 - $12,000 –4 year private colleges - $20,000 - $50,000

Other Costs Fees ($500-$1,000) –health insurance, –athletic facility usage –laboratory supplies –and student activities Books Meals - Food Housing Transportation Costs This includes the cost of going to and from college. Many people forget to include these costs when they think about paying for college but if you can’t get to class, it is hard to go to college This is often a significant part of the cost of Community College

Who really gets Financial Aid? Over 60% of undergraduate students at the University of Minnesota – Twin Cities campus receive some kind of financial aid. Over 94% of undergraduate students at private colleges in Minnesota receive some kind of financial aid.

NEXT