Hands on Banking ® Financial Education Paying for College © 2016 Wells Fargo Bank, N.A. All rights reserved.

Quick tips Determining how you will pay for a student’s college education is one of the most important decisions that families make. Start early. Research all of your options to make an informed decision. If you miss a deadline, don’t give up. Work with your student through each step of the financial aid process. They'll likely feel relief that you're helping them learn what options are available to pay for college. Don’t assume that your student has the knowledge to take care of everything. 1

What are my family’s options? There are many options that families use to pay for college expenses.  Income  Savings  Scholarships  Grants  Tuition payment plan*  529 Plans  Federal student loans  Private student loans  Investments *Typically offered through the educational institution 2

What’s the best option? The best choice is different for every family and individual situation. What’s right for you doesn’t have to be just one option — a combination of aid, savings, loans and income might be the right choice. Some things to consider: What’s your financial situation today? Will the amount in savings or your 529 plan cover the entire cost, or will you need more? How much of the cost do you want to cover, and how much do you expect your child to pay for? 3

How does financial aid fit in? The Free Application for Federal Student Aid (FAFSA) should be completed for each year the student plans to attend college in order to qualify for financial aid. You can contact the school’s financial aid office. They’re a good source for information on grants, scholarships and aid. Financial aid offices will help answer your questions about paying for college, including what your specific financial aid package might look like. 4

Financial aid myths Only students with a perfect grade point average get aid. If your family has a decent income, you won’t qualify for anything. Only great athletes get grants and scholarships. There’s so much paperwork involved, it’s not worth the time and effort. 5

Financial aid facts Financial aid is money that: Can come in the form of grants or scholarships that don’t have to be paid back Could include a Work Study program May also include federal loan options that will need to be repaid. Be sure to carefully review your financial aid package to determine what is free aid and what aid will need to be paid back. 6

First things first Complete the Free Application for Federal Student Aid (FAFSA) with your student. Most undergraduates need their parents’ information to complete the form. Most schools require the FAFSA to qualify for federal aid Gather your required tax and income information from the previous year The results are automatically sent to the schools that you indicate. Obtain personal log-in information to authenticate your identity and to access your federal student aid information fafsa.ed.gov Complete your application each year you plan to attend college at fafsa.ed.gov 7 Note: Check with the financial aid office for additional forms or applications that you and/or your child may need to complete.

The FAFSA online 8

The award process After completing the FAFSA, watch for the Student Aid Report (SAR). It is a summary of the information you submitted on your FAFSA form. If anything is incorrect, make any necessary updates. On the SAR, you'll also find your Expected Family Contribution (EFC). The EFC is the dollar amount the government calculates your family can pay toward your student’s college education, and schools will use this number when calculating your financial aid package. From here, each college your student is accepted to will send an award letter. It will show the financial aid package your child received for that particular school, including potential grants, work-study, and federal student loans. Compare award letters! Not all financial aid packages are the same. Some schools might have additional grants or scholarships. Check with the school to see if your student can qualify for the same aid every year, and understand the full picture of the future cost of education at each school. Remember, you don’t have to accept everything. Start with the lowest-cost options. 9

Types of aid  Don’t have to be repaid  Beware of scams — you should never have to pay to do a scholarship search. Find details on tuitionfundingsources.com 10 ScholarshipsGrantsThe Federal Work- Study Program  Awarded based on financial need and/ or academic achievement  May not have to be repaid*  Some are federally funded and others are state programs  Some institutions have their own private grant programs  Based on financial need  Allows students to earn income working part-time  Can work either on or off-campus *You might have to pay back part or all of a grant if you withdraw from school before finishing an enrollment period.

What federal loans are available?  Need-based  Low interest rates 11 Federal Perkins Loans Federal subsidized and unsubsidized loans Direct PLUS Loan for parents and graduate students  Fixed interest rates  Origination fees  Government guaranteed  Qualify for unsubsidized regardless of family income  Fixed interest rates  Origination fees  Cover the cost of education  Not need-based For more information on federal loans go to studentaid.ed.gov

How much will college cost? When planning how much to borrow, consider the following costs: Tuition & fees: varies by school Housing: dorm room or rent Meals: cafeteria or groceries Books and supplies: buy used textbooks to save Transportation: the bus or parking pass and gas (Student loans cannot be used for the purchase of a car) Consider inflation on tuition and living expenses when calculating the full cost of education. Sources:

Estimate before borrowing If you decide to borrow for the benefit of a student or if they are borrowing on their own, you’ll want to consider repayment. No one wants a surprise from that first billing statement. Use an online loan calculator to estimate how much the monthly payments will be Pay attention if a loan has deferred payments. What is borrowed now may accrue interest while the student is in school; interest is normally capitalized (added to the balance) at repayment. If you or the student can afford to, pay the interest or even part of the principal balance while he or she is in school Be realistic — consider your child’s estimated income versus their estimated monthly payments. Ideally, student loan payments should be 10 percent or less of net monthly income. 13

Timeline  As soon as possible, file the Free Application for Federal Student Aid (FAFSA) at fafsa.ed.gov 14 JanuaryFebruary/March  Remind your student to register for advanced placement tests.  Help your student complete scholarship applications.  Look in the mail for your Student Aid Report and financial aid award letter(s)

Timeline  Compare financial aid awards  Look for additional funding if aid doesn’t cover the cost  Have your student make the final selection on the college they want to attend. If applicable, send in deposit to college by the required deadline. 15 AprilMaySummer Make sure your student’s final transcripts are sent to the school that they will attend If your student has a summer job, remind them to save money!

What if financial aid isn’t enough? Private student loans When federal funding and other sources of aid aren’t enough, you may want to consider a private student loan. Private loans vary by lender, but they typically offer: No origination fees Credit based approvals Variable or fixed interest rates Cover the cost of education minus other financial aid Deferred repayment 16 Note that most students will need a qualified cosigner to qualify for a private student loan.

More information for students and parents  Covers the basics of good money management and the skills you need to create a brighter financial future handsonbanking.org 17 The Hands on Banking ® Program

Further questions? Thank you for your time today. For even more information: studentaid.ed.gov fafsa.ed.gov anycollege.com collegenet.com tuitionfundingsources.com 18