Preparing for College Finances in Middle School

1
Preparing for College Finances in Middle School

• Presented by
• James Madison University
• December 6, 2008

2
Before We Get Started

• This PowerPoint Presentation will be available
  to download on the JMU Office of Financial Aid
  Scholarships website
  
• www.jmu.edu/finaid
• (under the Prospective Students link)

3
ECONOMIC ISSUES

• Before we dive into the financial aid
  presentation, do you have any questions/issues
  you would like to discuss based on anything you
  have seen in the news regarding the current
  economic issues as they relate to college costs
  and aid (e.g., student loans credit crisis,
  scholarship availability, etc.)?

4
Objectives

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

5
Consult with Appropriate Stakeholders

• Determine who will be involved in paying for the
  students 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

6
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

7
What Does College Cost Now?

• Example at JMU in 2008-09 (full-time in-state
  undergraduate student)
  
• 6,964 tuition
• 7,292 on campus room/board/internet fee
• 14,256 direct (billable) costs
• Tuition has been rising around 4 - 8 per year
  for the past several years
  
• Room/Board has been rising around 4 - 6 per
  year for the past several years

8
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 2013-2014
  school year costs could be
• Tuition 9,767
• Room/Board 8,872
• Direct (billable) Costs 18,639

Figures provided for demonstration and planning
purposes only and are no guarantee of what costs
will be in the future.
9
How Am I Going To Pay For College

• Five primary sources of financial aid are
• Federal
• State
• Institutional
• Private
• Self/Family

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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
11
More information on Federal Aid
12
State Assistance

• Virginia Guaranteed Assistance Program
• Commonwealth Award
• Tuition Assistance Grant Program (private
  colleges only)
  
• College Scholarship Assistance Program
• Two Year College Transfer Grant
• Higher Education Teacher Assistance Program
• And many more

Aid programs are subject to change
13
More information on State Aid
14
Institutional Assistance

• Need-based grants
• Need-based scholarships
• Merit-based scholarships
• Combination Need/Merit-based scholarships
• Institutional Employment

Aid programs are subject to change
15
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

16

• Available From
• Local businesses
• Civic groups
• Churches
• Private benefactors
• National organizations
• Where to Look
• High school counselors
• Write, call, or visit businesses, civic groups,
  churches, etc.
  
• Public libraries
• Internet (free ones only)

• Financial aid from
• private resources
• can be the most
• elusive of all aid
• programs

17
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 http//www.bbb.com
• U.S. Department of Education http//studentaid.ed
  .gov/students/publications/lsa/index.html

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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

19
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

20
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
• http//www.savingforcollege.com/coverdell_esas/

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529s

• Two Types
• Prepaid Tuition Plans
• Education Savings Plans
• Website to research this program
• http//www.savingforcollege.com/college_savings_20
  1/

22
Prepaid Tuition Plan

• Called VPEP in Virginia
• Locks in tomorrows tuition at todays
  prices
  
• Guaranteed to pay tuition based on your contract
• Has become progressively more expensive over the
  years
  
• Information available at
• www.virginia529.com

23
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
• www.virginia529.com

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Other Options

• Personal savings
• Reducing debt or expenses prior to college to
  make paying for college more affordable
  
• Investments (e.g., Mutual Funds, CDs, bonds,
  etc.)
  
• Payment plans offered through the college
• Part-time employment
• Federal, state, and institutional financial aid
• Private Loans (last resort)

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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

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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

27
Financial Literacy Assistance

• http//www.jmu.edu/finaid/finliteracy.shtml
• On and Off Campus Student budget case studies
  worksheets
  
• PowerPoint on financial information
• Other information and tools
• Listen to a 23 minute podcast discussing issues
  pertaining to paying for college and financial
  literacy

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Questions

• Office of Financial Aid Scholarships Contact
  Information
  
• 3rd floor counter in Warren Hall
• Phone [phone]
• E-mail fin_aid_at_jmu.edu
• Web www.jmu.edu/finaid