Don’t Let Your Reality CheckBounce!

A Presentation of the Indiana StudentFinancial Aid Association

What Parents and Students Need to KnowAbout Saving and Financial Aid for College

Careers of the Future Increasingly high-skilled,

information-based.More diverse, smaller

workforce.Average worker will hold

9 different positions by age 34.

Technology provides less traditional work environments. U.S. Dept. of Labor

Potential Returns on Potential Returns on Postsecondary Education!Postsecondary Education!

• Understand and appreciate moreUnderstand and appreciate more• Achieve higher earning potentialAchieve higher earning potential• Expand your talents and abilitiesExpand your talents and abilities• Create greater job securityCreate greater job security• Make more informed decisionsMake more informed decisions• Cope with changeCope with change• Become a Lifetime LearnerBecome a Lifetime Learner

Invest in yourself

• Even with rising costs, college is still a good investment.

• Studies show college graduates can earn an average of 75% more than high school grads.

• Postsecondary education pays off over a lifetime.

Career Earnings by Education Level

$21,314$30,560

$38,118

$49,344$57,676

$71,573

No highschool

diploma

High schooldiploma

Two-yearcollegedegree

Bachelor'sdegree

Master'sdegree

Professionalor doctorate

degree

Data is from an analysis by the Employment Policy Foundation of data from the Bureau of Labor Statistics. The complete press release is available at http://www.epf.org/media/newsreleases/2001/nr20011219.htm

Expect a Financial Return on Expect a Financial Return on Your Investment!Your Investment!

• Unemployment Trends (2000 Bureau of Unemployment Trends (2000 Bureau of Labor)Labor)

– No HS DiplomaNo HS Diploma 7.9%7.9%– HS DiplomaHS Diploma 3.8%3.8%– Some CollegeSome College 3.0%3.0%– College DegreeCollege Degree 1.5%1.5%

After High School, Then What?

• Employment– Apprenticeships– On-the-job training

• Military– Training/experience– Saving for college

• Postsecondary Education– Vocational/Technical– Associate Degree– Baccalaureate

Postsecondary Education

• Degrees/Certificates– 9 to 18 month certificate

programs– Two-year associate

degrees– Four to five-year

baccalaureate (bachelor’s) degrees

– Postgraduate degrees

• Institutional Types– Public, private, and career

schools

What can my child do to What can my child do to gain a competitive edge? gain a competitive edge?

• Set goals.Set goals.• Make school attendance a priority.Make school attendance a priority.• Review and improve scholastic standing.Review and improve scholastic standing.• Take the right classes. (Core 40)Take the right classes. (Core 40)• Develop talents and expand interests.Develop talents and expand interests.• Become involved in school and Become involved in school and

community activities.community activities.• Explore Advanced Placement classes. Explore Advanced Placement classes. • Limit hours worked while in school.Limit hours worked while in school.

Paying for College:Paying for College:A Combination of StrategiesA Combination of Strategies

• Savings (never too early/late to start)Savings (never too early/late to start)– ParentsParents– StudentStudent

• Current Income (while in college)Current Income (while in college)– ParentsParents– Student (summer job, on/off campus jobs)Student (summer job, on/off campus jobs)

• Future Income (after college)Future Income (after college)– Parent LoansParent Loans– Student LoansStudent Loans

• Scholarships, Grants, and Fee WaiversScholarships, Grants, and Fee Waivers– Merit based: academic, talent, other Merit based: academic, talent, other

criteriacriteria– Need based: must apply for financial aidNeed based: must apply for financial aid

Savings StrategiesSavings Strategies• Estimate the cost of Estimate the cost of

postsecondary education.postsecondary education.• Establish goals for savings.Establish goals for savings.• Save systematically and Save systematically and

regularly.regularly.• Diversify.Diversify.• Explore plans with educational

benefits resulting from purchases.• Invest windfalls rather than spend

them.

Estimating College Costs Estimating College Costs Example of budget for Indiana resident, Example of budget for Indiana resident, living on campus at a public college:living on campus at a public college:

9-month academic year9-month academic year

Tuition/feesTuition/fees $4,100$4,100

Room/boardRoom/board $5,600$5,600

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Books/suppliesBooks/supplies $ 790$ 790

TransportationTransportation $ 750$ 750

Personal expensePersonal expense $1,643 $1,643

Coverdell Education Savings Account Coverdell Education Savings Account (ESA)(ESA)

formerly known as Educational IRA (EIRA)formerly known as Educational IRA (EIRA)

• Contributions are not excludable from AGIContributions are not excludable from AGI• Earnings accumulate tax-freeEarnings accumulate tax-free• Distributions are not taxableDistributions are not taxable• Maximum contribution of $2000/year until Maximum contribution of $2000/year until

beneficiary reaches age 18beneficiary reaches age 18• Interest and tax-free withdrawal must be Interest and tax-free withdrawal must be

used or transferred by beneficiary’s 30th used or transferred by beneficiary’s 30th birthdaybirthday

• Cannot use with Hope/Lifetime tax credits.Cannot use with Hope/Lifetime tax credits.

College Choice 529 Investment College Choice 529 Investment PlanPlan

• Tax-deferred growthTax-deferred growth• Qualified withdrawals tax-free for Federal Qualified withdrawals tax-free for Federal

and may be tax-free for Indiana residents.and may be tax-free for Indiana residents.• No income limitsNo income limits• No age limit on beneficiaryNo age limit on beneficiary• Investment options include age-based and Investment options include age-based and

custom portfolioscustom portfolios• Anyone over 18 can open account Anyone over 18 can open account

regardless of state of residencyregardless of state of residency• Minimum initial contribution: $50Minimum initial contribution: $50• Additional contributions: $25 or moreAdditional contributions: $25 or more• Monthly ACH deductions from your bank Monthly ACH deductions from your bank

account are availableaccount are available

Call 1-866-400-7526 for enrollment kit.

www.collegechoiceplan.com

Investment Guidelines• Start as early as possible. (But it is

never too late!)• Begin with an aggressive strategy.• Become more conservative as college

enrollment approaches.– Choose investments according to number

of years until enrollment and risk tolerance.

Be Aware of Risks• Extremely high risk

– Stock options– Futures

• High risk investments– Individual stocks– Some mutual funds

• Low risk investments include– Some mutual funds– Bonds– U.S. Savings bonds, state savings plans,

EIRA– Money market and certificate of deposit

Options for your studentOptions for your student• Consider college payment plans.Consider college payment plans.• Investigate two-year college Investigate two-year college

options.options.• Work in exchange for housing/etc.Work in exchange for housing/etc.• Plan to complete in four years.Plan to complete in four years.• Attend part-time.Attend part-time.• Consider employment.Consider employment.• Explore Military.Explore Military.

– ROTC.ROTC.– Montgomery G.I. Bill.Montgomery G.I. Bill.

• Investigate co-operative education.Investigate co-operative education.• Consider internships.Consider internships.

Financial Aid: One of Many Financial Aid: One of Many StrategiesStrategies

• SourcesSources– Federal Student Aid ProgramsFederal Student Aid Programs– Indiana Student Aid ProgramsIndiana Student Aid Programs– College/University FundsCollege/University Funds– Private Organizations, Business, and IndustryPrivate Organizations, Business, and Industry

• TypesTypes– Scholarships, grants, and fee waivers (fee Scholarships, grants, and fee waivers (fee

remission)remission)– Student Loans (for students and parents)Student Loans (for students and parents)– Student Employment or Work Study Student Employment or Work Study

Note: Some scholarships have strings Note: Some scholarships have strings attached and attached and may become loans if conditions of may become loans if conditions of the award are not the award are not met. met.

Indiana Funding for Higher Indiana Funding for Higher Education Education

• Twenty-First Century Scholars ProgramTwenty-First Century Scholars Program– Students enroll in 7Students enroll in 7thth or 8 or 8thth grade. grade.– Receive tuition assistance (up to 30 Receive tuition assistance (up to 30

semester hours per year) at eligible semester hours per year) at eligible Indiana colleges or universities for 4 years. Indiana colleges or universities for 4 years.

• Need-based Grant ProgramsNeed-based Grant Programs– Frank O’Bannon Grant Program Frank O’Bannon Grant Program (formerly (formerly

the Indiana Higher Education Grant Program)the Indiana Higher Education Grant Program)• Higher Education AwardHigher Education Award• Freedom of Choice AwardFreedom of Choice Award

– Minority Teachers and Special Education Minority Teachers and Special Education ScholarshipScholarship

– Nursing Scholarship (tuition/fee specific)Nursing Scholarship (tuition/fee specific)

Other Indiana Assistance Other Indiana Assistance • Hoosiers Scholars Hoosiers Scholars

– One to three scholarships awarded by One to three scholarships awarded by each eligible high school to academically each eligible high school to academically talented college-bound seniors.talented college-bound seniors.

– One-time $500 award at eligible Indiana One-time $500 award at eligible Indiana institution.institution.

• Fee Remission at State Fee Remission at State Colleges/UniversitiesColleges/Universities– Child of Veteran & Public Safety Officers Child of Veteran & Public Safety Officers

ICPAC Career & Education Hotline 1-800-ICPAC Career & Education Hotline 1-800-992-2076992-2076 http://icpac.indianahttp://icpac.indiana

Indiana funding for higher education:Indiana funding for higher education:http://www.in.gov/ssacihttp://www.in.gov/ssaci

Federal Student Financial Aid Federal Student Financial Aid • Federal Pell GrantFederal Pell Grant• Campus-Based ProgramsCampus-Based Programs

– Federal Supplemental Educational Opportunity Federal Supplemental Educational Opportunity GrantsGrants

– Federal Work StudyFederal Work Study– Federal Perkins LoansFederal Perkins Loans

• Direct and FFEL Stafford Loans (for students)Direct and FFEL Stafford Loans (for students)• Direct and FFEL PLUS Loans (for parents)Direct and FFEL PLUS Loans (for parents)

1-800-4-1-800-4-FED-AID (1-800-433-3243)FED-AID (1-800-433-3243)http://www.ed.gov/index.jhtml http://www.ed.gov/index.jhtml

Steps To Remember• Review your scholastic standing.• Be aware of Core 40 courses.• Develop interests/skills. • Estimate cost of education. • Estimate savings needed and begin savings

program.• Start scholarship search NOW!• Estimate the amount of cost to be covered

by current income (student and parent income).

• Estimate the amount of cost to covered by student loans.

• Know all application deadlines and procedures.

Web Browser Bookmarks• Scholarship search

– Financial Aid Information Pagehttp://www.finaid.org

Allows access to FastWeb and other scholarship databases

– College Boardwww.collegeboard.org/

• College and career planning– Indiana Career and Postsecondary

Advancement Center - http://icpac.indiana.edu

– Mapping Your Future

http://mapping-your-future.org/