1 College Financing Seminar Presented by: The Massachusetts Association of Student Financial Aid Administrators (MASFAA)

MASFAA2 Agenda  Early College Planning  Financial Aid Overview  Your Financing Options  Where to Get More Information

Loans Greater Factor In Financing College  Financial Aid For Families Has Grown  Increasingly Aid Means Loans Loans as a % of Financial Aid Source: The College Board, 1999 Trends in Student Aid

MASFAA Benefits of Saving  ALL educational options left open, regardless of cost  Reduces or eliminates the need to borrow  Spreading out the cost of college over time, minimizes the impact on your lifestyle during the years you pay for college  Minimum impact to financial aid Need Analysis  Family contribution from parents’ assets = 6%  Family contribution from student’s assets = 35%

MASFAA Why Save?  An example of the positive effect of saving versus borrowing  To accumulate $10,000 in 10 years at 7% interest  Save $79 per month  To repay $10,000 over 10 years at 7%  Pay $116 per month  The real cost of borrowing rather than saving  $116 - $79 = $37 x 12 months x 10 years = $4,440

Massachusetts Association of Student Financial Aid Administrators6 Overview  Over $68 Billion given out in Financial Aid in *  Parents in the same circumstances should be able to afford the same amount for college; those in different circumstances, different amounts  Parents & Students have the primary responsibility for financing college cost  *The College Board

What is Financial Aid?  Grants, Scholarships  Free Gifts  Do not have to be repaid  Loans  Money that must be repaid  Borrowed by student, parent, or both  Work Study  Money student is given the opportunity to earn $$ IOU

Vocabulary COA = Cost of Attendance - Includes tuition, room, board, fees, books, supplies, transportation, personal expenses EFC = Expected family contribution - Measure of what a family is expected to contribute over a year Financial Need (Eligibility) = Difference between COA and EFC

9 Resources for Estimating Your Expected Family Contribution (EFC) Federal EFC Handbook 1(800)4FED-AIDFederal EFC Handbook 1(800)4FED-AID On the WebOn the Web

‘Financially’ Manageable During and AFTER the College years PARENT STUDENT Will not jeopardize  Financial Security  Comfortable Retirement  Educating other children  other financial goals  Will not leave excessive debt  Will not jeopardize financial independence after graduation Estimate the ‘Total’ Cost of Education 4+ years of expenses Estimate the ‘Total’ Cost of Education 4+ years of expenses Look at your entire Financial Situation Make financial decisions that :

 Parent savings  Transfer of income producing assets to a child under the Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA)  Series EE and Series I US Savings Bonds  Education IRA  Traditional IRA  Roth IRA  Qualified Savings Tuition Plans Strategies for Financing Higher Education

12 Ownership of Investment Parent versus Student Time Factor Tax Exemption Risk Individual Stocks Zero Coupon Bonds Treasury Bills Mutual Funds Savings Bonds Investment Options CD’s U. Plan Prepaid Tuition Program Investment Considerations Money Markets Municipal Bonds U. Fund College Investing Plan College Savings and Investment Options Education IRA Traditional & Roth IRA’s

 U.Fund College Investing Plan  Tax-advantaged investing opportunity  Use at any college for all qualified educational expenses College Savings Plans Options in Massachusetts

Using the U.Fund  Use for qualified educational expenses (tuition, room, board, fees, books, and supplies)  Use anywhere in the United States  Accredited post-secondary institution  Public and private  Two-year community college  Vocational technical schools  Undergraduate and Graduate Education

 U.Plan Prepaid Tuition Program Lock in tomorrow’s tuition at today’s rates 82 Participating Colleges and Universities

16 Financial Planning Recommendations  Estimate your total costs for all 4 years of college  Parents and Student together should develop a plan to fund and finance => know what you’re signing up for => know how you will pay for it  If you need to borrow: => understand your options educational loans, personal loans, home equity loan => know the terms  Apply to at least one financially ‘safe’ school

It’s Never Too Early or Too Late to Start Saving  Determine how much you’ll need  Don’t be discouraged..financial aid could be available  Determine how much you can afford to save  No amount is too small  On a regular basis (weekly, monthly)  Select appropriate investment vehicles  Evaluate your financial situation annually

18 How Parents Can Help  Encourage student to keep options open  Facilitate decision-making and access to appropriate courses  Make students aware of all the opportunities available and the academic requirements involved  Be aware of opportunities for financial aid and the benefits of early financial planning  Visit a public and private college campus and look around

Thanks For Your Attention! Questions…