Financial Aid Puts College in Reach! 1 Spring 2014

 COLLEGE IS THE BEST ECONOMIC INVESTMENT MOST PEOPLE EVER MAKE IN THEIR LIVES!  Students with some college have better health, social satisfaction, and incomes than those with none – some is better than none!  Find colleges that are “good fit” for students, and then determine what is affordable… don’t look at price alone 2

 NO LONGER PRACTICAL TO “work one’s way through college” – wages have not kept up with the costs of college… UNREALISTIC!  Nearly no one goes to college entirely on “scholarships” or gets “a full ride” – the cost of college is much more than the tuition and fees that most scholarships address! 3

 Support student’s academic preparation;  Voice their hopes, expectations and plans for students to attend college;  Don’t limit options based on cost –keep options open till real financial aid has been factored in! Don’t COUNT YOUR STUDENT OUT! 4

 Reducing out-of-pocket family expenses now and setting aside savings from current income will smooth out the “pinch” of paying for college later! 5

 Pay off credit cards  Retirement Savings  SAVE FOR COLLEGE - Open a College Savings Plan for each child and contribute (even small amounts – but do it regularly), and let students know that you are doing this.  One idea - See California College Savings plan at: 6

 Parents will be expected to contribute based on their income and assets, mostly as reported on the Free Application for Federal Student Aid (FAFSA)  The college will then award federal, state, and institutional grants and scholarships up to the student’s eligibility  Outside Scholarships – civic groups, employers, foundations, churches, clubs, etc. Most scholarships are a small fraction of the cost of college these days.  Students will be expected to work and borrow; at present, the amounts are between $8,000 - $12,000 per year 7

 Parents who have not saved enough will have to borrow; usually the best option is the federal parent loan program – PLUS  Parents who cannot qualify for federal PLUS loans will burden their students to borrow even more  All students receiving financial aid will be expected to both work and borrow each year 8

 Parents should not plan on borrowing from: ◦ their home equity or ◦ their own retirements (Parents should be very wary of borrowing from private loan sources – interest rates are only one part of the overall cost) 9

 Student Loans are different from an ordinary expense – they are an INVESTMENT in the student’s future  Student loans can be ◦ Flexible - monthly payments linked to income; ◦ partially forgiven for full-time public service (broadly defined and not taxable!) ◦ cancelled for death and disability ◦ Extended so repayment is longer than 10 years to keep monthly repayment amount manageable 10

 Typical undergraduates will have manageable monthly payments linked to earnings; there are new repayment and forgiveness options  Federal Student loans are usually best choice, even compared to parent loans  Most students who file a FAFSA qualify for federal student loans 11

 Full time summer employment savings (start now! – small savings do not reduce aid)  Part time employment during high school to generate savings for college  Outside scholarships – over and above what the college awards – these amounts can reduce the need to work and/or borrow 12

◦ Enroll in at least 15 units each term and finish in four years! – Biggest savings! ◦ Live with more roommates – second biggest savings! ◦ Don’t bring a car payment or a credit card balance to college –live without a car and pay down credit card balances! 13

 Working more than about 20 hours per week is associated with lower academic performance and longer time to degree, although working on or near campus less than half time is associated with staying in college!  Students transferring into bachelor’s programs report having heavier reading assignments and more time-consuming problem sets and other homework responsibilities making it harder to work more than half-time during school terms. 14

 Living with family is not “free” – the family is subsidizing the student, although costs may be lower overall at home;  Living on campus, particularly at first, is associated with greater college persistence  Living on or very near campus can provide a “residential experience” (involving greater social and possibly academic support) that is not as readily available for commuters  Going, even while living with family, is better than NOT GOING! So GO! 15

 Envelopes are not likely to arrive in the mail – admissions and financial aid updates and information are mostly ON LINE and sent TO THE STUDENT – almost nothing comes to the parents. Students need an address for “college business” that they check often.  Even when mistakes happen, recovery is possible, particularly in California! 16