1. Understanding and Planning for Your Child’s College Education
Tips for Smart Borrowing
Understanding and Planning for Your Child’s College Education
Presented by Danisha Dumornay of the ASA College Planning Center to the Cambridge Housing Authority Families

2. The Rising Cost of College
Saving for College
Financial Aid Overview
Minimizing Debt
Borrowing Basics
Managing Debt 01 07 10 24 28 32
Agenda

3. ASA College Planning Center
About Us
ASA College Planning Center

4. Multilingual Advisors
What we do
Free Services
Walk-in only, no appointment necessary!
One-on-one Advising
Assistance completing applications and forms
Resources on education, financial aid and loan counseling
Multilingual Advisors
English, Spanish, Chinese, French, and Haitian-Creole
@ASAPlan4College
ASA College Planning Center

5. Main location: Boston Public Library, Copley Square
Come visit us!
Main location: Boston Public Library, Copley Square
700 Boylston St. Boston, MA 02116
(617) or Toll-free: (877)
Mon-Thurs. 9AM-7:30PM Friday-Saturday 9AM-5PM
Satellite Location: Bunker Hill Community College – Chelsea
70 Everett Ave. Chelsea, MA 02150
Every Monday, 11AM-5PM
Satellite Location: Asian American Civic Association
87 Tyler St. Boston, MA 02111
Every Wednesday 9AM-12PM and 1PM-5PM
ASA College Planning Center

6. Financial Aid Overview: The Relationship Between College Savings & Financial Aid
Title

7. Financial Aid
What is financial aid?
Money and resources that help to meet total college costs which includes:
Federal and State Grants
Institutional and Private Scholarships
Student Loans
Federal Tax Credits
Federal Work Study
Self-Help
ASA College Planning Center

8. ASA College Planning Center
Affording College
Apply to colleges strategically keeping in mind varying cost of attendance
Make a diverse list of schools including two year and four year programs, be flexible- there is no one path to getting a degree
Ask yourself: “Is the school a financial fit?”
Look into scholarships
Families should plan in before school starts
Be clear about what parents will pay for and what students will pay
ASA College Planning Center

9. ASA College Planning Center
Words to Know
FAFSA
Expected Family Contribution
Federal Pell Grant
Federal Loans
Self-Help
Gift Aid
Merit Aid
Need Based Aid
ASA College Planning Center

10. Balance of $9,700 after financial aid is provided This amount is
based off of EFC
(expected family
contribution on
FAFSA)
What “Self-help”
options remain?
Case study

11. Saving vs. Borrowing
Title

12. Tuition expenses are rising faster than inflation.
Why Save for College?
Tuition expenses are rising faster than inflation.
Presentation Title

13. Why Save for College?
Going away to college?
Average tuition and fee growth by region from 2002– through 2012–2013
Midwest
Four-year public 49%
Four-year private 24%
New England
Four-year public 62%
Four-year private 22%
West (includes Alaska and Hawaii)
Four-year public 126%
Four-year private 22%
Middle states
Four-year public 30%
Four-year private 18%
Southwest
Four-year public 78%
Four-year private 44%
South
Four-year public 77%
Four-year private 26%
Source: Trends in College Pricing, ©2012 The College Board, collegeboard.com

14. Tuition increases in relation to income and aid
Why Save For College?
Tuition increases in relation to income and aid
Inflation-adjusted changes in tuition, fees, household income and student aid over the last decade
As you can see, the most significant implications are realized when we compare tuition increases to another growth rate — that of median family income.
Adjusting for inflation, tuition at private four-year institutions between 2002–2003 and 2012–2013 grew 26%, and tuition at public four-year institutions grew 66%. However, median household income for the age bracket during this decade decreased by 13%. This large gap in growth rates means that, although tuition costs are increasing, families’ ability to fund the increases through wage growth is not keeping up.
Let me emphasize the significance of this. Currently, increases in Social Security benefits are indexed to the increase in wages. Economists have suggested that one way to reduce the burden of Social Security benefits in the future is to change the index to prices (CPI) since wages tend to increase faster than prices. But as we can see, this is not the case when looking at college prices.
The result? Financial aid per undergraduate student during this same period closed the gap by rising 114%.
The question: Is this increase in aid a good thing?
Median household income (age 45–54)
Public four-year tuition and fees
Total aid per full-time undergraduate student
Private four-year tuition and fees
Sources: Trends in Student Aid and Trends in College Pricing,
©2012 The College Board, collegeboard.com;
U.S. Census Bureau, Current Population Survey,
historical table H-10AR (in 2011 dollars)

15. How Can You Prepare?
Title

16. Traditional savings account 529 Plans
Saving Options
Traditional savings account
529 Plans
Savings grow tax free, and distributions for qualified expenses are also tax free
529 Prepaid Tuition Plans
529 College Savings Accounts
CHA Matched Savings Account
Presentation Title

17. Saving Options: CHA Matched Savings Program
The Matched College Savings Initiative helps Work Force participants to save up to $3,000 for post-secondary expenses in the following steps:
1. Participants open a deposit only savings account with Cambridge Savings Bank in fall of their 10th grade year;
2. They make direct deposits from their class pay or Exploratory jobs pay on a bi-weekly basis;
3. Participants can earn additional money by meeting certain monetized incentives (see below);
4. We encourage parents and participants to deposit additional money during the three years before high school graduation;
5. CHA matches dollar for dollar all deposits between $500 and $1500 in each participant’s Matched College Savings Account, for a maximum total of $3000 for the participant to put towards post-secondary expenses.
Presentation Title

18. Saving Options: CHA Matched Savings Program
Work Force participants have a variety of ways to save into their Matched Savings Accounts. When participants sign up for a Matched Savings Accounts, they automatically enroll into a $5/paycheck direct deposit into their account.
At any point, participants can increase or decrease their direct deposit amount by filling out a CHA direct deposit form.
Participants also receive a Work Force Matched Savings Card with their bank account number on it so they or their family can easily make additional deposits at their local Cambridge Savings Bank branch.
Presentation Title

19. Saving Options: CHA Matched Savings Program
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20. Saving Options: CHA Matched Savings Program
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21. Saving Options: CHA Matched Savings Program

22. Saving Options: CHA Matched Savings Program

23. Saving Options: CHA Matched Savings Program

24. Borrowing Basics

25. Exhaust ALL financial aid options before borrowing student loans
Borrowing Basics
Exhaust ALL financial aid options before borrowing student loans
Borrow ONLY what you need!
Before thinking about borrowing, exhaust all other aid options. Grants and scholarships are the most attractive aid options since they are “free money” and never have to be repaid. Work-study is an option for you to earn money toward your education by working in an on campu s student work position. Take advantage of tuition reimbursement and assistantships and fellowships as well if they are available.
Once you’ve exhausted all other aid options, then look into borrowing. The yearly loan maximums are very generous and are often much more than you need. Don’t borrow this full amount unless you absolutely need it. Before applying, determine your remaining expenses and then borrow only the amount you need. By limiting the amount you borrow, you will have a positive impact on your financial future.
Many students need to borrow money to pay for college. Whether you’ve already borrowed, filled out an application for a loan, or are planning to, it’s critical that you know the basics of borrowing money.

26. Loans are a responsibility
Borrowing Basics
Loans can provide help
Education loans are a resource to help you meet college expenses, establish credit in your name, and become financially responsible.
Loans are a promise
You promise to repay the principal plus the interest
Loans are a responsibility
You must repay your loan whether or not you find employment, complete your degree, or achieve your salary goal.
Before thinking about borrowing, exhaust all other aid options. Grants and scholarships are the most attractive aid options since they are “free money” and never have to be repaid. Work-study is an option for you to earn money toward your education by working in an on campu s student work position. Take advantage of tuition reimbursement and assistantships and fellowships as well if they are available.
Once you’ve exhausted all other aid options, then look into borrowing. The yearly loan maximums are very generous and are often much more than you need. Don’t borrow this full amount unless you absolutely need it. Before applying, determine your remaining expenses and then borrow only the amount you need. By limiting the amount you borrow, you will have a positive impact on your financial future.
Many students need to borrow money to pay for college. Whether you’ve already borrowed, filled out an application for a loan, or are planning to, it’s critical that you know the basics of borrowing money.

27. The Benefits of Federal Loans
No credit check
Annual limits
3.76% fixed interest rate for (Undergrad)
5.31% fixed interest rate for (Graduate)
Repayment, Deferment and Forbearance Options
Parents can also borrow Federal Loans, known as the Parent PLUS Loan

28. Private or Alternative Loans
Loans made by banks or other lending institutions.
Each private loan product offers its own terms and conditions—so do your research.
Exhaust your federal loan eligibility before you consider a private loan.

29. Private Loan Considerations
Consider the following:
Interest rate
Fees
Repayment options
Application of extra payments toward principal
Frequency of changes to monthly payment
Also important:
Cancellation policies, grace period, deferment & forbearance options, benefits, and default

30. Know What You Owe You are responsible for keeping track of your loans.
Did you borrow through more than one lender?
How much have you borrowed?
Has your loan been sold?
Are your loans being serviced with different servicers?
Resources exist to help you keep track of your loans.

31. Make on-time, monthly payments Read correspondence from lender
Repay your loan(s)
Make on-time, monthly payments
Read correspondence from lender
Notify lender of changes within 10 days
School & enrollment status
Name, address & telephone number
Ask your lender for help
Your Responsibilities
Speaker notes
Accepting a loan means you accept legal and financial responsibilities until your loan is repaid in full. A student loan must be repaid regardless of whether you complete your program or get a job after graduation. You are also obligated to make on-time, monthly payments—even without notice from your lender—and read all correspondence regarding your student loan.
In addition, you must notify your lender within 10 days if you reduce your status to less than half time, withdraw from school, stop attending classes, fail to re-enroll for any term, change your expected graduation date, or change your name, address or telephone number. Finally, shortly before leaving school, you are required to attend exit counseling.
Key
Summarizes Stafford loan borrowers’ responsibilities.

32. Keys to Successful Repayment
Keep school and lender informed about changes
Keep copies of all documents in one place
Open all mail
The longer it takes to repay your loans, the more interest you will pay
Build good credit with timely payments
Always ask for help
Speaker notes
The keys to responsible repayment are simple. (Review bullets.)
Activity
Ask students to verbally give you a number between one and 10. When someone in the group has stated a number (seven, for example), then say, “We need seven ways you can avoid default.” Begin by stating the first way. As students give their answers, you keep track of the number and add any information that students miss.
Key
Provides the keys for successful repayment.

33. Avoid Delinquency and Default
A loan is considered in default after 270 days of missed and/or late payments
A payment received one day late is considered delinquent
Delinquent payments are reported to the credit bureaus
Always call your lender or ASA for help

34. Consequences of Default
Subject to federal and state offsets
Wages and tax refund may be garnished
Credit will be negatively affected.
Loss of deferment and forbearance options
Loss of eligibility for future financial aid
May lose eligibility for certain federal or state jobs
May lose professional license

35. Consider the long-term implications
Borrowing Basics
Do your homework
Ask for reduction or elimination of your loan amount if you don’t really need it
Consider the long-term implications
Before thinking about borrowing, exhaust all other aid options. Grants and scholarships are the most attractive aid options since they are “free money” and never have to be repaid. Work-study is an option for you to earn money toward your education by working in an on campu s student work position. Take advantage of tuition reimbursement and assistantships and fellowships as well if they are available.
Once you’ve exhausted all other aid options, then look into borrowing. The yearly loan maximums are very generous and are often much more than you need. Don’t borrow this full amount unless you absolutely need it. Before applying, determine your remaining expenses and then borrow only the amount you need. By limiting the amount you borrow, you will have a positive impact on your financial future.
Many students need to borrow money to pay for college. Whether you’ve already borrowed, filled out an application for a loan, or are planning to, it’s critical that you know the basics of borrowing money.

36. Strategies to Minimize Debt

37. Strategies to Minimize Debt
Use a variety of options to cover your balance. The goal is to MINIMIZE borrowing!
Student Savings
Loan Programs
529 Plans
Student Salary
Parent Salary
Resident Assistant
Outside Scholarships
Payment Plans
Parent Savings
Employer Benefits
Work Study
Orientation Leader
Gap Programs
Education Tax Credits
There is no ONE way to cover the balance, and in fact multiple methods are usually best with the main goal of lowering your balance as much as possible before borrowing.

38. Strategies to Minimize Debt
Options to pay college costs not covered by aid, grants, or scholarships:
Tuition payment plan—spreads the cost out over 12 months
Loans– Federal and private options
Live at home if possible
Try to graduate in 3 years instead of 4
Presentation Title

39. Money Management & Planning Ahead

40. How can you minimize your debt load to lessen your financial burden?
What should I be doing today?
Where should I be heading tomorrow?
For your future:
Have you truly considered what you want to do and where you want to go?
How much debt should you realistically take on based on your intended career?
How can you minimize your debt load to lessen your financial burden?
Should you revisit any of your decisions?
For today:
How can you change your spending patterns (or creatively increase your income) to reduce your future debt load

41. Managing Debt with Financial Planning Tools
Develop good money strategies
Savings accounts, budgeting, investing, etc.
Create a college spending plan
Create a post-college spending plan
Compare salaries
Compare repayment options
Federal loans offer income-based repayment if you are eligible

42. Managing Debt with Financial Planning Tools
Good money strategies: Do you know where your money goes?
Dinner in Boston
Every
Saturday
$30/week
$1,400/year
One Grande Latte Every Weekday
$3.80/drink
$988/year
Fast food meal
Twice a week
$5.64/combo
$687/year

43. Managing Debt with Financial Planning Tools
FAFSA – fafsa.ed.gov
NSLDS – nslds.ed.gov

44. Resources

45. Saving
Saving
Local bank
CHA Matched Savings Program
Financial Advisor

46. Loan Forgiveness Volunteer work Military service
Loans
Loan Forgiveness
Volunteer work
Military service
Teach or practice medicine in certain communities
Other loan forgiveness resources
AmeriCorps—
Peace Corps—

47. Contact our Borrower Services Team!
Do you have questions about a loan you are repaying or about to begin repaying?
Counseling Services
Mon - Thu: 8:00 a.m. - 10:00 p.m.
Fri: 8:00 a.m. - 5:00 p.m.
Sat. 9:00 a.m. - 6:00 p.m.
Sun: 11:00 a.m. - 8:00 p.m.
Have you fallen behind on your loan payments or are you experiencing financial difficulties?
Have you received a Notice of Default?
Agency Relations
Mon – Thu: 8:00 a.m. – 8:00 p.m.
Sat: 8:00 a.m. - 12:00 p.m.
Additional Contact Information
For FFELP lenders and servicers:
, option 4
For all other inquiries:

48. For Free Education Advising
Visit us at the
ASA College Planning Center
Located at the Boston Public Library
700 Boylston Street
Boston, MA 02116
(The lower level of the Johnson Building)
Phone:

49. Thank you