Paying for College

1. Paying for College Kelly Graves Associate Director of Scholarships Baylor University

2. Public Universities: $15,640* Projected costs by 2020 $160,341** Private Universities: $22,255* Projected costs by 2020 $345,593** How much does college actually cost? *Includes tuition & fees, room & board, books & supplies, transportation, other expenses based on average charges for fall 2005 **Assumes a 6% annual increase with costs expressed in *

3. Tips for Reducing College Costs • Take the Recommended High School program to prepare for college • If you are not prepared, you will have to take & pay for development education courses before beginning college level courses. • This can amount to an additional year of college--& an additional year of expenses!

4. Tips (continued) • Take college courses while you’re still in high school (discuss with your school’s counselor for details) • Take advanced placement (AP) classes & exams or place out of college hours by taking a CLEP exam • Begin your college career at a public community or technical college (ensure courses will be accepted at institution you will transfer to)

5. Plan Ahead Paying starts with planning! With the right planning, a college education is within reach for every Texas student.

6. Ways to Pay • Savings • Portion of current income • Student’s part-time & summer earnings • Education tax credits • Military service • Financial aid

7. Savings Plans Tomorrow’s College Investment Plan (the Texas 529 Savings Plan) • Educational plan sponsored by the state of Texas (www.texastomorrowfund.org) • Earnings on your investment will grow tax free (no capital gains taxes are paid) • Withdrawals for qualified education expenses are tax free • Anyone can contribute, whether the 529 plans is for their child or that of a friend or family member

8. Education IRAs Educational Savings Accounts • Tax payers may withdraw funds from a regular Individual Retirement Account (IRA) without penalty for their own higher education expenses or those of their spouse, child, or even grandchild.

9. Education IRAs (continued) For each child under the age of 18, families may deposit $2,000/year into a special Education IRA in the child’s name. • Earnings are tax-free & no taxes will be due upon withdrawal if money used for post-secondary expenses • After the child reaches age 30, his/her IRA must be closed or transferred to a younger family member • There are a few restrictions. Visit www.irs.gov/pub/irs-pdf/p970.pdf for more details

10. Education Tax Credits • Education tax credits, like the Hope Scholarship Tax Credit & the Lifetime Learning Tax credit, are available to individuals & families who file a tax return & owe taxes • Tax credits are subtracted from the tax an individual or family owes rather than reducing taxable income like a tax deduction • For more information visit www.nasfaa.org/taxbenefits.asp

11. Military Service The U.S. Armed Forces have helped millions of Americans go to college! • Military First, College Later • Students can receive up to $50,000 toward school expenses in return for an active duty tour • Students can receive up to $24,000 in return for a one weekend a month & 2 weeks a year training by serving part-time in the Reserves

12. Military Service (continued) • College First, Military Later • ROTC • Students who participate in the Reserve Officers Training Corps (ROTC) can be eligible for merit-based scholarships worth more than $50,000 • The Armed Forces cover tuition and pay students a monthly allowance for living expenses; the student is then required to serve a minimum active duty obligation (3 years for Army, Navy & Marines; 4 years for the Air Force)

13. Military Service (continued) • Military Academies • For students who receive a Congressional appointment to a U.S. military academy, the federal government will pay 100% of the cost of attendance. • In return, students serve as a full-time member of the military during school & must commit to five years of service after graduation.

14. Financial Aid What is financial aid? Student financial aid is money used to help pay for college expenses. It is available from many sources & in many forms. Financial aid can be used to pay for tuition & fees, books & supplies, & the living expenses associated with attending college.

15. Financial Aid (continued) There are two types of financial aid: • Merit-based aid • Need-based aid

16. Financial Aid (continued) Merit-Based Financial Aid • Merit-based aid is awarded based on how well the student performs in a particular area such as math, science, athletics, overall academics, or intended major area of study

17. Financial Aid (continued) Merit-Based Financial Aid • A prime example of merit-based aid is scholarships • Merit-based aid usually does not have to be paid back although sometimes there are restrictions or conditions on the award

18. Financial Aid (continued) Need-Based Financial Aid • The amount and type of need-based aid depends on how much the family can afford to pay toward education expenses. • The amount you should be able to pay is referred to as the Expected Family Contribution or EFC.

19. Financial Aid (continued) How is financial need determined? Students must first complete the Free Application for Federal Student Aid (FAFSA) at www.fafsa.ed.gov. The EFC is calculated using a standard formula that uses the information input on the FAFSA including: • Family size • # of family members in college • Family’s income & assets • Student’s dependency status

20. Financial Aid (continued) How is financial need determined? (cont) Financial need is the different between the school’s cost of attendance (COA) & the EFC. COA –EFC = Financial Need

21. Financial Aid (continued) Types of Need-Based Aid: • Scholarships • Grants • Federal or state work study programs • Subsidized loans

22. Financial Aid (continued) Scholarships • No federal or state need-based scholarship programs & few merit-based scholarships (e.g., Byrd & Fifth Year Accounting Scholarships) • Institutional awards usually funded from endowments • Private scholarship funds (e.g., Gates Millenium Scholarships) • Think local (church, civic organizations, etc.) • www.fastweb.com • Check with your high school counselor

23. Financial Aid (continued) Beware of Scholarship Scams! • The Federal Trade Commission warns parents & students to look out for these tell-tale lines: • “The scholarship is guaranteed or your money back” • “You can’t get this information anywhere else” • “I just need your credit card or bank account number to hold this scholarship” • “The scholarship will cost some money:” • “You’ve been selected by a national foundation” or “You’re a finalist” in a contest you never entered

24. Financial Aid (continued) Grants • Federal programs: • Federal Pell Grant • Academic Competitiveness Grant • National SMART Grant • Federal Supplemental Educational Opportunity Grant (FSEOG)

25. Financial Aid (continued) Grants (cont) • State programs: • Texas Public Education Grant (TPEG) • Tuition Equalization Grant (TEG) • Towards Excellence, Access, & Success (TEXAS grant)

26. Financial Aid (continued) Loans • Federal loan programs: • Federal Perkins Loan • Federal Family Education Loan or William D. Ford Federal Direct Loan Program • Subsidized Stafford Loans • Unsubsidized Stafford Loans • PLUS loans for parents of dependent students • PLUS loans for graduate or professional students

27. Financial Aid (continued) Loans • State loan programs • B-On-Time Loan • College Access Loan (CAL) • Alternative or private loan programs. • Student must be credit worthy or have credit worthy co-signer • Terms vary greatly depending on lender & credit worthiness of borrower/co-signer

28. Financial Aid (continued) Work Study • Federal work study • Texas college work study

29. Financial Aid (continued) Some aid programs have both need-based and merit-based components. Two examples include the Academic Competitiveness Grants (ACG) and National Smart Grants • In Texas, ACG grants are awarded to freshmen ($750/yr) & sophomores ($1300/yr) who completed the Recommended or Distinguished High School plan & who are Pell Grant eligible • SMART grants ($2000) are awarded to juniors & seniors with certain majors (e.g., math, science, foreign language) who are Pell Grant Eligible

30. Financial Aid (continued) Comparing Aid Offers • Review the COA of the different colleges • Compare the total gift aid to the COA • Note the restrictions or conditions of the award(s) • Is there unmet need?

31. Financial Aid (continued) Financial Aid Myths • My family’s income is too high to qualify for financial aid. The only way to know for certain is the complete the FAFSA, which takes into consideration a number of different factors. • My parents saved for my college education so we won’t qualify for any aid.In fact, the EFC formula only uses a small portion of parental assets, if any. • My brother wasn’t eligible for financial aid so I won’t be either. The EFC formula takes into account siblings attending college. • Millions in scholarships go unclaimed every year. This statement has never been verified & used by scammers to entice families into paying for their services.

32. Financial Aid (continued) FYI: Financial aid is often divided into two other main categories: • Gift Aid (aka Free $$) • Scholarships • Grants • Self-Help Aid • Loans • Work study

33. Financial Aid (continued) Quick Fact: Of the $129 billion in aid available to students in 2004-05, 47% came from federal student loans, 33% from federal, state, & institutional grants, and 6% from tax credits.

34. Financial Aid (continued) Quick Fact: Full-time students at 4-year institutions received an average of $3,300 in grants & tax benefits in 2004-05. Full-time students at 4-year private schools received an average of $9,600.

35. Paying for College Special credit goes to the following websites & their parent companies: • www.collegefortexans.com • www.nasfaa.org • www.salliemae.com • www.ftc.gov And a big thank you to the Texas Farm Bureau for this opportunity!

36. Paying for College Thank you! Have a good evening & enjoy the rest of your TFB Youth Leadership Conference