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College Bound

College Bound. Personal Finance for College. Take Stock. Where are you now? How long before college? How much have you saved? What is your current plan? What resources are available?. Set Goals. Characteristics of goals Specific, measurable, reasonable and realistic Time-frame

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College Bound

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  1. College Bound Personal Finance for College

  2. Take Stock • Where are you now? • How long before college? • How much have you saved? • What is your current plan? • What resources are available?

  3. Set Goals • Characteristics of goals • Specific, measurable, reasonable and realistic • Time-frame • Short-, medium-, long-term • Examples for this life stage • Save “x” dollars • Get a summer job • Design a budget • Fill out FAFSA

  4. Create a Budget - Income • Allowance • My job or business • Odd jobs • Grants • Scholarships • Gifts • Loans

  5. Money I owe Savings College savings Giving Gifts Transportation Food Clothing Personal care School supplies Telephone Recreation Vacations Create a Budget - Expenses

  6. College Costs Continue to Rise • In 2008-09, total expenses for private 4-year college • $33,301 • 439 percent increase from 1982 to 2007 • In 2008-09, total expenses for public 4-year college • $16,357 – In-State • $26,304 – Out of State

  7. Choices Impacting College Costs • In-state vs. out of state school • Resident vs. commuter student • Part-time vs. full-time enrollment • 2 year vs. 4 year college • Private vs. public school • Dependent vs. independent status

  8. Grants Loans Campus based aid programs Scholarships 529 plans Pre-paid tuition plans Coverdell plans Roth IRA Military coverage Options to Pay for College

  9. Were born before 1/1/85 Are married Graduate or doctoral student Have children that you pay more than ½ support for Have dependents other than children Are an orphan or ward of the court till age 18 Are a military veteran You Are Dependent Unless You:

  10. Fill Out Your FAFSA • Determine if you are a dependent • Get your PIN • Gather tax, income and asset information • Keep copies of everything

  11. Expected Family Contribution • Your EFC is calculated according to a formula based on income and some of the family’s assets • This amount is what your family is expected to pay • Any changes in income or assets can be discussed with the Financial Aid office at your school of choice

  12. Federal Pell Grant • Does not need to be repaid • Maximum award for 2008-2009 is $4,731 • Grants depend on need, school costs and full- vs. part-time status • For undergraduates only

  13. Federal Stafford Loans • Subsidized • Based on financial need • Government pays interest until student is out of school for 6 months • Unsubsidized • Not need based • Interest can be paid or capitalized while borrower is in school

  14. Stafford Loan Limits • Dependent full-time students can borrow: • $5,500 first year • $6,500 second year • $7,500 thereafter • Independent full-time students can borrow: • $9,500 first year • $10,500 second year • $12,500 thereafter

  15. Parents can borrow for child’s education Eligibility determined by credit check Limit is costs minus other aid sources Interest is variable, can’t exceed 9% Repayment begins 60 days after funds disbursed Any remaining money must be used for education Parent Loans to Undergraduate Students (PLUS)

  16. Supplemental Educational Opportunity Grant Work-study Perkins Loans Administered by each campus, not the government School receives flat amount of funds When they run out, they are out, so apply early Campus Based Aid Programs

  17. Supplemental Educational Opportunity Grants • Pell grant recipients with lowest EFCs will be first recipients • No repayment of grants • $100 - $4,000 per year based on need, application date and funds available • For undergraduates only

  18. Work-Study • Provides part-time jobs to students with financial need, allowing them to earn money to pay educational expenses • Can provide work experience in community service or course of study, as well as other types of jobs

  19. Perkins Loans • Low interest (can’t exceed 5%) for exceptional need • $4,000 per year limits • Repayment begins 9 months after student is no longer full-time student • Loan can be forgiven in some post-college work programs

  20. Scholarships • Apply through your high school or college offices • Use library references • Be wary of internet sites that charge fees to search for you

  21. 529 College Savings Plans • Offered through all states • Some states allow you to deduct all or part of your contribution from state taxes • Contributions are not deductible from your federal taxes • Earnings grow tax-free, and withdrawals are tax-free if used for college

  22. 529 College Savings Plans • You have control – beneficiary has no right to funds without your authorization • Plan assets are managed, and you can auto-debit your contributions • Anyone eligible and contribution limits are very high ($300,000) in some states

  23. Pre-Paid Tuition Plans • Vary state to state • Allow you to contribute a flat amount now to cover tomorrow’s tuition costs • Gains are tax-free, and some are state-deductible • Most plans limited to state residents and offered for state colleges and universities, not private schools

  24. Coverdell Education Savings Account • Contributions aren’t deductible • Earnings and distribution are tax-free if used for education expenses • Contribution limits of $2,000 per year per student • Money can be used for primary and secondary private school tuition and college expenses • Some high-income families ineligible to contribute

  25. Roth IRA • You can decide how to invest the money • If your child doesn’t need the money, you can save it for retirement • No IRS penalty if withdraw used for education

  26. Military Options for Aid • Montgomery GI Bill • 36 months education benefits to eligible service people • Veterans Educational Assistance Program • Government matches 2/1 per dollar contributed to this program

  27. Military Options for Aid • Survivors and Dependents Educational Assistance Program • Benefits for children of veterans who have died or become disabled during service • ROTC • Provides scholarships for tuition in exchange for military service after graduation • Provides living stipend and book allowance

  28. Strategies for Getting More Aid • Limit savings in the student’s name • Will assume 35% available for education • Avoid lump sum income in student’s junior year of high school • Shift assets • 401(k), IRAs, cash value life insurance, home equity

  29. Tax credits Community college for 2 years Choose in-state school Live at home during college AmeriCorps programs Military options Tuition remission for full-time school staff and dependents Resident Assistant jobs for housing Reduce the Costs of College

  30. Be Credit Wise • Over 75% of college students have credit cards • Over 30% of college students have 4 or more credit cards • 3 out of 5 students with credit cards maxed them out in their freshman year • Over 60% of college students don’t have a budget

  31. Be Credit Wise • How to establish credit • The “C’s” of credit • The costs of credit • Your credit report • From SAT to credit score

  32. College Bound

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