Saving for College: A Critical Step Toward College

Affordability

• College Savings Landscape and Current Research

• Our college savings work • What have we done as individual organizations?

• Our collaboration• What has collaborating allowed us to do?

• Best practices

• Q&A

Agenda

• GAO Report• A small percentage of families save in 529 plans• Savers have median income 3 times that of non savers• Most families saving in 529 plans have gone to college• Factors that can affect saving are lack of resources, lack of awareness

about 529 plans, and people have trouble selecting one

• Financial aid/Paying for college/Enrollment factors/Debt

• How America Saves for College (2013) Sallie Mae Study• Anticipated savings don’t match actual savings nor meet with reality

of college costs• Saving tied to life “triggers” – birth, start of school• Not saving for college is more common in low income families

• Fidelity CSI Study• Families now not expecting to cover all college costs• Parents overestimate starting salaries of their students

College Savings Landscape

• Participation in states’ college savings plans has increased rapidly.

• There is much room for growth.

College Savings Landscape

• “Youth who expect to graduate from a four-year college and have a (college savings) account are about 7 times more likely to attend college than youth who expect to go to college but do not have an account.” Elliot, W. and Beverly, S. (2011)

• While assets are positively related to college attendance, completion, and success, account ownership alone seems to be a very large predictor of success.

• Behaviorally there is evidence that saving for college may focus attention of parents and children on postsecondary education affecting outlook, orientations, course selection, and discipline.

Research that Motivates

• MEFA is a not-for-profit state authority that works to make higher education more accessible and affordable through community education programs, college savings plans and low-cost financing options.

• Created the U.Fund® and the U.Plan® college savings plans and has offered affordable and fixed interest rates college loans for 30 years.

• MEFA has assisted hundreds of thousands of families to finance a college education.

About MEFA

MEFA’s College Savings Programs

• It’s never too early to start saving for college and MEFA offers guidance, a wealth of resources and two college savings plans, the U.Fund® and the U.Plan®, to help make paying for college a possibility for families

Mayor Menino at a Start U Reading Event

• MEFA reaches families of young children in a number of ways to emphasize the importance of saving for college early.

› Start U.Reading› Art Competition› Dreams Tour› Museums and Road

Races

The Early Years: Outreach Initiatives

Our Work: FUEL

• Boston – based private nonprofit• College planning and saving program for parents• Reach parents through collaborations with community

organizations• Boston, Chelsea, and Lynn

Families United in Educational Leadership

Our Work: uAspire’s Mission & Vision

uAspire works to ensure that all young people have the financial information and resources necessary to find an affordable path to – and

through – a postsecondary education

College cost is a barrier that every college-ready young person from a low and moderate income family must

overcome.

Our Work: uAspire Program Model

PREPAREFight the misperceptions of college costs that derail students early in their high school careers

7th-11th

Grade

AFFORDGuide students through the

financial aid process, securing financial aid and enabling

good decision-making

12th

Grade

SUCCEEDSupport students throughout their

postsecondary career, helping them reach their goal of college graduation

College

COMPASS IDA PROGRAM

26%

2%

4%

58%

5%5%

Asset Purchases to DateHomeownership

Home Repair

Post-secondary Education for SelfPost-secondary Education for ChildRoth IRA

Small Business

Our Work: Compass Working Capital

Saving for college is one of top two savings goals for families.

Collaborative Work: Compass, MEFA & FUEL

EARLY COLLEGE PLANNING INITIATIVE (ECPI)*

U.S. Department of Education College Savings Research Project (3 year study)

Working with parents of low and moderate income 8th and 9th graders within the Boston Public Schools

Core question: How can we support families to prepare for college financing earlier?

*Project funded through grants from the United States Department of Education and the Bill and Melinda Gates Foundation

Collaborative Work: MEFA & uAspire

Provide general college

planning info?

Provide general info

AND introduce the 529 plan?

Provide general info

AND introduce the 529

plan AND provide the

$50

uAspire+MEFA uAspire+MEFA uAspire

• Early messaging to students and families• Integrate savings into current access/success

programming• Collaborate: partner with your state’s 529

provider• Make savings automatic and provide incentives• Optimize other savings opportunities• Walk through process step-by-step• Simplify the overall process• Build trust and strong relationships with families• Provide ongoing coaching support

Best Practices

• Age level: elementary and middle school audiences

• Content: combine savings information for parents with college cost information

• Sticker price• Scholarship information

• Benefits: early messaging allows you to break down myths and misconceptions early

Best Practices: Early messaging

• uAspire program model evolution• Where and when we integrate savings

Best Practices: Integrate savings

• Partner with your state’s 529 provider• States have generally structured the investment options to benefit

participants from all economic backgrounds within their state. • Low contributions• Less risky investments• Inclusive marketing strategies-zoos, museums, libraries• Convenient enrollment procedures and contribution options-payroll

deduction, electronic fund transfers, and online contributions and enrollment.

• Use research to make policy changes• 35 states offer tax benefits (deduction or credit)*• 12 states offer matching grants• 16 states give 529 assets special treatment for state financial aid

funds

• Widespread agreement about the importance of financial education about 529 plans and about college savings in general as it relates to receiving financial aid and paying for college.

*5 states have tax benefits that cross all states (parity)

Best Practices: Collaborate

19

Best Practices: Make Savings “Automatic” & Use Incentives

Source: Inspire Compass Working Capital Survey, n=31

0%

20%

40%

60%

80%

100%

Perc

ent

of

Resp

ondents

Workshop Attendees

Presentations from MEFA andFidelity

$100 incentive

Open an account at the workshop

Sign up with direct deposit

Q: Which aspect of the workshop had the biggest impact on your decision to open an account? (Choose one)

Best Practices: Optimize Other Resources

Individual Development Account (IDA) programs - matched savings accounts for working, low-income families (www.idanetwork.org)

Family Self-Sufficiency Programs – an employment and savings program for families in Section 8 or public housing.

Tax-Time – encourage families to save part of their Earned Income Tax Credit (EITC)

Best Practices: Walk through paperwork

• Example - FUEL formats application for uploading personal information, and adds helpful hints

• A peek at a FUEL enrollment presentation…

Walk Through Paperwork, continued

• Review & Correct your information

• Participant (Account Owner) is YOU• Beneficiary is the STUDENT

• Fill in SSN’s• SIGN! section 8• Meet FUEL staff to review and open your account individually.

Regardless of how you promote saving for college, if you are successful and parents begin saving, you can encourage them to keep it going through financial coaching strategies.

• Fielding questions, referring to the appropriate agency• Navigating account statements• Workshops

• Strategies• Vocabulary• Using funds• Applying for financial aid

Best Practices: Provide Ongoing Support

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and K

assa

ndra

For more information:

• Julie Shields-Rutyna MEFA jshields-rutyna@mefa.org

• Sherry Riva Compass Working Capital

sherry@compassworkingcapital.org

• Michelle Murphy FUEL m.murphy@fuelaccounts.org

• Claire Dennison uAspire claired@uaspireusa.org

Question & Answer