10 Things You Gotta Know about Paying for College

What Would You Do, If You Knew You Couldn’t Fail?

10 Things You Gotta Know about Paying for College

EP 21

The Process The Long Plan StrategyThe Short Plan Strategy

The Free MoneyThe Loans

The State SystemThe Other Aid

The OfferThe Long Haul

The Secrets

Update/Review from last month

EP 21

EP21 Website

The Scholarship Search Book

EP21 Timeline

New Favorite Timeline

The Process1000’s competing for same $ - New car annuallyAverage Cost of a College Education (click here)Need – difference between COA and EFC

Diff than old days (84% vs 25%)EFC Calculation Tables (click here)Need-based vs Non-Need-based Aid (not always true!)Financial Aid Limits

The ProcessDiff methods used to calculate your EFC (Focus – Fed)Formulas used = Federal Methodology (not institution)Demystifying FAFSA (don’t wait!)

Base Year“As of Today”35% vs 6% (% of assets used in FAFSA formula)# of Students in School (verification…no worries)Deadlines are single biggest reason $ is limited/lost“I make too much $!” – Ignorant mind…

The Profile (more detailed than FAFSA)

The Long Plan Strategy3 Years & Out (Do things that need to be done)Most scholarships won years out - not during Sr. year

Why invest? Why plant? Why study? SAT, GPA, etc. More kids in school decreases EFCRetirement – too many parents heading 4 Alpo diet> $60,000 (probably no Pell for 96%)Back to the Future?

529 Plan: College Savings Plan vs Prepaid TuitionCoverdell (Pros & Cons)

Buying a home & home equity

The Short Plan StrategyMinimize income/assets the year before starting college

Postpone bonus until January after base year< $50K (simplified need test ignores assets, such as assets,

cash and savings on hand…only for public schools)Hope Credit and Lifelong Learning Credit ($2,500 & $2,500)

http://www.irs.gov/formspubs/article/0,,id=177996,00.html http://www.irs.gov/individuals/article/0,,id=96273,00.html

Income Brackets (Parent vs Teen) – IRS vs Dept of Educ Opposite: Teen income is assessed more harshly (Parents should

never put assets in the teen’s name during the base year)

10 Ways to Reduce Year Income

The Short Plan StrategyIncome protection

Student vs Parents 22% < Max rate for parents < 47% (Protected up to $29K -varies) Student protection stops at $3,080 (50% rate above that) May be better off not working base year if income > $3,080???

Income Penalty Exceptions Work Study (say yes!) AmeriCorps

Asset Allowance Parents $ < $45K is protected; Parent $ > $45K taxed at 12% Student’s contribution is 20% of total assets ($ increases as Senior) Spend your assets (things you need) before completing FAFSA

The Short Plan StrategyAsset Allowance (cont.)

Gift Postponements until Senior year or given to parentsLiabilities not counted like assets against EFC

(pay down consumer debt w/check from grandma)Dependency vs Independency…not easyResidency (cheaper in state); EFC can be lowered if out of

state school is selected – but tuition is higher (choices)Can move to states and work 1-yr for residency (varies)

Panic Plan (2 yr) – Not a bad fall back plan (reality says...)

The Free MoneyThe Ratio (Loans becoming bigger percentage of fin. aid!)Pell has NO deadline (Gov’t) // Read page 59SEOG - good BUT NOT guaranteed (Campus-based)State Grants…you have to work to earn it…Minnie Piper!Scholarships (All Types) – FastWeb.com & Number2.comService Awards & FellowshipsHidden Free $

Tuition Waivers (before and during admission)Housing Allowances (Resident Assistance)Loan ForgivenessTaxation benefits

The Loans (10 Types)Perkins LoanSubsidized Stafford LoanUnsubsidized Stafford LoanPLUS LoanAlternative (or Private)

Loan

Consolidated LoansEmergency LoansForgivable LoansHome Equity LoansState Program Loans

FINANCIAL AID LOAN TYPES/LIMITS: CLICK HERE

AGE 45!!!

The State SystemApply EarlyOut of State is Expensive (can be waived)Residency & Tuition ReciprocityOther State Assistance (i.e., Tuition Rebate for Texas)

The Other AidWork StudyCo-opWaiversFrom Fee to Free (i.e., application, housing, etc.)InternshipsAssistantshipsCLEP

The Offer (ways to get more)Beat the DeadlinesChoose Help WiselyAce the FormsCheck the Student Aid Report for AccuracyAppeal (Professional Judgement)Understand the Letter(s)Know the Ratio (scholarship vs loans)NegotiateShop AroundChoose School

The Long HaulFAFSA has to be done annuallyExtra MoneyCut Big Cost (Buy 3/1 Free; Alumni benefit)Cut Small Cost (Credit Cards; Phones, etc.)Keep Up w/School WorkKeep Looking for $Expand your Horizon (Study Abroad, Spring Break, etc.)Get your Game on Annually

The SecretsGet started in college early (AP, Summer classes, 2+2)Combine Undergrad and Grad School (buy 4, get 1 free)10 good lending institutions (free info)Summer Secrets (i.e. U of H, Prairie View Summer pgms)Satisfactory Academic Progress (SAP)www.teachforamerica.com

DestinyWatch your thoughts, they become your wordsWatch your words, they become actionsWatch your actions, they become habitsWatch your habits, they become your characterWatch your character, for it determines your destiny

Thanks For Showing UP!You will reap rewards for just showing up. Mark your

calendar now for next month’s workshop.Work on the timeline and catch up if you haven’t done

previous month’s task.Making the Final Push for College (What I did for my

kid)

Reminder from last month

EP 21

EP21 Website

The Scholarship Search Book

EP21 Timeline

New Favorite Timeline

Postpone a year-end bonus to the next yearTake an unpaid leave of absenceMaximize contributions to retirement plansTry to have overtime payments deferred to the next yearDon’t earn more than $3,080 if you’re a studentDelay accepting large cash gifts (Senior Year)Accelerate income, if possible, to the year before base yrSell off losing investmentsDon’t sell off real estate or stocks during the base yearPay down consumer debt

10 Ways to Reduce Year Income

10 Things About 529

10 Good Things About 529

10 Bad Things About 529

10 Things About the Coverdell ESA