Transcript How to pay for college

Paying for College
Kelly Graves
Associate Director of Scholarships
Baylor University
How much does college actually
cost?
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Public Universities:
$15,640*
Projected costs by 2020
$160,341**
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Private Universities:
$22,255*
Projected costs by 2020
$345,593**
*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 *
Tips for Reducing College Costs
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Take the Recommended High School program to
prepare for college
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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!
Tips (continued)
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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)
Plan Ahead
Paying starts with planning!
With the right planning, a college education is
within reach for every Texas student.
Ways to Pay
Savings
 Portion of current income
 Student’s part-time & summer earnings
 Education tax credits
 Military service
 Financial aid
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Savings Plans
Tomorrow’s College Investment Plan (the Texas 529
Savings Plan)
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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
Education IRAs
Educational Savings Accounts
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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.
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.
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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/irspdf/p970.pdf for more details
Education Tax Credits
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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
Military Service
The U.S. Armed Forces have helped millions of
Americans go to college!
 Military First, College Later
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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
Military Service (continued)
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College First, Military Later
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ROTC
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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)
Military Service (continued)
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Military Academies
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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.
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.
Financial Aid (continued)
There are two types of financial aid:
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Merit-based aid
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Need-based aid
Financial Aid (continued)
Merit-Based Financial Aid
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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
Financial Aid (continued)
Merit-Based Financial Aid
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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
Financial Aid (continued)
Need-Based Financial Aid
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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.
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:
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Family size
# of family members in college
Family’s income & assets
Student’s dependency status
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
Financial Aid (continued)
Types of Need-Based Aid:
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Scholarships
Grants
Federal or state work study programs
Subsidized loans
Financial Aid (continued)
Scholarships
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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)
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Think local (church, civic organizations, etc.)
www.fastweb.com
Check with your high school counselor
Financial Aid (continued)
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Beware of Scholarship Scams!
The Federal Trade Commission warns parents &
students to look out for these tell-tale lines:
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“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
Financial Aid (continued)
Grants
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Federal programs:
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Federal Pell Grant
Academic Competitiveness Grant
National SMART Grant
Federal Supplemental Educational Opportunity Grant
(FSEOG)
Financial Aid (continued)
Grants (cont)
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State programs:
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Texas Public Education Grant (TPEG)
Tuition Equalization Grant (TEG)
Towards Excellence, Access, & Success (TEXAS grant)
Financial Aid (continued)
Loans
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Federal loan programs:
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Federal Perkins Loan
Federal Family Education Loan or William D. Ford
Federal Direct Loan Program
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Subsidized Stafford Loans
Unsubsidized Stafford Loans
PLUS loans for parents of dependent students
PLUS loans for graduate or professional students
Financial Aid (continued)
Loans
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State loan programs
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B-On-Time Loan
College Access Loan (CAL)
Alternative or private loan programs.
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Student must be credit worthy or have credit worthy cosigner
Terms vary greatly depending on lender & credit
worthiness of borrower/co-signer
Financial Aid (continued)
Work Study
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Federal work study
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Texas college work study
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
Financial Aid (continued)
Comparing Aid Offers
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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?
Financial Aid (continued)
Financial Aid Myths
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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.
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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.
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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.
Financial Aid (continued)
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FYI: Financial aid is often divided into two other
main categories:
Gift Aid (aka Free $$)
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Scholarships
Grants
Self-Help Aid
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Loans
Work study
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.
Financial Aid (continued)
Quick Fact:
Full-time students at 4-year institutions received an
average of $3,300 in grants & tax benefits in 200405.
Full-time students at 4-year private schools received
an average of $9,600.
Paying for College
Special credit goes to the following websites & their
parent companies:
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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!
Paying for College
Thank you!
Have a good evening & enjoy the
rest of your TFB Youth Leadership
Conference