December 10th, 2014

Facilitator:

Shonna PricketteTraining & Development Manager

Presented By:

INTRO

Introductions

Eat cookies to stay awake!

PAW

Supporting local paper companies

Sources are cited; sites are sourced

Ask questions!

I’ll provide education, not advice

Present the facts, your options, & the process

of student financial aid so that you’re prepared

to make decisions when that time comes.

Source: Bureau of Labor Statistics; Current Population Survey, unpublished tables, 2012visual.ly/why-go-college

Source: Carnevale, Anthony P., Jayasundera, Tamara, and Cheah, Ban. (2012). The College Advantage: Weathering the

Economic Storm. Georgetown University: The Center on Education and the Workforce.

$$ SAVED MONEY $$

$$ FREE MONEY $$Scholarships & Grants

$$ BORROWED MONEY $$

Federal or Private Loans

Source: Sallie Mae; Go to: http://news.salliemae.com/research-tools/america-pays-2013

for this study & more information on how America pays for college.

Start early, save whatever you can

It’s not too late to start now

Keep saving as long as you can

Encourage good spending habits

Change your spending habits

College = Financial Independence

GET ADVICE ON HOW TO SAVE*

$100 = Initial Deposit

+ $50 = Monthly Deposit

X .15% = Interest Rate

X 18 = Years of contribution

$10,900 (Actual) + $150 (Interest)

$100 = Initial Deposit

+ $50 = Monthly Deposit

X 3% = Interest Rate

X 18 = Years of contribution

$10,900 (Actual) + $3800 (Interest)

Standard Savings

Money Market Savings

CD (Certificate of Deposit)

Traditional IRA

Roth IRA

Custodial Account (UGMA/UTMA)

Educational Savings Bonds

Named for tax code

Savings product tied to mutual funds Return is based on performance of the market

Can be used only for higher education expenses

Each state has their own 529 Plan WI 529 Plan is called Edvest or Tomorrow’s Scholar

WI residents receive state income tax deduction for contributions up to $3000 per child, per year

DIY & Advisor plans offered

Earnings can be exempt from WI & Federal tax

You can use ANY state’s 529 plan

No income limits

Contribute up to $350,000 per child

Named for Senator who pushed through Congress

Savings product tied to mutual funds/securities

Return is based on performance of the market

Qualified distributed earnings are federal income tax free

No state income tax benefits

Can be used for elementary, secondary, or higher

education expenses (K – grad school)

Not available to high income families

$220K max joint income/$110K max single income

Contribute up to $2000 per beneficiary, per year

I have $_____ per month to

save for my child’s education. What do you recommend?

I’ve been putting $____ into

a _____ to save for my

child’s education. Do you

have any other recommendations?

PRIVATE

INSTITUTIONALGOVERNMENT

Do your best in school

SAT/ACT scores are important

Colleges you apply to will offer “merit”

scholarships with your financial aid package

Start looking for private scholarships early

Junior year of high school

Do your research to find the best fit

Ask questions

Use your time wisely

USE YOUR RESOURCES!

Guidance Counselor

On-line Databases contain info on millions of

scholarships worth BILLIONS of dollars

Cfffoxvalley.org (Local)

Salliemae.com/scholarships

Studentaid.ed.gov/scholarship

Careerinfonet.org/scholarshipsearch

College Financial Aid Office

Be smart about the applications you complete

Watch the deadlines

Based on terms of the scholarship

No need! (the best part)

Federal Pell Grant

Undergrad, up to $5,730 (2014-2015 award year)

Fed Supplemental Ed Opportunity Grant (FSEOG)

Undergrads with exceptional financial need, up to $4,000

TEACH Grant

Elementary or secondary school teacher

Must teach full-time in a designated teacher shortage area

4 year commitment, up to $16,000

Iraq & Afghanistan Service Grant

Parent passed away as a result of military service after 9/11

Federal Work Study

Guaranteed employment while you’re in school

On campus – usually work for your school

Off-Campus – usually private NPO or public agency

You will earn at least minimum wage

Employer must pay you directly, once a month

Important considerations:

Will work interfere with studies or sports?

Do I want to work while in school?

Could I get a higher paying part-time job elsewhere?

What is a federal student loan? Money from the government that’s repaid WITH

INTEREST

Helps you pay for educational expenses at an eligible college, tech school, vocational school, or grad school

Who gets aid? Every student, regardless of age or family income

Must meet some basic eligibility requirements

14 MILLION students currently receive aid

How much aid is available? More than $150 BILLION is available every year

WHY FEDERAL STUDENT LOANS?

Lower interest rates

Flexible repayment options

Longer repayment terms

Tax-deduction of interest paid

Student can borrow to build credit

When considering the options to borrow for a

college education, it’s recommended that you

exhaust federal funds BEFORE private loans!

KNOW YOUR COLLEGE

KNOW YOUR EMPLOYMENT OUTLOOK

UNDERSTAND THE FINANCIAL AID OPTIONS

KNOW YOUR FINANCIAL AID OUTLOOK

WHAT IS THE “COST OF COLLEGE”?

Education expenses might include any of the following..

Tuition

Room & Board

Supplies, books, & equipment

Child care expenses

Transportation

Personal PC

Lab fees

COLLEGE AFFORDABILITY & TRANSPARENCY

CENTER

US Department of Education

www.collegecost.ed.gov

1. College Scorecard

2. College Navigator

3. Net Price Calculator

COLLEGE SCORECARD

Basic, quick information

Enter the name of the college to see:

Average Net Price (Cost)

Graduation Rate

Loan Default Rate

Median Borrowing

COLLEGE NAVIGATOR

National Center for Education Statistics (US D.O.E)

In-depth analysis

Enter the name of the college to see:

Tuition, fees, net price, & financial aid

Faculty, enrollment, ethnicity, & gender

Programs, majors, varsity athletic teams

Crime stats

NET PRICE CALCULATOR CENTER

Links to Net Price Calculator on college site

Enter the following info for personalized analysis of

your cost & an estimated financial aid package:

ACT/SAT scores, GPA, & high school rank

Student Tax info

Parents Tax info

Family Assets

OCCUPATIONAL OUTLOOK HANDBOOK Bureau of Labor Statistics Bls.gov/oco

Guide to career info on hundreds of occupations

Highest median pay for 2012

Projected # of new jobs

Projected growth rate

Job Category

HOW MUCH CAN A STUDENT BORROW? How much you get depends on:

Financial Need

Cost of Attendance

Enrollment Status (F/T vs. P/T)

There are limits: Annual (per year)

Aggregate (total)

The limits depend on: Year in school

Dependant Status

HOW MUCH AID WILL WE RECEIVE?

Must complete Free Application for Federal Student Aid

(FAFSA) for official eligibility

Fafsa4caster.ed.gov

Early eligibility indicator

For anyone not ready to file an official FAFSA

Provides an estimate

The FAFSA determines your eligibility for

federal loans, grants, work-study, & some

state & institutional aid.

It’s the ONLY way to apply for federal financial aid

It’s REQUIRED if you want federal financial aid

Completed online at fafsa.gov

Complete ASAP after Jan. 1 of the year you’ll start

school b/c some aid is awarded on a first-come,

first-served basis

The Student Aid Report (SAR) summarizes

the info you provided on the FAFSA & will

contain your Expected Family Contribution

SAR is returned 3-10 days after FAFSA is submitted

Review the SAR carefully to make sure it’s correct

Colleges listed on your FAFSA will also receive your

SAR

From this point, stay in contact with your college’s aid

office as they will put together your aid package

Expected Family Contribution (EFC) is

calculated based on the info you reported on

the FAFSA, according to a legal formula

How much are you expected to contribute

EFC will appear on your SAR

Income, assets, family size, & # attending college are

considered in the formula

EFC is used to determine need for federal student aid

• Cost of attendance – EFC = Financial Need

Colleges that accept you for admission will

send an award letter detailing the financial

aid package you’re being offered

Award letter shows COMPLETE aid package

This is all grants, scholarships, loans, & work-study

offered from state, federal, & institutional sources

Evaluate the aid package paying close attention to

loan interest rates, fees, & repayment terms

“I’d recommend applying to 3-4 schools, even if you’re SURE you know where you want to go. It might cost a little to apply but you’ll get a better comparison of what different colleges offer for financial aid. Then, don’t take the first offer on your aid package. Negotiate

with the financial aid office if you feel the offer could be better.

Colleges will compete for your student! What’s the worst they can say?”

WHAT IS A LOAN? A loan is a borrowing agreement made between two

parties, where one party lends money to another party who

agrees to repay the borrowed money on specific terms,

with interest.

A loan is made up of 2 components:

PRINCIPAL = Original amount borrowed

INTEREST /FEES = Expenses paid by the borrower

Interest is calculated (compounded) monthly. With

student loans, the interest can be paid right away, or

CAPITALIZED (added to the unpaid principal).

WHAT IS A SUBSIDIZED LOAN? “Subsidized” means the US Dept of Ed. pays

the loan interest during certain time periods

You’re in school ½ time

During your grace period

During periods of deferment

“Unsubsidized” means you are responsible

for the loan interest during ALL periods

Interest accrues as soon as the loan is disbursed

You can choose to pay the interest right away

You can choose to capitalize the interest

WHAT’S A LOAN ORIGINATION FEE? Basically, a processing fee

Some federal loans have origination fees

Fee is subtracted from the loan amount before

disbursement

Your loan is $1,000 with a 1% origination fee

$1000 (amount borrowed) - $10 (1%

origination fee) = $990

$1000 is the amount you pay back

Loan = $5000 (Disbursed 9/2015), No Origination Fee, 5% Interest Rate, Subsidized thru 1/2020

$5000 (Principal)

- $0 (Origination Fee)$5000 (Amount disbursed on 9/2015)

$5000 (Value of Loan)X $0 (Monthly Interest accruing @ 5%)

$0 (Monthly interest added for 54 months)

= What you owe in Jan, 2020 (+ interest)

Loan = $5000 (Disbursed 9/2015), 1% Origination Fee, 5% Interest Rate, Unsubsidized, Interest NOT capitalized

$5000 (Principal)

- $50 (1% Origination Fee)$4950 (Amount dispersed on 9/2015)

$5000 = Value of loan$21 = Monthly interest charge @ 5% APY

54 = Number of months you make this payment$1145 = Total interest paid over 54 months

= What you owe in Jan, 2020 (+ interest)

Loan = $5000 (Disbursed 9/2015), 1% Origination Fee, 5% Interest Rate, Unsubsidized, Interest capitalized

$5000 (Principal)

- $50 (1 % Origination Fee)$4950 (Amount dispersed on 9/2015)

$5000 = Value of loan$21+ = Monthly interest charge @ 5% APY

54 = Number of months interest capitalizes$1258 = Total interest capitalized over 54 months

= What you owe in Jan, 2020 (+ interest)

FEDERAL PERKINS LOAN:

Awarded for exceptional financial need

5% Fixed Annual Interest Rate

Unsubsidized

No Origination Fee

$5,500 per year limit ($27,500 maximum)

Student is the borrower

College is the lender

Funds applied to college “bill” first with a refund

issued for excess funds

FEDERAL DIRECT SUBSIDIZED LOAN:

Also known as: Stafford Loan

Awarded to students with financial need

Undergrad students only

4.66% Fixed Annual Interest Rate (As of 7/1/14)

Subsidized

1.073% Origination Fee (As of 10/1/14)

Maximum Eligibility Period is 150% of the

published length of your academic program

School determines eligibility

Student borrows; US Dept of Education lends

FEDERAL DIRECT UNSUBSIDIZED LOAN:

Also known as: Stafford Loan

No requirement to demonstrate financial need

Undergrad & grad students

4.66% Fixed Annual Interest Rate (As of 7/1/14)

Unsubsidized

1.073% Origination Fee (As of 10/1/14)

School determines eligibility

Student borrows; US Dept of Education lends

FEDERAL DIRECT LOAN LIMITS:

Subsidized & Unsubsidized combined

YEAR 1 = $5,500 (up to $3,500 can be Subsidized)

YEAR 2 = $6,500 (up to $4,500 can be Subsidized)

YEAR 3 = $7,500 (up to $5,500 can be Subsidized)

YEAR 4+ = $7,500 (up to $5,500 can be Subsidized)

AGGREGATE LIMIT = $31,000 (up to $23,000 Subsidized)

WHAT ABOUT THE REST?$12,000 (Annual Net Cost of Attendance)

- $2,000 (Perkins Loan)

- $4,500 (Stafford Loan)

- $1,000 (Private Scholarships)

- $1,000 (Work-Study)

= $3,500 (REMAINING BALANCE)

FEDERAL DIRECT PLUS LOAN: Used to borrow the remainder of cost for education

Parent is likely the borrower

Approval based on credit history

No need to demonstrate financial need

7.21% Fixed Annual Interest Rate (as of 7/1/14)

4.292% Origination Fee

Borrow up to 100% of cost of attendance

No aggregate limits

Unsubsidized

US Dept of Education is the lender

Loan cannot be transferred to student

SMART OPTION STUDENT LOAN: Used to borrow the remainder of cost

Student & Cosigner are likely the borrowerApproval based on credit history

No need to demonstrate financial need5.74-11.85% Fixed Annual Interest Rate

2.25-9.37% Variable Annual Interest Rate

NO Origination Fee

Borrow up to 100% of cost of attendance

Unsubsidized

Sallie Mae is the lender

Cosigner release = Loan can be

transferred to student

HOME EQUITY LOAN OR LINE OF CREDIT:

Also known as: Second Mortgage

Borrowing against the equity in your home

Used to borrow any of the of cost of education

Homeowner is borrower

Loan cannot be transferred to student

No need to demonstrate financial need

Rates are low right now

Interest paid may be tax-deductible

May incur closing costs

To accept, sign the award letter and return it to

the school for processing.

The financial aid office at your college will guide

you thru the paperwork which includes signing a

promissory note, (you PROMISE to repay your loans

according to the terms)

College is required to provide entrance counseling

Loan funds will be “disbursed” in at least 2

installments

Most student loan funds will go directly to the college

or come directly from the college

College will use aid money first to pay for tuition,

fees, room, board, and other expenses on your

student account. If any aid money remains, you will

receive the funds by check

Before loan money is disbursed, you may cancel

all or part of your loan by notifying the school.

After the loan is disbursed, you may cancel all or part

of the loan within certain time frames

Promissory note will explain procedures for

cancelling loans

For MOST student loans, you are not required to make payments during certain periods While enrolled in school

During periods of forebearance

During “grace period” after graduation:• Perkins = 9 months

• Stafford = 6 months

Unsubsidized loans start to accrue interest as soon as the loan is disbursed which will be capitalized onto the principal,

unless you choose to pay the interest charges while in school!

StandardFixed monthly payment, $50 minimum, 10-year term

GraduatedMonthly payment starts low & increases, 10-year term

ExtendedFixed or graduated payments

Must have more than $30,000 in Direct Loans

25-year term

Income Sensitive or ContingentIncome-based repayment options

Student loans are LEGAL obligations!

Student loans are borrowed money that MUST be repaid just like car loans & home

mortgages. You MUST repay a student loan ever if your circumstances become difficult.

Non-payment of student loans has serious consequences (legal default on a loan) and

will negatively affect your credit rating.

Repayment schedule from loan servicerExit counseling will be provided at graduation

When first payment is due

Number of, amount of, & frequency of payments

You will be notified if your servicer changes

The loan is YOUR responsibility!Make payments regardless of receiving billing notices

You must pay even if you aren’t getting reminders

Notify your loan servicer of all change of addresses

National Student Loan Data System:www.nslds.ed.gov

Dept of Ed’s central database for student aid

Access & retrieve your student loan data

Repayment Estimatorwww.studentloans.gov

Shonna Prickette

Training & Development Manager

Shonna.prickette@myprospera.com 920-882-4801

Jeff Garrett

Licensed Financial Consultant

Jeff.garrett@myprospera.com 920-882-4780

FINANCIAL AID PROCESS INFOGRAPHIC

studentaid.ed.gov/prepare-for-college/checklists/#checklists

“FUNDING YOUR EDUCATION – Guide to Federal Student Aid” Document

Studentaid.ed.gov/resources

Checklists to begin preparing (K-12th grade)

Studentaid.gov/prepare-for-college/checklists

Edvest & Coverdell Savings Plans

www.edvest.com

www.edvest.com/learn/compare.shtml

Scholarship Opportunities:

– Careerinfonet.org/scholarshipsearch

– Salliemae.com/scholarships

– Studentaid.ed.gov/scholarship

College Scorecard, College Navigator, and Net Price Calculator

– Collegecost.ed.gov

Labor Statistics Occupational Outlook Hndbk

– Bls.gov/oco

Free Application for Federal Student Aid– Fafsa4caster.gov

– FAFSA.gov

Sallie Mae Smart Option Student Loan– Contact your financial institution

National Student Loan Data System– nslds.ed.gov

Repayment Estimator– studentloans.gov