Making College a Reality Through College Savings

Your Massachusetts Educational Financing Authority. The one Authority you can trust to be on your side when it comes to paying for college.

Make College a Reality

There are many options when it comes to choosing a college to attend based on cost:

SOURCE: The College Board, Trends in College Pricing 2012, Figure 1.

There are many sources of Undergraduate Student Aid. In 2011-12, over $185 billion was distributed to students in many different forms:

SOURCE: The College Board, Trends in Student Aid 2013

3 Types of Financial Aid:

1. Grants & scholarships

2. Loans

3. Work-study

Paying for College – The Basics.

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> Parents and students have the primary responsibility for financing college costs

> A family’s ability to pay is evaluated on standard methodologies, the financial aid formula:

Cost of Attendance (COA) _ Expected Family Contribution (EFC)

= Financial Aid Eligibility/Financial Need

The Financial Aid Formula

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Cost of Attendance (COA) is the total cost of attending college, including living expenses. The COA is not what a family is expected

to pay.

-Cost of Attendance (COA)

Expected Family Contribution (EFC)

Financial Aid Eligibility/Financial Need=

Visit www.mefa.org to learn more about the financial aid process and calculate your estimated EFC.

http://www.mefa.org/

The Expected Family Contribution (EFC) is a number that estimates the amount of college costs you can absorb relative to

other families, but makes no particular assumptions about how you will finance that contribution.

Cost of Attendance (COA)




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Your EFC will be based on:

1. An analysis of your annual adjusted gross income, which counts for about 22% - 47% in the EFC formula

2. Your assets, which colleges may define as savings and investments, other real estate, 529 plan assets, a business, etc.

a. Your assets figure at about 3% - 5.6% of the EFC. Note that a much higher percentage of your income, rather than your assets, will be considered available to pay for college. Also consider that a 529 plan account is considered to be an asset of the Participant.

3. 50% of the student’s earned income over $6,310 is considered

4. 20% of the student’s assets. Custodial accounts are considered to be an asset of the beneficiary (i.e., child)





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Here’s how the elements of your financial situation

will affect your EFC:

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The Financial Aid Formula: Your EFC

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Source: www.finaid.orgThe EFC formula above is used for the Federal Methodology.

$$ $ $+ + + = $

EFCParental assetsParental income

0% to 47% ofadjusted grossincome minusall taxes andallowances

Student income

50% over $6,310

Student assets

20% of all assets

3% to 5.6% of nonretirementassets

• 529 College Savings Plans

• Brokerage and/ormutual funds

• Coverdell Education SavingsAccounts

• Prepaid Tuition Programs

• UGMA/UTMAaccounts

• Other savings

The Financial Aid Formula: Your EFC

http://www.finaid.org/


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Financial Need is the difference between the Cost of Attendance and your Expected Family Contribution. Colleges try to meet your Financial Need with a Financial Aid Package.

Financial Aid policies differ from college to college. Some meet full need, while others meet a part of your need.



Financial Aid Eligibility/Financial Need

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Net Price Calculators provide a personal net price at each college.

(Learn more about Net Price here)

College Navigator (Department of Education): College search tool with college-specific admissions, academic, & cost information

CollegeNavigator.gov

College Scorecard (White House)College search tool that shares a college’s average net price, loan default rates, and median loan debt

CollegeCost.ed.gov\Scorecard

Financial Aid Shopping SheetFinancial aid award letter template with personal net price & college information

There are a number of FREE resources available to families.

http://www.mefa.org/uploadedFiles/MEFACounselor/Understanding%20NCP%20Whitepaper.pdf

http://www.collegenavigator.gov/

http://www.collegecost.ed.gov/Scorecard

“Saving for college means no financial aid.”

Prevailing myths about saving for college…

We want families to know the truth:

The benefit of saving for college far outweighs the expectation that you can pay more toward college costs.

Parent income remains the same, while assets increase

Concerned that savings will impact financial aid?

This example is an estimate only. Based on 2014-15 Federal Methodology (one child in college).

Family A

Family B

Family C

Income $60,000 $60,000 $60,000

Assets $0 $75,000$150,00

0

EFC $5,040 $6,765 $10,635

Difference $1,725 $5,595

• Assets have minimal impact to the EFC, as it is primarily an income-driven formula

• Having saved for college or having other assets that you can use to help pay for college is a good thing; it gives you options for paying the balance due.

“It’s not worth saving for college if I can’t save

the entire cost.”



Any amount saved, small or large, will be a help when the time comes to pay college bills.

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Families decide the best plan to meet the balance due at the college based on their own personal finances. The options fall under three major categories:

Past Income• Savings• Other Assets

Present Income• Salary• Payment Plans (Can you

afford $100/month now to eliminate borrowing later?)

Future Income• Parent Loans• Student Loans

*Based on 10 years at an interest rate of 7%. This example is an estimate only and market conditions may change.

Saving vs. Borrowing

“Times are tough. I can’t save at all.”



Watch this short video to learn how real families are managing to put a small amount aside for college.

https://www.youtube.com/watch?v=_RYa5Y7pWjs&index=3&list=PLBxYSU0m7s0jRme8crBSUzK_FITYofpw1

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Strategies for Saving> Start saving as early as

possible. Use time to your advantage.

> Use automatic transfers

> Get the word out and let your family and friends know that they may contribute or open a plan up on behalf of your child.

> Involve your child in the process. There are great savings tools for kids online.

Your Massachusetts Educational Financing Authority. The one Authority you can trust to be on your side when it comes to paying for college.

MEFA’s Savings Options

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The Massachusetts College Savings PlansMEFA U.Fund College Investing Plan

How it works:> Save for qualified higher education expenses such as

tuition, fees, room, board, books, supplies and equipment.

> Savings can be used at any accredited college or university nation wide

> Minimum Initial Investment - $50 lump sum or $15/ monthly automatic investments

> Combined Account Maximum - $350,000

> Annual Account Maintenance Fee - No Fee

> Multiple investment options (active management; indexed portfolio; individual allocation portfolios)

> FDIC insured option

Enroll online at fidelity.com/ufund aor by calling 800.544.2776 to get started.

Established in 1999

http://www.fidelity.com/ufund

http://www.fidelity.com/ufund

How it works:> Allows you to prepay up to 100% of tuition & fees at

80 MA public and private colleges & universities

> By purchasing Tuition Certificates now, you lock in today’s tuition and mandatory fee rates

> U.Plan Tuition Certificates:

> Represent interest in Commonwealth General Obligation Bonds

> Are backed by the full faith and credit of the Commonwealth of Massachusetts

> Are not subject to market fluctuation

> $300 minimum to get started

> Annual enrollment period: May 1st to June 30th each year

Enrollment Kit and Purchase Request Forms may be accessed at mefa.org/uplan

The U.Plan Prepaid Tuition Program

http://www.mefa.org/uplan

http://www.mefa.org/uplan

Making College a Reality Through College Savings

Economy & Finance

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