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 | | | | | How Much Does a College Education Cost? | | | With higher education costs climbing steadily upward nearly 6% per year many families are particularly concerned about accumulating enough money to put their children through college. College cost projections are continually increasing. Based on the latest averages from The College Board and recent average annual college cost increases, a child who entered kindergarten in 1995 will face four-year college costs of $59,447 if he or she chooses to attend a public college in 2008. For a private college, costs will be $141,331. Years Until Child Starts College | Projected Cost of
a 4-Year Education | Years Until Child Starts College | Projected Cost of
a 4-Year Education | Public | Private | Public | Private | 0 | $59,447 | $141,331 | 10 | $106,460 | $253,102 | 1 | $63,013 | $149,811 | 11 | $112,848 | $268,288 | 2 | $66,794 | $158,799 | 12 | $119,618 | $284,385 | 3 | $70,802 | $168,327 | 13 | $126,795 | $301,448 | 4 | $75,050 | $178,427 | 14 | $134,403 | $319,535 | 5 | $79,553 | $189,132 | 15 | $142,467 | $338,707 | 6 | $84,326 | $200,480 | 16 | $151,015 | $359,030 | 7 | $89,386 | $212,509 | 17 | $160,076 | $380,572 | | 8 | $94,749 | $225,260 | 18 | $169,681 | $403,406 | | 9 | $100,434 | $238,775 | | | |
Starting average cost is based on The College Board's Annual Survey of Colleges for the 2007-2008 school year and includes tuition, fees, and room and board; but not transportation, books, or other expenses. The figures do not account for any financial aid or other assistance. The table assumes 6% annual increases in education costs. | | | | | |  | | | College Savings Requirements Worksheet | | |  | | | 1. Age of Student | 2.
Years
Until
College | 3.
Total
Estimated
Cost | 4.
Less:
Current
Savings | 5.
Less:
Financial /
Tax Aid | 6.
Equals:
Required
Savings | 7.
Annual
Savings
Required | | | | | | | | | How to use:
1. Age of Student - Enter the age of the student.
2. Years Until College - Enter the number of years until the first year of college.
3. Total Estimated Cost - Estimate the cost of college for four years and multiply the cost times the factor below to adjust it for a 6% inflation rate. | Years Until
College | Cost
Factor | Years Until
College | Cost
Factor | Years Until
College | Cost
Factor | | 5 | 1.338 | 10 | 1.791 | 16 | 2.397 | | 6 | 1.419 | 11 | 1.898 | 17 | 2.540 | | 7 | 1.504 | 12 | 2.012 | 18 | 2.693 | | 8 | 1.594 | 13 | 2.133 | 19 | 2.854 | | 9 | 1.689 | 15 | 2.261 | 20 | 3.026 |
| 4. Current Savings - Take the current savings you have available times the same factor above to assume savings will grow at the same rate as the costs.
5. Financial / Tax Aid - 50% of all students receive some form of scholarship, grant or loan. You may wish to estimate that some of the cost will be handled this way. Also include any Tax Aid (incentives).
6. Required Savings - This equals Total Estimated Cost (3) minus Current Savings (4) minus Financial / Tax Aid (5).
7. Annual Savings Required - This equals Required Savings (6) divided by number of Years Until College (2). This amount is in future dollars. The actual amount needed can be reduced to account for any interest or gains in savings. |
| | | | | | Financial Aid Calendar | | |  | | | | Use this calendar to keep on track for their first year in college. | | Pre-Senior Year | - Visit Schools
- Target scholarships and note deadlines
- Position financial affairs for Free Application for Federal Student Aid (FAFSA)
- Conduct college financial planning review
| | September thru November: Senior Year | - SAT/ACT preparation
- Develop a calendar of deadlines for specific schools
- If your clients are looking for early decisions from specific schools, make sure all financial aid materials are sent to those schools
- Fill out College Applications
- Collect financial aid information from specific schools
- Establish and revise tax strategy for while in college
| | December | - Review the federal loan process
- Set up FAFSA PIN if filing application on line
- Start filling out and filing all applications
- Review and pre-fill out FAFSA application
- Collect and organize tax return information
| | January thru Mid Feb | - File FAFSA application as soon as possible
- Review financial aid programs
- Continue filing applications
| | February thru March | - Follow up on any applications to ensure receipt
| | April thru June | - Acceptance and award packages received
- Determine the best aid packages
- Ask for more aid from school if required
- Identify other financial needs while at school (food, transportation, etc.)
- Select school
- Shop for financial aid (talk to banks)
| | July thru August | - Acquire necessary equipment; computer; furnishings, etc.
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| | | How to Improve Your Client's Chances of Getting Financial Aid... The Free Application for Federal Student Aid (FAFSA) is the starting point for determining eligibility for financial aid. Understanding this process will help you to provide college planning assistance to your clients. | - Make sure the application is filled out accurately and timely
- A parent's assets are expected to be used less than the student's
Parent's Contributions: - 47% of a parent's income is assumed to be used as a payment for college.
- 5.6% of a parent's assets is expected to be contributed.
Student's Contributions: - 50% of student's income above $2,550 is expected to be used as a payment for college.
- 35% of a student's assets is expected to be contributed.
- FAFSA is a snapshot of your client's financial condition at a moment in time. Some ways to improve the
· chances for receiving Student Aid include: | Planning Guidelines for Parent's: | 1. Sell stock early. Time the selling of stock saved for college to keep capital gains out of the FAFSA reporting year. | 2. Pay down credit card debt. It trims cash assets in the formula, saves interest, and credit card debt does not count in the FAFSA application. | 3. Pay down your home mortgage. Home equity is not assessed by FAFSA (it can be for private schools, however). Plus paying down the mortgage reduces cash. | 4. Contribute the maximum to retirement savings. It reduces income and non-current year retirement funds are excluded from the FAFSA calculation. | 5. Deplete cash. Cash is counted against your client in the FAFSA calculation. Deplete cash for planned purchases. Your clients will still need assets to pay for their portion of the payment for college. | 6. Pay medical bills. Medical bills in the FAFSA reporting year are a reduction in the income calculation. | Planning Guidelines for Student's: | 1. Delay gifts. Have planned college financial gifts given after the FAFSA application OR have the gifts go directly to the school. | 2. UTMA management. An UTMA (Custodial Uniform Transfer to Minors Act) account should be managed to reduce the balance in the year PRIOR to the FAFSA filing. Remember assets in the child's name are more heavily weighted than the parent's assets. | 3. The more the merrier. The more students in college with 6 credits or more, the better the application will look for this student. |
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| | | College Planning Websites | | | | | | | Key College Planning Web Sites | | Website | What is it? | What's there? | | http://www.collegeboard.com | The Collegeboard is a non-profit group made up of participating schools. | Tools for college. Great place to send clients for more information. | | http://www.fafsa.ed.gov | U.S. Department of Education - Free Application for Federal Student Aid. | The required application necessary to determine how much financial aid the student is eligible to receive. | | http://ifap.ed.gov/IFAPWebApp/index.jsp | U.S. Department of Education - information for financial aid professionals | Information on the federal calculation for determining amounts of student aid. |
| | | | | |  | Highlights of Tax Benefits for Education... is our comparison chart detailing the different tax benefits for the various education deductions, credits, and programs. To obtain your copy click the links below: | Part I - Covers Scholarships, Fellowships, Grants, and Tuition Reductions; the Hope Credit; the Lifetime Learning Credit; Student Loan Interest Deductions; and the Tuition and Fees Deduction.
Part II - Covers Coverdell Educational Savings Accounts (ESA's); Qualified Tuition Programs (QTP's); the Educational Exception to Additional Tax on Early IRA Distributions; the Education Savings Bond Program; Employer-Provided Educational Assistance; and the Business Deduction for Work-Related Education. For more information and/or a college plan analysis please leave your information and a consultant will get back to you. |
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