Early College Planning

Angela Howes: Perfect. All right. Well, welcome again, everyone. Thank you so much for joining us. My name is Angela House and I am the teen librarian at the East Bridgewater Library. I'm so glad we could have you all here with us this evening. And it is my honor to introduce our presenter, Julie. Julie is the Senior Director of College Planning, Education, and Training at MIFA.

She joined MIFA in 2007, and in her role provides expertise related to planning, saving, and paying for college to families, colleges, and other organizations. Prior to joining MIFA, Julie worked for the College Board, Nellie Mae, and American Express, and was the Director of Financial Aid at the Harvard Graduate School of Education.

Julie has been involved with MASFA in a variety of positions and committees since 1993. She holds degrees from the University of Massachusetts in Amherst and the Harvard Graduate School of Education in Cambridge. So Julie, go ahead and take it away.

Julie Shields-Rutyna: All right. Thank you so much. And we'll get started and welcome everyone.

So this evening, we're going to talk about early college planning. And I think I'll just ask, um, Well, we'll go through some logistics and then I will ask you while we're doing that to maybe put into the chat. Just the ages of your children, the students, you might be thinking about all of that. And we'll go through the logistics of how the webinar will work.

You have control of your audio settings. And Oh, I guess the chat feature is disabled so maybe you can put that in the, in the q amp a if you'd like, but also ask your questions as you go along as you're thinking of things put them in the, in the q amp a and I will be sure to answer those questions. And if you need.

Close captioning, which I think some people have already taken advantage of just hit the live transcript button and you'll be able to see the words that we're speaking. And if you need to leave the webinar. You can do so at any time and we will send you a link to both the recording and the slides, so you'll have them.

And a little bit about MIFA. So MIFA is a state authority created in 1982 to help families plan, save, and pay for college. And we have the state's college savings plans, the U Fund and the U Plan, and we're going to talk about those tonight. We also have low cost financing loans if families need those to pay for college.

And everything else we do is provide free guidance to families to students at whatever age or stage you're in in this whole process. And so there's so many ways. Please come back to me for often and you'll see we have a podcast. We have a blog. We have a great website and we have lots of Of events webinars like this and in the community, um, over, over all the years that you're, you know, your children, your students are growing up and getting ready to go to college.

So tonight's topics, we're going to talk about the plan for college academic planning and financial planning. And then we will talk more specifically about some specific savings programs, and all the things you can be doing now, so I'm going to take a quick look and see to those of you who've talked about great you.

Children, we have 15, 14, 9, twins, congratulations. 7 and 11, sophomore, 9th grader, 16, 13, 15, 16, wonderful. Okay, this is terrific.

All right, well, let's just talk a little bit about academic planning. You, of course, probably stay on top of this for your students in their schools. When you want to think about graduating from high school to be able to attend college. One thing you can do is just look at the Department of Education for Massachusetts at this website do a do a dot mass.

edu. Um, to review the guidelines for graduation, um, many, many high schools, you know, the, the classes that your students take will far surpass those guidelines, but it's always good to just know what that baseline is. And another thing you can review is the admission standards for Massachusetts state colleges and universities.

Um, and that's at mass dot edu and you'll see the graduate, the GPA that's required. And sometimes if, if a student has a GPA that doesn't quite meet those admission standards, they can take a standardized test to balance that out. So all that information is at that website at mass dot edu. It's also great, uh, to, to understand the curriculum at the high school.

So what kind of course options do your students have? Do they have advanced placement, which is, those are classes that are actually, um, college level work. And a student can take an exam at the end and receive a one to five grade and put that on the college application. And that's, that demonstrates to colleges that, that students can do college level work.

There's. I B, which is. international baccalaureate, and that's um, another type of a program like that, that shows colleges that students can do advanced and high level work. There are also things like honors classes that show that students are challenging themselves in, in high school as well. However, let's say your high school doesn't have any of that.

That's okay too. Um, so whatever, whatever the high school offers. You just want to be aware and work with your student on choosing, um, choosing classes wisely and dual enrollment is another one where students can go and take college classes at community colleges nearby and receive both receive credit and, um, have it as a class.

So that's another option. So you can, you can check out all of those things with, with your high school. And we have, we have some tips on one of our blogs about me, me for. org. Slash high school academics. So you can, you can find a little bit more there. And MIFA also has a free web portal tool for students in grades six through 12.

And it's a little different if a student is a middle school, they see certain pieces of the portal. And if they're in high school, they see others, but you can just go in and say, I am a student and register and then start to use this very. age specific, student centered, interactive tool to do all kinds of things.

Like, take some skills and interest assessments so you can kind of think about, oh, what do I like? And they're done in a really fun way for students. Um, one of them is a game, the would you rather game. And um, so done in a very fun way. And students can then learn about Things they like, skills they have, skills they'd like to explore, and then connect that to careers and to jobs and to post secondary programs that will lead them to that path.

There's also financial aid and scholarship information in here and a digital portfolio that can keep the student can just keep. So as the student goes in and works through this portal and does different activities, um, they can create a resume, they can start to search for colleges in here and, um, always go back and it will, the, the digital portfolio will show them where they left off and what's the next activity they can complete.

So this is a terrific free, free tool for students.

So another, another topic we just like to Put right out in the open is, you know, is it worth it? Is college worth it? And, uh, we, we hear a lot about that lately. And after the pandemic, um, that question I see come up now and again. So here's what, here's what I'd say. First of all, college can be many things.

So college can be a lot of things. A four year leafy green campus that looks like the pictures of college as we've always seen them in the movies or that type of thing. But college can also be the the school down the street that you commute to that has great programs and is Affordable. Um, it can also be two year programs, four year programs, um, certificate programs.

It really, um, college and post secondary education can be very wide. So what I would say about it being worth it is, well, yeah, a student graduating from high school, um, probably wants to continue to build skills and get training. Um, and so therefore have a plan for after high school. And the same then goes for college.

If college is a big expense, so it's good to have a good idea of, of why you're going to college and why you're going to the college that you're going to, the college you're going to choose and that you're paying for. And connect that to who you are as a person, your skills, your career goals, aspirations, all of that.

So I guess it's just being, being a little bit mindful and putting in the, um, the work to think that through, um, between parent and student to make a good decision. And then. Then mostly it does pay. Um, so you can just see from this that, um, median earnings and tax payments, um, of workers, of those who done professional degrees, doctoral degrees, master's degrees, bachelor's degrees, associate's degrees, and all the way down to some college, high school, and no college.

And you can see there is a big disparity. So mostly, you can see that there is a big disparity. So mostly, It, it does pay to go to college. But I will say that it's, it's not a hundred percent. Um, it is possible that, um, sometimes someone could go to an expensive college, take out a lot of loan debt and get, have a career or a job that maybe takes a long time to earn back those earnings.

So those are just things to consider and think about early on, and do this as a, a fun conversational exercise students parents. All together, and this is just a chart showing how much does college cost and so that's another thing that I'd like to point out that it's not one cost, there are many types of colleges.

And here you can see the most expensive type tends to be that private, not for profit. And then the next would be the public four year. And, um, out of state and then the public four year in state and then community colleges tend to be a very affordable way to, um, get a college education, begin a college education, all of that with transferable credits.

And we're going to show you some, some options, but the other thing to know is when you see these very high college costs published, um, they include. Everything it would cost for a student to attend for a year, such as tuition and fees, living expenses, food, books, supplies, equipment, all of that. Um, so that's when you see a cost of college that seems really high, just know that that includes everything.

And so. More important, though, than how much does a college cost, how much is just that, that full cost of attendance is what is the real cost to you as a family, how much is the college going to cost you, that's more important. And so here are some ways that you can begin to learn about that. There's something called an Expected Family Contribution Calculator.

Now, I'll put out there that this EFC is changing in the federal regulations for federal financial aid. It's going to be called the Student Aid Index, uh, beginning next year. So, but anyway, it will be the Student Aid Index Calculator. And you can go onto the MEFA website. And put in information about your finances and get a sense of what your expected family contribution will be.

Is it 5, 000? Is it 20, 000? Is it 60, 000? Um, and that can help you for planning purposes. And what that means is that that's probably an amount that you might be expected to pay toward college before financial aid will come in to help. So if that's a low number, that means that potentially there will be a lot of help from financial aid.

And if it's a high number, it means probably that you'll be paying more of those college costs out of your own pocket. Additionally, uh, college, colleges all have something called net price calculators on their websites. And they give you a similar number, but they also give, take one, take it one step further and can give you an estimate of the type of financial aid that your student might be able to receive at their college.

It's an estimate, because of course you're doing this years before college starts. Um. But it's just it's just good to have a general sense for planning purposes. And here are some other great websites that you can you can navigate you can you can search through about colleges and learn lots of detailed information about colleges.

So here's an example of one. So, with this one, let's see we're looking at Boston College here I believe. Yep, we're looking at Boston College, and if you go to College Scorecard, College Navigator, you can find, gives information on the address, where it is, graduation rate, average annual cost, median earnings of someone who graduates from that school, and there are There's lots more data to about how many people in different majors.

Um, what's the average scholarship or grant for, for a family with your income, things like that. So there are, there are lots of websites that you can use to learn more details about colleges.

And let's just see, I'm sorry, I have all these boxes in my way. So this is a net, an example of a net price calculator from Boston College. So it's going to say, all right, you completed this calculator. Here are the direct costs. And here's the estimated financial aid grants and scholarships that you would be awarded estimated.

And here would be your direct costs after. The grants and scholarships. And then your student might be eligible for these loans, these federal loans. And so here's the estimated remaining cost after financial aid. Oh, I guess this is UMass Boston. Sorry. Um, so that just shows you some of these tools that you can use to just get a sense of, um, what these numbers really will mean for your family.

And let me talk about a couple of other great options that you can explore. I mentioned that community colleges can be make things very affordable. So we have a program called mass transfer here in Massachusetts. And that means that if a student starts at a community college. And then transfers to a four year institution.

There's so many ways to save a lot of money. So there are things such as guaranteed credit transfer. So the student will know these credits I'm putting in are going to transfer to a four year. School and then there are ways that you can have a tuition credit and freezes on tuition. So I would highly encourage you to explore this mass.

edu mass transfer website and play around with it to see all of the ways that you could make an education even more affordable by starting at a community college. Sometimes it's good to explore this and sometimes a student might when beginning to apply to colleges have. a community college on the list and a lot of four year institutions on the list.

Um, but just to keep all the options open to make sure that you can also make an affordable choice. And another great website is the tuition break website. And I'll stop there because I see Angie and you must have a question. Yeah, we

Angela Howes: do have a couple of questions in the Q and A. We had one person asking about a few slides back when it said 58, 000.

They thought that looked a little low and that the cost was now closer to 75, 000. Do you think that that 75, 000 figure is more accurate

Julie Shields-Rutyna: today? I think you're right. Was that for Boston College? I think

Angela Howes: that was back for the average cost for college. Oh, maybe one more slide. Yeah.

Julie Shields-Rutyna: Well, I'll tell you what, what it is.

This is from the college board. And so these are national statistics and new England has the highest cost colleges in the country. So you're right. That is low for new England and, um, and in new England, I think nationwide, these figures are still fairly accurate, but in new England, um, yes, we have so many colleges that cost in the seven seventies and eighties.

Yeah. And that. that keeps going up. So thank you for pointing that out. Yes. The price

Angela Howes: we pay to live up here in beautiful New England. And then just to confirm, these are amounts per year?

Julie Shields-Rutyna: Yes, absolutely. They are per year. Yes.

Angela Howes: And then the last question is, um, just to confirm, we're going to be sharing the slides after the event, or are we going to share the entire

Julie Shields-Rutyna: recording?

We will share both the recording and the slides. Yes. All right. That's all the questions for now. Oh, that's great. Thank you. And if you have more. Yes, those are great ones. Thank you so much. All right, so we talked about mass transfer. So now let's talk about tuition break. And that is a program that's here in New England.

It's through the New England Board of Higher Education. And that's a program that allows students to attend a public university in a neighboring state. So in, in Massachusetts, we, a student could attend any of the, any of the, um, any of the public institutions in New England. And certain programs allow the student To go out of state, but pay in state tuition.

So someone could attend a, a program at the University of Maine, but pay Massachusetts public institution costs. So, um, I would just. There are lots and lots of programs that fall into this category, so go to the NEBI website. And also, we had the director of Tuition Break do a webinar for MIFA. So, listen in on that one as well to learn all kinds of details about it.

About that great program. All right. And then I keep talking about financial aid. So how's this financial aid going to help you and what is financial aid? So financial aid is any money that is going to help the student pay for college. And we usually say there are three types, grants and scholarships, which are the best.

That is just money that is awarded to the student and the student does not have to repay. Now, sometimes people think of Grants as being based on financial need and scholarships being based on merit and that is true sometimes, but I'm just going to say that these terms are interchangeable and and so, um, you don't have to worry so much about that.

The best thing to know is that they are free money to the students. So that's something that you are going to apply for and and will help give you that information. Um, but other types of financial aid. Our work study. Which is a program where students, um, can get a job on campus, sometimes off, um, and work during the school year while they're a student and get paid.

And it, the reason work study itself, um, is a special program is that it's a federal program that allows the college to employ many more students than they would be able to afford. afford otherwise. And also that the earnings that students earn in these work study jobs are not counted toward their financial aid in, in following years.

So that's another reason this type of aid is helpful for students. Plus work study is just great. Sometimes students can choose a job where they do not much, like sit. Um, maybe at the library desk and check students into the library, just making sure they count how many people are in the library and they can do their homework.

That's one example, or they could work a job, maybe in the admissions office that's very busy. Maybe they're giving campus tours and meeting students and all of that. It's busy, but it's also allowing them to gain a lot of skills that they might be able to use, um, in another. in another job in the future.

So work study is a great program. And then student loans. Student loans, um, are federal student loans that are just in the student's name. They're called the federal direct student loans. Do have special benefits that are unlike any other loan that, that We as parents would, would, would borrow. And so for that reason, those student loans are considered financial aid.

A couple of things are that they are, they are, the interest rates are capped and fixed. Students have many repayment options. They don't have to pay them off while they're in college. Um, so there are lots of reasons. They are loans. And the students do need to pay them back. So for that reason, they're not as good as the other types of aid, but they sometimes allow a student to attend a higher cost institution than they might be able to otherwise.

And so, when As a family, you apply for financial aid, you'll, you'll, you'll learn that their financial aid is awarded based on two things and sometimes it's a little bit of a mix, but the first is based on merit. So let me talk about that for a minute. Colleges, of course, every year want to bring in a class of students who are all going to be able to do the work, succeed.

And go out and do great things afterwards. So they're very invested in bringing bringing in a class that is going to be a great fit for the institution. And so they're looking for, um. a lot of things to fill out a well rounded class. The number one thing that they're looking for, though, is academically capable students.

And so students who fall high in the admission pool at a certain college in a certain year, um, will be sought after and can sometimes receive merit based aid, which would be grants and scholarships given to them that they don't have to pay back. Um, also for athletics. Sometimes merit based, um, aid is awarded or for a theater or, or drama or an artistic skill.

So basically the college uses, uses merit based aid to, to really pull in a class that they would like to admit. So keep that in mind, but also keep that in mind that you don't have to be the valedictorian of your high school to receive merit based aid. You just have to be, um, academically. On the higher end of the admissions pool.

And that could be the whole top half or something of an admissions pool at a college. Um, so I guess what I'd say to you, younger students that doing, working hard in high school and, um, doing well in your classes, getting good grades, having a good GPA, all of that will help you when it comes to merit based aid.

And then other aid is awarded based on financial need, and that's the financial need of the family. And so as a family, you'll apply for financial aid using the required forms when your student is a senior in high school, and depending what is what your financial situation is on those forms, then you can be awarded financial aid based on your financial need as determined by.

By the college. So we mentioned that expected family contribution, you know, when there's the cost of the college. Minus what you are expected to pay the balance, then is your financial need. And that's what colleges can use to award need based aid. So that's how that works. And I will also add that over, over time, MIFA has lots of workshops on applying for that financial aid and how all of that works.

So how do families pay for college? We know it's expensive. Thank you for whoever pointed out that, uh, 75, 000 isn't an unheard of number for many colleges in this area. How are families paying for college? So here are all the ways that they're paying financial aid. Hopefully most families receive some type of financial aid.

And then other than that, they're paying for college with past income, present income and future income. So what does that mean? That means past income. Some savings other assets that families have. That's one way families are paying present income right out of your salary. Are you are you paying most colleges have a monthly payment plan.

So, while the norm is to pay once in the fall once in the spring. You can set that up differently so that you pay monthly if you have room in your budget to make some of those payments. or future income, which is student loans or maybe parent loans as well. And so most of the families that I have worked with, and I will say you heard that I've been doing this since, uh, for many, many years.

I think it's upwards of 30 years that I've been working in this higher education financing field. So I've worked with Thousands and thousands of families, and most of the families that I have worked with do a mix of all of this, especially if you have multiple children. And so, um, that's what we're going to get into a little bit more.

But what I will say is we're going to start to talk about why savings is such a good idea. And that's because the more that you have saved, the less pressure that puts on your current income or the need to borrow. When you get to that stage.

So this, I think this. illustrates that. Let's say you have a 10, 000 college cost and you save money for it. Well, hopefully you save over time and you can earn interest. So this is a very simple example, of course, but it's showing that if you save, you could save 6, 960 earn interest and there's. 10, 000 of cost.

If you don't save to come up with the 10, 000, you might have to borrow it and pay interest over time and you end up paying a lot more. So I guess that's the point of this slide that most families pay for college over time. It's just when does that time start? Does it start early or does it go late?

And let's talk about the two biggest myths or the two biggest, um, comments that people make. First is Well, if I save, won't that just hurt my financial aid? Should I not save? Because that means I won't get financial aid. And the truth is, that's false. Don't think that. The truth is, that income is the biggest factor in determining that need based financial aid eligibility, not savings.

So while your savings get counted, it gets counted at a rate of about 5%. So if you have. 100, 000 in assets and savings. That's going to increase what you're expected to pay toward college each year by about 5, 000. So it's factored in, but in a, in a minimal way versus your income, which factors it in pretty heavily.

So, um, your savings will definitely help you much more than it could ever hurt you. I really think it won't hurt you. It really. Will help you be able to pay. And the other thing that families say to me a lot is I when I look at these numbers, I keep going back to your comment about 75, 000 a year I have three children.

This is overwhelming. How could I ever. How could I ever. do this. Um, so I'm not even going to bother because I can't begin to save what I need. And so the truth is it's still worth saving. Of course, you probably can't save everything. Most families don't, but it is helpful. Every little bit you save even a little bit over time is going to help you when it comes time to pay those college bills.

I will also add that I have a 26 year old, so he is out working on his own, and uh, I'm not having to support him anymore, and then I have a senior in college, and I just wrote my last check. So, um, I'm very much on a personal level, um, I've seen this all from that. angle as well. And I will tell you that, that having some money saved was very helpful to me.

So here are all the ways that your savings will help you. It will just give more education options when it comes time. The student has a list six to eight colleges they're going to apply to at different costs. Um, you'll receive different financial aid from different colleges because that's just how things work.

Having some savings. will allow more options, um, as far as choices. So that's, that's a good reason to save. And it will also allow maybe the student to take advantage of different options while in college, such as maybe an unpaid internship one summer or a study abroad program, something like that. And it definitely can reduce the amount of loans that.

Parents need to borrow that possibly students need to borrow. Perhaps it can allow the student to work less and study more. Um, but let's let me be clear. Um, I think working a little bit in college and it's been proven can be very helpful to students to organize their time. To make a contact on campus with adults, with an office.

Um, so working a little bit can be great. Uh, but if a student ends up having to work too much, that could mean they have to take fewer classes, extend their college experience, all of that. And again, we, as we said, this, saving for college will have a minimum impact on financial aid eligibility. Hi, Angie.

Yeah. Hey, we have a couple of

Angela Howes: questions for you. Um, the first one is, can a child use the income from a divorced parent who makes less than the other parent who may make more to help them receive

Julie Shields-Rutyna: more financial aid? Such a good question. Well, I will tell you that the, the laws around this the regulations I should call them around this are changing right now.

For the so for the 2024 2025 academic year. So if your student is going to start college at that time, there's going to be a change about who should file the financial aid forms at that time. So, up until now, and up until this year. Um, the parent in a divorced or separated situation that files the financial aid forms with the student is the parent that the student lived with more in the last calendar year.

So, many times that could be the parent that earns less. So, that worked out that way. Starting If you're applying for financial aid starting next fall for again that 24 25 year, the new regulations are going to be the parent that, um, provides more financial support or the parent, the parent that, that earns more.

So that is changing. Um, so that, yeah, that may not be good news for, but let me say that although that's happening, There are some colleges that require another financial aid form that's so the main financial aid form I should start with is called the FAFSA, the free application for federal student aid, everyone will complete that.

The other form is called the CSS profile form, and that form always collected information from both parents anyway. So some colleges will still have you. Both submitting so it won't change so much in those cases. But lastly, what I'll say is that yes, there are these forms, you'll complete them, but any unique circumstances that you have as a family, you can always write to the financial aid offices at the colleges that you're applying to and share any.

Different information, unique information. Um, and they will take that into consideration. They, they have something they call professional judgment. And while they receive these forums electronically and look, look through, they also will take information that you submit. So you can work through some of that as well.

Great.

Angela Howes: That's actually really, really interesting information. Breaking

Julie Shields-Rutyna: news. Yes, it is.

Angela Howes: It is. And then another question is, do 529s fall in the same

Julie Shields-Rutyna: category? So 529 plans are considered in the financial aid process, parent assets. Um, and even though the student is the beneficiary, they're not a student asset.

And that is positive. That's a good thing because parent assets are the ones that are treated at that. 5 percent mark, whereas student assets are treated at 20%. So if there's any money in a student bank account that's specifically the students, that's treated a little more heavily than parent assets. So yes, 529 plans, they count, but they count in that minimal.

Nice. And

Angela Howes: then we just had one more question come in. What if the child chooses not to go to college? What can be done with

Julie Shields-Rutyna: the MIFA college fund? That's great. Yeah. So if you save in a U fund, the 529 plan from MIFA and Fidelity, then what happens is the child doesn't want to go to college. You can do a couple of things.

You can, first of all, you could hold it in the account. There's not an expiration date. So they might choose to go in two years or something like that. Um, or you could transfer it to a beneficiary, another beneficiary, any relative of the first beneficiary. So to a sibling or to yourself, or even to a cousin, that's one thing you could do.

Um, and all those things would allow you to realize all the tax benefits of these programs. But let's say no siblings. Parents don't want to go back to school. Um, the student really has, has gone off is. doing well in other ways and is not going to use this money for college, then you can withdraw the money.

But what you do is you will end up paying, um, regular income taxes on any interest that's been earned. And also a 10 percent penalty on any interest that's been earned on the account. But other than that, you can take the money out and then it's, it's, it's yours, but, but you don't get those tax benefits if it's used for something other than.

Then college. But again, I'll go back to that wide definition of college. Um, it's not just a four year institution. It sometimes could be, um, be a training program or other. So you'd want to look into that because, um, because the 5 29 plans do extend to those things as well. Awesome. And if you don't mind one more question, no, no, this is great.

Do we

Angela Howes: include retirement savings in

Julie Shields-Rutyna: our assets? I, that's a great question. I love it. No, that's a beautiful thing. You do not include retirement savings on your financial aid forms. Um, in fact, I'll, you definitely don't include them on the FAFSA. The CSS profile form that I mentioned does ask about.

Different has retirement questions on it, but that those numbers are used for other reasons to separate out assets, the ones that should be included the ones that shouldn't. Um, all of that. So, that is not counted in the financial aid formulas. Awesome.

Angela Howes: Thank you so much. I'll let you keep going. I'm sure there will be more questions soon.

Julie Shields-Rutyna: So great. Thank you everyone. This is, this is great. And you know, the last point on this slide about how savings can help you is that I will also share that studies have been done that students who know that there's a college savings account in there with their name on it as a beneficiary. Um, there's just been research done that, um, they, they tend to, um, Go to, go to college in higher numbers and graduate from college in higher numbers.

And we think it's that aspiration, aspirational effect, where it's kind of motivating to know that that expectation is there from, from parents. So if you are saving for your child, let them, let them know. All right. And here are just a couple of examples to kind of put some of these numbers into real world, um, real world things.

So this is just. A student, Kyle, who wants to attend a four year public college to study business, and the full annual cost of this school is 22, 500. Again, I know that can seem low for around here, but so this family has an AGI on the tax return. I told you these formulas are income driven. And so their income is 49, 000 and they have no college savings to speak of.

And so this is Kyle's financial aid award from this institution grants and scholarships of 13, 000. A federal work study award of 2000, which is a typical amount, and that federal student loan of 5500, which is the typical amount for a freshman in college. So Kyle's total aid is 20, 500. And that means there is, um, there is an amount.

That's left over that the family does need to pay out of pocket. So Kyle's family needs to pay 2, 000 out of pocket each year so that Kyle will be able to attend and cover all the full costs of 22 five. And then of course, Kyle's family has to think about the fact that it's not just for one year, it's for four years.

So, um, making sure they can pay that. And then let's look at Lisa wants to attend a four year private institution to study nursing and the full annual cost is 60, 000 and Lisa's family makes 47, 000 199 and is not eligible for. Need based grants, which this is just an example because I'm just throwing this out there.

Um, I think generally at that income, she would be eligible for need based grants, but let's just say she isn't in this case. Um, so she receives a merit based scholarship and a nursing award and a federal loan for 27, 500. But that means Lisa's family needs to pay 32, 500 out of pocket each year for college.

And so, yeah, maybe, maybe Lisa's family can do that, but maybe can't. So, this might be. A conversation about let's look at some other paths. What is what? What are the awards that other colleges have offered to Lisa in in a nursing program if that's what she really wants? So, um, just just some examples of of how these conversations happen at that time when you're trying to make that decision.

All right. So what are the strategies that MIFA encourages for saving start as early as possible? Truly If you, if you, if you don't have a savings account going on for your child, start today and it doesn't, I think a lot of people put it off because they start thinking, well, how am I going to save? Am I going to save in a 529 plan or somewhere else?

And how much should I be saving? All those questions are important, but the most important is just to start and start saving somewhere. And save what you can and then you can figure it out and maybe increase that over time and all of that, um, and learn about having a goal in mind of how much once you run some of those calculators and see what might be expected of you to pay for college, then you can start to have that goal for saving and start to.

Save as much as you can use automatic transfers all of that. Um, there are ways and this this little page that you see here is from the you fund 529 page that you can also once you open a you fund, anyone can contribute to it. So then even on birthdays or other holidays, you could sort of send the link.

And share with relatives who might want to contribute and say, you know, instead of another game, um, Maybe a small contribution to the college savings fund would be helpful and have other people start to put some money in there as well. And even when your child gets old enough and has a job and is doing that, they could even contribute to the account as well.

All right. So now let's talk about, oh, before we do well, then we'll get into these exact Mephis college saving plans. Yeah. All right. We

Angela Howes: have some really great questions. Um, if my child is in 10th grade,

Julie Shields-Rutyna: can I add ketchup fun? Um, so yes, that's great. Yes, you can. Um, the, the limit. Of what you can put in well is the gifting is the gift the amount of the gifting amount which I believe is 15, 000 this year, it doesn't say it there.

So you can put in. up to that each year as catch up. Another

Angela Howes: question. Does parent home value or outstanding mortgage impact aid or grants?

Julie Shields-Rutyna: Great question. You're right. All of these. Um, so the FAFSA, the main financial aid form does not ask any questions about how much your home is worth. The one that you live in your, your main home, how much it's worth, what's owed on it.

Nothing. So it asks nothing about your primary residence, um, which on some level is good because it means it's not counted as an asset. And in some cases, it might be an asset. So, so that's good. However, that other financial aid form, the CSS profile that does ask questions about your home and it asks, um, what is it worth?

How much is owed on it? What did you buy it for all of that and the equity amount. So what it's worth minus what is owed on it is your home is the equity you have in your home. And that's the number that is considered an asset. In the financial aid process now it's still considered at that 5 percent rate.

So if you have home equity of 100, 000, that increases what you'll be expected to pay for college only by about 5000. But if you have 400, 000 in equity on a home, then quickly that's that starts to add up to be expecting you to pay over 20, 000 more toward college. Great. Thank

Angela Howes: you. And then what is the cutoff for parents income that would not allow the child to qualify

Julie Shields-Rutyna: for financial aid?

Yeah, a very common question. So there isn't really a cutoff because let's say you're applying, let's say you're, I keep calling it, calling it expected family contribution. Again, it will be your student aid index, but, um, let's say it's 20, 000 and let's say, You are applying to a college that is relatively inexpensive and cost 25, 000.

And the student can take a student loan. Well, put it this way. Let's say 25, 000 minus your 20, 000. You only have 5, 000 in aid eligibility. And if the college fills that with a, um, with a student loan, then you're not eligible for any more aid. But let's say the same family is Your expected family contribution is 20, 000 and you're applying for a college that costs 80, 000.

Well, 80, 000 minus 20, 000 is 60, 000. You have a lot of eligibility for financial aid. So one big factor is the cost of the college that you're applying to. Um, another big factor is how, how large is your family? So do you have a, do you have three children or do you just have the one child. So that is a factor.

Um, so there, it's hard to give a, an exact number. However, what I'd say is if you use those calculators that expected family contribution calculator. Um, on the me for website, you can sort of see if your expected family contribution comes out to be, um, I'm just going to make this up, but. 80, 000. And then you pretty much know that all of the colleges you're applying to aren't too, don't cost too much more than 80, 000.

So you're probably not going to be eligible for too much need based aid. Um, but If, if it's anything less than that, um, it's probably worth applying and there are good reasons to apply anyway, um, to free a student to be able to take those loans if, if, if you need that, um, or just what if your situation changes halfway through the year, it's not a bad idea to have.

The financial aid forms on file, but again, depending on how large that expected family contribution is, you can kind of make that, that decision. Great. Thank

Angela Howes: you. And then we have a question that refers back to the example with Lisa's family. Um, so in that example, could she have taken out more in student loans or is that hypothetically the maximum amount that

Julie Shields-Rutyna: she's been awarded?

Oh, these questions just hitting on everything so good. So for federal student loans, That's 5500 is the maximum that a freshman can take and then sophomore 6500, and then 7575 for junior and senior year. So, those federal student loans are the best, they are the loans that a student should take first, but they are capped.

And so that's an issue because. Okay, then where do you turn. And so that's when. You would the student and I'm saying you student and or parent would have to turn to additional loans on top of that. And there are loans that the federal government has that are parent loans plus loans. That would be just in the parents name.

And then there are loans, like the meat alone, that would be. The parent and student are on that loan note together. And then there are some loans where the student would be on the note, but the parent needs to be a co borrower. Basically any other loans are going to need, um, a credit worthy co borrower on the loan.

And there are lots of. Options available and you'll want to choose the best one, but the federal loan that's just in the student's name is capped at that low amount. And then

Angela Howes: we have two more questions and then

Julie Shields-Rutyna: I'm gonna let you keep going and any more questions

Angela Howes: we'll jump in the later time. Um, so the next question is, can the contributions continue even if my child has already started

Julie Shields-Rutyna: college?

Yes. Great question. Absolutely. Yes. So you can continue contributing all the way through and just keep that fund up to be paying those bills all along. Yeah. So I know another one of our sort of taglines at MIFA that we say is it's never too early to start and it's never too late. So that's great.

Angela Howes: Great.

Awesome. And then we have a situation. I started a MIFA fund for my kids seven years ago when I lived in Massachusetts. And now we live in Maine. Can I still use the funds for any

Julie Shields-Rutyna: college nationwide? Yes. Yes. So you can, um, and I say any college, it's any accredited college or university. Yes. And it doesn't matter about the state lines.

You can use it anywhere, anywhere that you, yes. Yes. Great. All right. I'll let you continue. Oh, great, great questions. Oh, all right. So let's, yeah, let's talk about these two college savings programs specifically. So, all right, we'll start on the left in the green. This is the UPLAN. This is MIFA's prepaid tuition program.

And what this is is a way that you can lock in just tuition and fees just undergrad at participating institutions in Massachusetts, and I'm going to quickly show you the list and then come back. It's a lot of institutions, it's about 70 institutions, public, private, You see Amherst College, Boston College, Emerson, North Shore Community College, UMass Amherst, Wheaton, huge list of colleges that participate in this.

Um, and so what you would do is you would. You would put some money in at one point, and that money would would lock in a percentage of the tuition when you put it in in the year that you put it in. So I'm going to give a simple example, let's say, and these numbers are not correct, but let's say the UMass Amherst tuition and fees today was 10, 000.

And you had 5, 000 to put in the U plan. So you put 5, 000 in the U plan this year, 2023, you're locking in 50 percent of UMass. tuition and fees. So when your child then decides to attend in 10 years, let's say, and the cost is 20, 000, then you've locked in 50 percent of that, so your 5, 000 has become 10, 000.

I think that's the simplest way to explain it. So it can be A really terrific way to sort of outpace inflation, so to speak, and families who have saved in the you plan we have a number of examples of who have done really well with their kids going to Massachusetts colleges and universities. You don't pick a college up front.

You just every year you receive the list of all the colleges and what percentage you've locked in. So, you know, you don't have we don't have a crystal ball, of course, to know the future. So what if your student doesn't attend one of those colleges, and I'll tell you, my students. My children, one went in New Hampshire and my daughter is in Pennsylvania.

So of course that was the case with me. Um, but I was able to withdraw the money from the U plan. I didn't get the benefit of that, that, um, percentage of tuition and all of that, but I withdrew the money that I had invested and I received the money back with, um, What's it called with interest? Just the basic interest, uh, CPI, consumer price index interest.

So I still had that money and I still used it to pay those college bills, but, um, but I didn't, I didn't get the benefit of that real lock in. And, um, outpacing that the tuition increases. So, um, anyway, if you have interest in that program, go to mifa. org slash you plan. We have some webinars on it. We have some 92nd videos.

You can always call us and talk about it. Um, but it is, um, it's an interesting program and it has been helpful for some families now with the, you fund. The orange, the U Fund is the Massachusetts, the MIFA 529 plan. And so MIFA is the program manager and, um, and, and Fidelity, MIFA, it's MIFA's fund and Fidelity is the program manager and we work in tandem.

So this works like all 529 plans where you, you go in, you open the account and you begin to save. And you can do that either through automatic savings or savings when you can, and you then save for as long as you can. And then when you go to take the money out, as long as you use it at any accredited college or university nationwide, and, um, for any qualified expense, tuition fees, room and board, books, supplies, all of that.

Um, then when you withdraw the money, you won't pay any taxes on any earnings on the account. So it becomes interest in, uh, interest in income tax free when you take it out and use it for qualified. Educational expenses. Uh, there's no annual account maintenance fee. Um, when you go in, it's fairly easy to open one of these accounts.

The biggest decision you have to make when you open it is, how do I want to invest my money? And, um, there are lots of choices and you can have a Fidelity representative talk with you and help you figure that out. Um, one very common way that families invest is through what's called an age based fund. Um, and so Fidelity offers those and that means that.

You're invested in portfolios that, um, that start out a little more risky when your children are younger and you have long time horizon to save. But as your child gets older, and as they get closer to college age, it gets more and more conservative automatically so that hopefully your account isn't having these big swings right at the time where you need it for college.

So, um, many, many people use. You can use those, but your Fidelity representatives can help you with that. Um, so you'd go to fidelity. com slash you fund, start your application and you can ask any questions as you go along there. So I knew it would have questions about these accounts. Yeah. Great question

Angela Howes: about the five 29 account and funds saved in a five 29 account be used to pay for federal and private loans after a student

Julie Shields-Rutyna: has graduated.

Great question that yes, that is a, a, um, an expanded. An expanded use with a maximum, though, of 10, 000 per student. So, yes, the expanded uses are, um, apprenticeship programs and student loan payments.

Angela Howes: Great. And then, can a U Plan set up for one kid be used

Julie Shields-Rutyna: for a second kid? Great question. So yes, um, however, um, the lock in, the lock in year is locking in for the year that the first child Was planning to attend.

Okay, so let's say that 50 percent lock in that I mentioned. Um, the first student is attending and that 5, 000 would have been worth 10, 000 at UMass Amherst because that was the lock in. Well, let's say you change the beneficiary, which you can definitely do. But the other student doesn't attend until two years later.

Well, your money has still Had that lock in, so it still has a big benefit, but the lock in stopped two years prior. So, um, that's just one thing, but if your students are close in age, that, that still works pretty well.

Angela Howes: Great. And then can money in a U Fund account be moved to a U Plan

Julie Shields-Rutyna: account? So no, I mean, it can, but not.

In the way you're thinking, it can't just be transferred over like a U fund account can be moved to any other U fund