QUESTIONS TO CONSIDER ALONG THE EDUCATION PATH

How much will you need to send your child to college?

The current annual cost of attendance for these selected universities is as follows:
University of Georgia	$14,758*
Berry College	$29,384*
Emory University	$44,844*
The inflation rate for a college education is 6% annually.**
Rate of return on investments is 8% using industry averages.

How much will you need to save per month?*

University of Georgia (State School)
At Birth	$339
Age 5	$442
Age 10	$670
Middle School (Age 12)	$1,026
High School (Age 15)	$1,669
Berry College (Private School)
At Birth	$640
Age 5	$844
Age 10	$1,294
Middle School (Age 12)	$1,682
High School (Age 15)	$3,255
Emory University (Private School)
At Birth	$1,103
Age 5	$1,448
Age 10	$2,209
Middle School (Age 12)	$2,867
High School (Age 15)	$5,536

*These figures are based on 2006-07 estimates.
**Based on the lower average of industry statistics.

What strategies can I use to maximize financial aid?

Getting an early start

• Financial aid strategies should begin as early as the freshman year in high school. At this time one should start to look at scholarships and develop a plan to apply for them.
• Another consideration is what type of aid you are looking for. Is it merit aid or need based aid? Start in the freshman year to look at what your Expected Family Contribution (EFC) will be in order to qualify for need based aid. You can start to develop merit aid early by having the student focus on their studies, extra curricular activities, and community involvement.

Getting a late start

• Determine how much you can actually pay for college. Would you want to take out loans in the students name or the parents name to pay for college?
• Determine your EFC to find out if you qualify for need based aid.
• Will there be a likelihood of receiving merit based aid? Will the student qualify for awards based on their athletics, academics, musical talents, or other attributes?
• It will be important to match the student up with the right school. The proper match can result in significant savings.

I need to start saving for college, where is the best place to save?

• The first place to start is to determine how much you will need for your retirement. One thing to remember is you can borrow money to pay for education but not for your retirement.
• The next step is to determine how much you will need for education and how much time you will have before you pay for school. The more time you have will allow more opportunities for growth.
• If the money is to be used to fund multiple goals, consider using one of the following:
  • Certificates of Deposit
  • Mutual Funds
  • Stocks
  • Bonds
  • Real Estate
  • Exchange Traded Funds
• If you want the money to be set aside for education exclusively, consider one of the following:
  • 529 Plan
  • Coverdell ESA
• A key to savings is to use any of these options as a tool and not the toolbox. You may want to use one, two, or more of these options to help meet your goals.

As a business owner, where should I begin to look for tax advantages that would increase my savings and ultimately provide more money for college?

• One of the keys is to coordinate your tax savings with available financial aid. Review the rules for completing the FAFSA by visiting www.fafsa.ed.gov. You can also pull up information on the EFC formula.
• You may want to implement a Health Savings Account (HSA) or Flexible Savings Account (FSA). See IRS Publication 969 on Health Savings Accounts for available options and specifics.

An Employer Provided Education Assistance Program may allow a business to deduct up to $5,250 per employee. See IRS Publication on Tax Benefits for Education.

Does it really matter what college I go to for my undergraduate degree?

• Take a look at graduation rates-Is the four year graduation rate closer to 10% or 90%?
• Look at the percentage of students that come back after their freshman year-There are schools out there that help students graduate college even if they were in the bottom 50% of their high school class. In many colleges these students would not make it through the system.
• Look at the school and the type of students the school attracts. There are certain schools that focus on home schooled children.
• Test scores can play an important part in the admissions process-Some schools place a lot of emphasis on standardized test scores while other schools place more emphasis on student attributes. There are some schools that do not use standardized test scores in the admissions process.

What are some common errors that are made in paying for college?

• Failure to control interest, dividends, and capital gains distributions. Capital gains and losses can impact one’s tax liability and eligibility for financial aid. A key part of paying for college is to have a plan that will provide tax and financial aid control.
• Distributions from a 529 Savings Plan may be taxable. Pay attention to the allowable qualified expenses. See IRS Publication 970 for specifics.
• Many financial professionals such as financial advisors, stockbrokers, and insurance agents are skilled in developing a plan to save for college. By not having a full understanding and expertise in paying for college the result can be a higher tax bill, less financial aid, and a higher out of pocket cost. Consider talking to a professional that specializes in paying for college. The Certified College Planning Specialist (CCPS) is a designation for those specializing in college planning.
• Tax benefits for education have to be coordinated. A plan to pay for college should consider coordinating the following:
  • Federal Hope Credit
  • Lifetime Learning Credit
  • Coverdell ESA distributions
  • 529 Plan distributions
  • US Savings Bonds
  • Student Loan Interest deduction
  • Employer education assistance program

I don’t think I will qualify for any aid so why should I fill out the FAFSA?

• By filling out the FAFSA you will know if you do qualify for any federal aid.
• In addition, many schools require that the FAFSA is filed in order to be considered for other types of aid.
  

I plan on talking to someone about filling out the FAFSA form. What questions should I ask to make sure they have the experience and the forms will be prepared correctly?

• How many students have you helped with the financial aid process?
• How many FAFSA’s have you completed?
• What can be done to reduce my EFC (Expected Family Contribution) and when should I make changes?
• How do you use the SAR (Student Aid Report) to verify the preparation?
• How many award letters have you reviewed?

12 Step Smart College Money Program

Make sure you do all you can to maximize your savings and get the best education for you or your child. Check out our 12 Step Smart College Money Program to learn everything you should be doing. Don't forget to sign up to receive our free white paper "12 Tips to Maximize Your Scholarships."

Contact us today or sign up for an upcoming seminar if you are ready to get started on the path toward achieving your education goals.