Early College Planning

MEFA's mantra is "never too early, never too late" when it comes to saving for college. Learn how, in working with MEFA, you're encouraged to start saving and planning for college as early as possible, and not to hold off until your student is a junior or senior in high school.

Download the webinar slides to follow along.


Angie Costello: What do you think, Julie? Looks like we're just starting the recording now, which is good. So just so everyone knows this webinar will be recorded. We'll be sending the link out afterward to all of the people who registered. I want to take a quick moment just to thank you all for joining us tonight. My name is Angie, and I am the Teen Librarian at the East Bridgewater Public Library.

Um, and I'm very excited that you all are here. We're going to find some very useful information tonight, I think. So, I'm going to take a quick moment to introduce Julie, and then she is going to take it away from there. So, Julie 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 please join me in welcoming Julie. Take it away,

Julie Shields-Rutyna: Julie. Oh, thank you, Angie. And thank you to all the libraries who, uh, who, you know, have organized this and have You know, so we'll have this great information going out. So thank you. All right. Well, we're going to talk tonight about early college planning and early can be very early or just a little bit early or any, any planning you do for college is great.

And I might ask you to even put into, um, the Q and a or the chat. It might be the Q and a that you have access to just the age The age of your student or the grade of your student that will give us a little bit of a sense. I think probably we'll have a real mix here and there's there's something for everyone.

So that will be great. And another the way you can participate tonight is if you have questions or anything you want to say, type them into the Q and a and we will. We will be able to see that. And if you need closed captioning, you should hit the CC button to get a live transcript of the words that we're speaking.

If you do need to leave early, as Angie said, you'll, you'll receive a recording and the slides tomorrow. So you'll have those. So you don't also don't have to take furious notes in all of this. So a little bit about MIFA. MIFA has been around since 1982 and our mission is to help families plan, save, and pay for college.

And you're going to hear a lot about what we do this evening, but in short, we have the state's college savings programs, the U Fund 529 plan and the U Plan. Prepaid tuition program. We also have low cost private loans if you need that type of financing to fund college and then everything else we do is free and is to provide guidance at whatever stage that you're in at this college process, you know, can kind of jump in and out at any at any point.

So let me just quickly look to see we have. Yeah, we have 8th grade 7th grade. Sixth grade, eighth grade. Oh, this is wonderful. This is True early college planning and you will, um, you will not be sorry and questions already about how much should be saved. So we're going to talk about all of that. So that is terrific.

Right. All right. So our topics tonight are. Going to be a little bit about the academic planning, and then we're really going to talk about why college is an important investment for you, um, and why it's a great thing that you're here tonight. Then the big question, someone asked already, you know, how much should I save?

And we're going to say, well, you know, how much is college going to cost? So we'll give you some of that information. And then we'll talk about how families pay for college and some strategies for saving. And then I will get into some specifics about MIPHA's two programs, and they're really the Massachusetts State programs that you fund and that you plan, two great ways to save.

And, you know, all along we're going to talk about what you can be doing right now and really what you can be doing at each stage of your student's life.

Alright, so a little bit of academic planning. It's just, um, obviously a great thing to, um, you know, be supporting your student academically all the way along. And if you want to get a jump on what the student will need to do to graduate from high school and be eligible to attend college, you might want to renew, look at some of these, um, websites that I'm going to give you right now, reviewing the mass core guidelines to graduate.

And that's just going to talk about. You know that a student needs four years of English and a certain computer science, math class and foreign language and all of that. So you can look through those those guidelines. And then you also might want to look at admission standards for the Massachusetts state colleges, which are at mass dot edu.

There are certain grade point averages for maybe a UMass Amherst versus the other state. Colleges and universities and you can you can learn about those just so that you you stay up up on that when your student is Is you know going through high school? And you also want to think about what are the options at my high school different high schools have different options And it really doesn't matter If your high school has an advanced placement class and another high school doesn't have an advanced placement class, I'll talk about what that is.

It just means that you understand what the options are and then can make sure that your student takes advantage of that. What your specific high school has. So some of those options could be advanced placement. And those are classes that really allow a student to show that they can do college level work.

And so the student, you know, usually will take an AP class. And then at the end, they can also take An exam and get a get a grade one through five on that AP class. That's something that they can show colleges if they take an advanced placement class and they get a five, which is the best score, then a college will say, oh, well, that student really can do college level history work, for example.

So that's a nice, um. That's a nice option to be able to show colleges. And IB, that's the International Baccalaureate, that's another terrific program that shows colleges that your student is really capable of, of, um, high level academic. College level work. And then there are some other programs like dual enrollment, where if your school offers that, it means that as they go along, they can sometimes begin to take a class at a community college while they're in high school.

And that's another way to show that they can do college level work, get some credit, and sort of get a jump on some of those basic classes. Um, at the college level. So all kinds of things like that. So you'll want to just find out what, what opportunities are at your high school. And then we also on the MIFA website, and I should say our MIFA website is MIFA.

org. We have so many resources there. Um, and one is about high school academics. So you can, you can click on that and go in and get some tips with all of that. Um, I will also mention, Okay. That right on the front page of the MIFA website, if you scroll to the bottom, you can sign up for MIFA emails. And all you give is your email address and the grade of your student.

And twice a month, we'll send you an email that's targeted to the age and stage of your student. And, oh, these are the things you can be doing right now. And as you can imagine, As your student becomes, you know, 10th grade, 11th grade, 12th grade, those emails become really important to keep you on track with everything that needs to be done.

And MIPHA also has a website, I'll call it, for students in grades 6 through 12 called MIPHA Pathway. And it's free. So the student can just go in, click I'm a student and sign up and get an account. And it's, it's really a college and career planning tool that is a meant for students. So it's engaging, it's colorful, uh, uses language meant for either middle school or high school students.

And depending on what your student's grade is, they'll get the language that's, that's for them. And it allows students to take skill and interest assessments, do some career exploration. Later, you can do a college search. Lots of information about financial aid and scholarships and all the while there's sort of a digital portfolio where a student can keep track of things that they're doing, um, so that it's, it's really, it's really a great free tool and the skill and interest assessments are.

I'm very much again targeted to the students. So they're sort of fun where they feel like they're games, you know, where they play a game called, would you rather, and give some options. And then the student picks what they'd rather, how they'd rather be spending their time. And at the end, it comes out and says, it seems like you would like a creative job.

Here's some examples of those and things like that. So, um, Yeah, sometimes I like to say that's a good summer summer project. And, you know, I'm going to first just sort of talk about college and people sometimes ask, you know, is it worth it? We hear all these stories about how expensive colleges and I'm not surprised that people say, is it worth it?

Um, and so. This is this comes from the college board. They put out a series of papers every fall, and this one is called education pays. And this just shows that with increasing levels of academic achievement, students do earn more when they graduate with a bachelor's degree or a master's degree or a doctoral degree.

So you can see that on this chart, but I also I'm going to say I've been talking about this for many years. And the truth is that college isn't necessarily what we've always thought. Oh, it's a four year college with a big green lawn out in the middle of all the buildings. College can be anything that you do after.

High school and students have more options than ever to pick a path that's really going to interest them that they're going to be engaged in and it's going to set them up well for life. So, um, that might mean two year colleges, four year colleges. It might mean they go on to graduate level. It also might mean they they do something that's more technical.

Um, and those options Are available to students as well. And that's why some tools like that portal I showed you, um, can be just ways for them to explore a lot. A lot of things that maybe they hadn't, um, thought about. And in that portal and other places, they can learn a little bit more about careers that they may not understand and see, well, what's the day in the life of, of an engineer?

Uh, things like that. So, um, All of the early, this early piece should be just fun and really geared to helping the student figure out what they, what they love and what they're good at. And this is another chart about the financial piece, just talking about how much does college cost right now. And so this shows that different types of colleges cost different amounts.

So, um, a private not for profit institution, four years, um, can. With tuition fees, room and board, books and supplies, other expenses can cost, you know, here on this chart shows 60, 000. Here in Massachusetts, we even have some colleges that are closer to 80, 000 when you, when you pull all that in. But then public four year institutions that are out of state might cost a little less.

Public institutions in state. They cost even less than that. You can see and then community colleges, which are very affordable and becoming even more. So, um, but the key that we're going to talk about tonight as well is it's not necessarily just what that cost is or. Sometimes we use the word sticker price.

It's after financial aid, how much are you going to be paying? That's the more important number for you to be thinking about. And there is a lot of financial aid available. We'll talk about that a little bit, but the key number that you're going to want to be focusing on is not just what that big sticker price is, but what your family with your finances, with your students, academics, all that, what you'll be.

Paying, which is usually a lot less than that sticker price. So here's some, some things you should know when you're thinking about what, what will be, we'd be expected to pay. So there's something called the student aid index, which is the number that. comes out when you file your financial aid forms. And that's the number that your financial aid will be based on.

And so you can go to MIFA. org, look at our student aid index calendar, and, uh, calculator, and put in your information, as you will someday on a financial aid form. And the number that pops out of that will be your student aid index. And that will give you a sense That's roughly how much you might be expected to pay for college, so that that's help a helpful tool and planning and answering that question that someone asked, How much should we save?

That will give you a sort of ballpark estimate. Um, and then another other calculators that you can use that will really be helpful are net price calculators on specific college websites. So if you want to fine tune it even more, if your students begins to be interested in a certain college, you can go to that college website, find their net price calculator, which you could just type in the search, put in information again about finances and academics, and you'll be able to see an estimate of a financial aid offer that Your family, your student might be able to receive from that college.

Now, of course, it's only as good as the information you put in, and it's an estimator, and it might be, you know, years in advance, but it's, it's a good, it's a good number to give you a sense. You know, should I be saving, uh, 10, 000? So, um, these can be helpful tools just to guide you, um, in the right And then these are some other great websites.

College Navigator, College Scorecard and MIFA's College Cost Projector. All that will allow you to search, research different colleges and see a lot of data about those colleges, such as, um, you know, What is the average cost for a family with your income? What's the average salary for students when they graduate?

Um, if your student's interested in a specific major, how large is that major? You know, what do graduates of that major earn? So these are all good websites and tools that you can play around with. Oh, and here's an example showing you. So this shows Boston College. Gives an example of how many undergraduate students are there and what's the graduation rate very high at Boston College, which can tell you something that can tell you that probably there's a lot of students support.

There's a nice student support system there. Um, so. That's that's great. And then the average annual cost, um, which just shows that a lot of students receive financial aid to go there and then earnings of what what students earn when they graduate. So you can look at a lot of different colleges on this website.

And this is showing you an example of a net price calculator on a college website where it would show you the direct cost, the estimated grants and scholarships you could receive, and then how much you would have to pay. So, right down at the bottom there where it says estimated remaining cost after financial aid, 17, 000.

So you might quickly say, okay, well a rough estimate of what I should save for my student would be You know, 17, 000 times four to cover the four years something like that over over time. Um, but again, most families that I work with and I've worked with many over the years. Aren't able to necessarily save all and there are other ways that, that we'll talk about that you'll be able to pay, but any savings that you can put in place will be a super help to you when it comes time to paying for college.

And these are a couple of programs that we have here in Massachusetts that are worth knowing about. Um, the first is Mass Transfer. That is the program where a student can begin college at a community college. And then transfer to a four year public institution in Massachusetts. And by doing so, really, really ensure a very affordable education.

So there are so many benefits like guaranteed credit transfer, tuition credits, freezes on tuition. These days you can really save a lot of money. By deciding to go that route, community college to four year, and I will share that in other parts of the country. This is a well worn path, you know, in California, so many students, uh, started the community college and then transferred to the four year we've we've done less of that, or it's been less popular here in Massachusetts.

I think because we have so many private institutions in Massachusetts, but this really can be a very affordable way to, um, Receive your four year degree at a very reasonable cost. And then another great program is called Tuition Break, and that's from the New England Board of Higher Education. And that's a program where a student can go outside of Massachusetts to a neighboring state, New Hampshire, Connecticut, Rhode Island, and If they are enrolled in a certain program that qualifies under tuition break, they can pay in state Massachusetts prices, even though they're attending out of state.

So, it's worth taking a look on that website. The tuition break website to see if some of those programs are of interest, and if so, that might be worth the student applying to a UNH or UConn or University of Maine, and, um, being able to attend a program out of state, but still pay those lower in state costs.

Julie, do you mind if I jump in? No, that's great. I was just about to say yes.

Angie Costello: So we have two questions that are on specific plans, which I think you might be covering a little later on. Um, but there are two questions that I think are pertinent to what you're talking about right now. One of them is, does the financial aid depend on how much money you

Julie Shields-Rutyna: have?

So yes, in fact, we're going to talk about it in one moment, but I'll say it now. Anyway, um, financial aid is really awarded based on two things. One, yes, your finances, you know what your income and assets are, but another is merit. There is a lot of merit aid out there. So merit is based on your student's academic profile.

So are they applying to a college where they are going to be very high in the applicant pool because they have a grade point average from high school that's excellent. Um, so there's some merit aid and then there's some need based aid, which is the aid based on your finances. So, and we're going to talk a little bit about that now too.

Angie Costello: Great. And then the other question is, how can you use the calculator if we will be in retirement when our son goes to college? What income shall

Julie Shields-Rutyna: we use then? Yeah, that's a good, that's a great question. So I would say, if you have an estimate of what your income might be when you're in retirement, um, just use that number.

You know, use, use an estimate. Um, and you could play around with it, too. You could, you could do the calculator a couple of different ways and use a lower amount, a higher amount if that helps you to make some decisions, too. Um, but just do your best to estimate what your income might be at the time. And that will give you a better estimate.

All right, you can keep

Angie Costello: going and we'll, we'll address the other questions

Julie Shields-Rutyna: in just a little bit. That's perfect, Angie and interrupt me anytime. That's good. All right. So the financial aid, which I think is exactly, um, what that family was hoping for some information here. So what, you know, what is financial aid?

It's really any money that is going to help your student pay for college and usually broken down into three types. The first being grants and scholarships, and that's the best kind. So that is money that is just financial aid. Given to your student and the student doesn't repay, it just comes right off the cost.

So that's, you're looking for a lot of that. But then there are a couple of other kinds too. There's work study, which is basically your student is awarded an allotment of money, say 3, 000 for the academic year. And it's not awarded to the student up front, but it allows the student, it makes it easy for the student to get a job on campus.

Because it allows colleges to hire lots and lots of students through that program, where the student can work, earn money, and usually pay for things like shampoo, bus fare, pizza, uh, travel, things, things like that. They're usually, usually not paying tuition and fees with that because it's coming later.

But it is covering some of those necessary expenses during During the school year. So that's another type of financial aid. The student just has to get a job. And the other nice thing about work study is I feel like the student can go one or two really good directions. And the first direction is they might be able to, if they're Chemistry major, get a job in a chemistry lab or something, and that might put them in touch with faculty and research assistants that will be helpful to their program.

That could be a super job to have that then is experienced when they graduate, all of that. So that could be A nice way to use your work study. Another great way to use your work study might be to get a job sitting at the front desk of the library or the gym or another building and you have a clicker in your hand and you check people in to make sure that not too many people are You know, coming to the gym that night or coming to the library, and what that allows a student to do maybe is to sit and get homework done, get some reading done, get a jump on that.

So those are also great jobs for students, um, so that they can, they can really, you know, keep up with their, with their schoolwork and be getting paid. So, uh, work study is a great, great, great thing. And then student loans. And I know, you know, we hear a lot about, Student loans in the in the news these days, but the bottom line is there are very specific student loans for undergraduates that have limits.

Um, that can be helpful, especially if the student attends an expensive institution. Um, so that can be another way that. That students can complete that full cost if they're attending a college that has that sticker price of a 60 or 80 or something like that, and this was answering that last question of, um, and I'll point out that top number to 177 billion is awarded to students each year in financial aid.

So there's a lot of money, and it's usually based on one of these two things. Sometimes it's It gets comes together need and merit, but merit being for their academics for it could also be, you know, a football scholarship, or it could be, um, a musician receives a scholarship, uh, something like that. So it's about academics and special talents and schools do award money based on that.

But then they also award money based on it. Your financial situation as information you put on the financial aid forms when your student is a senior.

And in general, here are all the ways that families pay for college these days. Number one, financial aid. So, definitely when your student is a senior, you're going to want to apply for financial aid so that you can see what you're eligible for. That's great. You want to take any money off the top that you can.

And then the other ways families pay are past income. Meaning, savings, any, any assets you have are past income, present income, so if you, you know, have a monthly budget, um, sometimes people pay as they go along, and all colleges have something called a monthly payment plan, which allows you to split up the cost of paying on a, over, over many months, so the, I don't want to say the normal, but the typical way that you bill from college is, um, once for the fall, once for the spring.

And so you're usually paying a college bill maybe in August and December. Um, but you can also join a college's monthly payment plan and pay over time. And that's if, if you have money in your budget and want to do it that way, you can do that as well. And that's not a loan. That's just a payment plan. And then the other way that families do pay is they They do take on financing.

Either the student borrows the student loans. Sometimes the parent borrows some other educational loans or, you know, and really sits down students and parents. Sometimes they do a little bit of both. And so I'll leave it at that for now. But I guess the Point here that I like to make is truly the more savings you have on again, I take the pressure off to say most families I know cannot save it all.

But the more savings you have, the less pressure you have on your present income or having to borrow alone. So that's why your college savings is a good thing. And yeah, this is a great. Way to show this to let's say that you have a 10, 000 college cost and you save, you save for that. So let's say you're saving 6, 960 and then you're earning interest over the many years.

Well, that could mean that's how you come up with that 10, 000 for that college cost. If you don't save, and let's say you have to borrow that 10, 000 college cost, then you pay interest back, um, then you're going to end up paying 13, 920 for that 10, 000. So the point being that most people pay for college over time.

It's just, are you going to start that time early, or are you going to wait and pay later? And actually great, you know, point. I'm glad the person who's going to be retired when your student is in college spoke up because that's something you want to consider that, um, you might not want to be paying for it after the fact while you're already retired.

So the more you can do up front, um, the more helpful that will be. Then when I start talking about financial aid and then I start telling everyone you should save, save as much as you can, the first thing that people say to me is, Julie, why would I save? Isn't that just going to hurt me? Isn't that just going to mean I'm not going to get any financial aid if I save?

And it's a, it's something I've heard over many years as I've been doing this work. And it makes sense. It makes sense that. That's what someone would say. Why should I do this if it's going to hurt me? Um, but it is a big myth and it's, it's a myth we always try to dispel. MIFA really tries to help people understand this.

So, the truth is That in that financial aid formula, your income is the biggest factor in determining financial aid eligibility, not your assets, not your savings. And so because of that, your savings accounted at such a low amount, whereas your income, you know, they're expecting pay for college, depending on how much income you have.

Um, it is so worth saving because you're going to be so much better off with the savings to help you pay for college. In fact, I'll just throw out a number so you have it in the back of your mind. Your savings are treated in that formula at a rate of 5. 6%. So what that means is that if you save 10, That a college is going to count 560 of that as money they think you can use toward paying for college each year.

So that's a pretty low amount given the 10, 000. If you save 100, 000, they're going to expect that you could pay about 5, 600 per year toward college. Still low compared to the amount that you have to actually use and pay. So it's really worth paying. Worth saving. Um, and then, then the other thing that people say is, you know, once I start talking about colleges that cost 60, 000, 80, 000, and then I'm telling you to save and you think, there's no way I can save that.

I have, you know, two kids, three kids. Um, we have lots of expenses. Life is expensive here in Massachusetts. Um, Should I just not even bother because I can't even get close to saving enough, but that also, um, is not true. The truth is. Any little bit you save, you will be happy that you saved. And, um, I've just heard this from families year over year where people say to me, I'm so glad I saved.

I don't know how I would have done this if I hadn't. And then everyone always says, I wish I saved more. So, um, I'd say save as much as you can, but then let it go and don't beat yourself up on it because you can't save it all. Most people can't, um, just do the best that you can. And if you start saving and you're consistent about it, you'll be amazed at how much money you can put away.

to be used toward college costs.

And here are all the ways your savings will help you. So, you know, you'll hear if you come back to a MIFA workshop, when your student is a senior, you'll hear me say that you want your student to apply to a variety of colleges, um, different types of colleges, because you always want students to keep all their options open.

And Then you'll student will hear back. Are they accepted? They, you know, are they admitted to a certain college and then they'll hear back about a financial aid offer that was given. And then you'll really sit as a family and decide, is this affordable? Can we, can we afford this college? Or how about this other college that is also terrific, maybe costs a little less.

You'll make those kinds of decisions. But if you've saved some money, Okay. It just opens up those options. Maybe maybe does allow your student to go to their first choice versus their second or their second versus their third choice. So it opens up those options. And it's I think it's a key point in this whole.

Education college process of keeping options open, and it also could allow a student to take advantage of a special program such as a study abroad program, which sometimes is not even more expensive than than staying on campus. That's that's wonderful about study abroad. But with travel and all that could be an extra expense.

And so having saved some money could help with something like that, or allowing a student to do an unpaid internship. One summer that might be really good for their career and program. Um, it also might reduce or eliminate the need to borrow loans and. Although it's shown that students who work a reasonable number of hours, 10 to 15 hours a week during college, that that's actually a help to their studies versus hurting.

But let's say a student has to work more than that. Um, that could end up becoming a burden and make it hard for them to keep up with their schoolwork as well. So having saved would maybe keep the student, allow the student to keep a reasonable work schedule and. Again, we talked about how, um, the impact on financial aid is very low with your savings.

And lastly, you know, this is just some research because MIFA has been trying to work with families, um, to start saving even when their kids are babies. And, um, some of that comes from some research, which shows that if a, a student knows that The parents are saving money for them for college. It can have some aspirational effects where, um, that student might just do a little bit better in school or really start thinking that way too, of, oh, my parents saving for me.

They don't know how much or whatever, but, and that research shows that the amount doesn't matter. Um, just that, oh, a parent's saving for me. They expect me to go to college. Oh, I'm going to live. So it's, um, a lot of research out of, uh, he was at the University of Michigan when a lot of this was done. His name is William Elliott.

Um, and I believe now he might have moved universities, but he's done a lot of studies on on savings.

So I'll, any questions that you want to address. Angie, before I dive into a couple of examples, or Sure, why

Angie Costello: not? Um, so we did have one question. How do college admission standards account for a child on an IEP or 504

Julie Shields-Rutyna: plan? Such a, such a good question. And actually, I'm going to tell you that MIFA has some Webinars and the recorded webinars on our website on these topics where we bring together college folks to talk specifically because we also have this program called attainable, which is a saving program for people with disabilities, students with disabilities, um.

That is like a 5 29 college savings plan, but you can use it for all kinds of things. So because we have that, we do a lot of work with, um, with this topic. So I'll refer you to definitely. Check some of that out on the me for website. But what I would say is that, um, colleges these days have have many resources and bring in diverse classes of students.

Um, so it should be a good thing. It should be something you think about when you're looking to colleges to make sure that you're applying to colleges. That student is applying to colleges that are going to have Great support systems for them. So, you know, you have your high school IEP and then it's different when you go to college, but you want to make sure that the college has a lot of those resources, but many, many students, um, go to college having had the IEP and college admissions offices know that and they're welcoming those students, but you just want to have that as a high factor when you're looking into different colleges.

Angie Costello: Great. And then we have three questions now about the 529 plan. Do you want to get into that now or do you want to wait a little bit later?

Julie Shields-Rutyna: Why don't we wait? Because then we're going to talk about the 529 and then we'll That's what I

Angie Costello: figured. So, okay. So 529s,

Julie Shields-Rutyna: stay tuned. That's great. All right, so I'll give you just a couple of examples about how that the savings will be helpful.

So let's look at this is case study one and we're going to talk about Kyle, who wants to attend a four year public college to study business and the full annual cost of the college is looking at is 22, 500. Over the side, we see that Kyle's parents AGI, adjusted gross income, is 49, 000 and has no college savings.

So let's look at a typical award that Kyle might be able to receive. So in this case, he's receiving grants and scholarships, the best kind of aid, of 13, 000. federal work study award of 2, 000 and that federal student loan of 5, 500, which is the maximum amount for a freshman. So Kyle is awarded 20, 500 and what that shows then is that because the cost of the institution is 22, 500 that Kyle's family will need to pay 2, 000 out of pocket.

Each year of college. And if you look at Kyle's parent, AGI and no college savings. That might be tough, um, to even pay that amount. Um, so that might mean that Kyle's parents will need to take a loan for that. Um, so any savings that they could have saved would really make this decision easier where, okay, we can, we can come up with 2, 000 a year.

Um, so that's just to show that even, even small amounts of college savings could be super helpful in a case like this. And then let's look at Lisa, who's going to go to a four year private school to study nursing and the Annual cost of her college is 60, 000. And so we're looking at some different data here on the left.

We're not looking at at this family's income. We're looking at how much that EFC is, is the, is the number that the family is Supposedly going to have to pay each year. So that means they probably have a fairly high income and so high that this family is not eligible for any need based grants because of their their high income.

So Lisa is receiving a 20, 000 merit scholarship. She had great grades in high school, a nursing award and the federal loan totaling 27, 500. But that means that Lisa's family will need to pay 32, 500. And out of pocket each year of college. That's a large amount. Even if Lisa's family has a fairly high income, that's still a lot of money to come up with each year.

And so for that reason, that's where having some college savings would be super helpful for this family.

All right. So now we're going to talk about some strategies for saving before we talk about the very specific different types of savings plans. But a key is to start saving as early as possible. Just, you know, the longer time horizon you have to let your money grow, the better. So. You know, hopefully you've started saving in some way, and if not, I'd say do that as soon as possible.

And it's good to start with a goal in mind. And I think that's why I think some of those calculators can be somewhat helpful, just to give you an estimated goal. Early on, we looked at that family that was going to be paying about 17, 000 a year for college. And so, oh, maybe the family has that as a target.

It says, alright, 17 times 4, I'm going to target that amount to save. Um, and then kind of figure out what they can save per month. And then, families who are able to sort of set it and forget it, you know, have a certain amount. That they're saving going into a college savings account every month, sort of like you do for retirement.

If you have a company that offers a retirement plan and you just have a certain amount. Going right into your retirement so you're not thinking about it every month. If you can do that with college savings, that can be helpful too because you don't have to think every month. Do I have a little extra?

All of that. So that's a nice way to build your savings. And another way to build your savings is to Just take advantage of any unexpected funds. Let's say your student has a birthday or graduation from middle school or something like that. Um, and you have a little party and some relatives give some money.

Maybe you can put that in all at once into the college savings plan. And this photo you see here is from Fidelity has this gifting page where if you are having a party for your your child or something you can put a really cute picture up and send a link to your friends and relatives to say You know, any small amount donation into the college savings plan would be, would be a great gift.

Um, and I, I've found over the years that people are always looking for, you know, what, what can I do to help? And, um, I think it can be a really good gift and people feel, feel really good about giving to a college savings fund. What I've sometimes done for friends is I buy a very small, inexpensive you know, a little book or a little hat or something, um, or a toy, a little toy that the child might like.

Um, but then, then also have, um, a small check that goes into a college savings account. That can be, that can be a nice balance. I always joke and say that my kids are older now and they didn't have this little cute gifting page. And so, um, at this point, you know, I can't, I can't put the. Pictures of 20 year old kids and try to ask for money for them, but when your kid is kid is young and cute in elementary or middle school, I think that's a great option.

Um, let's see. Yeah. And just when your child does get older and maybe gets a little job, um, you can also get them in on it too and have them save a little bit of their money for, for college.

All right. So now I know some of you have questions on the U plan and the U fund. So just because I have them on the screen this way, I think I'll talk about the U plan first, which is the prepaid tuition program. And then we'll talk about the U fund, which is the 529 plan. And, um, both Massachusetts plan.

So the U plan prepaid tuition program is kind of a unique program. And the way it works is there are about 70 participating institutions. I'm going to show you them just so we so here's Here are the institutions in Massachusetts that participate in the U plan, and you'll see it's a, a mix of public and private.

And so the way this works is that you don't have to pick a college up front, but you just know that that all these colleges participate. And so you purchase a tuition certificate. Now, whatever your child's age is, and Then that is calculated of the percentage that that tuition certificate is worth at all of these different colleges, and I'm going to give you an example to make it easier to and then that means that you lock in that percentage.

So when your child is ready to go to college, you've locked in that percentage of savings at that school, which can mean that that can sort of Possibly beat out inflation of that. Tuition seems to go up each year. So let's give an example. And these numbers are not correct in the example. Um, but I'll just make it simple.

Let's say so we're gonna go back. Let's say today that U. S. Amherst tuition and fees is 10, 000. It's more than that. But let's just say that's what it is. Um, and you had 5000. to save. You could put 5, 000 into the U plan and then you will have locked in 50 percent of the tuition and fees at UMass Amherst today.

And then let's say by the time your child goes to college, UMass Amherst tuition and fees is 30, 000. Let's just say then your five has become 15 because you have locked in 50 percent of the cost of that. So, um, and then you receive a report every year saying your money is worth this percentage at all of these different institutions.

So it can be it can be a really great program. If your student doesn't end up going to one of the participating colleges, then you just withdraw your money and you get your money back that you put in with CPI interest. So you don't get that great benefit of that lock in a percentage of tuition. But you do get your money back with interest.

And, um, another personal story that I'll share is that I had a U Plan, but my kids ended up going to New Hampshire and Pennsylvania. So I withdrew my U Plan money with interest and used it to pay their bills, but I didn't get that big benefit of having them, um, lock in tuition at one of these.

Massachusetts colleges. So if you have more questions, you can visit the MIFA website, but that that can be a terrific program. And some of the people who have saved in that have really have great experience with it. So then let's talk about the U Fund, which is the 529 plan here in Massachusetts. And most states have a 529 plan.

You can save in any of them, but there are a In Massachusetts. So the way this works is you open a U fund account and You start saving either automatic savings or once in a while, and as you're saving, you're earning interest. Hopefully we'll talk about that. And you're not paying any taxes on the interest that you earn all the way along.

And then when it comes time to withdraw this money. As long as you use it to pay for a wide range of educational expenses, tuition, fees, room and board, books, supplies, equipment, um, then you never pay taxes on any of the earnings on that 529 account. So that's really the beauty of that. Um. What else can I tell you about the you fund?


the key I said. Hopefully you're earning interest. So you're investing in mutual funds and you get to choose how you want your money invested and you have fidelity investments runs this program for us. You can talk with fidelity and they can help you choose the plan that. You know, it's gonna work best for you.

You can always call Fidelity. Um, you can go online to fidelity. com slash you fund lots of information there. Um, but you can use this program at any accredited college or university. In all of the United States in many international colleges. Also, any international college that has a federal school code, you can use this.

So I think I'll take the questions and that might trigger some other thoughts I have about, um, things to say about the U fund.

Angie Costello: Sounds good. Okay, so this question is, my child is currently in sixth grade. Is it too late to open a 529 or similar plan? I feel like we should have started 12 years ago and I'm not sure if we should

Julie Shields-Rutyna: even bother now.

Oh, such a great question. Yes, you should bother. And, um, I know it's never too early, never too late. That's what we say. So yes. Hindsight 2020 think back. I wish we started my child was in kindergarten, but that's okay. You have plenty of time and actually you will be amazed that from 6th grade to 12th grade, how much starting to save now and you'll get to see those savings, um, build each year.

It is definitely not, not too late. I can, I can promise you that. Awesome. Okay,

Angie Costello: next question. Should you put more than 2, 000 into a 529

Julie Shields-Rutyna: college plan?

I guess, and maybe the person could tell us, does that mean total or in a certain time period 2, 000? Um, but yes, I think you maybe want to put money enough money in to save to your loose goal. And if you want to have, if you want to have, you know, enough money to keep all options open, you, you want to save, save as much as you can, really.

And I will add so I talked about qualified expenses being tuition fees, room and board books, supplies and equipment. There are new expenses added. It seems to be expanding where now you can use it for some K through 12 expenses. You can use it to pay off 10, 000 of a student's student loan and coming.

soon, there's even a way that if you don't use all the money in your 529 plan, which I don't see that often, that you're going to be able to roll some of it into a retirement account. So they're trying to make it so that no one would have a fear of, no one would decide to not save because they weren't sure of the exact amount to save.

They're trying to give as many options as possible on how to use this money. And it looks like they did

Angie Costello: follow up and said they meant 2, 000 per year. Only 2000 is

Julie Shields-Rutyna: tax deductible. Oh, great. So, great question, and that was another thing I should talk about. Actually, so, actually, all of the money that's earned, all of the earnings, is not taxed for all of the time that it's in the account.

For federal taxes, okay? So, all of your earnings don't get taxed, and if you take them out and use them for a qualified expense, you never pay taxes on those earnings. Period. Additionally, If you're a Massachusetts taxpayer and you have money in the U fund, you, you can get an additional tax deduction up to 2, 000 on your Massachusetts return for the money that you put in the U fund.

So you can get that up to 2, 000. I would say that. You could save more. You're still benefiting from a federal tax perspective and benefiting from saving. Um, but anything over 2000 doesn't count to give you that extra Massachusetts tax deduction. So thank you for bringing that up because I might have forgotten to talk about that.

Great. Thank you. We have lots

Angie Costello: of questions rolling in. So the next one is, can you talk about 529s? Are those considered saving at 5. 6 percent or at 100 percent since it is allocated entirely

Julie Shields-Rutyna: to education? Oh, such a great question. Um, 529 plans are considered parent assets on the FAFSA, which is the best place for it to be.

So they are considered at that 5. 6 percent rate per year. Awesome. All right.

Angie Costello: The next question is about the U Fund. If the child joins a college in a foreign country, can we use the money from U Fund, or is it only for colleges in

Julie Shields-Rutyna: the U. S.? Great question. Yeah, so there's a, um, a website. And I'm gonna I wonder if I could look it up.

I'll look it up at the end. I believe it's college savings dot com. Um, but actually you could do that or you could just Google federal school codes, but we'll we'll do it when we finish this. And if The college that you're applying to in another country has a U. S. federal school code. Then you can use the year you fund 5 29 savings or any 5 29 savings that you have.

So when we finish these slides, remind me, Angie, let's go in and I'll show you that website where you can check and find colleges where you can use this money. All right. I've written it down,

Angie Costello: so I will try to remember. Um, another question about the 529. Actually, this is a two parter. What happens to a 529 if the child does not go to college or if they take several years off following

Julie Shields-Rutyna: high school graduation?

Oh, such great questions. So, um, let's see if the child does not go to college. One thing we'll deal with the first last one first. This money never expires. So you can just leave the money in the 529 account. And if the child decides to go back to college a few years later. That's fine. Um, and in fact, you can use these for undergrad for graduate all of that.

So, so you never have to close the account. So that can work if someone's just going to take some time off. But let's say the students, uh, let's do the best example. The student, you know, becomes famous and, uh, has a very wonderful career path that they're happy with. And they, they are not going to go for any further education.

Then you have a few options. You can. Yeah. Transfer the money to another beneficiary. So a sibling, a cousin, yourself, if a parent, you want to go back to school. So you have, you can transfer it to any relative of the original beneficiary. No penalty. Nothing. That's good. Or trying to think if there's any other options there, you know, hold on to it as we talked about.

Or if there's nothing else that you can do with it, um, you can just withdraw the money. And then what you will pay is you will pay on the earnings. So not on the initial amount that you put in, but on any earnings, you'll pay your regular income taxes and a 10% income tax penalty. So you'll end up paying a lot of taxes on the money if you take it out and it wasn't used for any qualified expense.

Great. Awesome.

Angie Costello: Um, the next question is, if the college is not listed on the college list, can the U fund be used for other expenses like boarding,

Julie Shields-Rutyna: books, et cetera? Yeah, I have to see if I understand the question. So the list that I showed is for the you plan and Whereas the U Fund, students can go to any accredited college in the United States and sometimes elsewhere.

So that's the first piece. But, because of the end of the question, I think you might mean this. Since the U Plan is for just tuition and fees, You could use that to pay for one of those colleges, and then if you had a U Fund as well, you could use that for the room, board, books, supplies, so you, so the U Fund is just a little more flexible with the number of institutions and with the types of expenses.

Um, but you can use both at a certain college, but that person can write back if I didn't really answer that. Perfectly.

Angie Costello: Great. Thank you. Um, this is kind of a follow up to the previous question about the penalties. Oh, yeah. Do the 529 penalties count if you are

Julie Shields-Rutyna: rolling it into retirement? So as long as you follow the exact directions of this new qualified expense eligibility criteria, which we're still ironing out, um, so there's going to be, like, it has to have been in the account for a certain period of time.

It may not be able to be more than a certain amount of money. So there are going to be some criteria, but as long as it follows that, then there will be no penalties.

Angie Costello: Um, and then the next question, if the student's 529 is owned by his grandparent instead of his parents, how does that factor into the parent's application for financial

Julie Shields-Rutyna: aid?

All right, this is my favorite question to answer right now, because as of now, the FAFSA, which is the main federal financial aid form that students use to To apply for financial aid. There are lots of changes this year. So the form that students are completing now for the 24 25 academic year has a lot of changes.

And one of the really positive cha

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