Growing up, lots of kids are left thinking that, tucked away in a bank somewhere, safely nestled away, there exists a substantial college fund just waiting for the day they graduate high school and get accepted to college. This belief comes from a history of movies, books, and television shows which tell us that parents start college funds for their children some time after the first sonogram – but this simply is not true. It is through no fault of the parents and sometimes, of course, parents do have college funds tucked away for their children. Those who do not are by no means bad parents – it is difficult to save money for anything these days, when everything – especially college expenses – is so much more expensive than it used to be. Fortunately, there is now a college savings plan called the 529 Plan, which is designed to help parents – or anyone else – save money for the future college experience.

The 529 Plan is a tax-advantaged investment. It was created to encourage parents, grandparents, legal guardians, et cetera, to begin saving money for the future college educations of their children, grandchildren, are legal wards. It receives its name from Section 529 in the Internal Revenue Code, and it is offered by state agencies and state organizations.

Not all states offer the 529 Plan just yet, but those which do individually decide how the plan is designed and what kinds of investment options they will offer. Most plans allow investors to come from out of state. The advantages for in-state residents who apply for the 529 college savings plan within their state can include tax deductions, matching grant and scholarship opportunities, protection from creditors, and even exemption from financial aid debt.

The 529 Plan is offered in two different forms. There is a prepaid plan, sometimes also called a guaranteed savings plan, which allows for the purchase of tuition ahead of time, based on the current calculations of what the tuition of a specific university is. It is then paid out when the beneficiary of the policy attends a college or university.

There are also savings plans, which are based around the market performance of underlying investment. These are generally comprised of mutual funds. An astounding forty-eight states, plus the District of Columbia, offer the 529 savings plan. Usually, savings plans become more conservative, the older the beneficiary gets. There are also options for risk-based investments, which allows underlying investments to remain in the same fund, no matter what the age of the ultimate recipient.

The 529 college savings plans are a great way for parents, grandparents, or legal guardians to ensure that their young loved ones will be able to afford to go to the very best colleges and receive the very best degrees. It allows children the opportunity to follow their dreams, like before they are actually capable of reaching them. They are ideal plans for adults who want to provide college funds for their children but are unsure or unable to go about it in the way the movies have always told them they should. The 529 plans are realistic and affordable investments, designed to ensure a child’s future successes.

It is never too early and it is never too late to start thinking about college. Nevertheless, early is always better.

What are you and your child doing to prepare for college?

THE EARLY YEARS

Begin college preparation in kindergarten, young students are receptive to thinking about college. Spend the early years exploring study methods, reading and experiencing life, find opportunities that increase curiosity and open the mind to creative and organized thought processes. Foster goal oriented thinking and time management skills in the child, so in the future they will have the tools to keep themselves on task.

Young students are especially successful at learning languages and music, even a child as young as four or five can start taking piano or keyboard lessons. If you have the means to expose them to a second language through travel or tutoring, give it a try, children can pick up second languages much faster than adults.

Of course, it is never too early to open a college savings account.

JUNIOR HIGH

By junior high, students should have a solid understanding of mathematics and be able to compose logical, grammatically correct essays.

Establish a college savings fund or other fund designed specifically for higher education if you haven’t already, this is a good time to start. See your local bank or credit union to find an account that offers the best rate. Parents should discuss investments and deposits to the college fund with the child, it is important that they understand the realities of how much college and living outside the home costs.

Children at this age are capable of visualizing their own future independent of parents, and strive for a decision-making role in their own lives. Recognize and respect uniqueness, support interests and allow them to evaluate opportunities. Of course, teenagers might think they know everything, so before they make a choice, ask them carefully thought out questions to guide them to a logical and informed decision.

HIGH SCHOOL

In high school, curriculum, grade point average and extracurricular activities become important factors in regards to college entrance requirements and scholarship opportunities.

Generally, most colleges desire that the student successfully complete the following basic subjects in high school:

4 years of English
3 years of Math, including Algebra and Geometry
3 years of history and social sciences
2 years of lab sciences
2 years of a foreign language

College Guidance Counselor: Students should begin meeting with a guidance counselor at the beginning of 9th grade to ensure that all of the proper course work is taken, maintain a relationship throughout high school. Often the counselor can provide information on college entrance exams and scholarship information.

A Note on Mathematics: Since many students struggle to retain their math skills, it is unwise to skip math in the senior year. Forgetting valuable information before taking placement exams, Advanced Placement Tests, the SAT or ACT could prevent the student from receiving a high score or require them to take a remedial math class in college.

Quite often parents have forgotten their advanced math course work and do not have the skills to help with homework, so investing in a tutor could prove beneficial. Usually a knowledgeable and affordable tutor can be found at a local university or junior college.

One way to keep math skills sharply honed, instead of four years of math, is by taking a year of trigonometry, algebra or calculus based physics. Many bachelor degree programs only require statistics or intermediate college algebra, so even if the student does not make it through calculus in high school, for most programs they will be adequately prepared with intermediate algebra, geometry and trigonometry.

The Essay: Learning to write essays well will help students to succeed in college and most scholarship applications will require an essay of some sort. Even math or microbiology majors write essays, so learning to write a good essay is paramount.

Honor Classes: Colleges not only look at grades, but also the coursework, quite often a B grade in an advanced placement class or an honors class will carry more weight than an A grade in a regular class. So even if the curriculum is more challenging, enroll in honor level class or advanced placement classes whenever possible.

Extracurricular: Colleges look for well-rounded students who contribute to their community. Extracurricular activities whether in sports, student government, art or volunteer work enriches school and life experiences, provides the opportunity to learn teamwork and connects students to the community in which they live.

Sometimes competition to get on high school sports teams excludes students from participating, if this is the case, look for other activities such as karate, dance or intramural teams. Often students as young as 16 years of age can enroll in local university/junior college courses in subjects such as rock-climbing, kayaking or racquetball.

Student government provides leadership skills, colleges look for students that have held a student officer position, participated as a class representative or in campus clubs.

Some students enjoy participating in local theatre productions or taking art classes.

Volunteer opportunities are unlimited, look around in the community and find something of interest. Better yet, if there is an unmet need in the community, create the solution.

Employment: Consider summer employment to assist with college expenses and to learn valuable work skills and responsibility. Colleges especially favor young entrepreneurs.

Mentoring/ Job Shadowing: It is never too early to research real-life employment situations. If a student thinks they want to be an accountant, find a willing accountant in the community that can answer questions about the day-to-day realities of their job and the training required to perform their duties. Quiet often too much time is spent thinking about a dream job without researching the realities. Half way through college or after graduation is too late to start investigating career choices. So before valuable time and money is wasted, evaluate career choices thoroughly.

Letters of Recommendation: In the junior year, after establishing good relationships with teachers and leaders in the community, ask for letters of recommendations to accompany college and employment applications.

COLLEGE ENTRANCE EXAMS

Most colleges and universities require either SAT or ACT scores and the PSAT qualifies students for the National Merit Scholarship. Contact the selected universities and inquire about which exam they require. However, do not limit the opportunity of attendance at a different university, take both exams, so all options are available. Do not let financial hardship prevent the student from taking these tests, talk to the guidance counselor about a fee waiver. All of the exams can make accommodations for students with documented disabilities.

Scores: Every school has different score and GPA requirements. But usually it is a combination of the two, for example an exceptionally high exam score can give you a little room on your GPA, and vice versa.

PSAT/National Merit Scholarship Qualifying Test: Evalutes skills in critical reading, math problem solving and writing.

Registration for this test is not available online, contact the high school counselor for registration information.
Study through the first two years of high school and take this exam in the 10th grade.

SAT: Tests critical reading, math problem solving and writing skills.

Get a SAT Registration Booklet from the guidance counselor at the high school to register by mail, or go the College Board website to register online.
Study for this test through the 9th and 10th grade year.
Take SAT early in the junior year, so if the score is lower than desired there is plenty of time to retake.

ACT: Comprises multiple-choice sections that cover English, mathematics, reading and science. The test also offers a written test that evaluates a short essay.

Register by contacting a high school guidance counselor or go the ACT website.
Study for this exam through the 9th and 10th grade.
Take this exam in the 11th grade, so there is time for a retake if necessary.

How to prepare for the college entrance exams:

Read good books, magazines and timely news informationTake a preparation coursePurchase and use preparation softwareTake practice testsIncrease your vocabulary, including roots, prefixes and derivationsOvercome test anxietyTake challenging classes during high school yearsStudy and write essays,/li>

Advanced Placement Tests: These tests can earn credit in college level courses and eligibility for an AP Scholar Award. Tests are single subject exams, offered in 35 different subjects, ranging from art history to physics to world history. These tests can be taken any year, but contact the AP coordinator, or call AP Services at 888-225-5427 to find the local AP coordinator and testing schedule.

Financial Aid and Scholarships: Federal Pell grants are available for students who have financial need; qualification is based on parents’ income. To apply for the Pell grant call 1-800-4FED-AID or apply online at www.fasfa.com. Talk to the universities’ financial aid office to inquire about other funds, scholarships, grants and student loans. Tuition can be costly, but do not forget living expenses, which in some cases require more money than tuition and books.

College Application: During the summer before the senior year, finish the final research on college selection and check on their website to find out the freshmen application date. Be sure to find out what other items they require such as, test scores, transcripts, letters of recommendation or other documents such as proof of disability or military status.

LEAVING HOME

Many kids will leave their parent’s home to attend college. Learning to balance life, schoolwork and employment is a difficult task for many students. So preparing for these issues before leaving home can greatly increase the chances for a smooth transition between high school and living at home to college and living on their own.

Life Skills: Knowing how to write an essay or memorization of the quadratic formula will not help with day-to-day living, helpful skills to learn before leaving home include:

Basic cooking
Looking for and applying for a job, résumé preparation
Looking for and applying for an apartment, roommates
Budget and bill paying, filing taxes
Bargain shopping
Laundry and house cleaning
Street Smarts and self defense
Auto insurance, basic car maintenance
Using public transportation
Civic responsibility, local laws, voting and jury duty
Health care, patient rights, insurance and public health
Relationship and personal boundaries

Proper preparation can help guarantee success and a smooth transition to independence. Preparing for college and preparing for adult life should not be left to chance or with hopes that knowledge will come naturally during the high school years. Most of all, it is important to not limit opportunity and choice by bad preparation.

References

College Board – http://www.collegeboard.com/splash-

Rigoglioso, Marguerite. Stanford Graduate School of Business: Bad Preparation Puts Community College Students at Risk. – http://www.gsb.stanford.edu/news/research/socialinnovation_kirst_collegestudents.shtml

U.S. Department of Education, Office of the Under Secretary, Preparing Your Child for College – http://www.ed.gov/pubs/Prepare/pt5.html

For parents or grandparents, there are few things in life more important than funding for a loved one’s college education.

Throughout the years, folks have selected mutual funds as the primary vehicle when saving for college costs. Although there are many variations of mutual fund based plans-from the traditional brokerage account to the newer 529 plans; there is even a Education IRA that is popular as well. The latter plans were developed so that a person could save for college, using after tax money and based upon the underlying mutual funds, the person could enjoy tax-deferred savings

A lot of the financial press has been dedicated to promoting the virtues of these savings vehicles from the standpoint that college costs are rising faster than inflation and a family needs to accelerate their savings using these types of plans. However, hidden in the fine print was the unfortunate realization that these types of vehicles could, in fact, lose money! How many families were shocked when their hard-earned money evaporated when the stock market declined 35% decline in the S&P 500 Index from 2000-2002-only to have it go down another 46% decline from October 2007- October 2008?

The problem with a lot of college planning techniques is that money is typically invested in mutual funds inside these plans and those funds are 100% at risk to loss due to stock market downturns thereby subjecting the invested money to the 46% and 35% declines listed above.

So if you can lose money in mutual funds, how do you save for college? That’s a good question and the simple answer is that “it depends”. This is a simple answer that many quality financial advisors use to determine the right solution for your needs. It is also a way to do a proper job for any potential investor-thereby not throwing the “latest and greatest” product or plan at a potential client!

Generally speaking you could have put money into a tin can for the last 18 years and had more money than investing in the market! Hmmm, let’s say that again-more money in a tin can than the market-whatever do you mean? First off, you need to start with some kind of deposit, let’s say $50,000 or the amount necessary to accumulate $50,000 in 18-years which in this case would be $231.48 per month (assumes no interest or taxes paid). Now, let’s think about your own situation, if you had put away that money-knowing full well that it’s not earning a penny-would you be happy with that? “It depends”. There he goes again with that simple phrase! If you started with $50,000 and because of the market it is now worth $25,000-then the answer is an emphatic YES! If you had $50,002.50-maybe. If it was worth $101,290.83-definitely NO! What about $79,938.88, again definitely NO!

But, how would you guarantee< $79,938 or $101,290 to be there in 18-years? Certainly not from a tin can-right? Correct! These numbers represent investing $231.48 per month for 18-years at an interest rate of 4% or depositing $50,000 into an account that pays 4% for 18-years. But where could one find a steady 4% interest rate? One place is a fixed, deferred annuity. A fixed annuity is a safe savings vehicle brought about by an insurance company. Your money earns a fixed interest rate declared by the insurance company, using not less than 3% annually. Some annuities pay a multi-year guaranteed rate of interest, which can be 4% or higher depending on the term of the plan.

Now are you ready for the good part? Wait, you are telling me that having invested $50,000 18-years ago is now worth $101,290 is not the good part? Yes. It is a very good part, but let’s get back to our original discussion about college savings. If you are a parent whose son or daughter is approaching college and much like your peer group, you have saved money in (my opinion) the wrong places-ie. Mutual funds, you are now going to be faced with another problem: Financial Aid eligibility! Without getting too much into detail, all the money that you’ve invested for their college may now go against you for financial aid purposes! However, if you had invested in a fixed annuity, do not worry because those monies are sheltered from the financial aid formulas. Now, your family (depending upon many other factors) can reasonably expect to receive some financial aid that you may not have received due to money that is open to discussion on your balance sheet!

Stephen J. Cagnassola

Wealth Protection Systems and upon distribution to the college-tax-free withdrawals!

Students who want to study in college can get United States government grants in several forms and they can study further for free or almost for free of cost. It is also available for basic and school education. The process should be started early as there are many people who apply for it.

Different forms of government college funds include:

• student low-interest loans
• scholarships
• US government college work funds
• some other types of funds

All students should get a chance to study further and the government makes the cash available. You can also get funds like:

• high school diploma government grants
• higher education grants

Funds are available for all levels of education including:

• to continue your education
• to get a masters degree
• to obtain a different type of degree
• to starting college

You must start the process as early as December or January of the previous year of starting the college. It is important to give enough time for your form to get processed because the funds for education are limited. You may not be able to join when you want.

You can find many schools and colleges which have free courses. You can apply there if you want to do a high school course. It is better to fill the forms in early as the courses can fill up fast. People who apply can get funding. The US government offers free money for education. It is very essential for all kinds of education funds to do the paperwork properly and fill in the forms early.

As an educator for over 20 years, a high school administrator for the past 12 years, a Hispanic, and the parent of a freshman, I know first hand how daunting preparation for college can be. Fortunately, there are several things that can be done in order to prepare your child for a scholarship and many Hispanic scholarships are available.

A good starting place is the National Hispanic Institute, an organization started in 1979 that assists promising Hispanic youth with the college admissions process and with the development of their leadership potential. Their website espouses college and university visits that are specially designed to encourage high school age Hispanic students to aspire to take leadership positions in society.

The Kappa Delta Chi sorority also offers competitive scholarships for Hispanic women in order to access their first year of college.

The Hispanic College Fund is also an excellent resource for aspiring Hispanic college youth. Their mission is to provide “talented and underprivileged Hispanic youth with vision, mentors, resources and scholarships” (Hispanic College Fund website). Last year they provided over $1.8 million to 615 youth.

Finally, the Hispanic Scholarship Fund, headed by Sara Martinez Tucker, has the goal of doubling the rate of Hispanics earning college degrees by 2010.

Finding the funding sources is half the battle. After that initial step, aspiring applicants need to complete the application, which often includes an essay, and try to distinguish themselves form other applicants as the most worthy. This is where applicants find the most challenge. Finding guidance personnel at the school is often the best first step. They have staff members trained, ready, and able to assist. Other alternatives are finding for-pay, web-based resources.

In any case, the goal is to gather as much financial support from as many different sources as possible because college can be an expensive proposition and our Hispanic youth deserve the opportunity to access those institutions of higher learning.

A client came in this summer and told me her son was entering college. Because her son was 18, he could access the money in his custodial account, and she wanted to know how to discuss it with him. Keep in mind each state has different age limits on custodial accounts that range from 18 to 21. There are essentially three scenarios that can play out.

A popular but unfortunate option is not telling your children about the money. This is denial. If you set a precedent of not talking about financial matters now, your children will have little hope for financial literacy in the future. A less common approach is to turn over the accounts wholesale. This is setting your children up for failure. Instead we need a reasonable plan.

I suggest making it a family affair. It is their money, but they need assistance and probably should keep the checkbooks with you for safekeeping at first (read: until graduation!). Sit down with your children and show them the monthly statements, explaining how you built up the accounts over the years so you could assist them in starting their adult lives.

College can represent a dry run for both parties: parents are learning how to pass on wealth to their children who are learning how to leverage that legacy. College tuition is usually the first step. Have your children write the checks to the college treasurer. The first day of classes will take on new meaning when they think of how much money they are spending to be there. Also, have them set up their own checking accounts. Help them develop a budget for living expenses and write one check from their custodial accounts to their checking accounts. I know, they will probably overspend and come to you for more money. This is a golden opportunity to teach them about living within one’s means. We learn from our mistakes, so let your children make some on their own. Better now than later.

The point is that both parents and children are learning something here. If you can talk to your children about their custodial accounts, you will be able to talk about passing on your legacy later in life. Transferring wealth in the future will be easier if you have imparted your financial values and are confident about your children’s money management skills. Think of it as training wheels for an inheritance later in life: teach your children to do a good job and their training wheels eventually come off. Do a bad job and your legacy may end up in a generation skipping trust!

Or is your growing college fund killing your financial aid?

The more you save for college, the less chance you have at financial aid. This irony has created the urban legend that you will be better off if you don’t save and rack up debt, so the government will pay for your child’s education. As a responsible parent, or a loving grandparent, you want to save for the education of your future collegian – but you don’t want those savings to jeopardize any chance your child has at the best financial aid.

How can you avoid or reduce the effects of this paradox?

When you save for college, hold your assets in a manner that will have the least affect on your future Expected Family Contribution, or EFC. Financial aid is determined by first calculating the EFC – how much of student and parental assets and income are expected to be used for college expenses each year. Parents and students complete a FAFSA form (Free Application for Federal Student Aid) to provide their income and asset information to schools. The schools use the EFC calculation derived from the FAFSA to offer aid packages of grants and/or loans to fund the difference between the EPC and the total cost of tuition, room & board.

What is the expected contribution from student and parental income?

Income calculated after allowances*:
Student Income 50%
Parental Income 22-47% (based on income level)

*Allowances include: federal and state taxes, social security contributions, “income protection” ($19K for family of four), and “employment expenses” ($3100, typically)

Student Income includes:
Income from employment, business, contracting May include withdrawals from 529 Plan, if owned by someone other than the parent (such as the grandparent) Income from a trust or partnership (in some cases)

Parental Income includes:
Income from employment, business, contracting Income from non-retirement assets (real estate, stocks, mutual funds, bonds, cash) Withdrawals from IRAs and/or other retirement accounts May include annuity distributions

Not included:
Withdrawals from 529 Plan owned by parents Withdrawals from Educational IRAs

Income may change for year to year depending upon how the EFC was funded the year before. For instance, if the parents withdrew $10K from their IRA to pay for tuition, that withdrawal, while without tax penalty, is included in the income of the parents, and raises the EFC for the following year. However, $10K withdrawn from a 529 Plan is not included in the parent’s income and does not affect the EFC.

What is the expected contribution from student and parental assets?

Student Assets 35% (drops to 20% for 2007-2008 school year)
Parent Assets 2.6-5.64%

Student Assets:
Accounts & assets owned by the student, directly Custodial accounts UGMA/UTMA accounts Trust accounts Coverdell ESA / Education IRAs (may be changing) Savings Bonds in the student’s name

Parental Assets:
Taxable accounts & investments (non-retirement) 529 Plans (owners) 529 Plans inside a UGMA/UTMA for the child (as of 7/1/2006) Savings Bonds Investment real estate

Not Included:
Retirement Accounts (e.g., IRA, Roth IRA, 401(k), 403(b), pension) Equity in primary residence Life insurance Annuities Withdrawals from 529 Plans and Education IRAs 529 Plan if owner is not parent or student (e.g., grandparent)

Obviously, the most advantageous position is for assets to not be included in the calculation. Otherwise, you would want hold assets as parental assets, instead of student assets, to reduce the EFC.

What are other considerations?

Some schools perform their own calculations, and may include other assets, such as equity in the primary residence. Gift, estate, and generational-skipping tax considerations – for example, grandparents may need to transfer assets to the parents or student to reduce the grandparent’s future estate. Parents and grandparents may want to maintain control over assets by retaining ownership, or placing restrictions on the assets (such as through a trust). Accounts directly in the child’s name, custodial accounts, UGMA/UTMA, and some trust accounts, become under the child’s control at their age of majority (in California, at age 18). Parents should be wary of reducing their retirement savings to fund college. Various types of accounts have tax benefits, or penalties, for withdrawal to fund higher education expenses. Accounts have differing returns, risk, and fees, which may greatly affect their ability to fully fund college expenses. Funds inside a 529 Plan are subject to penalty and income tax if withdrawn for non-educational uses, with some exceptions. Multiple funding strategies may be used to take advantage of the varying options and benefits: for example, a 529 Plan to fund the first few years of college and an IRA to fund the final year.

Have you noticed that some people have all of the opportunities? They can get all of the different college scholarships? They are the people who have the best grades, because they do not need to work. It is hard when you have to work, and study just to get through high school. It makes getting the best grades difficult. It also makes being awarded with college scholarships almost impossible. Now you have an opportunity – College Scholarships For Minority Students

It does not matter if you are native American, Hispanic, African American, Asian or a woman, you have the opportunity to get a college scholarship as a minority group. You have the opportunity to get the college education that you deserve.

Some people are very lucky because they can afford a college education. They have the best grades and have a college fund that has been set up for them, since they were young. Some families do not have that option. That should not stop you from being able to attend college. That is why there are scholarships and grants for minority students have been started. They are there to give you the opportunity to get the college education that you deserve.

A good place to go to get all of the information on different scholarship opportunities is scholarship websites. You will find all of the information that you need so that you can get a college scholarship. By getting all the the information you need you are starting the process to get the college scholarships that you need, and that you deserve.

For many different people who will not go to college due to the cost of attending college it is gratifying to know there are different kinds of scholarships for students of minority groups. You don’t have to compete with the best students. Taking the first step to get the information is the first step in changing your life.

Going to college is a right for everyone. It does not matter who you are. Finding the money to pay for college is something that you can easily do. You just need to know where to look. With college scholarships for minority students, you can get the additional money you need to make your dreams of attending college become your reality. The time is now to change your life. The time is now to get the college scholarship that will give you the keys to your future. Louis Zhang, Collegescholarshipadvice dot com

Financially Challenged? There’s lots of free college information available online, and here are some of the most popular questions when it comes to student Financial Aid. Learn about the difference between grants, student loans and college scholarships and bank on your future!

What is Financial Aid? Financial aid is monetary aid to help you pay for your college education. Aid is made available from grants, college scholarships, student loans, and part-time employment from federal, state, institutional, and private sources. The types and amounts of aid awarded are determined by financial need, available funds, student classification, academic performance, and sometimes the timeliness of application. What is the FAFSA? FAFSA stands for Free Application for Federal Student Aid. The FAFSA is the Federal Department of education’s primary application for financial aid and is the gateway form to just about any other federal, state or private grants, college scholarships, student loans or college work study programs. The FAFSA form must be filled out each year between January 1 and March 10th (although some colleges have their own earlier deadlines) and can be completed online or by mail. Four to six weeks after you file the FAFSA (two to four weeks if you filed electronically), you will receive your Student Aid Report (SAR) which will contain a summary of the information you submitted on your FAFSA and presents your Expected Family contributions (EFC) which tells you the amount your family is expected to contribute towards your education. The amount of financial aid is then determined approximately by the tuition of your college subtracted by your EFC. If you do not receive the SAR within a reasonable amount of time, you can call the Federal Processor at 1-319-337-5665. Review the SAR carefully for errors. If necessary, make any corrections on Part 2 of the SAR and return it promptly to the address listed on the form. You will then be sent a new SAR with the changes made. What is the College Scholarship Services Profile (CSS Profile)? Some colleges also require you to fill out a College Scholarship Services Profile form in addition to the FAFSA. It is a secondary financial aid form that supplies further information about your family income. Be sure to check whether this form is necessary and about specific deadlines with your college directly. What is the difference between a Grant, a Student Loan and a College Scholarship? A grant is free money from government or non-profit organizations that does not need to be repaid. Grants are usually determined by financial need but can also be influenced by academic merit. Unlike grants, student loans are money loaned from an academic institution, financial institution, or federal government that must be repaid. Like a grant, a student scholarship is free money, but is generally offered through colleges, businesses, private individuals and outside sponsors. Those awarded by the college itself are often called MERIT AID. While grants tend to be issued according to financial need, college scholarships are awarded on a broad-base of criteria, the most common being academic merit. Furthermore, to receive any grants or loans you must complete a FAFSA, however, many scholarships may not require you to complete a FAFSA to be eligible. Instead, you may need to obtain application material directly from the donor of the scholarship. What are the different kinds of grants? There are federal as well as campus-based (institutional) grants. Federal Grants are free gift money from the Federal Department of Education while campus-based grants are government funds issued directly from your college. The campus-based grants provide a certain amount of funds for each participating school to administer each year. When the money for a program is gone, no more awards can be made from that program for that year, so make sure you find out about the types of grants awarded by each college you are considering as well as their specific deadline. Below are some of the most common grants. Federal Grants Pell Grants are considered a foundation of federal financial aid, to which aid from other federal and non-federal sources might be added. Pell Grants are usually only awarded to undergraduate students who have not earned a bachelor’s or a professional degree. The amount you get depends on your financial need, your college’s tuition, your status as a full-time or part-time student and your plans to attend school for a full academic year or less. The Academic Competitiveness Grant is a new grant available to first year college students who graduated from high school after January 1, 2006 or for second year college students who graduated from high school after January 1, 2005. Only students who are eligible for a Federal Pell Grant and who has successfully completed a rigorous high school program as determined by the state or local education agency and recognized by the Secretary of Education. An Academic Competitiveness Grant will provide up to $750 for the first year of undergraduate study and up to $1,300 for the second year of undergraduate study for full-time students who are eligible for a Federal Pell Grant. The National Science and Mathematics Access to Retain Talent Grant (AKA the National Smart Grant) is available during the third and fourth years of undergraduate study to full-time students who are eligible for the Federal Pell Grant and who are majoring in physical life, or computer sciences, mathematics, technology, or engineering or in a foreign language determined critical to national security. The student must have also maintained a cumulative grade point average (GPA) of at least 3. 0 in coursework required for the major. The National SMART Grant award is in addition to the student’s Pell Grant award. Campus-based Grants The Federal Supplemental Educational Opportunity Grant (FSEOG) The FSEOG is a campus-based grant aimed at assisting students with exceptional financial need. Pell Grant recipients with the lowest expected family contributions (EFCs) will be considered first for a FSEOG. You can receive between $100 and $4,000 a year depending on when you apply, your financial need, the funding at the school you are attending, and the policies of the financial aid office at your school. What are the different kinds of student loans? A student loan is money that needs to be repaid after you have completed your studies. Generally, interest rates are low- so that you do not rack up as much debt as you would with a credit card or bank loan. There are campus-based loans, which you repay directly to your college, as well as federal loans which you repay either directly to the U.S. government or to your financial institution. Campus-based LoansFederal Perkins Loan The Federal Perkins loan is a campus- based loan because it is administered directly by the financial aid office at each participating school. In other words, your school is the lender although the loan is made with government funds. Your school will either pay you directly or apply your loan to your school charges. You’ll receive the loan in at least two payments during the academic year. You can borrow up to $4,000 for each year of undergraduate study with a maximum of $20,000 for your entire undergraduate degree. The amount you receive depends on when you apply, your financial need and the funding level at your school. The Federal Perkins Loan is a low-interest , 5 % loan for students with exceptional financial need. You must repay this loan directly to your school and you have nine months to begin your repayment plan after you graduate. Generally you will make monthly payments to the school that loaned you the money over a 10 year period. Federal LoansThe U.S. Department of Education administers the Federal Family Education Loan (FFEL) Program and the William D. Ford Federal Direct Loan (Direct Loan) Program. Both the FFEL and Direct Loan programs consist of what are generally known as 1. Stafford Loans (for students) and 2. PLUS loans (for Parents). Schools generally participate in either the FFEL or Direct Loan program, but sometimes schools participate in both. For either type of loan, you must fill out FAFSA, after which your school will review the results and will review the results and will inform you about your loan eligibility. You also will have to sign a promissory note, a binding legal document that lists the conditions under which you’re borrowing, and the terms under which you agree to repay the loan. Stafford Loans Stafford loans are federal loans for students. Eligibility rules and loan amounts are identical under both the FFEL and Direct loan programs, but providers and repayment plans differ. For all Stafford loans first disbursed on or after July 1, 2006, the interest rate is fixed at 6. 8 percent. However, you can be considered for a subsidized loan, depending on your financial need, in which the government will pay (subsidize) the interest on your loan while you’re in school, for the first six months after you leave school and if you qualify to have your payments deferred. You might be able to borrow loan funds beyond your subsidized loan amount even if you don’t have demonstrated financial need. In that case, you’ll receive an unsubsidized loan. Your school will subtract the total of your other financial aid from your cost of attendance to determine whether you are eligible for an unsubsidized loan. Unlike a subsidized loan, you are responsible for you’re the interest from the time the loan is disbursed until the time it is repaid in full. After you graduate, you will have a six month ‘grace-period’ before you must begin repayment. During this period of time, you’ll receive repayment information, and you’ll be notified of your first payment due date. You are responsible for beginning repayment on time, even if you don’t receive this information. You will receive more detailed information on your repayment options during entrance and exit counselling sessions provided by your school. Federal Family Education Loan (FFEL)Funds from your FFEL will come from a bank, credit union or other lender that participates in the program. Schools that participate in the FFEL program, will usually have a list of preferred lenders. Student loan borrowers may choose a lender from that list, or choose a different lender they prefer. Your loan money must first be applied to pay for tuition and fees, room and board and other school charges. If money remains, you’ll receive the funds by cheque or in cash. Besides interests, you will pay a fee of up to 4 % of the loan, deducted proportionately from each loan disbursement. For a FFEL Stafford Loan, a portion of this fee goes to the federal government, and a portion goes to the guaranty agency (the organization that administers the FFEL Program in your state) to help reduce the cost of your loans. Direct LoanUnder the direct loan program, the funds for your loan come directly from the federal government and you will need to repay your Direct Loan to the U.S. Department of Education’s Direct Loan Servicing Center. Like the FFEL loan, you will pay a fee of up to 4 % of the loan. For a direct Stafford Loan, the entire fee goes to the government to help reduce the cost of the loans. PLUS Loans (Parent Loans)Parents can borrow a PLUS Loan to help pay your education expenses if you are a dependent undergraduate student enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the Direct Loan Program. Your parents can get either loan, but not both, for you during the same enrolment period. They must also have an acceptable credit history. For a Direct PLUS Loan, your parents must complete a Direct PLUS Loan application and promissory note, contained in a single form that you get from your school’s financial aid office. For a FFEL PLUS Loan, your parents must complete and submit a PLUS Loan application available from your school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.



What are the different kinds of scholarships? Scholarships are awarded on a broad-base of criteria, the most common being academic merit. Many scholarships carry conditions besides academic merit, such as financial need, affiliation with a group-, leadership, athletic talent, artistic or musical ability etc. Some scholarships are awarded by the college itself, often called MERIT AID. Other scholarships are awarded by outside sponsors. For some scholarships, you need to be nominated. For most of them, you apply directly to a sponsor. Because there are so many different types of scholarships, you should check directly with your financial aid office at your college. Can I apply for a grant, a loan and a scholarship at the same time? Yes. You can team up different types of financial aid or simply have one kind. Nevertheless, some types of financial aid are contingent on others. For example, you can only receive an Academic Competitive Grant or a Federal Supplemental Educational Opportunity Grant if you have received a Pell Grant. While you cannot team up a FFEL loan with a direct loan, you may be eligible to receive a subsidized loan (in which the interest is paid by the government) and an unsubsidized loan (in which you are responsible for the interest) at the same time. You can also combine grants with loans and scholarships, so it never hurts to try to get as many different varieties of aid as possible!What is the Federal Work Study Program? The Federal Work-Study Program (FWS) is a campus-based program that provides part-time jobs for undergraduate and graduate students with financial need, that allows them to earn money to help pay education expenses. The program encourages community service work and work related to the recipient’s course of study. How often should I apply for financial aid? You will need to apply for financial aid each year. Even if you did not qualify this year, you should reapply next year since financial circumstances can change. The number of family members in college, for example can have a big impact on your eligibility for financial aid. If you submitted a FAFSA during the previous year, you may be able to complete the shorter Renewal FAFSA form instead. The renewal FAFSA will be mailed to your home. The renewal FAFSA preprints most of your answers from the previous year’s FAFSA. Verify that the old responses are still accurate and provide corrections or new answers where appropriate. If you don’t receive a renewal FAFSA by February 15, fill out a new FAFSA form. How do I know whether I am eligible for financial aid? Don’t assume that you will not qualify for financial aid. Nearly all U.S. citizens or eligible non-citizens enrolled at least half the time are now eligible for some form of financial aid. Even if you don’t qualify for a grant, free college info is still available, and you may still be eligible for other forms of financial assistance. Many families don’t apply for financial aid, because they believe that they earn too much money. However, you don’t need to be from a low-income family to receive financial aid. Some loans and scholarships are available regardless of need. Many factors are used to determine your eligibility for financial aid and there is no simple cut-off base on income. You can’t get aid unless you apply!!

CampusCompare facilitates the college search and selection process by providing free information, student college reviews, and interactive media, connecting students to over 3000 colleges. Its helpful tools include the What Are My Chances tool and the Financial Aid Calculator to help students in the “match me with a college” process.



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There is good news for Hispanic families on a budget searching for a way to pay for higher education costs: College bound Hispanics can benefit from increasing scholarship opportunities. This year, Hispanic students have a wealth of scholarship options. Just as frenzied students are selecting college programs or planning their return to school, many Hispanic organizations are announcing scholarship funding programs and guidelines for the school year beginning this fall.

Offering scholarships to minority and disadvantaged students has gained popularity. Corporate giants like CNN, Coors, General Motors, Lockheed Martin, MasterCard, NASCAR, Office Depot, Sallie Mae, Time Warner and Wachovia are among the companies providing scholarships to Hispanic students this year. Why are these do-gooders dedicating thousands of dollars to Latino scholarships and what can other companies learn from them?

While each one of these companies may have more than one reason to support existing Hispanic scholarship programs established by Latino organizations such as the Hispanic Association of Colleges and Universities, National Association of Hispanic Journalists, Hispanic College Fund and Hispanic Scholarship Fund, most benefit from the positive community and public relations results the programs generate.

Over the years, Latino consumers have become increasingly acculturated into mainstream America. Some have gained positions of influence in the public and private sectors and most have become more sophisticated consumers. Part of the process has resulted in the realization for some that they have been neglected and even mistreated by many companies that ever since the 2000 Census target them as consumers for their products and services.

At the same time, marketers and communicators have begun to wise up to the growth and potential of the Latino markets with many keeping their eye on of the future prize of the rapidly growing Hispanic buying power, estimated by The Multicultural Economy, 1990-2009, report from the Selig Center for Economic Growth to near $700 billion a year. Scholarship programs are a relatively inexpensive means of generating good will among future consumers of their products and services. At the same time, the recipients of the scholarships may also become members of their future workforce.

There are critics who argue that in some cases the scholarships are too few in relation to the total number of students in need. And that they are the direct result of criticism of exclusionary policies that have denied Latinos their fair share of the American pie. That may very well be true. And yet, more students than before are benefiting from scholarship programs. As they graduate and join America’s working hordes, they too will impact the future and perhaps generate additional programs.

The good news is that this results in opportunities for Hispanics students and benefits the donors in multiple ways. The impact is immediate as Latino communities and leaders become aware of the programs. There are also long term effects as the recipients go to school and eventually graduate with an appreciation toward the company that made it possible, in part, for them to complete their studies.

At the same time the Internet has made scholarship hunting much easier and possible for many students who a few years ago would have been limited to their school counselor’s advice and other local resources. The generation entering America’s colleges and universities has better access to online resources, including information on scholarships and who funds them, than any other before it. Smart companies are banking on the benefits by putting their money where their corporate mouths are and funding Latino scholarships. And equally smart Latino students are taking advantage of the increasing opportunities.