New Skills for a New Age

Stepping outside the realm of the three R's a recent edition of Edutopia magazine included an article "New Skills for a New Age," that offers a perfect answer to the question: What skills do the futurists suggest a student must master to succeed?


Students throughout their education experience, from pre-K through higher education, need to learn the following Learn/Create/Collaborate skills to succeed in both education and the workplace.

Learn:
1. Access, evaluate and use different forms of information
2. Exercise critical thinking
3. Evaluate fluency with tech tools

Create:
1. Use various forms of media when presenting ideas
2. Display originality
3. Employ problem-solving skills

Collaborate:
1. Work successfully as a team
2. Demonstrate cross-culture awareness
3. Communicate complex ideas effectively

Students can use the skills they have experienced as a guide in preparing a resume and should be able to elaborate these accomplishments by using concrete example in a job interview.

NICCP

Equity-Indexed Annuities

Equity Indexed Annuities (EIA) can be used to diversify a retirement portfolio. An EIA is a type of tax-deferred annuity whose credit interest is linked to an equity index such as the S&P 500. It guarantees a minimum interest rate (typically less then 3%) and protects against loss of principle. An EIA is a contract with an insurance or annuity company.

The returns maybe higher then a fixed instrument such as CD's, money market accounts and bonds but not as high as market returns. EIA's are not FDIC insured and our subject to risk of default by the insurance company.

Let assume that the S&P 500 at the beginning of your investment was at 1000. It is currently around 825 but for the sake of this example, we will use 1000. Let us compare the difference between investing directly into a S&P 500 mutual fund and a EIA.

If the S&P 500 was to go up 20% to 1200 in the 1st year on a $100,000 investment your value would be $120,000. In this example, the EIA is guaranteed to never lose your principle can only credit your investment with 50% of the real market gains. So the value of the EIA at the end of one year would be locked in at $110,000. Please note that some EIA's have caps higher than 50% others might be lower.

Now, let 's say the market goes up the second year by another 20% to 1440. The value of your account would be $144,000. The EIA, because the principle and any gains once locked in at the end of the year are guaranteed, can only credit you 50% of the actual gain. So, the EIA would give you a value of $121,000.

Now let's assume the market takes a 21% loss from the 2nd to the 3rd year your investment would be $113,760. Because your EIA guarantees that you will never lose your principle or any gain that has been locked in at the end of any one year, the value of the EIA at the end of the same period would be $121,000

It is because the market has down turns like this that people end up losing money investing directly into the market with all of their money. Having a portion of your portfolio in EIA's can help take some the risks away of the down turns of the markets


NACFA

Targeting 529 Plans

According to the Kiplinger's Washington Editors, the IRS will clamp down on 529 plans this year and issue regulations that will target abuses. Under the microscope: putting as much as $120,000 into accounts for different people, then quickly changing the beneficiary on all of the accounts to one individual. And another ploy. . stuffing a lot of money into a 529 plan and later using the funds to pay for retirement. That allows contributors to circumvent the pay-in-ceiling and distribution requirements that apply to qualified retirement plans.

NICCP

What You "Must Know" About Financial Aid

Arlina DeNardo director of financial aid at Lafayette College and Carolyn Lindley director at Northwestern University presented their list of "must know" information at a recent College Board Conference. This is what they say parents, counselors and students should know about financial aid:

1) Every student should apply for aid --- regardless of family income. The financial-aid office needs the Free Application for Federal Student Aid or FAFSA to process a loan, even for students who don't qualify for need-based aid. And, if a student's financial situation changes, the financial-aid office cannot offer aid without that form.

2) Deadlines matter. Students have to apply for aid each year, and they must do so on time. First-year students need to understand that different colleges may have different deadlines.

3) All aid applications are not the same. All colleges require the FAFSA. About 250 colleges require a CSS/Financial Aid Profile, a form that asks for more information than is included on the federal form. State grants (not CA) and outside scholarships may also require additional paperwork. (For information about the Profile go to www.collegelboard.com/parents/pay.)

4) Students should know what colleges mean by "family contribution" (EFC). This figure is what a college determines a family can contribute based on the FAFSA, sometimes combined with information for a CSS/Financial Aid Profile. The dollar amount is not necessarily what the family will pay, since students don't all spend the same amount of money on items like housing. It could also vary from college to college. For example, some financial-aid offices will add in an expected contribution from a student's summer earnings.

5) Students should be aware of what is included in the cost of attendance. This figure includes tuition, fees, housing, and indirect costs like books, supplies, and transportation. The actual cost paid for some of these items will vary from student to student.

6) Eligibility and need aren't always the same. If a student meets the criteria for a federal Pell Grant, the college has to award it. But the college may determine that a student who is eligible for a Pell Grant on paper doesn't demonstrate the level of need to get other institutional need-based aid.

7) There is a big difference between need-based aid and merit aid. Merit aid is almost always tied to academic performance, and some is tied to specific criteria like having a certain major or being from a certain part of the country. Need-based aid is determined solely from families' documented financial situations.

8) There are different forms of aid. Students can receive federal, state and institutional aid. Aid can come in the form of grants, loans, or work. And yes, financial-aid offices view loans as a form of aid.

9) Award letters vary. Be sure to note whether aid is in the form of grants or loans and whether it is renewable from year to year.

10) Award letters can be appealed. If a family knows or expects its financial situation will change, it should talk it over with the financial-aid office. Most offices can help a family with special circumstances --- an issue many expect to see happened more in a year like this one.

Chroncile of Higher Education

Government To Take Over Retirement Plans?

The three major risks of retirement plans are a stock market collapse, outliving money and steep inflation. A little common sense is all that is required to understand The College Plan approach to solving this problem. Think of your retirement as if its has three buckets to fill, one for home equity to fight inflation, a second for guaranteed income to soften the blow of a market collapse and insure monthly income for life and a third bucket to build your nest egg.

The Democratic led House Education and Labor Committee is considering a much more radical approach. Their plan takes over your retirement plan starting with your account balance as of August before the stock market crash. All workers would receive a $600 annual inflation-adjusted subsidy from the government but would be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested into special government bonds that would pay 3% a year adjusted for inflation.

This plan would build the guaranteed income bucket. The current proposal would however, eliminate other tax incentives which would make it more difficult to build your nest egg. Home equity is not included as part of the plan.

Homer Sweeney

Get Out of High School Two Years Early?

The state of New Hampshire is currently studying a proposal that would allow students to leave high school after completing their sophomore year. Students who pass a very vigorous set of exams would be allowed to move on to the Community College to complete their high school requirements and start college courses. College could be completed in a shorter period time potentially saving parents thousands of dollars.

Homer Sweeney

College Cost Shock!

College prices rose slightly faster than inflation during the 2008-09 school year. This is shocking news for those who have followed college costs for years. Normally the increase is double and many times triple the rate of inflation.

During the 2008-09 school year tuition and fees rose on average from 4.5% to 6.5% for various types of institutions. In California, Cal State East Bay rose 3.9%, Cal Poly SLO 7.5%, UCLA 7.3%, San Jose State 9.9%, UC Davis 6.5%, USC 5.8%, Stanford 3.5% and Santa Clara University 5.9%. These increases do not include room and board and other indirect costs.

Homer Sweeney

Sources of Student Aid

Student Financial Aid for the current 2008-09 school year came from following sources:

Federal Loans 41%
University Grants /Scholarships 21%
Pell Grants 14%
Private and Employer Grants 7%
State Grants 7%
Education Tax Credits and Deductions 3%
Miscellaneous federal grants 3%
Federal Work Study 1%

The Chronicle of Higher Education

What Is The Difference Between A Scholarship And A Grant?

In the language of admission and financial aid offers, a scholarship and a grant are basically the same thing. Each is considered "gift aid" which means they do not need to be paid back. However, this doesn't mean there aren't some "strings" attached. Many scholarships and grants require the recipient to focus study in a particular major. Others have a grade average requirement to keep the scholarship or grant over the college experience. Students need to make certain they know the conditions under which they accept and can maintain gift aid.

NICCP

College Savers Stuck?

While parent's invested in 529 plans were wondering how they were going to pay for college a Wall Street Journal article directed at these investors said "Don't Panic!" However, no guaranteed solutions were provided. Keep your options open the article suggested and make sure that you are in a position not to miss out on future stock market gains. The big question is when will these gains come. Is there enough time? College savings is usually accomplished in a relatively short period time. It took the stock market 25 years to recover from 1929. On September 3, 1929 it hit a high of 381. On July 8, 1932 the low was 41. It took until November of 1956 for the market to reach 381 again.

With 529 plans, investors put after-tax dollars into an account that typically offers a range of mutual funds and other investments. Distributions and earning are tax free, as long as they're used for qualified higher education expenses.

The College Plan uses a different approach on how to best pay for college. It is called the Fillmore Hill Plan. In the decades prior to the early 40's, counter balance cars (1/2 trolley car and 1/2 cable car) took passengers up and down San Francisco's Fillmore Street. One car would go down so another car could come up the other side. This college savings program works in a similar manner. Using the Money Merge Account system, the mortgage balance goes down at an accelerated pace while equity goes up at a much quicker rate because less interest is being paid. The goal of the program is to pay off the mortgage prior to start of college so that the dollars that paid the monthly mortgage can be used for college. If this is not possible because of the lack of time, additional strategies may be used if financially feasible.

Homer Sweeney

How Much Is A Trillion?

It is hard to imagine that the financial system will return to the way it was before this present crisis in which $8.4 trillion has been lost in the stock market. According to a report released by the Urban Institute, a nonprofit research and educational group, in the year ended September 30, 2008, retirement accounts in the United States had lost 18.3% or $1.6 trillion of their value from September 30, 2007. If you start to think about a trillion dollars, it's nothing short of mind-blowing.

Imagine a $1.00 bill, the one with George Washington's picture on it.
* A stack of $1.00 bills 1 inch high would be worth $250.
* A stack of $1.00 bills 4 inches high would be worth $1,000
* A stack of $1.00 bills 4,000 inches high would be worth 1 million dollars
* A stack of $1.00 bills 4 million inches (63 miles) high would be worth $1 billion
* A stack of $1.00 bills 4 billion inches (63,131 miles) high would be $1 trillion.
If you broke this stack into smaller ones, you could have 11,480 stacks as high as Mount Everest.

Early Decision vs. Early Action

As one applies to college, something that may come up is Early Decision and Early Action. Be sure to know the deadlines and how each college defines these terms. Typically they are defined as follows:

Early Decision:
* Your absolutely agree to attend that college if accepted
* You may only apply to one college in the method of Early Decision
* You apply in October or November and receive an answer in December
* You may apply to other colleges under the regular process
* If accepted, you must withdraw all other applications from other schools
* You will typically be required to give a nonrefundable deposit by May

Early Action:
* Similar to Early Decision, however, not binding
* Apply in October or November and receive an answer by December
* If accepted, you may commit then or in the Spring
* May apply to other colleges under Early Action as well
* May apply to other colleges under regular admissions process.

NICCP

What Admissions Counselors Expect To See At Colleges That Accept Less Than 30%

The ten most important things that admission counselors expect to see at colleges that accept less then 30% of their applicants are as follows:

1. High level of performance from freshman year on: Develop strong academic, language, mathematics and critical thinking skills by taking challenging courses showing consistent improvement and classroom participation. No senioritis.

2. Strong standardized test results: i.e. SAT 1 - 2100+, ACT 32+

3. All AP Classes: Applicants will have been expected to have taken all available AP courses. Test scores should be at 4 --- preferably 5.

4. Meaningful Extra Curricular Activities: One maybe two activities that the student has shown serious interest and ability pursuing is very helpful to round out the application. Ideal activities will show strong leadership, follow through and organizational and /or creative talent as well as purpose and breadth.

5.Well Written Essays: This is called on many applications the "Personal Statement" for a reason. The ideal essay would leave the reader with a desire to meet the applicant. It is an opportunity to let the admissions counselor know something personal about the applicant. For assistance contact Kristine Fox at krisfox@verizon.net. UC assistance http://www.ucgateways.org/

6.. Interesting Interviews: Admissions counselors will play down the importance of these interviews in the final decision. Don't you believe it. Make sure the student has researched the school policies, curriculum and academic profile. Be well dressed but do not over do it. Have questions ready that are preferably related to their possible area of academic concentration.

7. Flawless Applications: How questions are answered in the applications are crucial! This is where bright applicants in a rush to meet a deadline and "get through with it all;" respond too hastily to important questions.

8. Personal Factors: This is the admissions counselor effort to diversify the student body and construct a class that will have a particular geographic, ethnic, social economic and talent mix.

9. Demonstrate Interest: The DI could begin way back in the first half of the junior year. We encourage personal communication between the student (not mom) and the college as early as the last half of the junior year. Students should not over do it. Nor should they email queries to colleges that are easily learned on the college's website.

10. The "hook": When all else fails, this could be an applicants saving grace. It could be an exceptional accomplishment, athletic skill, musical talent or a wealthy relative who needs a good reason to gift the old Ivy Tower.

Eric Goodhart
Smart College Planning

$28 Million in Cuts for UC Berkeley

The Wall Street Journal reports that according to administration officials the University of California, Berkeley faces $28 million in cuts or unavoidable cost increases for the academic year that began in July. But the real bad news is that starting in July of 2009, the faculty and staff have been told to expect to make contributions to their pension funds for the first time since 1990. Can you imagine contributing to your own retirement fund? Things can't get much worse!

Homer Sweeney

The Bailout

There is, in any commerically advanced country, three layers of debt, government debt, the debt of banks and businesses, and finally, private consumer debt (e.g. your mortgage, student loans, car loans, credit cards, etc). The bailout legislation simply transfers the debt problem from the banks and businesses to the government. The printing presses will be working overtime meaning that your money will be worth less. It's called the hidden tax. Even sharing in 5% of "Joe the Plumber's" profits will not be enough. The government is not going to bail you out. Getting out of debt is going to be your responsibility. How long will take you? Will you be debt free by the time you retire? Is the Money Merge Account for you? Start planning now. Don't wait! Get a free analysis today.

Homer Sweeney

This Date in History

October 13, 2008 is the 91st anniversary of "Miracle of the Sun" which was the basis for a 1950 Warner Brothers film. Can you name this picture? Homer Sweeney

The 3b Approach to Retirement

Last week the first question asked at the "town hall" presidential debate was about individual retirement accounts. Neither candidate came close to answering the question. If I was a candidate here is how I would have replied.

Individuals are responsible for their own retirement. Government helps by providing tax incentives to encourage investing. The financial industry has provided a variety of ways to accumulate funds for retirement during your working years. However, the potential dangers and pitfalls have not been communicated very well as witnessed by the reaction to the current stock market decline. There are three major risks that could cause havoc with your retirement account.

1) Sharp decline in the stock market for those near retirement or retired.
2) Expanded life spans. If you live longer, your money needs to last longer, too.
3) Steep inflation.

With these three risks in mind, it's important to carefully and thoroughly review your approach to retirement. One simple method suggested is called the 3b or 3Bucket Approach. The goal is fill each of the three buckets:

1) Build Your Home Equity Bucket by paying off your mortgage a quickly as possible. This can be accomplished by using the Money Merge Account program which allows people to pay off their mortgages in a shorter period of time without any increase in payments of change of lifestyle. Once paid off this money can be used to further build your nest egg and guaranteed income buckets. Owning your home free and clear during retirement provides great protection against inflation and unexpected financial emergencies.

2) Build Your Guaranteed Income. Social Security provides a base for guarantee income. Is it enough for you? Or do you need to build this bucket? This bucket will provide income for life for you and spouse and lessen the dependence on the nest egg bucket.

3) Build Your Nest Egg Bucket. The financial experts suggest that you continue to contribute to your 401(k) and IRA as the law allows. The theory being that your monthly contributions will buy much more now with the market depressed and when market rises again it will carry many more stocks or units with higher value so that over time you will recover your losses.

The market drop devastated millions of Americans because they counted too heavily on their 401(k)s. Build your home equity and guarantee income buckets then in future market drops your retirement will be hurt but will not be devastated.

Homer Sweeney

A Sure Fire Mistake That Can Reject Your Application

The advent of e-mail has probably made communicating with colleges too convenient. Schools are getting deluged with questions that the answers can easily be found on the website. By asking these types of questions shows that you have not done your research about the college and can leave the impression with the admissions counselor that you are not really that interested in attending.

One way to avoid making this type of mistake is to print out all the Frequently Asked Questions you come across on the website. They can be found in admissions, financial aid, academics and just about any other section of the college website. File these FAQs in a folder that you have set up for college information and then review them before asking a question via e-mail or phone.

Homer Sweeney

Reasons For Selecting A College

Current college freshman are more concerned about academic quality and affordability than they have been in decades. Sixty-three percent of students said academic reputation was a very important factor in selecting a college, an increase of 5.6 percent points from 2006. Thirty-nine percent cited financial-aid offers as key in their selections, a rise of 5.1 percentage points. And 52 percent listed "graduates get good jobs" as a top reason for their college choices, up 2.6 percentage points.

More than 270,000 freshmen at four-year institutions completed the annual survey conducted by the Higher Education Research Institute at UCLA.

Like To Play With Rocks? Here's A Major For You!

With energy prices soaring and many oil company employees retiring soon, petroleum-engineering graduates are in demand. Top ranking petroleum-engineering graduates this year can expect starting pay of $80,000 - $110,000 plus signing bonuses and other benefits. Geologists, the people who study rock formations in search of oil, also have seen their starting salaries rise. The average starting salary for a geologist fresh out of school is $81,300 up 48% in five years from $55,000 in 2003.

Stanford Boosts Financial Aid

Stanford joined many other elite universities to boost financial aid to middle and upper-middle-class families.

A summary to the new provisions:
1) Parents earning under $100,000 don't pay tuition.
2) Those earning under $60,000 don't make any contribution to the cost of the child's education which means free room and board.
3) Loans eliminated from financial aid packages.
4) Amount of home equity considered in needs assessment capped at 1.2 times annual income.

Student Loans Hit By Subprime Woes

The recent sub prime mortgage crisis will soon effect students who rely on college loans, according to a recent report by financial aid guide FinAid. Furthermore, all student borrowers, not just sub prime borrowers, will see tighter lending methods.

Some problems could be the need for higher credit scores to get student loans along with higher interest rates on those loans. Major lenders will become more selective when granting loans.

As early as last July, student loans and other asset-backed securities felt the sub prime market's effects along with the mortgage world. Investors are becoming skeptical of the rising number of default and foreclosure rates.

Also, lender subsidy reductions as a part of the College Cost Reduction and Access Act passed in 2007 have made federal and private education loans less profitable for lenders. This will likely cause lenders to pass this burden on to the borrowers.

Expected changes from this sub prime crisis are:
1) Overall private student loan interest rates will be dramatically higher.
2) To qualify for a private student loan, a borrower will need to have a credit score of at least 650, a jump from the previous 620.
3) An elimination of borrower benefits.
4) An increase in minimum balance requirements for loan consolidation.

According to FinAid, you may also expect several changes to federal student loan policies. Expect that loan consolidation will be discouraged, maximum balances for loan consolidation will increase upwards to around $10,000, and loan discounts will be reduced.

Recently investors have been walking away from investing in student loans which means a drought will be forthcoming this fall in relation to the availability of student loans. Lenders are also expected to focus most of their marketing on private student loans and away from federal loans, costing borrowers more.

Keith Landis

Is Your House Paid For?

One family with two young children ages 6 and 9 had 301 months remaining on their 30 year mortgage. Using the MMA system they are now on schedule to be free and clear of all debt in 8.8 years or 105.6 months. They will free up over $21,000 a year to pay for college and increase their retirement savings.

This was accomplished without refinancing, with little or no change in their household budget and without increasing their minimum required monthly mortgage payment.

Do you want to know if you qualify for a system like this? Send an e-mail to homersweeney@yahoo.com. Qualification process takes about 15 minutes.

Homer Sweeney

Income Tax Help

The CPA firm of Darvis and Petersen have saved families thousands of dollars in taxes because they are experts in college related tax deductions. Rick Darvis is frequently quoted in the Wall Street Journal and other national publications and recently served as a consultant for the new Microsoft program on how to pay for college.

Here's how the program works:
- You complete a three page questionnaire and provide the firm with a copy of your most recent 1040.
- The company will run a tax opportunity report for you and explain it to you. Cost is $195.
- You can either then take the tax ideas to your current CPA or switch to Darvis and Petersen.

For additional information contact Casey Petersen at (406) 765-2030 or e-mail him at cpcpa@nemontel.net.

Homer Sweeney

FAFSA: Selected for Verification

If your report has been selected for verification, page one of the SAR will have a message that states, "you will be asked by your school(s) to provide copies of certain financial documents." This means that you will be expected to provide supporting documentation for the information on your FAFSA such as signed copies of your 1040, W-2 and 1099 forms. Instructions on the SAR explain how to do this.

Verification is a process to confirm information you provided on the FAFSA. The US Department of Education selects some FAFSAs for verification. Others are selected by schools due to discrepancies in their data.

These are the main reasons for being selected:
- You were chosen randomly
- The FAFSA you submitted was incomplete
- Your FAFSA contains estimated information
- The data you provided on the FAFSA is inconsistent.

Verification ensures that the information students and parents report is accurate. Verification prevents ineligible students from receiving aid by reporting false information and ensures that eligible students receive all the aid for which they are qualified.

The sooner you verify your information, the sooner you'll be able to receive financial aid if you're eligible.

SallieMae

Reviewing Your Student Aid Report (SAR)

Your SAR summarizes the data from your FAFSA and indicates your official Expected Family Contribution (EFC).

You'll receive one of the following within a few day (if you filed your FAFSA electronically) two to four weeks (if you mailed a paper FAFSA).

- Student Aid Report (SAR) if you applied using the paper FAFSA and did not provide a valid e-mail address or
- SAR Information Acknowledgment, if you applied using FAFSA on the WEB but did not provide a valid e-mail address or
- An e-mail with a secure line to access your SAR online, if you provided a valid e-mail address when you applied.

After receiving your SAR, carefully check it for mistakes. Compare the information listed on the SAR to a copy of your FAFSA, since the EFC listed on your SAR will determine the amount of aid you are eligible to receive.

If you believe your information is incorrect, you can fix any mistakes by writing the correct answers on the Information Review Form that is on the back of the SAR. When the Information Review Form is complete, you can:
- Contact your financial aid office to see if the school can send the corrections electronically, or
- Mail the form to the address designated on the SAR.

To make your SAR available to more schools for free follow the directions on the SAR.

SallieMae

Who Gives National Merit Scholarships?

A relatively few of the 8,262 National Merit Scholar finalists from the class of 2007 will receive scholarships offered by the National Merit Corporation and other sponsoring corporations. The vast majority of scholarships are awarded by participating universities. The schools with highest number of finalist enrolled are listed below. The number shown in parenthesis ( ) indicates how many of these national merit scholarships were paid by the universities.

The top five universities with most enrollees for the 2007-08 school year:
Harvard University 285 (0)
University of Texas at Austin 283 (232)
Northwestern University 249 (186)
University of Southern California 231 (195)
Washington University of St. Louis 204 (154)

Other California universities enrolling more than twenty finalists:
Stanford University 164 (0)
Harvey Mudd College 68 (52)
University of California, Berkeley 60 (0)
Cal Tech 36 (0)
UCLA 28 (0)

Ten additional universities awarding National Merit Scholarships:
University of Chicago 196 (156)
University of Oklahoma 175 (137)
Texas A & M at College Station 173 (134)
Vanderbilt University 172 (116)
University of Florida 168 (132)
North Carolina at Chapel Hill 166 (127)
New York University 159 (137)
Rice University 159 (95)
Arizona State University 150 (127)
The Ohio State University 118 (93)

Figures provided by National Merit Scholarship Corporation

Increased Grants Equals More Competition

College endowments keep growing at the rate of 17% - 30% a year while tuition continues to increase. This has angered Congress. Many elite colleges with large endowments of over $1 billion have responded by increasing their financial aid offerings to include more grants and less loans. Yale recently said undergraduates whose families earn between $60,000 and $120,000 will typically pay between 1% and 10% of their income to attend. Dartmouth College announced that it would eliminate tuition for students from families with income less than $75,000, a rather small concession when compared to other recently announced grant increases. Will these changes satisfy Congress? Private foundations are required by law to spend 5% minimum annual payout whereas colleges are typically spending a little over 4%. Congress wants these colleges to reduce their hoarding and to spend a least 5% of their endowments to assist current students.

For some families these grant increases will make elite schools more affordable. They will cost less then many public colleges and almost all privates. The results will be more qualified applicants added to an already very talented pool. Princeton rejects more than 90 per cent of their applicants, Stanford 89.7%. Harvard turned down 1,100 students who scored a perfect 800 on the math portion of the SAT while Yale reported rejecting several students who scored a 2400 on the SAT.

Homer Sweeney

Changes for 2008

The College Plan has been in business since 1992. During these 16 years we've changed focus as the need presented itself always looking for new ways to better serve our clients. In the beginning we concentrated on admissions and financial aid forms. As college costs became a greater issue we counseled parents and students on how to keep cost down with good planning and to graduate in four years.

In the late 90's we developed strategies and worked with parents on how best to pay for college. Mortgage rates dropped which allowed many families to refinance in order to obtain funds for college. Rates increased and new strategies were needed.

Recently we discovered a new plan that utilizes bank strategies which have been around for decades. It allows qualified home owners to potentially pay off their mortgages in 1/3 to 1/2 regular time with little or no change to their day to day spending habits and without increasing their minimum regular monthly mortgage payments or refinancing.

It came as no surprise that every homeowner was a potential client because we could show them how they could save thousands if not hundreds of thousands of dollars in interest. We thought about eliminating college planing but we quickly learned that this new revolutionary plan was the best way to save for college and a very efficient and cost savings way to pay off college and current debt in order to be better prepared financially for retirement.

This site is titled nocollegeloans@blogsport.com for a reason. With this new plan the goal of our planning is not to have any college loans. It will serve as our main channel of communications. You will be notified by e-mail once or twice month when new information is available on the site. The College Planning News and the TuitionRx website have been eliminated because of costs and philosophical differences.

If you need assistance have questions or wish to be dropped from our list e-mail me at homersweeney@yahoo.com.

Homer Sweeney

Home Equity . . . Appeal It and Repeal It!

Many private colleges are starting to give breaks to homeowners by using more generous financial aid calculations that is expected to reduce the expected contributions for families whose homes have appreciated. Unlike past aid efforts, which mainly helped financially needed students, the latest moves also stand to benefit more affluent families.

Some universities in the past have counted the market value of the home up to 2.4 times the family income. Other schools have been counting home equity and cap that at 1.2 times income. Stanford University said it would begin capping the amount of home equity assessed in the calculation of a parental contribution to 1.5 times the family income.

Harvard University announced recently that they would not count home equity in their formula. It's about time! Home equity probably never should have been counted in the first place at this Ivy League school or any other college in the country.

A family owns their home with a value of over $800,000 free and clear. The equity can be used to sell and buy another home or it can be very helpful during retirement if one decides to take a reverse mortgage. However, using home equity to pay for college is very expensive.

Home equity is not the same as having a savings account with a bank. You can't go to the bank and say I have $800,000 in equity please give me $150,000. To use equity one must borrow from the bank. A family takes out a $150,000 30 year 6% mortgage with monthly payments of $899.33 to cover the cost of college. Over the course of the loan they would pay $173,757 in interest making the total cost of $323,757 more then double the original amount.

Instead of holding the property for thirty years the family decides to sell after ten years. They would still owe $125,529 on their $150,000 loan after making $107,920 in payments. During the past decade very small equity growth like the $24,471 in this situation has gone relatively unnoticed because of triple digit appreciation. This is not the case today. Home values have dropped. Real estate prices could remain stagnant for some time to come.

If you are taxed by a college because you have a large amount of home equity you would have a strong case to appeal using similar evidence as provided above and asking how they can justify it today.

Are 529 Plans Counted On The FAFSA?

A 529 Plan owned by the student will not be included as an asset on the FAFSA for the 2008-09 school year. Beginning in 2009-2010, student owned 529s will be assessed at the parent's asset rate. 529s owned by the parent with the student as the beneficiary are currently treated as a parent asset and will continue to be.

Contributed by the NICCP

Financial Aid --- More Grants and Less Loans

Harvard University recently announced that it will eliminate student loans and ask families with salaries between $120,000 and $180,000 to pay no more then 10 percent of their income and charge its neediest student nothing. That's the good news!

The bad news is that competition for admissions will be even tougher. Many qualified students who did not apply in the past because of the high cost will now apply since many will be able to attend the Ivy League school for less then a U.C.

Duke University also said it would reduce loans for students with family incomes up to $100,000 and cap loans on wealthier ones. Swarthmore College said they would replace loans with grants for all students. Yale will announce its new financial aid plan later this month. Furthermore the "The College Planning News" reports that California private colleges, such as Cal Tech, Pomona and California Lutheran University will begin matching the college tuition for students who were also admitted to California public universities.

Fresno State University will reinstate women's swimming and diving teams and add a new sport of Women's Lacrosse for the 2008-09 school year which will provide a few more athletic scholarships.

Homer Sweeney

Some Financial Aid Basics

EVERYONE SHOULD APPLY
No matter your financial situation, you should always apply for financial aid. Nearly every U.S. citizen is eligible for some form of financial aid including, subsidized-interest federal student loans, regardless of income. Additionally, all families should file for federal financial aid because some colleges and universities will not consider a student for institutional aid unless a federal application form is on file.

ATTENDING AN EXPENSIVE SCHOOL
Attending an expensive school might actually mean that a family will qualify for more aid than if the student attended a lower-cost institution. That is why it is important to choose a college based on academic interest and ability, and not on finances.

TYPES OF FINANCIAL AID
There are two basic types of financial aid; gift aid and self-help aid. Gift aid includes grants, which are determined by your financial need and scholarships, which are usually based on academic performance. For graduate students, there are fellowships, which are based on merit. Self-help aid includes subsidized interest loans, which must be repaid, and government work-study programs.

GETTING STARTED
The first step in getting financial aid is to complete the Free Application for Federal Student Aid (FAFSA). The FAFSA will help determine the amount of federal aid for which you may be eligible. You can find out more about the FAFSA, as well as download or fill out the form online at www.fafsa.ed.gov. Note that eligibility for the federal Parent Loan for Undergraduate Students (PLUS) loan program is not determined with this application.

TWO OR MORE IN COLLEGE
The federal assessment of aid eligibility is based on an "expected family contribution"--- the amount of money that parents are expected to shell out, based on their financial picture. That expected outlay stays the same no matter how many kids you have in college at the same time. So if you have two or more children attending college, your expected contribution is split among them. You are likely to qualify for more aid when you have multiple children in college at once.

Complied by NICCP