What is college worth

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What is college worth

  1. 1. PRESENTER USC Lancaster Kenneth T. Cole USC Director of Financial AidLANCASTER
  2. 2.  Education as an Investment Calculating College Costs Reading an Award Letter Comparing Colleges by Costs and Awards Determining How Much You Should Borrow
  3. 3. Tuition Room Books & Total 4 Year Cost & Fees & Supplies Annual (assuming 7% increase/year) Board CostUSC Lancaster $6,252 $6,840 $1600 $14,692 $71,000(2 year Public)York Tech. $3,496 $7,200 $1,200 $11,896 NA(2 year Tech)USC Columbia $10,168 $6,556 $1600 $18,324 $81,000(4 year Public)Clemson Univ. $12,668 $7,228 $1090 $20,986 $93,000(4 year Public)Coker College $22,200 $6,950 $1,000 $30,150 $130,000(4 year Private)
  4. 4.  Median Annual Salary for workers with ◦ No HS Diploma $13,000 ◦ High School Diploma $21,079 ◦ Associate’s Degree $30,937 ◦ Bachelor’s Degree $40,166 About $20,000 a year for a Bachelor’s DegreeSource:U.S. Census Bureaus annual survey comparing earnings with education levels. Based on 2005 year data.“Study Shows Higher Salaries for College Grads”, by Howard Schneider; Washington Post Staff Writer Thursday, March 15, 2007; 10:00 AM
  5. 5.  What is the cost of education? ◦ 2 year degree $29,384 ◦ 4 year degree $81,000 ◦ Not considering what Financial Aid might pay What you could earn in 30 years? ◦ Without a School Diploma $632,370 ◦ With a 2 year Degree $928,110 ◦ With a 4 year Degree $1,204,498 What the degree is worth? ◦ 2 year degree $266,356 ◦ 4 year degree $491,128 College is an Investment that has a 600% return
  6. 6. Is 4 years of hard work worth $500,000 to you?
  7. 7.  Notification: ◦ Paper Award Letter ◦ E-mail notification (with secure link) Most award information is now online You should: ◦ Read Awards Terms and Conditions ◦ Accept loans if you want them ◦ Complete additional forms:  State Grant Affidavits  Student Loan Promissory Notes and Entrance Counseling  Work Study Job Applications and Interviews
  8. 8.  4 parts ◦ Estimated Cost of Attendance (COA or Budget) ◦ Expected Family Contribution (EFC from FAFSA) ◦ Calculated Need ◦ Awards  Award name  1st Term award Amount  2nd Term award Amount  Total Award Amount  Enrollment Status used for award (usually full-time)  Total Term Awards  Total Yearly Awards  Summer is usually not included in initial award.
  9. 9. Need Calculation Cost of $17720Estimated Cost of Attendance $17720 AttendanceExpected Family Contribution $ 1000 Tuition & Fees $6500Need $16720 Books & Supplies $1320Total Awards* $14100 Room & Board $7100Unmet Need $ 2620 Transportation $1800Award Fall Fall Spring Spring Total Decision Amount Enrollment Amount Enrollment Award (Accept/ Status Status Decline)PELL $2300 12 (full) $2300 12 (full) $4600 naLIFE $2500 12 (full) $2500 12 (full) $5000 naSub $1750 12 (full) $1750 12 (full) $3500LoanUnsub $1000 12 (full) $1000 12 (full) $2000Loan* * Unsub loans can be used to “offset” the EFC. So, in this case only $1000 of the Unsub loan was counted against Need.
  10. 10.  Give you an example of an “average” student’s costs and awards who is similar to you. It will ask: ◦ If you are filing a FAFSA ◦ Your age ◦ Your living arrangements ◦ Your state residency status ◦ Your marital status ◦ If you support any children ◦ Number of people in your Household ◦ Of those, the number attending college ◦ Family Income Range It will give you: ◦ Estimated Cost of Attendance (COA) ◦ Estimated Total Grants ◦ Estimated Net Price (COA-Estimated Grants) It does NOT tell you: ◦ What YOU are really eligible for ◦ What YOU will really pay
  11. 11.  You must determine seven things: ◦ Actual Expenses ◦ Living/Transportation Expenses ◦ Cost of Attendance (COA or budget) ◦ Family Contribution (EFC) ◦ Need ◦ Total Aid Offered ◦ Unmet Cost (budget less scholarships and grants) ◦ Loans Remember: Tuition, Fees, Books and Dorms are usually only charged 1 semester at a time. You may need to calculate
  12. 12.  Actual Expenses include: ◦ Tuition ◦ Fees ◦ Books ◦ SuppliesTuition Offset: ◦A scholarship/grant provided from institutional funds towards the cost of Tuition and Fees. ◦Large expensive colleges often offer an “offset” based on your academics and/or need. ◦These are usually Institutional awards that reduce the costs before other aid applies. ◦Tuition Offsets reduce Actual Expenses
  13. 13.  Living/Transportation Expenses: ◦ Room (dorm; apartment, deposits, utilities) ◦ Board (meal plan, eating out, cooking, snacks) ◦ Personal (laundry, toiletries, clothing, furniture) ◦ Emergencies (car repairs, medical issues, clothing) ◦ Daily Travel (bus fare; bike; insurance, gas, parking) ◦ Vacation Travel (car, flights, gas, food)◦ Cost of Attendance (budget): ◦ Actual Expenses + Living/Transportation Expenses◦ Need: ◦ Cost of Attendance - Family Contribution = Need ◦ Need limits grants, work-study and subsidized loans
  14. 14.  Total Aid Offered  Scholarships (except Tuition Offsets)  Grants (except Tuition Offsets)  Loans (you have a choice to accept or decline these)  Workstudy (student must work to earn this money) Cost of Attendance – Scholarships & Grants= Unmet Cost Unmet Cost is your actual “out of pocket expense” Options: ◦ Student Loans  to pay one time fees, or keep in savings for monthly bills ◦ Working a Job  to cover monthly bills and save for up coming big bills  Family Support  College savings plans, car insurance, gas money, food, etc…
  15. 15.  Total Resources=  Federal Pell Grant  State Scholarships  Scholarships from Sponsors (those not from colleges)  Federal Loans ($5500 as Freshman)  Savings Plans  Cash and other assets For Each College, determine:  Cost of Attendance – Total Resources = Unmet Cost of College  Subtract Institutional Grants and Scholarships = Actual Cost Use that to compare and determine which college you can afford.
  16. 16. Will you need to borrow a student loan? Example of a fairly inexpensive school Tuition + Fees + Books + Supplies $6000 + $500 + $1200 + $120 Need Grants Scholarships Need Grants and Only Only ScholarshipsActual Costs $7,820 $7,820 $7,820LIFE - $5,000 $5,000 $0Pell - $5,550 $0 $5,550Lottery - $0 $0 $950Unmet Costs $0 $2,820 $1,320
  17. 17.  Calculate your anticipate Loans ◦ Determine how much you must borrow each year ◦ Add 20% to the total  12% for cost increases  8% for accrued loan interest ◦ This is how much you will have borrowed at this college. ◦ The undergraduate loan limit is $31,000 ◦ You can also borrow private student loans, but it is discouraged.
  18. 18.  Your debt-to-income ratio can be a valuable number -- some say as important as your credit score. Its exactly what it sounds: the amount of debt you have as compared to your overall income. Lenders look at this ratio when they are trying to decide whether to lend you money or extend credit. Monthly Debt payments/ Monthly income=DTI You want to keep your “DTI” below 36%
  19. 19.  If you borrowed $31,000 in student loans, your monthly payments would be $400; and if you paid a typical house payment of $1000 and a typical car loan of $400 monthly; and if you wanted to maintain a DTI of no more than 36% (to keep good credit); then, you would need a monthly income of about $5000, or about a $60,000 annual income. Your student loan would therefore be about 51% of your annual income. Hence, we recommend...
  20. 20. Don’t borrow More in student loans than half of your anticipatedannual income for your career!
  21. 21.  Research your career field: Career Starting Income Rec. Limit ◦ Attorney: $100,000 $50,000 ◦ Software Developer: $92,000 $46,000 ◦ Finance Manager: $85,000 $42,500 ◦ Construction: $70,000 $35,000 ◦ Mechanical Engineer: $65,000 $32,500 ◦ Operations Manager: $60,000 $30,000 ◦ Human Resources Manager:$60,000 $30,000 ◦ Bank Manager: $55,000 $27,500 ◦ Executive Assistant: $47,000 $23,500 ◦ Accounts Payable Specialist:$37,000 $18,500
  22. 22. Thank you for your attention! Contact Us!USC LancasterKenneth Cole BY MAIL: PO Box 889 Lancaster, SC 29721 BY PHONE: (803) 313-7068 Visit Us: 127 Starr Hall, Hubbard Drive BY WEB: http://usclancaster.sc.edu/A presentation like this is available at the USC Lancaster Financial Aid Office Website

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