As we save for college, what if something unexpected were to happen to us. What if you were diagnosed with a critical, chornic, or terminal illness? What if death were to occur, would you be able to continue saving for you childs education?

1. 1 Educational Funding Seminar Sponsored by… American General Life andAccident Insurance Company

2. 2 American General Life and Accident Insurance Company In business since the early 1900’s Provides life insurance, supplemental health insurance, and annuity products Over 3 million customers Recognized as a technology leader in the insurance industry

3. 3 Agent Information Who I am… What I do… Why I am here…

4. 4 Why College? Workers with a bachelors degree typically earned 60% more than workers with only a high school diploma.* Having a master’s degree can almost double your lifetime earnings* In addition to higher wages, college graduates also enjoy:** Higher levels of saving and investments Increased personal and professional mobility More hobbies and leisure activities *Education Pays, College Board, 2007 **Institute for Higher Education Policy, 1998

5. 5 Average Costs in 2007 Current Average Annual College Costs* Private 4-Year 4-Year Public Resident (In-State) College College Tuition and Fees $23,712 $6,185 Room and Board $8,595 $7,404 Books and Supplies $988 $988 Transportation $768 $911 Other Expenses $1,311 $1,848 Total Annual Expenses $35,374 $17,336 *Trends in College Pricing 2007, CollegeBoard

6. 6 Projected Costs in 2017 Average Annual College Costs 10 Years from today* Private 4-Year 4-Year Public Resident (In-State) College College Tuition and Fees $42,465 $11,076 Room and Board $15,392 $13,259 Books and Supplies $1,769 $1,769 Transportation $1,376 $1,631 Other Expenses $2,348 $3,309 Total Annual Expenses $63,350 $31,044 *Assumes a 6% annual increase

7. 7 Projected Total Four Year Costs Total Four Year College Costs 10 Years from today* Private 4-Year 4-Year Public Resident (In-State) College College Tuition and Fees $169,859 $44,306 Room and Board $61,569 $53,037 Books and Supplies $7,077 $7,077 Transportation $5,502 $6,525 Other Expenses $9,392 $13,238 Total Annual Expenses $253,399 $124,183 *Assumes a 6% annual increase

8. 8 Worksheet Exercise 1 Local College Example: Tuition & Fees $ 6000 Room & Board $ 6000 Books & Supplies $ 1000 Transportation $ 1000 Other Expenses $ 1000 Total $ 15000

9. 9 Worksheet Exercise 2 Child’s Name = Example Child’s Age = 8 Annual Cost = $15,000 Inflation Factor = 7.16 Est. Future Cost = $107,400

10. 10 Worksheet Exercise 2 Est. Future Cost = $107,400 Investment Factor = .080 Annual Funding Requirement = $8,592 Monthly Funding Requirement = $716 Bi-Weekly Funding Requirement = $330

11. 11 What Are Some Options? Scholarships, Grants, Work Study State Lottery Scholarships Government Funded Programs School Funded Programs Privately Funded Programs Loans 529 Plans Coverdell Education Savings Accounts Custodial Accounts

12. 12 Financial Aid Statistics Private Scholarships Average private scholarship amount = $1,982* 6.7% receive private scholarships Grants Average Pell Grant = $2,494**(currently 32% of tuition, fees and room & board) Average total grant and tax benefits = $3,600*** *National Postsecondary Student Aid Study, 2004 **Per Full Time Equivalent (FTE) Student – Trends in Student Aid, College Board, 2007 ***Public 4 Year Institutions – Trends in College Pricing, College Board, 2007

13. 13 Financial Aid Sources 76% Received some form of financial aid. 62% Federal Aid 23% State Aid 31% Institutional Aid 23% Aid from other sources These figures include loan and tax information. *Mini-Digest of Education Statistics 2007, National Center for Education Statistics (NCES2008-023)

14. 14 Completing the Online FAFSA www.fafsa.ed.gov

15. 15 Loans & Educational Plans Descriptions of different methods forcollege funding

16. 16 Perkins Loan Program Perkins Loan Program Generally applied for by the college for the student Need based Low interest rate No loan payments while in school Can be canceled for students who are employed in certain public, military, or teaching service Guide to U.S. Department of Education Programs, U.S. Department of Education, 2007.

17. 17 Stafford Loans Federal Family Education Loans (FFEL)& William D. Ford Direct Loans (Direct Loan) Need based Low interest rates Two Types Subsidized: Federal government pays yearly interest while the student is enrolled at least half time in college. Unsubsidized: The borrower is responsible for the interest payments immediately. Guide to U.S. Department of Education Programs, U.S. Department of Education, 2007.

18. 18 PLUS Loans Parent PLUS Loan For parents of students Can borrow up to the total cost of education, minus any aid received Grad PLUS Loan For graduate students Can borrow up to the total cost of education, minus any aid received

19. 19 Other Student Loans Private Student Loans Offered by lenders/financial institutions Not subsidized Higher interest rates College Sponsored Loans Some colleges provide their own loans Low interest rates Other Loans Offered by private organizations and foundations

20. 20 Education Savings Plans 529 Plans Coverdell Education Savings Accounts Custodial Accounts(UGMA & UTMA)

21. 21 Advantages Certain states offer tax deductions for contributions Qualified distributions are not taxed Disadvantages Money is only tax free for qualified education expenses (Tuition, Fees, Books, etc.) Annual $12,000 IRS Gift limits Can only contribute up to $250,000 depending on the plan For tax advice, consult with your tax professional. 529 Plans

22. 22 Coverdell Education Savings Accounts Advantages Tax benefits for growth and distributions Investment flexibility Can be used for elementary, secondary & college educational expenses Disadvantages Annual contributions are nondeductible & limited to $2,000 Contributions can only be made until age 18 Excess distributions may be penalized Eligibility is subject to contributor income limits For tax advice, consult with your tax professional.

23. 23 UGMAs & UTMAs UGMA – Uniform Gifts to Minors Act UTMA – Uniform Transfers to Minors Act Guidelines for certain custodial accounts Permit you to transfer assets to minor without establishing a trust Generally simpler, quicker, and less expensive than typical trusts For tax advice, consult with your tax professional.

24. 24 Custodial Accounts Advantages Possible Tax advantages Does not have to be for education only Disadvantages May cause reduction in financial aid Donor / Transferor gives up all rights to the property Transfer may not be revoked or changed Earnings may be taxed For tax advice, consult with your tax professional.

25. 25 Planning for the Unexpected Putting Your Educational Planning in Perspective

26. 26 What If… You do all of the right planning, use the available funding resources, but an unplanned life event occurs before your education funding is complete?

27. 27 Unplanned Life Events A disabling accident can happen to anyone. Death could occur at any time.

29. …if you suffered a stroke and could no longer work.

30. …if you were in an accident and became disabled.

32. 30 Quality of Life…InsuranceSM What if there were a solution that could provide your family with income to help meet important needs if… …you or your spouse should suffer a critical or chronic illness. …you or your spouse became disabled. …you or your spouse died prematurely. *For specific Quality of Life…InsuranceSM policy benefits, please speak to an AGLA agent after the seminar.

33. 31 Quality of Life…InsuranceSM AGLA is changing the way American’s think about, purchase and use life insurance. Life insurance you don’t have to die to use. *For specific Quality of Life…InsuranceSM policy benefits, please speak to an AGLA agent after the seminar.

34. 32 Quality of Life…InsuranceSM Visit www.qualityoflifeinsurance.comto see a four minute move that highlights someof the features of Quality of Life…InsuranceSM

35. 33 Summary Education Funding Requires a Plan

36. 34 Additional Thoughts Higher education is expensive, but it is a worthwhile cost. Not everyone will qualify for federal financial aid. You must be prepared for unplanned circumstances.

37. 35 More Information is Available! High School Guidance Counselors College Financial Aid Offices Federal Student Aid Information Center 1-800-4FED-AID Internet www.ed.gov www.studentaid.ed.gov www.collegboard.com www.savingforcollege.com www.sec.gov

38. 36 Education Costs Survey Card American General Life and Accident Insurance Company Please take a moment to complete the survey card. Your feedback is important to us!

39. 37 Agent Contact Information Write my contact information on the Worksheet. How to reach me…

40. 38 Bibliography 1 College Board. Education Pays: The Benefits of Higher Education for Individuals and Society. Washington D.C., 2007. 2 _____, Trends in Student Aid. Washington D.C., 2007. 3 _____, Trends in College Pricing. Washington D.C., 2007. 4 Office of Communications and Outreach, Guide to U.S. Department of Education Programs, U.S. Department of Education, Washington, D.C., 2007. 5 National Center for Education Statistics, Projections of Education Statistics to 2016, U.S. Department of Education, Washington, D.C., 2007. 6 _____, Digest of Education Statistics 2007. Washington, D.C., 2007.

41. 39 Bibliography 7 VSA, L.P., Education Funding Analysis. AGLA 3a-16 ed. 01-08, <http://vsa.fsonline.com/vsa/na_calculators/3a-16is-0.html>, accessed on June 8, 2008. 8 Thomas, Kaye A. Problems with Custodial Accounts, <http://www.fairmark.com/custacct/problems.htm>, accessed on July 16, 2008. 9 FinAid Page, LLC. Number of Scholarships, <http://www.finaid.org/scholarships/awardcount.phtml>, accessed on May 30, 2008. 10 DeFrancesco, Roccy. Funding for College Education with “Out of the Box” Concepts: Part I, The Wealth Preservation Institute, St. Joseph, MI, 2008.