Saving for College: A Critical Step Toward College Affordability
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Transcript of Saving for College: A Critical Step Toward College Affordability
Saving for College: A Critical Step Toward College
Affordability
• College Savings Landscape and Current Research
• Our college savings work • What have we done as individual organizations?
• Our collaboration• What has collaborating allowed us to do?
• Best practices
• Q&A
Agenda
• GAO Report• A small percentage of families save in 529 plans• Savers have median income 3 times that of non savers• Most families saving in 529 plans have gone to college• Factors that can affect saving are lack of resources, lack of awareness
about 529 plans, and people have trouble selecting one
• Financial aid/Paying for college/Enrollment factors/Debt
• How America Saves for College (2013) Sallie Mae Study• Anticipated savings don’t match actual savings nor meet with reality
of college costs• Saving tied to life “triggers” – birth, start of school• Not saving for college is more common in low income families
• Fidelity CSI Study• Families now not expecting to cover all college costs• Parents overestimate starting salaries of their students
College Savings Landscape
• Participation in states’ college savings plans has increased rapidly.
• There is much room for growth.
College Savings Landscape
• “Youth who expect to graduate from a four-year college and have a (college savings) account are about 7 times more likely to attend college than youth who expect to go to college but do not have an account.” Elliot, W. and Beverly, S. (2011)
• While assets are positively related to college attendance, completion, and success, account ownership alone seems to be a very large predictor of success.
• Behaviorally there is evidence that saving for college may focus attention of parents and children on postsecondary education affecting outlook, orientations, course selection, and discipline.
Research that Motivates
• MEFA is a not-for-profit state authority that works to make higher education more accessible and affordable through community education programs, college savings plans and low-cost financing options.
• Created the U.Fund® and the U.Plan® college savings plans and has offered affordable and fixed interest rates college loans for 30 years.
• MEFA has assisted hundreds of thousands of families to finance a college education.
About MEFA
MEFA’s College Savings Programs
• It’s never too early to start saving for college and MEFA offers guidance, a wealth of resources and two college savings plans, the U.Fund® and the U.Plan®, to help make paying for college a possibility for families
Mayor Menino at a Start U Reading Event
• MEFA reaches families of young children in a number of ways to emphasize the importance of saving for college early.
› Start U.Reading› Art Competition› Dreams Tour› Museums and Road
Races
The Early Years: Outreach Initiatives
Our Work: FUEL
• Boston – based private nonprofit• College planning and saving program for parents• Reach parents through collaborations with community
organizations• Boston, Chelsea, and Lynn
Families United in Educational Leadership
Our Work: uAspire’s Mission & Vision
uAspire works to ensure that all young people have the financial information and resources necessary to find an affordable path to – and
through – a postsecondary education
College cost is a barrier that every college-ready young person from a low and moderate income family must
overcome.
Our Work: uAspire Program Model
PREPAREFight the misperceptions of college costs that derail students early in their high school careers
7th-11th
Grade
AFFORDGuide students through the
financial aid process, securing financial aid and enabling
good decision-making
12th
Grade
SUCCEEDSupport students throughout their
postsecondary career, helping them reach their goal of college graduation
College
COMPASS IDA PROGRAM
26%
2%
4%
58%
5%5%
Asset Purchases to DateHomeownership
Home Repair
Post-secondary Education for SelfPost-secondary Education for ChildRoth IRA
Small Business
Our Work: Compass Working Capital
Saving for college is one of top two savings goals for families.
Collaborative Work: Compass, MEFA & FUEL
EARLY COLLEGE PLANNING INITIATIVE (ECPI)*
U.S. Department of Education College Savings Research Project (3 year study)
Working with parents of low and moderate income 8th and 9th graders within the Boston Public Schools
Core question: How can we support families to prepare for college financing earlier?
*Project funded through grants from the United States Department of Education and the Bill and Melinda Gates Foundation
Collaborative Work: MEFA & uAspire
Provide general college
planning info?
Provide general info
AND introduce the 529 plan?
Provide general info
AND introduce the 529
plan AND provide the
$50
uAspire+MEFA uAspire+MEFA uAspire
• Early messaging to students and families• Integrate savings into current access/success
programming• Collaborate: partner with your state’s 529
provider• Make savings automatic and provide incentives• Optimize other savings opportunities• Walk through process step-by-step• Simplify the overall process• Build trust and strong relationships with families• Provide ongoing coaching support
Best Practices
• Age level: elementary and middle school audiences
• Content: combine savings information for parents with college cost information
• Sticker price• Scholarship information
• Benefits: early messaging allows you to break down myths and misconceptions early
Best Practices: Early messaging
• uAspire program model evolution• Where and when we integrate savings
Best Practices: Integrate savings
• Partner with your state’s 529 provider• States have generally structured the investment options to benefit
participants from all economic backgrounds within their state. • Low contributions• Less risky investments• Inclusive marketing strategies-zoos, museums, libraries• Convenient enrollment procedures and contribution options-payroll
deduction, electronic fund transfers, and online contributions and enrollment.
• Use research to make policy changes• 35 states offer tax benefits (deduction or credit)*• 12 states offer matching grants• 16 states give 529 assets special treatment for state financial aid
funds
• Widespread agreement about the importance of financial education about 529 plans and about college savings in general as it relates to receiving financial aid and paying for college.
*5 states have tax benefits that cross all states (parity)
Best Practices: Collaborate
19
Best Practices: Make Savings “Automatic” & Use Incentives
Source: Inspire Compass Working Capital Survey, n=31
0%
20%
40%
60%
80%
100%
Perc
ent
of
Resp
ondents
Workshop Attendees
Presentations from MEFA andFidelity
$100 incentive
Open an account at the workshop
Sign up with direct deposit
Q: Which aspect of the workshop had the biggest impact on your decision to open an account? (Choose one)
Best Practices: Optimize Other Resources
Individual Development Account (IDA) programs - matched savings accounts for working, low-income families (www.idanetwork.org)
Family Self-Sufficiency Programs – an employment and savings program for families in Section 8 or public housing.
Tax-Time – encourage families to save part of their Earned Income Tax Credit (EITC)
Best Practices: Walk through paperwork
• Example - FUEL formats application for uploading personal information, and adds helpful hints
• A peek at a FUEL enrollment presentation…
Walk Through Paperwork, continued
• Review & Correct your information
• Participant (Account Owner) is YOU• Beneficiary is the STUDENT
• Fill in SSN’s• SIGN! section 8• Meet FUEL staff to review and open your account individually.
Regardless of how you promote saving for college, if you are successful and parents begin saving, you can encourage them to keep it going through financial coaching strategies.
• Fielding questions, referring to the appropriate agency• Navigating account statements• Workshops
• Strategies• Vocabulary• Using funds• Applying for financial aid
Best Practices: Provide Ongoing Support
Rosa
and K
assa
ndra
For more information:
• Julie Shields-Rutyna MEFA [email protected]
• Sherry Riva Compass Working Capital
• Michelle Murphy FUEL [email protected]
• Claire Dennison uAspire [email protected]
Question & Answer