5 ways to make college more affordable

The value of a college degree isn’t what it used to be, but its importance certainly hasn’t diminished. In fact, in Sallie Mae’s report, “How America Pays for College,” 90% of families expect their student to earn at least a bachelor’s degree, with 54% expecting a graduate degree. Of course, if you’ve read any recent news about the financial details of college education, you’ll know that it’s also a foreboding prospect: there is nearly $1.3 trillion in total U.S. student loan debt, ongoing wage stagnation, and the prospect of enduring years f underemployment.

 

But it’s not all bad news. A notable paradigm shift is taking place: this year, a whopping 98% of current students are actively engaging in ways to make their education more affordable.

 

So how does a student and their family better prepare themselves? Here’s our list of the top five ways families can make college more affordable:

 

  • Save early and save often. 

 

    1. Recent research has shown a link between savings and college success: kids from low- and moderate-income (LMI) households with college savings between $1 and $499 are 3x more likely to attend college and 4x more likely to graduate.
  • Have a plan. 

 

    1. Only two in five of Sallie Mae’s respondent families created a plan to pay for college, but they were able to save 3.5 times more and borrow one-third less than non-planners. America Saves can help you make a plan to save for an education. Pledge to save and you will receive monthly reminders to save and specific advice to help you save more and pay less for college.
  • Be realistic in assessing college options.    

 

    1. Academic programs and financial details often take a back seat to personal choices, but considerations like in-state vs. out-of-state, scholarship opportunities, and work-study programs can mean the difference between college being affordable, or not. An honest assessment of a school’s programs and financial opportunities could knock a personal “want” off the list entirely.
  • Curb spending wherever and whenever possible. 

 

    1. Did you know that the average price of a new textbook has increased by nearly 30% since 2009? Whether you’re looking at room and board, books and supplies, or personal spending, there’s always a way to lower costs. Many students are choosing to live at home to reduce housing costs, while others opt for a track to get their degrees completed faster.
  • Leave no financial stone unturned.

 

  1. “Free money” is available in the form of scholarships and grants. There are a range of scholarships related to demographics and to characteristics like academic, athletic, and artistic. Find out more at your guidance counselor’s office or online. And by completing the FAFSA, you’ll receive information about any grants you or your child qualifies for.

 

Don’t know where to start saving? It’s never too late!

  • Get familiar with Children’s Savings Accounts (CSAs) and the benefits for kids in LMI households.
  • 529 Savings Plans are getting some clearer spending guidelines that may boost their already tax-friendly savings benefits.
  • ABLE accounts, tax-advantaged savings accounts for individuals with disabilities and their families, are rolling out this year and may include costs like education and housing for your student.

 

Tammy G. Bruzon works for America Saves, managed by the nonprofit Consumer Federation of America (CFA), which seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. Learn more at AmericaSaves.org.

 

Savings is an option for individuals with disabilities

By Michael R. Roush, Director, Real Economic Impact Network, National Disability Institute

 

Often individuals with disabilities are not familiar with the savings options available to them, or they may be afraid to save money in fear of jeopardizing their public benefits. However, there are a wide variety of saving strategies that individuals with disabilities can potentially access to achieve their savings goals and improve their financial well-being. At National Disability Institute (NDI), we focus on five key strategies that we believe can assist an individual build a life of work, savings, and asset development. The five key strategies are:

Benefits Planning and Work Supports

There are savings options available to individuals who are receiving a needs-based benefit, such as Supplemental Security Income (SSI), through the Social Security Administration (SSA). The SSA offers work incentives that support an individual to go back to work and maintain employment while receiving a public benefit; and examples of this is the Plan to Achieve Self-Support, often referred to as PASS. PASS is a plan for an individual’s future and allows an individual use income or other assets to help them reach their work goals. An individual could, for example, set aside money to go to school to get specialized training for a job or to start a business. To learn more about PASS or other work incentives, review the SSA’s Red Book at https://www.ssa.gov/redbook/documents/TheRedBook2016.pdf.

 

Employment

Employment is important to improving financial well-being, and employment services are available to help individuals with a disability to obtain, maintain, or enhance their employment status. A great starting point is a visit to a local American Job Center (AJC), also called Workforce Centers or One-Stop Centers. AJCs are designed to provide a full range of assistance to job seekers under one roof. They offer training referrals, career counseling, job listings, and similar employment-related services.

 

 

 

Tax Preparation

Tax time is an ideal time to encourage individuals with disabilities to save money. We find that individuals with disabilities will often not file a tax return either because of low wages or in fear that if they file and receive a tax refund, they will lose their public benefits. It is important for these individuals to know that refunds received from the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), or other refundable credits are not considered income. In addition, these refunds are not counted as a resource for at least 12 months from when an individual receives it for benefits or assistance under any federal program or under any state or local program financed in whole or in part with federal funds. More information about disability and free tax services is available online at https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/disability-and-earned-income-tax-credit.

 

Financial Education

Financial education is a critical first step on the road to financial stability. NDI has several initiatives dedicated to understanding and implementing key financial concepts to help people with disabilities take hold of their financial futures. FDIC’s Money Smart, for example, provides an accessible curriculum that is frequently used by disability organizations. To learn more about NDI’s financial education tools and resources, visit http://www.realeconomicimpact.org/financial-education/financial-education-toolkit.aspx.

 

Asset Development

Individuals may not be aware of programs that can assist them to save money to buy a home, go back to school, or to start a business. Individual Development Accounts (IDA) are a savings option for individuals with disabilities. If an individual saves money in a federally matched IDA program, the funds will not impact their eligibility for federal benefit programs. Similarly, ABLE Accounts are a savings option for individuals with disabilities who qualify. ABLE Accounts allow an individual to save up to $14,000 per year without these funds impacting a needs-based benefit such as Supplemental Security Income. Money saved in an ABLE Account can be used to pay for qualified disability expenses.

 

National Disability Institute is the first national organization committed exclusively to championing economic empowerment, asset development and financial stability for all persons across the full spectrum of disabilities. We affect change through public education, training, technical assistance and policy development to help the one in three Americans with disabilities living in poverty take steps toward creating brighter financial futures. To learn more, visit www.realeconomicimpact.org. If you have specific questions on savings options for persons with disabilities, please send an email to ask@ndi-inc.org. Engage with NDI on Facebook: RealEconImpact or follow NDI on Twitter: @RealEconImpact.

 

Plan for Retirement with America Saves – Guest Post

Plan For Your ‘Someday’ With These 3 Easy Ways To Save

 

Working hard, paying bills, and putting money aside for your needs and wants in the “now” are so often automatic in our day-to-day lives – so why aren’t we thinking about or planning for the future? According to the 2015 Retirement Confidence Survey from the Employee Benefit Research Institute, nearly one-third of workers have almost no retirement savings or investments (< $1,000), and a staggering 57% are underprepared with less than $25,000 for retirement.

 

It’s clear that anyone not using the present to plan for retirement will likely be setting themselves up for a less than golden future. But it’s never too early or too late to save for retirement. Try one – or more! – of these three ways to take advantage of retirement savings opportunities right now to build yourself a more secure future:

 

  1. Open Up a my Social Security Account

 

Social Security benefits play an important part of planning for retirement. Don’t forget about your my Social Security account! This free account can help you determine what your benefits will be and when will be best for you to start receiving them.

 

  1. Save Early and Save Often, No Matter How Much You Earn

 

Starting retirement savings early is the best way to take advantage of compound interest and establish good savings habits. Take advantage of any workplace opportunities, like a 401(k) or 403(b), and never turn down “free money” that comes in the form of employer contributions or matches. Individual Retirement Accounts or IRAs are also a great way to save, with some tax benefits in the process. If you get paid by direct deposit from your employer, you may also be eligible to participate in the new myRA program. myRA is a simple, safe, and affordable retirement account created by the United States Department of the Treasury for the millions of Americans who face barriers to saving for retirement.

 

Need help finding ways to save? Turning off your phone or cable could save you $5 a month. Find a penny, pick it up; by saving $.50 in change a day, you will save $15 a month. For more ideas like these, visit America Saves online.

 

Starting early isn’t possible for everyone, but that doesn’t mean you can’t play catch-up. Calculate what you will need to save in order to live comfortably in retirement. Once you have turned 50, you can make “catch-up contributions” – an extra amount beyond the normal limits that you can contribute to tax-deferred retirement plans.

 

  1. Take the America Saves Pledge

 

Those who make a commitment to themselves and their family to save usually save more than those who don’t. Make your commitment to retirement savings today and receive regular advice and support via email and/or texts while you save money. America Saves will provide you with the motivation and advice you need to reach your savings goal.

 

Tammy Greynolds works for America Saves, managed by the nonprofit Consumer Federation of America (CFA), which seeks to motivate, encourage, and support low- to moderate-income households to save money, reduce debt, and build wealth. Learn more at AmericaSaves.org. America Saves is proud to be part of the “Campaign for a Secure Retirement: Helping Millions of Americans Plan and Save for Retirement” joint, national educational retirement campaign to encourage retirement planning and saving and to promote the online Social Security Statement, available through mySocial Security, as an important retirement planning tool.08.21.2013-post

Practical Money Skills: The Upside to Downsizing

The Upside to Downsizing

Downsize often has a negative meaning in relation to the workplace; but when it comes to your home, car and lifestyle, downsizing or simplifying can actually be positive, improving your peace of mind and your financial outlook. According to a 2011 Federal Reserve report on consumer credit, total U.S. consumer debt has reached $2.43 trillion. In America, many of us are continuing to live beyond our means–buying more house, car and products than we can use or afford. In an effort to improve your finances and lifestyle, here are a few things you might consider downsizing:

  • Home or living space. Most of us are familiar with the sentiment “bigger is better.” But is it? When it comes to homes, larger houses require more maintenance, more insurance and higher mortgages. Before buying or renting that home with a few extra bedrooms, ask yourself: do I need this excess space? Is the cost worth the benefit? You may find that a smaller home or apartment actually provides some freedom from the expenses and responsibilities of a larger one.

  • Car or transportation needs. For many people, a large car symbolizes luxury. But in actuality, a smaller or more fuel-efficient car could be more comfortable, more environmentally friendly and more affordable. Likewise, relying on alternate means of transportation like carpooling, walking, biking or public transportation can not only offer significant savings in terms of gas and maintenance costs but can also be less stressful, more healthful and more sociable than driving.

  • Debt load. Personal debt is a major cause of financial stress and strain for many of us. The first step to tackling debt is sitting down to figure out what you owe. Next, create a plan for paying it off, consolidating balances to lower-interest accounts if needed. Although it takes time and dedication, tackling debt and building your savings is key to financial wellbeing. The less debt you have, the easier it becomes to build savings and meet financial goals. Find out more about the best ways to tackle debt here.

 

Read more upsides to downsizing at: http://www.practicalmoneyskills.com/personalfinance/tipsandtrends/downsizing.php

Practical Money Skills: Consider Life Without Owning a Car by Jason Alderman

Considering Life Without Owning a Car

By Jason Alderman

Most baby boomers couldn’t envision their early adult years without a car. However, times are changing and younger commuters are leading the way.

According to an October study (http://uspirg.org/reports/usp/millennials-motion) by U.S. Public Interest Research Group (U.S. PIRG) and the Frontier Group, millennials – those born between 1983 and 2000 – are driving significantly less than older Americans. Many post-college drivers swimming in college debt are opting for urban living (http://time.com/72281/american-housing/) where walking, biking and mass transit tend to be easier options. Increasingly, those with a temporary need for four-wheel transportation can do so by smartphone.

Today, there are many options to conventional car ownership, but it’s important to match solutions and their specific costs to your needs. Here’s a road map for exploring what’s right for you.

Start with the cost of driving. If you already drive and budget carefully, you will have an idea of what driving costs you can incur each year in financing, fuel, fees, maintenance and insurance. For averages related to a range of vehicles, look to the American Automobile Association’s (AAA) latest “Your Driving Costs” statistics. Keep in mind that smart car ownership doesn’t always mean “new.” Online references like Edmunds.com and Kelley Blue Book can help you spot used vehicles that hold their value and keep operating costs reasonable.

Would leasing be cheaper? The buy-versus-lease question has evolved over the years and many people have strong opinions about which option is better. The answer depends on your personal situation and how you plan to use the vehicle, so consider the pros and cons (http://www.practicalmoneyskills.com/buyorlease). Many people like leasing because they can often lease a more expensive car than they could afford to buy with no down payment. But failing to observe lease restrictions can cost plenty. Remember that all leases can be negotiated and it’s important to review the terms and fine print very closely.

Read more about the potential to free yourself from car ownership at: http://www.practicalmoneyskills.com/personalfinance/experts/practicalmoneymatters/columns_2015/0116_LiveWithout.php

Practical Money Skills: Roth IRAs for Grandchildren by Jason Alderman

Starting Roth IRAs for Your Grandkids

By Jason Alderman

Many grandparents go above and beyond to offer financial help to adult children and grandchildren. If you’re seeking to contribute to your grandkids’ financial future, one option might involve opening a custodial Roth IRA (http://www.irs.gov/Retirement-Plans/Roth-IRAs) on your grandchild’s behalf as soon as he or she starts reporting earned income.

While grandparents often find 529 college savings plans advantageous for their personal estate planning as well as supporting their grandchild’s educational future, custodial Roth IRAs (http://www.irs.gov/Retirement-Plans/Roth-IRAs) may allow for more flexibility depending on the child’s future needs. For example, a young adult may use tax-free Roth IRA proceeds to fund education expenses not covered by savings or a down payment on a first home. Roth IRAs may also be a useful and collaborative savings tool for important expenses young adults have, such as continuing education or a down payment on a first home.

Unlike traditional IRAs, Roth IRAs are funded with after-tax dollars. That means the account holder doesn’t get a tax break at the time of initial or successive deposits, but the money grows tax-free and can be withdrawn tax-free – a benefit for a grandchild who may need a substantial sum in the years to come.

 

Read more about the benefits of starting a Roth IRA for your grandchildren at: http://www.practicalmoneyskills.com/personalfinance/experts/practicalmoneymatters/columns_2015/0206_IRAs.php