sending your child to college

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

© 2009-2015 Ameriprise Financial, Inc. All rights reserved.

Sending your child to college

Gerrilee Hartman

Financial Advisor

Skillrud Financial Group

A financial advisory practice of

Ameriprise Financial Services, Inc.

May, 20th

2016

Why are you willing to risk the investment?

Source: Bureau of Labor and Statistics U.S. Department of Labor. USUAL WEEKLY EARNINGS OF WAGE AND SALARY WORKERS, FOURTH QUARTER 2014. Data on chart is annualized.

High school only Bachelor's degree only

Advanced degree $-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$34,528

$63,648 $72,852

Annual median income for workers over age 252014 (Q4)

Defining your goal

What investment options are available?

Which type of school will you and your child select?

How much will it cost?

How much are you willing to pay?

What sources of aid are available?

2-yr. public 4-yr. public in-state

4-yr. public out-of-state

4-yr. private $3,347

$9,139

$22,958

$31,231

$7,705

$9,804

$9,804

$11,188

Tuition & fees Room & board Books & supplies Transportation Other

Annual cost of college by type2014-2015 average estimated undergraduate costs

$16,325

$23,410

$37,229

$46,272

Source: Source: Trends in College Pricing. © 2014 The College Board. www.collegeboard.org

Are there ways to lower the cost?

• A later start

• Community college

• Living at home

• Less expensive school

• Child contributes

• State residency

• A vocational degree

• An alternate path

Consider

Other financial considerations

Your child does not attend college

Divorce

Blended family

Small business ownership and partners

Shared custody

Current K-12 tuition

How much are you willing to pay?

How much should you save?

Neither Ameriprise Financial nor its affiliates or representatives may provide tax advice. Consult your tax advisor or attorney regarding specific tax issues.

• Timing• Risk tolerance• Amount needed• Ability to save• Taxes

Important factors

Federal financial aid (2013-2014)National distribution*

Grants $8,080

Federal loans $4,840

Other $1,260

Average aid per recipient*

$14,180 Total

*Source: Trends in Student Aid. © 2014 The College Board. www.collegeboard.org

Federal work-study

Private & employer grants

State grants

Other federal grant programs

Tax credits & deductions

Institutional grants

Pell grants

Federal loans

1%

6%

5%

7%

8%

21%

18%

34%

Free Application for Federal Student AidSM (FAFSA)The federal financial aid application process

Source: Free Application for Federal Student AidSM − www.fafsa.ed.gov

FAFSA to-do list Find form at www.fafsa.ed.gov Apply Apply early Avoid mistakes Answer every question Apply annually

Expected Family Contribution (EFC)The federal financial aid application process

Factors• Your money• Your child’s money• Number of children• Number of children in college• Age of oldest parent• Unusual family circumstances• Unemployment


Cost of attendance– Expected family contribution Financial need

Formula

Pay less than “sticker price?”The federal financial aid application process


Public university

Private university

Annual cost of attending $20,000 $40,000

EFC $10,000 $10,000

Financial need or aid $10,000 $30,000

FAFSA/EFC

Example — Expected Family Contribution (EFC) remains constant

EFC — what is included in the calculation?The federal financial aid application process

Included in calculation

• Custodial parent & custodial stepparent income

• Custodial parent & custodial stepparent assets such as:– Trusts– Stocks, bonds, mutual funds, CDs– Savings/checking

• Student’s income & assets including EE savings bonds

Not included in calculation

• Income of non-custodial parent• Scholarships• Tax credits for educational expenses• Home/farm equity• Retirement plans• Annuities• Life insurance policies


FAFSA/EFC

EFC — assessing the family’s assetsThe federal financial aid application process

Owner name Savings Assessment

rateExpected

contribution

Kelly (Daughter) $10,000 20% $2,000

Karl (Dad) $10,000 5.6% $560

This scenario is shown for illustrative purposes only and does not represent actual clients. Actual client experiences will vary.


Example — it may be better for money to be in a parent's name

Finding the money

Student loans

Source: Trends in Student Aid. © 2014 The College Board.www.collegeboard.org

Average 2012-2013 loan debt per borrower: $25,600

Types of loans• Direct Subsidized Loans• Direct Unsubsidized Loans • Direct PLUS Loans• Direct Consolidation Loans• Federal Perkins Loan Program• Private Education Loans

Direct subsidized & unsubsidized loans

Terms Subsidized loansundergraduate

Unsubsidized loansundergraduate

Based on financial need Yes No

Interest begins to accrue When borrower leaves school From the day the loan is made

Annual loan limits (depending on grade level) $3,500 − $7,500 $9,500 − $20,500*

Maximum total debt (aggregate loan limits) $23,000 $57,500

Interest rate** 4.66% 4.66%

* Less any subsidized amount received for the same period. Loan limit also depends on year in school and dependency status.** 2014 – 2015 Academic year is July 1, 2014 – June 30, 2015

www.studentaid.ed.gov

Parent PLUS loans

Source: www.studentaid.ed.gov/types/loans/plus

Overview• For parents of dependent children

• Not granted based on need

• Good credit history required

• Fixed interest rate of 7.21%

Loan limit calculation

Cost of attendance– Other financial aid

Loan limit

Perkins Loans

Source: www.studentaid.ed.gov/types/loans

Overview• Full and part-time students

• Annual limits - Undergraduates $5,500- Graduates $8,000

• 5% interest rate

• Income-based repayment

Student loan repayment benefits

Student loan interest deduction • Up to $2,500 deduction

Forgiveness of eligible federal loans

• Discharges debt after 10 years of full-time employment in certain public services

• Visit www.studentaid.ed.gov

Direct Consolidation loan program

• Reduced monthly payments

• One lender, one monthly payment

• Varied deferment options

www.studentaid.ed.gov/types/loans

GrantsGifts that generally do not have to be repaid

Source: studentaid.ed.gov

TEACH grants

Federal Supplemental Education Opportunity Grants (FSEOG)

Pell grants

State grants

Institutional grants

Iraq and Afghanistan Service grant & the Post-911 GI Bill

Scholarships

Where to lookScholarship search companies InternetSchool guidance officeEmployersService organizations

When to lookChild’s junior year of high school

This example is for illustrative purposes only and does not represent actual clients. Actual client experiences will vary.

Educational savings accounts & financial gifts

versus

Unexpected resultsGood intentions

Age* In 2015, the Kiddie Tax applies when the child’s:

0-17 • Investment income is over $2,100

18 • Investment income is over $2,100 • Earned income not greater than ½ of child’s total support

19-23• Investment income is over $2,100 • Is a full-time student• Earned income not greater than ½ of child’s total support

*Age at the end of the year

Educational savings accounts & financial gifts

Control of money

Tax benefits Important issues

Financial aid eligibility

Educational savings accounts & financial giftsUTMA/UGMA

Educational savings accounts & financial giftsCoverdell Education Savings Accounts

Educational savings accounts & financial giftsEE Savings Bonds (restrictions apply)

Clients should carefully consider the investment objectives, risks, charges, and expenses associated with a 529 Plan before investing. More information regarding a particular 529 Plan is available in the issuer’s official statement, which may be obtained from an Ameriprise Financial advisor. Investors should read the 529 Plan’s official statement carefully before investing.

Clients contributing to a 529 Plan offered by a state in which they are not a resident, should consider, before investing, whether their, or their designated beneficiary(s) home state offers any state tax or other benefits only available for investments in such state’s qualified tuition program.

Educational savings accounts & financial gifts529 College Savings Plan

Other education tax benefits

American Opportunity Tax Credit• Extended through 2017• Up to $2,500 for college expenses• Up to 40% of the AOTC is refundable

Lifetime Learning Credit • Up to $2,000• Available for all years of postsecondary

education and for courses to acquire or improve job skills

www.studentaid.ed.gov/types/loans

Other funding ideas

Private industry jobs

Military ROTC

Federal Work-study

Investing your own money

Bankrupting your retirement

How will financial aid be assessed?

Are you willing to quit retirement?

Are you at risk?

What if the money isn’t spent on college?

How important is retirement?

How long can you work?

Can you get a loan for retirement?

Will you become financially vulnerable?

Individual investments

Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution and involve investment risks including possible loss of principal and fluctuation in value.

Certificates of deposit are FDIC-insured up to $250,000 per depositor.

Stock investments have an element of risk. High-quality stocks may be appropriate for some investments strategies. Ensure that your investment objectives, time horizon and risk tolerance are aligned with stocks before investing, as they can lose value.

There are risks associated with fixed income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall and vice versa. This effect is usually more pronounced for longer-term securities.

Protecting your goal

Cash value life insurance

Before you purchase, be sure to ask your sales representative about the insurance policy’s features, benefits and fees, and whether the insurance is appropriate for you, based upon your financial situation and objectives.

Smart spending

Writing your life story

Ameriprise Financial cannot guarantee future financial results. Client experiences may vary.

Ameriprise Financial

1 Ameriprise helped pioneer the financial planning process more than 30 years ago. We have more financial planning clients and more CERTIFIED FINANCIAL PLANNER™ professionals than any other company in the U.S. based on data filed at adviserinfo.sec.gov and documented by the Certified Financial Planner Board of Standards, Inc. as of Dec. 31, 2013.

2 Source: Company data as of Dec. 31, 2013.3 Source: Ameriprise Financial Fourth Quarter 2014 Statistical Supplement.4 Sources: No.1 financial planning firm in the U.S.: Ameriprise helped pioneer the financial planning process more than 30 years ago. We have more financial planning

clients and more CERTIFIED FINANCIAL PLANNERTM professionals than any other company, based on the number of financial planning clients SEC-registered investment advisers disclosed annually and documented by the CFP Board of Standards, Inc., as of Dec. 31, 2013. There is no guarantee that you will work with an advisor with a CFP® certification. No. 2 mutual fund advisory program in assets: Cerulli Edge - data as of 2Q 2014. No. 5 branded advisor force in the U.S.: Company reports as of 2Q 2014. No.5 variable universal life insurance provider (total assets): LIMRA International, 2Q 2014. No.11 long-term mutual fund assets in the U.S.: ICI Complex Assets, 3Q 2014. No. 10 variable annuity provider, LIMRA International, 2Q 2014.

Founded in 1894.

Ameriprise Financial is America's leader in financial planning.1

More than 2 million individual, business and institutional clients.2

Ameriprise Financial has more than $800 billion in assets under management and administration.3

Ameriprise Financial maintains leadership positions in each of its four core business segments: Advice & Wealth Management, Asset Management, Annuities and Protection.4

Never taken a bailout.

The initial consultation provides an overview of financial planning concepts. You will not receive written analysis and/or recommendations.

Complimentary Initial Consultation

Beforehand, take the 3-Minute Confident RetirementSM check

Map out your journey using the Confident Retirement approach

Tell me about what’s important to you

Learn about how I work with clients

Determine if we’re a good match

Investment products, including shares of mutual funds, are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

The Confident Retirement approach is not a guarantee of future financial results.

Ameriprise Financial and its representatives do not provide tax or legal advice. Consult your tax advisor or attorney regarding specific tax issues.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.

© 2015 Ameriprise Financial, Inc. All rights reserved.

Important information