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The Nations’ Capital: How to pay for an advanced education

VISTA, Calif. – A 2001 U.S. Census Bureau survey of earnings among adult American workers found that the median family income among American Indian/Alaska Natives was $2,676 per month.

Higher education has long been associated with higher earnings. The census reported an average earning of $3,319 per month. Professionals earned 2.4 times the average, while workers without a high school diploma earned less than 60 percent. Workers who received vocational training earned 87 percent of the average worker’s salary. Workers with associate degrees or some college earned just a little below average, about $3,100 per month.

The facts are straightforward. Post-high school education is expected at the workplace. College courses, vocational and technical training all prepare the worker to deal with a technologically sophisticated workplace.

The annual cost of job training and college education ranges from several thousand a year at community colleges to more than $60,000 at Ivy League schools. In 2002 – ’03, almost 70 percent of full-time college students received financial aid. Accredited colleges, vocational schools and universities all offer grants, work-study programs and loans.

The U.S. government provides more than 65 percent of all financial aid. Each state also provides information on grants, tuition aid, fee reductions for in-state students and loans.

While most federal programs are need-based, private scholarships provide for students interested in specific subjects, have special talents or achievements or are in an unusual circumstance.

A number of financial aid programs are specifically available to American Indians. The American Indian College Fund (www. provides more than 5,000 scholarships to deserving students. The American Indian Education Foundation ( offers not only scholarships and grants for vocational school and college, but also other resources to help students remain in school. The Morris K. Udall Foundation ( provides scholarships to college sophomores and juniors, and congressional internship to college graduates.

The financial aid process starts with filing a financial aid application called the Free Application for Federal Student Aid. The form is available on the Internet ( or from school counselors. The family’s income, assets and savings will be reported. The information is used to calculate the “Expected Family Contribution.” Schools use EFC to evaluate and propose a financial aid package for each student.

Some organizations forgive loans when a student performs public or community services. Examples include Teach for America, Nursing Education Loan Repayment Program, AmeriCorps and AmeriCorps*VISTA (Volunteers in Service to America), Peace Corps and the Corporation for National and Community Service.

Since room and board can cost more than $1,000 a month, students can save money by living at home and attending a community college. High school students can also take advanced placement courses that may be accepted by universities to fulfill lower-division requirements.

Family and friends can also help. Instead of buying Christmas and birthday presents for a child, consider putting that money into a 529 plan or Coverdell Education Savings Account. Earnings from both plans are federal tax-free. The plans differ in annual maximum contribution limits and required use.

Earnings from a CESA are subject to state income taxes. CESAs are available to single filers whose adjusted gross income is $110,000 or less, or to joint filers whose adjusted gross income is $220,000 or less. Corporations and tax-exempt organizations can also contribute to CESAs. The beneficiary (student) must be under age 30 at the time he or she uses the benefits or be a special-needs beneficiary.

The annual limit of $2,000 per year is available to single filers with AGIs of $95,000 or less, or to joint filers with an AGI of $190,000 or less. Phased-down contributions are available between $95,000 and $190,000.

Tax-free withdrawals are permitted for any educational use from kindergarten through college. Unused money can be transferred to a sibling.

<i>Cynthia Tam, CFP®, sets up investment and benefits programs for tribes. She can be reached at or (619) 200-6277. CA 0D69514. Securities offered through Investors Capital, member NASD/SIPC. Advisory Services offered through Investors Capital Advisory, 230 Broadway, Lynnfield, MA; (800) 949-1422.