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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.

collegefund.org) provides more than 5,000 scholarships to deserving students. The American Indian Education Foundation (www.aiefprograms.org) 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 (www.udall.gov) 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 (www.fafsa.ed.gov) 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 ctam@investorscapital.com 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.