Louisiana’s College Payment Plan
LOSFA has created Louisiana’s College Payment Plan (the “Plan”) to help families acquire the resources needed to educate their children after high school. The Plan incorporates the benefits of three major student aid programs – the state’s 529 START Saving Program and Scholarships & Grants programs, along with the William D. Ford Federal Direct Loan program – to meet the financial needs of individual students. The benefits of these programs, when customized for a student, can fully cover the student’s cost of attending college or other eligible postsecondary school. The Plan is versatile, meaning it is uniquely structured to meet the needs of each student as determined by the student’s financial circumstances and age. To take full advantage of the benefits offered by the Plan, families should make a long-term commitment and enroll their children in the Plan at an early age and stay the course, preferably from “cradle to college.” A principal benefit of the Plan is the professional advice and personal assistance provided to families to assure that the financial benefits of the state’s student aid programs are maximized for their children.
The Plan incorporates the benefits from these student aid programs to create a financial package to pay college expenses:
• The START Saving Program - Louisiana’s college savings program, a qualified tuition program under Section 529 of the Internal Revenue Code, offering earnings that are exempt from state and federal taxes, state matching contributions, and six investment options.
• TOPS - Louisiana’s Taylor Opportunity Program for Students, a series of merit-based scholarships that award amounts equal to tuition, some including a stipend, at a state public college, university, community college or technical school, (or the weighted average of public school tuition at certain in-state private colleges).
• William D. Ford Federal Direct Loan Program - the federal program offering low interest rate educational loans to students and parents.
The Plan considers the family’s ability to save and recommends a savings rate that, when complemented by benefits from other programs in the Plan, assures that the projected costs of the child’s education can be met. Saving for a child’s education should begin early to maximize the compounding of earnings over time and to minimize the amount that must be routinely invested in savings.
Upon the student’s entry into high school, parents must be counseled on the many factors which will affect their child’s eligibility for a TOPS award or other scholarship or grant aid and the child must be guided through the aid application and award processes. This assistance is automatically provided under the Plan and assures that families will be continually advised of the effect on their children of statutory or regulatory changes that may occur in these programs.
In packaging the resources needed by a student from among those available under the Plan, student loans are the program of last resort. If savings and a TOPS award will not meet the student’s total financial needs, then student loans will be used to fill the funding gap.
Many Louisiana families, particularly those with younger children who have not yet experienced ‘sticker shock’ from college fee bills, haven’t considered how the future costs of educating their children will affect them financially. Parents may assume that loans or scholarships will assure their child the opportunity for a college education when the time comes. Perhaps so, but one thing is certain – in tomorrow’s world, college or technical training will be the prerequisite to a productive and comfortable life style for their children. Every parent wants the best for their children and a child’s ticket to a happy and productive life may well be the parents’ plan for financing the child’s education. Louisiana’s College Payment Plan was created to be the family’s plan for financing their children’s education.