Saving for College         Tuition Savings Calculator          Student Loan Options   
Going Off to College Seminar         $500 Scholarship       Helpful Links

Saving for College

Going Off to College Seminar
With the cost of higher education continuing to rise, the ability to continue education beyond high school may depend upon the availability of financial assistance. Attend our "Going Off to College" Seminar to learn about the financial aid process, how to apply, other educational and alternative loans, preparing for college and more. RSVP by e-mail to marketing@firstamericancu.com or call 800-776-7159. Include the names of attendees and their ages. Seats are limited! Beneficial for high school juniors and their parents.

Helping You Achieve Academic Success
First American offers one (1) $500 scholarship each year to a qualified student to be applied toward any portion of an accredited college or university's comprehensive fee. The deadline for all applications has passed. We're in the process of reviewing applicants and will award the scholarship at our Annual Meeting on May 20, 2008. For more information about our $500 scholarship call 800-776-159 or e-mail us at firstam@firstamericancu.com.

Coverdell Education Savings Account
What is a Coverdell Education Savings Account (ESA)?
The Coverdell ESA (previously Education IRA) sole purpose is to help you pay for your child's education expenses, such as tuition, fees, books, supplies, equipment, and in some cases, room and board or computers.

How does a Coverdell ESA work?
Unlike traditional IRAs, contributions to a Coverdell ESA are never tax-deductible. However, a Coverdell ESA offers you the potential for tax-free withdrawals - including earnings. For example, if you make nondeductible contributions of $2,000 every year for 16 years ($32,000 total) and your Coverdell ESA has 6% annual return. Your money grows to $48,552.

What is the most I can contribute to a Coverdell ESA?
The total contribution each year to each child's Coverdell ESA cannot exceed $2,000. If you're eligible, you can contribute the full amount for each child. For example, if you have three children and each has his or her own Coverdell ESA, you can contribute $6,000 ($2,000 to each CESA).

Who is eligible to open and contribute to a Coverdell ESA for my child?
Anybody who meets the income requirements can open and contribute to your child's Coverdell ESA. This includes grandparents, aunts and uncles, family friends and anyone else who wants to pitch in to your child's education fund. Income requirements are as follows:
    •  Single filer with modified adjusted gross income (MAGI) up to $95,000
    •  Joint filer with MAGI up to $190,000
Corporations, tax-exempt organizations and other entities can also make Coverdell ESA contributions, and there are no income limits on these contributors. However, the total annual contributions to all Coverdell ESAs for each child can't exceed $2,000.

Who controls the account?
Every Coverdell ESA must have one, and only one, "responsible individual" to oversee the account. This person decides when funds will be withdrawn and if and when funds will be rolled over to the Coverdell ESA of a family member. The responsible individual can be either a parent or legal guardian of the child. The child can become the responsible individual after becoming an adult.

When can I withdraw funds from a Coverdell ESA?
As the responsible individual, you can withdraw funds at any time. However, to avoid tax consequences from the withdrawal, you must use the funds to pay for qualified education expenses for your child before he or she reaches age 30.

What educational expenses are considered to be "qualified"?
Qualified expenses include tuition, fees, books, and equipment required for enrollment or attendance at nearly any post-secondary educational institution. Certain room and board expenses also may qualify. Qualified expenses also include these same expenses for elementary and secondary education, as well as the purchase of computer technology used by the beneficiary and his or her family while in school.

Can I roll funds from a traditional or Roth IRA into a Coverdell ESA?
No. Rollovers from a traditional or Roth IRA into a Coverdell ESA are not allowed.

If I contribute to a Coverdell ESA, can I still contribute to a traditional or Roth IRA?
Yes. Contributions to traditional or Roth IRAs have no effect on the contributions you can make to each Coverdell ESA.

Contact a Member Service Officer to set up a Coverdell ESA today!                           Top of page

Student Loan Options
Perkins Loans
Perkins loans (which are federal loans) are need-based loans awarded to undergraduate and graduate students with the highest need. The interest rate is very low and the student makes no payments while in school.

Subsidized Stafford Loans or Direct Loans
These loans are need-based with a variable interest rate, and are designated by the federal government. The interest rate on a Subsidized Stafford loan and Direct Loan will never exceed 8.25%. The federal government pays the yearly interest while a student is in school.

Unsubsidized Stafford Loans or Direct Loans
These loans are designed by the federal government and are NOT need-based. The student is responsible for paying interest on the loan from the time the loan is disbursed until it's paid in full. The interest can be paid during school or it can accumulate and be capitalized (added to the principal of the loan).

Private Student and Parent Loans (also called alternative loans)
These loans are not subsidized and interest rates may be higher than federal need-based loans. A credit union loan generally contains high-quality service and flexible repayment terms. Families use private loans when the federal loan doesn't provide enough money to cover college expenses.

Federal PLUS Loans
Parents of dependent students enrolled at least half-time can borrow money to cover any costs not already covered by the student's financial aid, up to the full cost of attendance. Parents must meet certain requirements to be eligible for a Federal PLUS Loan.

When filling out your Financial Aid forms, write in First American's lender code 828714 to indicate you want us to be your lender. Contact us at 800-776-7159 for more information.              Top of page

Helpful Links (First American is not responsible for the content nor functionality of the websites listed below.)
For more information about federal education loans:
•  U.S. Education Department - www.ed.gov or www.ed.gov/studentaid/
•  FinAid - www.finaid.com
•  FAFSA on the Web - www.fafsa.ed.gov
•  Wiredscholar - www.wiredscholar.com

Other helpful links for college planning:
•  College Board - www.collegeboard.com
•  NEFE Teen Resource Bureau - www.ntrbonline.org
•  Credit Counseling - www.nfcc.org                                                                                                        Top of page