Paying For College: Getting Started

1
Paying For College Getting Started
Ravenwood High School December 3, 2007

• Brent Tener
• Associate Director, Student Financial Aid
• Vanderbilt University
• 615-322-3591
• b.tener_at_vanderbilt.edu

2
Financial Aid Myths

• Financial Aid isnt available
• Aid is only available at certain colleges
• Aid is only for the best students
• Our income is too high to qualify
• We should pick the school that offers the most
  aid
• Financial aid is the only source of money
  available
• Financial aid will only cover tuition costs
• Costs are the best way to compare colleges

3
Who Pays for College?
From Dont Miss Out The Ambitious Students
Guide To Financial Aid
4
Undergraduate Student Aid (in Billions) by
Source, 2006-07
Source Trends in Student Aid, 2007
5
Categories of Aid

• Gift Aid Grants or scholarships that are not
  repaid
• Loan Aid Borrowed money to be repaid with
  interest
• Work Aid Money earned as payment for job
• Loan and Work Aid considered Self-Help

And...

• Merit Aid - Money awarded based
  upon various
  qualifications
• Need-based Aid - Must show eligibility
  through pre-determined formula

6
Sources of Financial Aid

• Federal Aid Programs
• Free Application for Federal Student Aid (FAFSA)
• Institutional applications (if required)
• Stafford and/or PLUS applications
• State Programs
• FAFSA
• Specific scholarship forms
• Institutional Aid
• FAFSA
• College Board Financial Aid PROFILE (if required)
• Special institutional applications
• Private Opportunities
• Depends upon awarding entities
• FAFSA and/or PROFILE

7
Potential Problems in Process

• Application Errors
• Name, date of birth, social security number
• Adjusted Gross Income
• Non-taxable income
• Income tax paid
• Earning from work
• Household size/number in college
• Deadlines
• Be aware of each schools deadline
• Apply early, but accurately
• Estimate income if necessary to meet deadline
• Documentation
• Student and parent tax returns (if required)
• Federal Verification Worksheet (if required)
• Any other requested information

8
Principles of Need Analysis

• To the extent they are able, parents have primary
  responsibility to pay for their dependent
  childrens education
• Students also have a responsibility to contribute
  to their educational costs
• Families should be evaluated in their present
  financial condition
• A familys ability to pay for educational costs
  must be evaluated in an equitable and consistent
  manner, recognizing that special circumstances
  can and do affect its ability to pay

9
How Financial Need is DeterminedCost of
Attendance- Expected Family Contribution
Financial Need

• Tuition and Fees
• Books and Supplies
• Room and Board
• Transportation
• Miscellaneous Expenses
• Cost of Attendance

• Expected
• Family Contribution
• Parents Contribution from Income
• Parents Contribution from Assets
• Students Contribution from Income
• Students Contribution from Assets

10
Need Varies Based on Cost
11
Free Application for Federal Student Aid (FAFSA)

• Familys personal and financial information
  required to perform need analysis is collected on
  FAFSA
• Paper versions of FAFSA
• Regular FAFSA
• Renewal FAFSA
• Electronic version of FAFSA
• www.fafsa.ed.gov
• FAFSA is completed after January 1

12
FAFSA - Tips

• The correct name, date of birth, and social
  security number are crucial
• Use a black ink pen on the paper application
• Print carefully
• Round off figures to the nearest dollar
• You and Your refers to the student
• Read the instructions

13
PROFILE - Tips

• The PROFILE process
• Register and complete PROFILE application online
• CSS will send acknowledgement of receipt to the
  student
• This application must be completed online no
  paper application available

14
Understanding Your Award

• Comparing Award Offers
• Know how your award was packaged
• Know your expected family contribution
• Know how much of your need has been met
• Know how much is grant/self-help assistance
• Know the terms of each program offered
• Appealing Award
• Contact the financial aid office at particular
  school
• Follow specific guidelines
• Inform the office of special circumstances (in
  writing)
• Get the names of people with whom you speak
• Ultimately, the decision rests with the
  individual school

15
Role of the Financial Aid Office

• Determines eligibility for financial aid
• Packages aid
• Sends an award notification which details
• Students cost of attendance
• Types and amounts of aid offered
• How and when aid will be disbursed
• Student employment conditions
• Terms and conditions of offer
• Subject to availability of funds

16
Information Sources

• Resource Books
• College Cost Book. The College Board.
• Dont Miss Out The Ambitious Students Guide to
  Financial Aid. Octameron Press.
• The Scholarship Book The Complete Guide to
  Private-Sector Scholarships, Grants and Loans for
  Undergraduates. Daniel Cassidy, National
  Scholarship Research Service.

17
Information Sources

• Online Resources
• Department of Education - www.ed.gov
• FAFSA
• Hope Tax Credit
• FAFSA PIN Number
• www.pin.ed.gov
• The College Board - www.collegeboard.com
• The Financial Aid Page - www.finaid.org
• Comprehensive financial aid information
• Free scholarship search
• Various calculators, including need analysis
• State of Tennessee -www.state.tn.us/tsac/index.htm

18
Student Loans

• Julie Tompkins
• BancorpSouth
• julie.tompkins_at_bxs.com
• 662-329-4553
• www.bancorpsouth.com/sl

19
Types of Loans

• Stafford Subsidized Loan
• Stafford Unsubsidized Loan
• Parent Plus Loan
• Graduate Plus Loan

20
Federal Stafford Loans

• Federal Stafford loans are the most common source
  of education loan funds.  They are available to
  both undergraduate and graduate students.  There
  are two types of Federal Stafford loans
• Subsidized (need-based) - The federal government
  pays the interest on these loans while the
  student is in-school, in-grace and during
  authorized deferment periods.
• Unsubsidized (non-need based) The borrower is
  responsible for the interest on these loans as
  soon as the loan is initially disbursed. The
  borrower may elect to pay the interest or any
  part of the interest while enrolled in school, or
  in their grace period. All unpaid accrued
  interest will capitalize at repayment.

21
Federal Plus Loans

• Federal PLUS loans are federally insured loans
  for which borrowers may receive the full cost of
  education minus other forms of student financial
  aid received by the student. The lender is
  required to perform a credit check on each
  applicant to determine credit worthiness.
• Parent PLUS Loan eligible borrowers include
  natural parents, adoptive parents, or a spouse of
  a remarried parent of a dependent undergraduate
  student. Repayment begins within 60 days of the
  final disbursement.
• NEW!-Graduate PLUS Loan eligible borrowers are
  Graduate/Professional students. If you are denied
  due to adverse credit, you may still be approved
  by obtaining a credit worthy endorser. This
  endorser must also complete the PLUS Pre-approval
  form below.

22
Frequently Asked Questions
23
Do I qualify for Financial Aid?

• Do I qualify for Financial Aid?You do, if the
  following applies
• You must have a high school diploma or equivalent
  (GED).
• You must be at least a half-time student,
  enrolled in an eligible institution in a program
  that leads to a degree or certificate.
• You must be a US citizen or eligible non-citizen.
  
• You must make satisfactory academic progress (as
  determined by the university)

24
When do I apply?

• When do I apply?It is wise to complete the Free
  Application for Federal Student Aid (FAFSA) as
  soon as possible after you and/or your parents
  have filed prior year income tax returns. Federal
  Aid (i.e. grants, scholarships) depletes rapidly
  due to the overwhelming request for free aid.
  Apply as early in the calendar year as
  possible.You may apply by going to
  www.fafsa.ed.gov.

25
Are there any Fees?

• Are there any charges or fees for federal student
  loans?Yes. There is a 1.5 origination fee to
  the federal government to help run the Stafford
  loan program and a 1 default fee to the
  guarantor. There is a 3 origination fee to the
  federal government and a 1 default fee to the
  guarantor for Federal PLUS loans. This fee is
  deducted remitted to the prospective agencies
  on your behalf by the lender or the lender may
  elect to pay all or a portion of the fees on the
  borrowers behalf.

26
What is the interest rate?

• What is the interest rate for Federal Student
  Loans?The interest rates on federal student
  loans are fixed rates, 6.8 on Stafford Loans and
  8.5 on PLUS Loans. These are federal rates and
  will be the same with every student loan lender.

27
Will my student loan transfer?

• Will my student loan transfer from one college to
  another?Unfortunately, no. Each college's costs
  expenses are different therefore, you may
  qualify for more or less at a different
  institution. The remainder of your original loan
  would have to be cancelled, and a new loan
  certified by the new school.

28
Can a part time student receive aid?

• Can I attend college on a part-time basis and
  still qualify for aid?Yes. Under the federal
  loan programs, you must attend at least half time
  which at most colleges is 6 hours per semester.
  Please contact your financial aid office to
  verify their requirements for at least half time
  attendance.

29
What do I look for in a Lender?

• How do I choose my Lender?
• All Lenders will have the same interest rate,
  and loan eligibility amounts. When choosing a
  lender you want to compare lender benefits,
  availability, and resources.

30
Helpful Online Links

• Student Loan Links
• FAFSA on the Web www.fafsa.ed.gov
• fastWEB Scholarship Search www.fastweb.com
• The Financial Aid Information Page
  www.finaid.org

31
Questions?