Financial Aid for College

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Financial Aidfor College

• Maggie Bleeker, Northwestern University

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Tonights Program

• Behind the scenes What a College can help you
  with
• What exactly is financial aid
• The financial aid language
• Application process in a nutshell
• How eligibility is determined and how it can vary
  from school to school
• Other resources

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The Relationship Between Financial Aid,
Admissions, and the HS Counselor
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The Financial Aid Office

• Be committed to removing financial barriers
• Be an advocate for the student at all levels
• Educate students and families through quality
  consumer information
• Provide services that do not discriminate
• Maintain the highest level of professionalism

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A Partnership

• 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 appropriate
  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

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Choosing a CollegeWhat college would be the best
fit for you?

• Program
• Location
• Size
• Mix of Students
• Academics
• Extracurricular
• Facilities
• Financial Considerations

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College Costs2008-2009

• Two Year Public 14,054
• Four Year Public
• Instate 18,326
• Out-of-State 29,193
• Four Year Private 37,390
• Source Trends in Higher Education Series 2008,
  College Board

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What are the costs?
Tuition Fees
Room Board
Transportation
Books Supplies
Miscellaneous Living Expenses

Cost of Attendance (COA)
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    Other Expenses     Transportation     Books
and Supplies     Room and Board
    Tuition and Fees
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What is Financial Aid?

• Scholarships
• Grants
• Student Loans
• Work-Study

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Financial aid is available from three major
sources

• ? U.S. Department of Educationthe federal agency
  that provides college funding in the form of
  grants, scholarships and loans
• ? States
• most states have agencies that administer state
  scholarship and grant programs, college savings
  and prepaid tuition programs, and loans. (In IL
  it is ISAC, the Illinois Student Assistance
  Commission)
• ? Colleges and Universities
• schools offer their own scholarship, grant,
  work-study and loan programs, with each college
  setting its requirements

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Two Categories of Aid

• Merit-based
• Need-based

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Merit Scholarships

• Based on a students . . .
• Academic ability,
• Merit
• Talent

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Types of Need-Based Aid

• Gift aid
• Self-help aid

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Gift aid vs. Self-Help

• Scholarships gift aid
• Grants gift aid
• Work-Study self-help aid
• Loans self-help aid
• These funds may be merit-based,
• need-based,or non-need-based.

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Private Financial Aid Sources

• Private Foundations
• Civic Organizations
• Scholarship Search Services
• High School College Counseling Office

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Who Receives Private Scholarships?

• 2.3 Million Recipients
• 3.3 Billion Awarded
• 2,000 Average Award
• 7 of undergraduates
• 3 of total aid

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Scholarship Scams

• Consultants
• Seminars
• Warning Signs
• WWW.FINAID.ORG

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So . . . how does the process begin?
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• To apply for all federal and state aid, families
  must complete the...

• Free Application for Federal Student Aid
  (FAFSA)
• The FAFSA collects financial data such as income
  and asset equity, and student and family
  demographic information. It is used to determine
  the students eligibility by calculating an
  index called the EFC (Expected Family
  Contribution)

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Supplemental Financial Aid Applications

• The College Scholarship Service Financial Aid
  PROFILE
• A Colleges own application for financial aid
• Information from Noncustodial Parent
• Federal Tax returns
• Other

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Special Situations

• Examples of items not on the FAFSA
• income change (work, child support, SSBs, etc)
• large healthcare costs
• some educational costs
• support of extended family
• significant non-elective home repairs
• consideration will vary from school to school
• check with financial aid office for how to
• provide s and explanation, and daytime phone

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Overview of the FAFSA

• 2009-2010 available January 1
• 7 Steps
• Submit it soon after January 1
• FAFSA4caster

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FAFSA4caster

• http//www.fafsa4caster.ed.gov/
• Instantly calculates a student's estimated
  eligibility for federal student aid and can be
  completed at any time
• Automatically fills in half the questions on the
  FAFSA, making it easier for families to complete
  the real form during the student's senior year
• Calculations for 12 different school scenarios,
  including four-year and two-year schools, public
  and private, in-state and out-of-state residency,
  and on-campus and off-campus housing.

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Three Ways to Access the Free
Application for Federal Student Aid

• FAFSA on the Web
• www.FAFSA.ed.gov
• PDF FAFSA
• www.Federal StudentAid.ed.gov
• Paper FAFSA
• 1-800-4-FED-AID

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FAFSA on the Web (FOTW)

• Available January 1
• English or Spanish
• Skip logic and online editing
• Electronic signature

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Student needs one ----- Parent needs one
----- Each one is different!
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PIN E-mail Notification
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Expected Family Contribution

• Your expected Family Contribution or EFC is
  established by the federal processor.
• Your EFC is the amount of money you and your
  parents can be expected to contribute to your
  college costs each year.

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Expected Family Contribution

• Contribution from Parental Income
• Contribution from Parental Assets
• Contribution from Student Income
• Contribution from Student Assets

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What are the Costs?

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

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• The College determines eligibility for financial
  aid by
• Cost of Attendance
• - Expected Family Contribution
  Financial Need

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Financial Need Comparison

• College A
• COA 25,000
• EFC - 10,000
• Financial
• Need 15,000

• College B
• COA 8,500
• EFC -7,500
• Financial
• Need 1,000

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• The Financial Aid award letter or package
• Will contain a combination of
• scholarship, grant, loan and work-study funds
• Why might packages be different?
• cost of attendance
• scholarship criteria and availability
• institutional philosophy and funding
• federal funding levels

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Comparing Financial Aid Award Letters

• List the assumptions used to determine the COA
  (such as enrollment status, housing, fees, books,
  travel, etc.)
• Clearly states what your family contribution is
  as well.

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Sample Award Letters

• Example 1
• Dependent Freshman with Very High Need and meets
  full need.
• Cost of Attendance 12,240
• Family Contribution 0
• Financial Need 12,240
• Federal Pell Grant 4050
• Federal SEOG Grant 1000
• State Grant 1000
• Federal Work Study 1800
• Federal Perkins Loan 3000
• Federal Stafford Loan 890
• Total Financial Aid Package 12240

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Example 2 Dependent Freshman with High Need at a
High Cost School

• Cost of Attendance 29,120
• Family Contribution 1,649
• Financial Need 27,471
• Institutional Grant 11,998
• Federal Pell Grant 2,400
• Federal SEOG Grant 1,000
• State Grant 1,500
• Federal Work Study 2,500
• Outside Scholarship 2,000
• Subsidized Stafford Loan 2,625
• Recommended Federal Parent PLUS Loan 3,448
• Total Financial Aid 27,471

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Example 3 Dependent Freshman with No Financial
Need

• Cost of Attendance 12,240
• Family Contribution 14,556
• Financial Need 0
• Scholarship 1,500
• Unsubsidized Loan 3,500
• Parent PLUS Loan 7,240

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Return the signed award letter to the college, if
required.Meet the deadline!
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Financial Planning

• Estimate total costs for length of program
• Develop a plan to fund and finance
• How will you pay?
• If you need to borrow understand your options
• Educational loans, personal loans, home equity
  loans
• Know the terms (read the fine print)
• Apply to at least one safe school
• Academics and affordability

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Federal Stafford Loan

• Low-interest loan the student takes out on
  his/her own behalf
• The FAFSA must be completed
• Interest Rate
• Varies depending on subsidized or unsubsidized
• Repayment begins 6 months after the student
  graduates or falls below half-time enrollment
• Freshmen may borrow 3,500

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Federal Stafford Loan(differences between 2
types)

• Subsidized
• Need-based
• Federal Government pays interest while student is
  in college and during grace/deferment periods.
• 2008-2009 6
• 2009-2010 5.6
• 2010-2011 4.5
• 2011-2012 3.4

• Unsubsidized
• Not based on need
• Payment of interest is always students
  responsibility
• 2008-2009 6.8 (this will not change)

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Federal PLUS Loan

• Parent is the borrower
• Fixed interest rate, 8.5
• Maximum loan amount is the cost of attendance
  minus all financial aid received for the student
• Approval subject to a credit check
• Repayment begins within 60 days after the loan is
  disbursed

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Private Loan Programs

• Credit checks
• Co-signer
• Higher interest rates
• Borrow cautiously

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Loan Programs
When evaluating loan options, consider
Source of Loan
Repayment Grace Period
Interest Rate
Subsidized vs. Unsubsidized
Know what youre signing what you promised
where your money goes your loan limits your
rights and responsibilities loan repayment,
deferment forbearance options how to manage
debt Entrance Exit Counseling requirements
the consequences of default and who to contact.
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More Ways to Finance Your Education

• Tax Benefits for Education Publication 970
• Hope Credit
• Lifetime Learning Credit
• Student Loan Interest Deduction

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More

• IRA Early Withdrawal Provision for Education
• No penalty for early withdrawal of IRA funds to
  pay qualified educational expenses.
• Education IRA
• Type of IRA in which contributions are made until
  the beneficiary reaches the age of 18.
• Prepaid Tuition Programs
• Tuition costs are rising at a faster pace than
  inflation so starting this program at any time
  can help reduce costs.
• 529 Plans
• Allows students of any age and their families to
  save money tax-free under Section 529 of the
  Internal Revenue Code. Plans vary from state to
  state.

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Where to Look for

• Your High School
• A Colleges Financial Aid Office
• The Internet
• www.collegezone.com
• www.college.gov
• www.finaid.org
• www.studentaid.ed.gov

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REMEMBER!

• Plan ahead
• Apply early
• Read CAREFULLY
• Meet deadlines
• Keep copies

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10 tips on Financial Aid

• Every student should apply for aid regardless of
  family income. The financial-aid office needs the
  Free Application for Federal Student Aid, or
  Fafsa, to process a loan, even for students who
  don't qualify for need-based aid. And, if a
  student's financial situation changes, the
  financial-aid office cannot offer aid without
  that form.
• Deadlines matter. Students have to apply for aid
  each year, and they must do so on time.
  First-year students need to understand that
  different colleges may have different deadlines.
• All aid applications are not the same. All
  colleges require the Fafsa. About 250 colleges
  require a CSS/Financial Aid Profile, a form that
  asks for more information than is included on the
  federal form. State grants and outside
  scholarships may also require additional
  paperwork.
• Students should know what colleges mean by
  "family contribution." This figure is what a
  college determines a family can contribute based
  on the Fafsa, sometimes combined with information
  from a CSS/Financial Aid Profile. The dollar
  amount is not necessarily what the family will
  pay, since students don't all spend the same
  amount of money on items like housing. It could
  also vary from college to college.
• Students should be aware of what is included in
  the cost of attendance. This figure includes
  tuition, fees, housing, and indirect costs like
  books, supplies, and transportation. The actual
  cost paid for some of these items will vary from
  student to student.

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10 tips on Financial Aid

• Eligibility and need aren't always the same. If a
  student meets the criteria for a federal Pell
  Grant, the college has to award it. But the
  college may determine that a student who is
  eligible for a Pell Grant on paper doesn't
  demonstrate the level of need to get other
  institutional need-based aid.
• There is a big difference between need-based and
  merit aid. Merit aid is almost always tied to
  academic performance, and some is tied to
  specific criteria like having a certain major or
  being from a certain part of the country.
  Need-based aid is determined solely from
  families' documented financial situations.
• There are different forms of aid. Students can
  receive federal, state, and institutional aid.
  Aid can come in the form of grants, loans, or
  work. And yes, financial-aid offices view loans
  as a form of aid.
• Award letters vary. Be sure to note whether aid
  is in the form of grants or loans and whether it
  is renewable from year to year.
• Award letters can be appealed. If a family knows
  or expects its financial situation will change,
  it should talk it over with the financial-aid
  office. Most offices can help a family with
  special circumstancesan issue many expect to see
  happen more in a year like this one.

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Questions
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