Financing Education Beyond High School

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Financing Education Beyond High School

• 2008-09

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Goals of Financial Aid

• Primary goal is to assist students in paying for
  college and is achieved by
• Evaluating families ability to pay educational
  costs
• Distributing limited resources in an equitable
  manner
• Providing balance of gift aid and self-help aid

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Definition of Need

• Cost of attendance (COA)
• Expected family contribution (EFC)
• Need

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Cost of Attendance

• Tuition and fees
• Room and board
• Books, supplies, transportation, and
  miscellaneous personal expenses, including
  documented costs for a personal computer
• Loan fees
• Study abroad costs
• Dependent care expenses
• Disability-related expenses
• Cooperative education program costs

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Need Varies Based on Cost
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Principles of Need Analysis

• To extent they are able, parents have primary
  responsibility to pay for dependent childs
  education
• Students have a responsibility to contribute to
  educational costs
• Families should be evaluated in their present
  financial condition
• Familys estimated ability to pay educational
  costs must be evaluated in equitable and
  consistent manner, recognizing that special
  circumstances may affect familys ability to pay

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Federal Methodology

• Federal Methodology is the formula created by
  Congress to determine the EFC.

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Independent Student Definition

• At least 24 years old by December 31 of award
  year covered by the FAFSA (for 08-09, born before
  January 1, 1985)
• Graduate or professional student
• Married
• Has children or dependents (other than a spouse)
  for whom the student provides more than half
  support
• Orphan or ward/dependent of the court
• Veteran of U.S. Armed Forces or currently serving
  on active duty (for other then training purposes)
  in the Armed Forces or
• Determined to be independent by financial aid
  administrator based on unusual circumstances

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EFC for a Dependent Student at a Glance

• Step 1 Determine available parental income
• Step 2 Determine available parental assets
• Step 3 Determine portion of available parental
  income and assets available for education
• Step 4 Determine student contribution
• http//www.ifap.ed.gov/eannouncements/attachments/
  0809EFCFormulaGuide.pdf

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EFC for a Dependent Student

• Step 1 Determine available parental income
• Total income (taxed and untaxed)
• Excludable income (e.i., child support paid)
• Taxes paid (i.e., federal, state, local,
  Social Security)
• Income protection allowance for basic living
  expenses (e.i., food, shelter, etc.)
• Employment allowance (if eligible)
• Available income (may be negative)

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EFC for a Dependent Student

• Step 2 Determine available parental assets
• Value of cash, savings, and checking accounts
• Adjusted business/farm net worth (total value
• minus debt against business/farm)
• Investment/real estate net worth (excluding
  home)
• Education savings and asset protection
• allowance (determined by age of older parent)
• x Asset conversion rate (12)
• Parental contribution from assets

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EFC for a Dependent Student

• Step 3 Determine portion of available parental
  income and assets available for education
• Available income
• Contribution from assets
• Adjusted available income (AAI)
• x Assessment rate (varies)
• Total parental contribution
• Number attending college (excluding parents)
• Parental contribution for student

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EFC for a Dependent Student

• Step 4 Determine student contribution
• Total income (i.e., taxed and untaxed)
• Excludable income
• Taxes paid (i.e., federal, state, local, and
  Social Security)
• Income protection allowance
• Parental adjusted available income if
• Students available income

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EFC for a Dependent Student

• Step 4 Determine student contribution
• Students available income
• x 50 assessment rate
• Income contribution from student
• 20 of the students net asset worth
• Student contribution

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EFC for a Dependent Student

• Parental contribution from income and assets
  (as adjusted, if more than one household member
  in college)
• Student contribution from available income and
  assets
• EFC

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Disclaimer

• The following examples are just examples from
  students at WCTC
• The information supplied does not include all of
  the data elements used in EFC calculations
• Awards are based on WCTC awarding procedures and
  awards could vary at other colleges

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Dependent Student Example 1

• Family of 3 with one in college
• Parents Information
• Adjusted Gross Income 65,346
• Taxes Paid 4,615
• Untaxed Income 4,163
• Savings/Investments 2,400

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Dependent Student Example 1

• Students Information
• Adjusted Gross Income 6,834
• Taxes Paid 184
• Savings/Investments 2,200

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Dependent Student Example 1

• EFC 12,636
• Award Stafford Loan 3,500
• May be Subsidized or Unsubsidized depending upon
  cost of attendance
• Not eligible for any federal or state grants
• Could be eligible for private grants or
  scholarships

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Dependent Student Example 2

• Family of 2 with one in college
• Parents Information
• Adjusted Gross Income 17,705
• Taxes Paid 0
• Untaxed Income 5,892
• Savings/Investments 150

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Dependent Student Example 2

• Students Information
• Adjusted Gross Income 7,398
• Taxes Paid 0
• Savings/Investments 1,000

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Dependent Student Example 2

• EFC 0
• Award
• Stafford Loan 3,500
• Federal Pell Grant 4,050
• FSEOG 300
• WI Higher Education Grant 1,000
• Federal Work-Study 2,400

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Dependent Student Example 3

• Family of 4 with 2 in college
• Parents Information
• Adjusted Gross Income 43,597
• Taxes Paid 2,039
• Untaxed Income 2,882
• Savings/Investments 50

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Dependent Student Example 3

• Students Information
• Adjusted Gross Income 10,973
• Taxes Paid 598
• Savings/Investments 190

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Dependent Student Example 3

• EFC 5502
• Award
• Stafford Loan 3,500
• Federal Work-Study 2,400
• Could possibly be eligible for a state grant at
  UW or private sector
• Could be eligible for private scholarship or
  grant

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Dependent Student Example 4

• Family of 6 with 2 in college
• Parents Information
• Adjusted Gross Income 102,209
• Taxes Paid 6,011
• Untaxed Income 4,577
• Savings/Investments 105,000

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Dependent Student Example 4

• Students Information
• Adjusted Gross Income 17,611
• Taxes Paid 1529
• Savings/Investments 500

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Dependent Student Example 4

• EFC 17,472
• Award Stafford Loan 3,500
• May be Subsidized or Unsubsidized depending upon
  cost of attendance
• Not eligible for any federal or state grants
• Could be eligible for private grants or
  scholarships

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Want to try calculating your own EFC?

• www.fafsa4caster.ed.gov
• http//www.finaid.org/calculators/finaidestimate.p
  html
• http//www.act.org/fane/

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So Now What?

• File the FAFSA
• Can do so beginning January 1, 2008
• Apply online at www.fafsa.ed.gov

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College Goal SundayFebruary 10, 2008 200
400 p.m.

• College Goal Sunday is a statewide event that
  will offer free assistance to families in
  completing the Free Application for Federal
  Student Aid (FAFSA)
• Volunteer forms, marketing materials and
  additional information can be found on the
  website
• Scheduled at 20 sites throughout Wisconsin

www.WiCollegeGoalSunday.org
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College Goal SundayComing to a Location Near
You!!!
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Loan Comparison Chart
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PLUS vs. Private Alternative Loan
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How to Evaluate and Choose a Lender

• Interest rates and terms some lenders offer
  better terms or discounts
• Front End Benefits awarded on or before
  repayment
• Origination Fee waivers
• Default Fee waivers
• Back End Benefits awarded after the loan is in
  repayment
• Electronic debiting incentives
• Interest rate reductions
• Loan principal reductions
• Borrower benefits may have specific eligibility
  requirements
• Loan application processes
• Can you apply online?
• Is instant approval offered?
• Repayment plans
• Customer service
• Toll free numbers during convenient hours
• Website

• Ability of lender to service all of your loans
• Carefully evaluate terms and conditions of loan
  options available via the Financial Aid Office,
  from direct mail, etc.

• Before borrowing, think about your ability to
  make the monthly payment when you leave school
• Borrowers are free to choose any participating
  lender
• Borrow only what is needed for direct educational
  expenses and avoid borrowing funds for
  discretionary spending

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Questions?

• Benjamin P. Dobner
• Financial Aid Manager
• Waukesha County Technical College
• 262.691.5436
• bdobner_at_wctc.edu
• www.wctc.edu/finaid
• Click on Financial Aid Basics, then Printable
  Documents.
• You will see this presentation listed under
  Presentations.