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• Affording College Solving the Financial Aid
  Mystery

Sponsored By
The Education Funding Consultants Association
A National 501 (c ) 3 Non-Profit Organization
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Handouts Does everyone have one?

• Strategies
• FAFSA WORKSHEET
• Evaluation Form
• www.efcagroup.org

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(No Transcript)
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Program Outline

• Who We Are
• The College Cost Environment
• College Facts Myths
• The differences between the SAT VS ACT
• The Financial Aid Process
• Paying For College?
• Strategies Programs-Making College a Financial
  Non-Event!

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Who Is The Education Funding Consultants
Association?

• Federal tax-exempt 501(c)3 non-profit
  organization.
• Works in conjunction with member colleges,
  universities, and organizations/companies.
• Provides HS informational programs to parents of
  college-bound students.
• Provide the necessary information about -
  financial aid, maximizing awards coping with
  the costs of college.

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Do You Know What This Is?
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Three Most Important Years

• Schools use a students first three years when
  considering acceptance for that student into
  their school.
• What they look at
• GPA and SAT
• AP or Honors classes
• Extracurricular activities (Talent/Skills)

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High School - 9th Grade This is an important
year!

• This year lays the foundation for the classes
  that the student needs to take in the coming
  years (the better the classes the better the
  chances for acceptance at the most competitive
  colleges).
• Take challenging classes in English, mathematics,
  science, history, geography, foreign language,
  government, civics, economics, the arts AND DO
  WELL IN THEM!!
• Get to know your career or guidance counselor as
  well as other college resources available in your
  school.

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High School - 10th Grade

• This is the most important year and often not
  considered as suchthis is the qualifying heat
  when determining where to place for 11th grade.
• Become involved in school - or community-based
  extracurricular (before or after school)
  activities that interest you and/or enable you to
  explore career interests
• Take the Preliminary SAT/National Merit
  Scholarship Qualifying Test (PSAT/NMSQT). You
  must register early.

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Myth about the PSAT
Does my childs score really matter on the PSAT?
I heard the score does not count towards
anything. Yes it does The PSAT is used to
disburse National Merit Scholarships. This is not
a test you want to take for granted.
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HIGH SCHOOL - 11th GRADE

• Meet with your career or guidance counselor to
  discuss colleges and their requirements.
• Decide which colleges most interest you. Contact
  them to request information and an application
  for admission. Ask about special admissions
  requirements, financial aid, deadlines and ask if
  you can see sample essays?
• Talk to college representatives at college fairs.
• Visit colleges and talk to students. Consider
  which people you will ask for recommendations -
  teachers, counselors, employers, etc.
• Investigate scholarships provided by private
  sources, talk to your guidance department about
  local scholarships.
• Register for and take the SATs or the ACT, SAT
  I-Subject Tests or any other exams required for
  admission to the colleges you would like to
  attend.

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SAT VS ACT
Which one should you take?
The Correct answer is .BOTH!
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How Do These Tests Compare?
What is the Content?
SAT
ACT

• Math up to basic Geometry Algebra ll
• Science none
• Reading sentence completion, short long
  critical reading passages, reading comprehension
• Writing essay testing grammar, usage, word
  choice

• Math up to Trigonometry
• Science charts, experiments
• Reading four passages, one each of Prose
  Fiction, Social Science, Humanities, Natural
  Science
• English stresses grammar
• Writing essay (optional)

Note The ACT essay is optional the SAT essay is
not!
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About the SAT / ACT
ACT Scoring
SAT Scoring
English 1 - 36 Math 1 - 36 Reading 1 -
36 Science 1 - 36 Writing 2 12 (Will
account for 1/3 of English/Writing score)
Critical Reading 200 - 800 Math
200 - 800 Writing 200 -
800 Essay 2 12 (Will
account for 1/3 of English/Writing score)

• Used by all U.S. Colleges as an admissions
  requirement to award scholarships.
• This exam tests more on what you have learned in
  school from the classes taken.

• Required for admission by most U.S. Colleges.
• It is a reasoning test requires reasoning
  skills to excel.

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Admissions Timeline

• Early
• Early Action vs. Early Decision
• Nov. 1st 15th Submission
• Dec. 15th Jan 10th Acceptance notification
• Regular
• Jan. 1st Feb 1st Submission
• March 1st April 15th Acceptance
• On or around May 1st decision by student

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College Fairs / Visits
Great way to get information on colleges you wish
to consider or visit.

• Graduation Rate
• Financial Aid
• Majors offered
• Campus life
• Cost of Attendance
• Give you a feel of their campus life (do you see
  yourself at this school?)

• SAT and GPA requirements
• Admission requirements
• Internship programs
• Job placement rate

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Fear Factor - Control The Fear

• Get Your Forms Done
• Avoid Making Mistakes
• Follow the Admissions Time Line
• Search for Grants Scholarships
• Visit our website for entry to a 10,000
  monthly scholarship giveaway!
• www.efcagroup.org
• Visit a few Colleges

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Marketing Opportunity for Colleges
Besides tuition colleges have many money making
opportunities

• Health Insurance
• Credit Cards
• Cell Phone Plans

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College Costs...
Prepare for a
SHOCK!!!
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College is EXPENSIVE !
Annual Costs
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The 200,000 Mark!
College / University
George Washington U. Bucknell
University University of Richmond
Bennington College Sarah Lawrence U. Columbia
U. Kenyon College Wesleyan Vassar College
Trinity Coll. Drexel University
UPENN
Source Money.cnn.com
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Chances of Graduating In 4 Years???

• 2 in 10 from a Public School.
• Less than 1 in 2 from a Private School.
• 65 of enrolled students do not complete a degree
  in 4 years.
• 50 do NOT finish where they started.

THIS WILL IMPACT YOUR TOTAL COST!
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Useful Statistics

• Number of HS Grads expected to increase until
  2014
• (58 women, 42 men)
• 50 of apps filed on-line
• 70 of students file 3 or more apps
• Steady increase in early apps (to 16)
• 400 apps per admission officer
• 70 of HSs rank
• Public HS counselor to student ratio is 3151
• 21 of public HSs have college counselor

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Types of Colleges(4200 total)
In the U.S. there is a higher education
opportunity for every level of student interest
and ability. My categories Register and
attend (1900) Routine enrollment
process Specialty schools (300) Admit on
interest and talent Meet basic standards (1500)
Admit more than 75 of applicants Competitive
(400) Admit from 40 to 75 of
applicants Selective (100) Admit fewer than 40
of applicants
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Specialty Schools
For students who have a very specific career
interest and dont need the typical college
experience. Examples (300)

• Culinary arts Johnson Wales
• Aeronautics Embry-Riddle
• Art, design, fashion Art Institute of
  Philadelphia
• Technology, engineering Webb Institute
• Business, accounting Babson
• Performing arts, music, dance Julliard
• Military academies West Point

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Competitive and Selective

• 5-year grad rate
• 50 or more for publics
• 80 or more for privates
• 50 or more of freshmen have SAT over 1200, ACT
  over 24
• 3.5 average high school GPA
• 1/3 or more from top 10 of H.S. class
• They are the types of colleges where good
  admission planning is needed.
• They tend to be more expensive and information
  about how to pay, with or without aid, is
  important.

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Personality and Career Assessment

• As a first step in the admission process, it may
  be a good idea to make a connection between ..
• Personality characteristics
• Areas of interest
• College courses, majors, and schools
• Career choices
• Collegeboard.com - Myroad.com

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Increasing Pressures on Middle Class America
INCOME IS DOWN DEBT IS UP
And Parents are busier than ever!
Parade Magazine April 2006
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The Cost of College 2008 2009
Pre-tax Needed
5 years
Annual Cost
Total Cost (5yrs.)
University of Maryland 37,218
200,297 266,395 RUTGERS U.
24,500 138,109
183,685 NYU
52,290 294,763 392,035
BOSTON COLLEGE 48,934 267,108
355,254 VILLANOVA
48,530 273,568 363,845
GEO WASHINGTON U 53,760
303,050 403,056
Assumes 6 Tuition Increase Annually. Assumes
33 Federal Tax NJ State Tax
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What is Financial Aid? How is it Dispensed?

• Merit
• Academic
• Athletic
• Other Talents
• Financial Need
• Family income
• Assets
• Scholarships
• Grants

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The Goal of Financial Aid
Assist students in paying for college and
achieved by

• Evaluating familys ability to pay
• Distributing limited resources in an equitable
  manner
• Providing a balance of gift aid and self-help aid

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Meeting a Students Financial Need

• Choose your college wisely, because
• Not all will meet 100 of need
• Private colleges generally
• Meet a higher percentage of need
• Award a higher percentage of gift aid
• Loans
• Work Study
• Many students can attend a private college for
  the same cost as a public university!

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Need Based Formula
Based on a "needs analysis" formula Total
College Costs (COA)
30,000 Expected Family Contribution (EFC)
12,000 Financial Need
18,000
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What is the "Expected Family Contribution (EFC)"?

• How much the family is expected to contribute,
  based on the FAFSA or PROFILE

The Cost of Attendance
Tuition and Fees Room and Board Books Transportati
on Cost of Computer Misc. Expenses

____________________
Cost of Attendance COA

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2007 2008 EFC Calculations
Based on Parent Income and Family Size
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Methods Used to Determine EFC

• Federal Formula (FM)
• Institutional Formula (IM)

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Federal Methodology

• Used by all accredited public and private
  colleges and universities
• Used to disburse Federal financial aid funds
• Does not assess home or family farm equity or
  retirement accounts (including annuities and
  cash-value life insurance)
• FAFSA form is used to collect the information

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(No Transcript)
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FAFSA on the Web
www.fafsa.ed.gov
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To Register for a PIN
www.pin.ed.gov
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Reportable Assets On FAFSA

• Brokerage Accounts, Savings Accounts
• In Parent and Student Names includes
• Mutual Funds, Stocks, Bonds, etc.
• 529 QTP

Note! Section 529 plans can CAUSE A LOSS OF
FINANCIAL ELIGIBILITY. Value is based on Parents
accessibility formulas and no longer assessed as
a student asset. However, all children 529
accounts are included in formula.
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Institutional Methodology

• Used by some private colleges to distribute
• Endowment funds
• Assesses the home and family farm equity
• Assesses a fee to complete the application
• PROFILE form is used to gather the information

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CSS Profile Application
Some Colleges, Universities, Graduate Schools
Scholarship Programs Information collected on
PROFILE awards non-federal student aid funds.
Pay a fee to register submit to each specific
school or program
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Reportable Assets on CSS / Profile
Institutional Methodology
Savings Stocks Bonds
Mutual Funds 529 QTP
Sibling Assets Home Value
Retirement Plans
Note! Some Schools may ask for the values of
Non-Retirement Annuities, Cash Value Life
Insurance, the value of Family Cars and Personal
Property.
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Special Situations
Two in College
Having more than one student in
post-secondary school at one time will lower your
EFC per student
EFC 10,000
Two Students 10,000 2 EFC5,000
Three Students 10,000 3 EFC3,333
Be careful of Gapping!
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Common FAFSA Errors
Avoid ERRORS!
Errors made in completing the FAFSA and/or
supplemental forms may delay application
processing and result in the loss of financial
aid funds.

• Divorced/remarried parent information
• Not Obtaining Two PINs
• Untaxed income
• U.S. income taxes paid
• Household size
• Number in post-secondary education
• Real estate and investment net worth

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Meeting a Students Financial Need

• Choose your college wisely, because
• Not all will meet 100 of need
• Private colleges generally
• Meet a higher percentage of need
• Award a higher percentage of gift aid
• Many students can attend a private college for
  the same cost as a public university!

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PUBLIC vs. PRIVATE COLLEGE
University of Virginia Cornell University
Total Cost 39,235 Total Cost Total Cost 50,384
EFC - 11,000 EFC EFC - 11,000
NEED 28,235 NEED NEED 39,384
Need Met 45 Need Met Need Met 100
Financial Aid Eligibility 12,705 Financial Aid Eligibility Financial Aid Eligibility 39,384
Gift Aid (42) 5,336 Gift Aid (81) Gift Aid (81) 31,901
Self-Help (58) 7,369 Self-Help (19) Self-Help (19) 7, 483
Out-of-Pocket Cost (Total Cost Financial Aid Eligibility) 26,530 Out-of-Pocket Cost (Total Cost Financial Aid Eligibility) Out-of-Pocket Cost (Total Cost Financial Aid Eligibility) 11,000
True Cost (Total Cost Gift Aid) 33,899 True Cost (Total Cost Gift Aid) True Cost (Total Cost Gift Aid) 18,483
Out of State Public School
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Federal Loan Programs
(Subsidized and Unsubsidized)

• Subsidized Stafford Must demonstrate need
• Unsubsidized Stafford Need is not a
  consideration
• Parent Loans Helps parents cover the complete
  cost of their childs education, less any
  financial aid received (Not based on income or
  assetseven Bill Gates would qualify!)
• Federal Loan Consolidation programs that takes
  multiple loans and folds them into one entity
  with fixed rates extended payment terms
• Lowest Rates in 38 year history of program
• Lower interest rates than other consumer options
  (Credit Cards, Home Equity, Private Education
  Loans)
• Flexible repayment terms and options for students
  and parents
• Remember NEVER go into debt without a clear
  plan to pay it back!!!

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Deficit Reduction Act of 2005

• 39 billion in cuts to student loan subsidizes
• Stafford limit increased from 2,625 to 3,500
• Stafford interest rate increased to a fixed 6.8
• Plus loan interest rate increased to 8.5
• Academic Competitiveness Grants 750 to 1,300

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Home Equity Loan
PLUS Loan
VS.

• Potentially lower interest rate
• You can borrow more than the cost of attendance
• If you sell your home, you must pay back home
  equity loan

• Can borrow the cost of attendance less financial
  aid award
• If you sell your home, you do not need to pay
  this off
• If death or total disability occur, loan is
  forgiven

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Know the System!

• Aid doesnt necessarily go to the most needy
• It goes to those with the most KNOWLEDGE!!!

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The Secret Weapon
Financial Aid Leveraging

• Financial aid now used as a tool to attract
  affluent and high-scoring students
• Data-mining and pricing techniques from the
  airline and marketing industries
• The Sure Things
• Schools use detailed data to systematically cut
  aid to students whose behavior shows they are
  likely to accept admission anyway.

Source The Atlantic Monthly, November 2005
Author Matthew Quirk
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The ResultFinancial Aid Leveraging

• Financial aid leveraging allows a school to buy,
  within certain limits, whatever class it wants.
• Its a brilliantly analytical process
• of screwing the poor kids.
• Gordon Winston, economist at Williams College

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Financial Leveraging

• A 20,000 merit-based scholarship
• Break into four 5,000 merit scholarships to lure
  the wealthy
• School reaps an extra 240,000 over four years
• Windfall used to buy more rich students or
  gifted students to improve the schools profile

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Admit-Deny Tactics

• Schools intentionally gap poor students
• The school knows they cant afford to attend
• Keeps poor students out claiming it doesnt
  consider a students finances when making
  admission decisions

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The Numbers

• Since 1990, average discount on sticker-price
  has risen from 26.5 to just under 40
• Proportion of students not paying full price has
  grown from 62.5 to 80
• Shifting from need-based to merit aid, increases
  a schools average SAT by 50 points and revenue
  162

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There comes a moment in every Parents life when
it becomes clear. Winging It is no longer an
appropriate funding plan for college.
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Parents Need to Solve the Dilemma Between..
Education Funding
Retirement Funding
These are important obvious concepts that need
to be examined solved before settling on any
specific school or giving the student carte
blanche to attend any specific school.
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College is Paid with After-Tax Dollars
Assumes additional 6 state and local tax and a
6 college inflationary increase only ONE
childs college expenses Actual dollar amounts
are higher---we rounded down!
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College Cash Flow
Typical Family Plan of Action
Use of Parent Loans to Pay the College
Expenses Based on 25,000 plus loan
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Cash Flow for Education/Retirement

• Can cash flow be increased?
• Can you save a comfortable monthly amount?
• Which strategies to increase cash flow?
• Decrease discretionary expenses
• Debt consolidation

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Understanding HOW to make Paying for college a
NON-EVENT!!!

• Identification of all appropriate financial
  strategies which may include
• Income Shifting
• Asset Reallocation
• Tax Concepts
• Academic Strategies
• Detailed action plan with instructions for
  implementation of all appropriate strategies to
  effect the most beneficial financial snapshot to
  enhance, both financial aid eligibility as well
  as long-term wealth planning
• Long term wealth planning Retirement

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College Dollars Spent
equals
Retirement Dollars Lost
Four Year Costs (2006-2009)
Years Until Retirement Public 90,000 Private 150,000 Elite 235,000

15 285,495 475,825 745,459
20 419,486 699,143 1,095,324
Assumes 6 investment rate, one child in college,
after tax dollars
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Let the IRS Help Pay for Your Childs College
Education

• Deduction may be the same as scholarship
• Higher your tax bracket, the greater the benefit
• IRS rules allow you to keep more
• NOTE All tax strategies MUST be reviewed with
  a tax advisor

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Income and Asset Shifting

• Accomplished by putting income-producing assets
  in a childs name
• Creates income and estate tax savings
• Gifts of appreciated assets during college years
  can reduce certain taxes.
• Compensating the child can reduce certain taxes.
• Gifts of highly appreciated assets prior to
  college years can be an effective strategy.

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What Are your Options?

• Do it yourself.
• Utilize the knowledge of a Certified College
  Planning Specialist (CCPS designation)
• A consultant/specialist working in a little known
  but very important niche!

No matter whathave a game plan!!!
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Important Internet Sites

• Financial Aid
• www.fafsa.ed.gov
• www.pin.ed.gov
• Scholarship Searches
• www.findtuition.com
• www.fastweb.com
• www.finaid.com
• College Resources
• www.collegeboard.com
• www.petersons.com
• www.college-retirement.com
• www.myroad.com(collegeboard)

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For College Funding Assistance
When you need advice Certified College
Planning Specialist
(CCPS) Financial Aid Expert
Complete Evaluation Form Check YES for a
Personalized NO-OBLIGATION ASSESSMENT
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Thank you for coming!
The Education Funding Consultants
Association National 501(c ) 3 Non Profit
Organization
866-597- EFCA (3322) www.efcagroup.org
Info_at_efcagroup.org