NACAC 2003

1
NACAC 2003

• Tackling the Basics
• College Financing

2
Its a Jungle Out There!
3
Beginning Premise

• Colleges and the government assume the primary
  responsibility for paying for college is with the
  family and student...

4
Ending Premise

• When financial resources are considered, some
  families fall short that is when financial
  assistance is considered

5
Financial Aid is a 3 Part Process

• Cost of Attendance
• Expected Family Contribution
• Financial Need

6
1. Cost of Attendance

• Tuition
• Room and Board

• Books Fees
• Personal Expenses
• Transportation

Indirect Costs
Direct Costs
7
2. Family Contribution

• An estimate of a familys financial strength- how
  they can absorb the cost of paying for college,
  based on financial resources available
• It is not an estimate of left-over resources
  from family finances once other responsibilities
  are met
• Always based on previous years income

8
2. Expected Family Contribution

• Parent Income
• Parent Assets
• Student Income
• Student Assets
• -------------------------------
• Expected Family Contribution

9
Factors that InfluenceFamily Contribution

• Parents
• Income
• Family Size
• Assets
• Age
• Number in College

10
Factors that Influence Family Contribution-Parent
Income

• Income Protection Allowance
• Is a national figure
• Takes family size into consideration
• based on national poverty thresholds
• NO allowance given for residing in high cost of
  living states (California, New York, etc.)
• Not a realistic picture of family income
  availability
• Generates the bulk of financial aid eligibility

11
Factors that Influence Family Contribution-Parent
Income Size

• Income Protection Allowance Example
• Family Size
• Four 20,710
• Six 28,580
• Eight 35,040

12
Factors that Influence Family Contribution--
Parent Assets

• Assets for Federal Methodology
• Home Equity is not counted as an Asset
• Qualified Retirement Funds do not count as Assets
• It is assumed parents need money for retirement
• Therefore FAFSA has a Parent Asset Protection
  table that INCREASES with AGE
• Any assets over asset protection limits are
  counted at 5.6 available rate

13
Factors that Influence Family Contribution-Parent
Age Assets

• Parent Assets based on AGE
• Two Parent One Parent
• age 40-44 39,200 19,400
• 50- 54 50,400 24,200
• 65 plus 74,000 34,100

14
Factors that Influence the Family
Contribution-Number in College

• Family Contribution is a family number, not an
  individual number.
• It is divided between the number of students in
  college.
• Family EFC 6000
• 1 in college 6,000 per student
• 2 in college 3,000 per student
• 3 in college 2,000 per student

15
Factors that InfluenceFamily Contribution

• Student
• Income
• Assets
• Independent/ dependent

16
Factors that Influence Family Contribution-
Student Income

• There is a Protection Allowance for student
  income
• Students can earn up to 2380 each year
• Each dollar earned OVER the income protection is
  assessed at a 50 available for college rate

17
Factors that Influence Family Contribution-
Student Income

• Example

• Student Contribution to EFC
• 2,380 0
• 5,380 1,500
• 12,380 5,000
• Moral Know your yearly earnings!

18
Factors that Influence Family Contribution-
Student Assets

• Student Assets
• Anything in a student name is counted as 35
  available for college each year

Student Income 5,000 10,000
Student Contrib. 1,750 3,500
Parent Contrib. 280 560
if parent has same amount of asset
19
Factors that Influence Family Contribution-
Independent Student

• To be independent a student must
• Be 24 years old by Dec. 31 of award year
• Be a graduate or professional student
• Be married (or separated)
• Have legal dependents (other than spouse) that
  receive gt50 support from you
• Be an orphan or ward of the court (this is the
  category a foster child falls into)
• Be a veteran

20
3. Financial Need

• Cost of Education
• --- Family Contribution
• _______________________________
• Financial Need

21
3. Financial Need
Cost of Education determines Financial Aid/ not
EFC

• Public A
• 12,000
• 6,000
• 6,000

• Public B
• 18,000
• 6,000
• 12,000

Private C 34,000 6,000 28,000

Cost EFC Need
22
3. Financial Need Example
College Offers Public A Public B Private C
Need 6,000 12,000 28,000
Financial Aid Offer 3,000 10,000 28,000
EFC 6,000 6,000 6,000
Parent Loan 3,000 2,000 0
Out of Pocket 9,000 8,000 6,000
23
Financial Aid Comes in Packages

• Gift
• Grants
• Scholarships
• Self- Help
• Student Loans
• Work Study

24
The Scholarship Fallacy

• Why do parents want students to get scholarships?
• To help reduce the family contribution!
• Scholarships do not generally go toward the
  Family Contribution
• They go toward Financial Need.
• They can sometimes replace student or parent
  loans or the amount a student needs to work.

25
The Scholarship Fallacy

• Example of Scholarships used in Financial Aid
  Package

Joe COA 14,000 EFC 4,000 Fin. Need
10,000 Scholarship 4,000 Award
6,000 less working and student loans
Maria COA 14,000 EFC 4,000 Fin. Need
10,000 Scholarship 0 Award
10,000 includes working and maximum student
loans
26
Students should use their HEAD to get scholarships

• H
• E
• A
• D

• Have understanding
• Explore all options early
• Application Excellence
• Determination-
• be persistent!

27
Web Resources

• US Dept. of Education
• (FAFSA, other federal aid)
• www.ed.gov/prog_info/SFA
• www.finaid.org

28
Help Parents/ StudentsSay YES to the Future!

• Y
• Teach them YOU can learn college financing
• terms definitions and assist them in that
  process
• E
• Assist families/students in EXPLORing options for
  financing college
• S
• Guide families/students toward SECUREing help
  from all available sources
• When you open doors for one child, you are
• opening doors for future generations