Post on 02-Jan-2016
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Financial Aid: An Overview A Presentation of
Introduction Tonight you will learn:
What Financial Aid is Sources of Financial Aid The formulas used in
determining your eligibility
When and how to apply Resources for more
information
Who Are You? Is this process new to you?
Where is your son or
daughter thinking about
attending college?
What is the cost of that
institution?
How will you pay for it?
Agenda
Learn the language: Review some simple vocabulary
Financial Aid Primer: Forms, Formulas and Funds
How do I apply? Financial Aid Calendar Review of the Forms
Grants, ScholarshipsFree Gifts Do not have to be repaid
LoansMoney that must be repaidBorrowed by student, parent, or both
Work StudyMoney student is given the
opportunity to earn
$$
IOU
What is Financial Aid?
Grants & Scholarships• Pell Grant
• MASSGrant
• SEOG
• Tuition Waiver
• Fee Grant
• Institutional Grant
• Private Scholarship
• Massachusetts Performance Bonus
Educational Loan Programs• Massachusetts No Interest Loan
• Federal Perkins Loan
• Federal Direct or Stafford Loan (subsidized or unsubsidized)
• Institutional loans
• Other state loans
6%4%4%
5%
11%
19%
52%
Federal LoansNon-Federal LoansOther Federal ProgramsFederal Campus-BasedState Grant ProgramsFederal Pell GrantsInstitutional & Other Grants
Over $68 Billion given out in Financial Aid in 1999-2000
Source: The College Board
STUDENTS have the primary responsibility for contributing to their education to the extent that they are able
PARENTS are responsible for contributing to their children’s education to the extent that they are able
FAMILIES with similar circumstances will be expected to contribute similar amounts to higher education; those with different circumstances will be expected to contribute different amounts
Financial Aid Basic Premises
Cost of Attendance (COA) - Expected Family Contribution (EFC)
= Financial Aid Eligibility/Family Need
Financial Aid BASIC FORMULA
Tuition and Fees
Tuition and Fees
Roomand
Board
Roomand
Board+
+
SuppliesSuppliesOther
Personal Expenses
Other Personal Expenses++
+Books
Transportation
COST OF ATTENDANCE (COA)
IS a measure of parent’s capacity over time to absorb educational costs
IS NOT a dollar amount expected from current income or assets.
IS NOT an estimate of “extra” cash available.
The Expected Family Contribution
Taxes
#
in f
amil
y
The Financial
Aid Funnel
Expected Family Contribution (EFC)
Used to award all Federal Aidat public and private schools
Uses both parent and student information (for dependent students)
Uses standard income and asset protection allowances
Does not consider HOME EQUITY or Qualified Retirement Assets
# in
colle
ge
Ass
ets
Income
FAFSA
Elements of Federal Methodology
Student Income 50% after taxes and income protection allowance of $2500
Student Assets 35%
EXPECTED FAMILY
CONTRIBUTION
STUDENT Contribution (dependent)
Parent Income 22-44% after taxes and income protection allowance
Parent Assets* 3-6% after asset protection allowance
* Retirement & Home Equity not included in federal formula
Divided by number in college
PARENT Contribution +
Current Federal Methodology
Used by colleges to give out their own money Formula could vary widely from school to school Generally includes more assets than the
Federal Methodology Home Equity often included
Often requires additional applications/forms
Institutional Methodology for Institutional Funds
23
Family Profile
Oldest Parent’s Age: 50Family Members: 4Number in College: 1Federal tax: 10% of AGI
The Parent Contribution A Case Study
$15,000 $50,300 $70,000 $100,000
Parents' AGI
$40,000 $1,716 $1,716 $2,236 $3,108
$60,000 $6,171 $6,171 $7,282 $8,974
$80,000 $13,160 $13,160 $14,271 $15,963
If Parents' Assets are:
Expected Parent Contribution will be:
2000-2001 Federal Methodology
$0
$5,000
$10,000
$15,000
$20,000
$25,000
Private A
Need
EFC
COA - EFC = NEEDCOA
Private B StateCollege/
University
CommunityCollege
$25,000$30,000 $10,000 $5,000COA
$30,000
How Does the Formula Work?
The “Step” Approach to Awarding Financial Aid
For Institutional Grants, Admissions Ranking can determine Financial Aid Awarded
Unmet Need = $1,900
Work = $1,500 Work StudyLoan = $2,600 Stafford Loan
Gift Aid = $6,000 Grant + $5,000 Scholarship
EFC = $8,000
COA - EFC = Need $25,000 - 8,000 = 17,000
The Financial Aid BarrelA Sample Financial Aid Award
Sources of Financial AidConsider All Your Options!
Federal Government State Government College / University Private Agencies
(Kiwanis, Elks, church or synagogue group)
Professional associations
Parent’s employer
‘Financially’ Manageable During and AFTER
the College years
PARENTPARENT STUDENTSTUDENT
Will not jeopardize Financial Security Comfortable Retirement Educating other children other financial goals
Will not leave excessive debt Will not jeopardize financial
independence after graduation
Estimate the ‘Total’
Cost of Education4+ years of expenses
Estimate the ‘Total’
Cost of Education4+ years of expenses
Look at your entireFinancial Situation
Look at your entireFinancial Situation
Make financial decisions that :
“Insider” Tips
Find out the deadlines and comply! Keep copies of what you send. “Guess-timate” on your applications If you have questions, ask! Look at all of your financing options Don’t rule out a school just because of its cost Apply to one or two financially ‘safe’ school Think about how you (parent & student) will pay
your share of total college costs (2/4+ years)
Financial Aid Application Materials FAFSA - Free Application for Federal Student Aid
– Required by all colleges– Free form
PROFILE– Some colleges need this– Paid form
Institutional Application– One per school– Usually part of admissions packet
Business/Farm Supplement Non Custodial
Parent Statement Tax Return
REMEMBER! Forms must
be filed EVERY YEAR.
Financial Aid
Can be required by the federal government or by any institution
is carried out by the institutions involves documentation of data provided on the
application forms an award based on non-verified information is
subject to change after the information has been verified
VERIFICATION PROCESS
The Financial Aid Calendar
January (or earlier for Profile): Complete forms (BEST GUESS IS OK FOR INCOME)
February (or earlier for Profile): Many school’s deadlines for forms
Late February - March: Schools may call you with questions
End of March - Early April: Admissions and Financial Aid notification mailed
The Financial Aid Calendar (continued)
April: Compare award letters from different schools
May 1: DECISION DEADLINE - Tell all schools yes or no
May: Pay deposits (tuition, room and board) - about $500
June: Bill for the Fall semester, due by 8/1 or so
November - December: Bill for the Spring Semester
“I need more help!...” Higher Education Information Center
1(800) 442-1171 Federal Student Aid Center - FAFSA
Processing:1-800-4-FEDAID
College Scholarship Service - Profile Processing: (800) 778-6888
Each college’s financial aid office Your high school guidance office Your state legislator’s office
Still more help on the WEB... www.finaid.org
www.fastweb.com
Resources for:• Financial Aid • Scholarships• College Information
HELPFUL HINTS IN COMPLETING THE FORMS
• READ all the instructions
• Complete the ENTIRE form, unless specifically instructed to leave something blank
• Use number 2 pencil or a pen with black ink
• Read “When You Fill Out This Form” on page 2 of FAFSA
• Be sure to answer all questions on the form using information about the individual about whom the question is directed(e.g. Do not provide parent's social security number when asked to provide the student's social security number. )
• Use regular first-class mail. Sending the forms special delivery or by overnight mail or by any other special process to the P.O. Box indicated MAY DELAY RECEIPT of the forms by the processor
• Notify all of the financial aid offices of institutions to which student applies regarding any unusual or special family circumstances not already reflected on both of the forms
Let’s Fill Out the Forms
Free Application for Federal Student Aid (FAFSA)– http://www.fasfa.ed.gov/
Profile Registration Form – http://www.collegeboard.org/profile
THANK YOU!