Financial Aidfor College

Laura SutherlandAssistant Director of Financial Aid

Northwestern University

Behind the scenes: How a college can help you

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

Tonight’s Program

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

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 discriminateMaintain the highest level of professionalism

The Financial Aid Office

To the extent they are able, parents have primary responsibility to pay for their dependent children’s education

Students also have a responsibility to contribute to their educational costs

Families should be evaluated in their appropriate financial condition

A family’s 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

“A Partnership”

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

Program Location Size Mix of

Students Academics Extracurricular Facilities Financial

Considerations

College Costs*2009-2010 Two Year Public $14,285 Four Year Public

Instate $19,388 Out-of-State $30,916

Four Year Private $39,028

*Source – Trends in Higher Education Series 2009, College Board

Tuition & Fees Room & BoardTransportation

Books & Supplies

Miscellaneous Living Expenses

Cost of Attendance (COA)

+

What are the costs?

What is Financial Aid?

Scholarships Grants Student Loans Work-Study

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 UniversitiesSchools offer their own scholarship, grant, work-study and loan programs, with each college setting its requirements.

Financial aid is available from three major sources:

Two Categories of Aid

Merit-based

Need-based

Merit ScholarshipsBased on student

achievements:

Academic

Extracurricular

Talent

Types of Need-Based AidGift aid

Self-help aid

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.

Private Financial Aid Sources

Private Foundations Civic Organizations Scholarship Search Services High School College Counseling

Office

Who Receives Private Scholarships?

2.3 million recipients $3.3 billion awarded $2,000 average award 7% of undergraduates 3% of total aid

Scholarship Scams Consultants

Seminars

Warning Signs

WWW.FINAID.ORG

So . . . how does the process begin?

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 student’s eligibility

by calculating an “index” # called the EFC (Expected Family

Contribution)

To apply for all federal and state aid, families must complete

the...

Overview of the FAFSA 2010-2011 available January 1

7 Steps

Submit it soon after January 1

FAFSA4caster

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.

FAFSA on the Web www.FAFSA.ed.gov

PDF FAFSAwww.Federal StudentAid.ed.gov

Paper FAFSA 1-800-4-FED-AID

Three Ways to Access the Free Application for Federal Student

Aid

FAFSA on the Web (FOTW)

Available January 1

English or Spanish

Skip logic and online editing

Electronic signature

www.pin.ed.gov

Student needs

one -----

Parentneeds

one -----Each

one isdifferent

!

PIN E-mail Notification

Supplemental Financial Aid Applications

The College Scholarship Service (CSS) Financial Aid PROFILE

A college’s own application for financial aid

Information from noncustodial parent

Federal tax returns Other

CSS/Financial Aid PROFILE Administered by the College Board,

required by many private institutions Similar to FAFSA Additional questions about assets and

expenses www.profileonline.collegeboard.com

Special SituationsExamples 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

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.

Expected Family Contribution

Contribution from Parental Income

Contribution from Parental Assets

Contribution from Student Income

Contribution from Student Assets

What are Parent Assets? real estate (other than parents’ home) trust funds UGMA and UTMA accounts money market and mutual funds certificates of deposit stocks and stock options

bonds and other securities Coverdell IRAs 529 plans owned by

parents installment and land sale contracts commodities, etc.

What are the Costs?

Tuition and FeesRoom and BoardTransportationBooks and Supplies

+ Miscellaneous Living Expenses

= Cost of Attendance

The college determines eligibility for financial aid by:

Cost of Attendance - Expected Family Contribution

= Financial Need

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

Comparing Financial Aid Award Letters List the assumptions used to determine the

COA (such as enrollment status, housing, fees, books, travel, etc.)

Clearly state what your family contribution is as well

Return the signed award letter to the college, if required.

Meet the deadline!

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

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 $5,500

Federal Stafford Loan(differences between 2 types)

Subsidized

Need-based Federal

government pays interest while student is in college and during grace/deferment periods.

2009-2010 5.6% 2010-2011 4.5% 2011-2012 3.4%

Unsubsidized

Not based on need

Payment of interest is always student’s responsibility

2009-2010 6.8% (this will not change)

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

Private Loan Programs

Credit checks Co-signer Higher interest rates Borrow cautiously

Sourceof

Loan

Repayment~

Grace Period

Interest Rate

Loan ProgramsWhen evaluating loan options, consider…

Know… what you’re 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.

Subsidized vs.

Unsubsidized

More Ways to Finance Your Education Tax Benefits for Education –

Publication 970 Hope Credit Lifetime Learning Credit Student Loan Interest Deduction

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.

Where to Look for Your High School

A College’s Financial Aid Office

The Internet

www.collegezone.com

www.college.gov

www.finaid.org

www.studentaid.ed.gov

REMEMBER! Plan ahead Apply early Read CAREFULLY Meet deadlines Keep copies

10 tips on Financial Aid1. 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.

2. 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.

3. All aid applications are not the same. All colleges require the FAFSA. About 250 colleges require the 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.

4. 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.

5. 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.

10 tips on Financial Aid6. 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.

7. 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.

8. 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.

9. 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.

10. 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 circumstances—an issue many expect to see happen more in a year like this one.

Questions