Financial Aid: An Overview A Presentation of MASFAA Financial Aid Presentation High School Financial Aid Presentation 1 1

MASFAA Financial Aid Presentation High School Financial Aid Presentation 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 2

MASFAA Financial Aid Presentation Who Are You? High School Financial Aid Presentation 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? 3

MASFAA Financial Aid Presentation Agenda High School Financial Aid Presentation 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 4

MASFAA Financial Aid Presentation High School Financial Aid Presentation What is Financial Aid? Grants, Scholarships Free Gifts Do not have to be repaid Loans Money that must be repaid Borrowed by student, parent, or both Work Study Money student is given the opportunity to earn $$ IOU 10 5

MASFAA Financial Aid Presentation High School Financial Aid Presentation Grants & Scholarships Pell Grant MASSGrant SEOG Tuition Waiver Fee Grant Institutional Grant Private Scholarship Massachusetts Performance Bonus 6

Educational Loan Programs MASFAA Financial Aid Presentation High School Financial Aid Presentation Educational Loan Programs Massachusetts No Interest Loan Federal Perkins Loan Federal Direct or Stafford Loan (subsidized or unsubsidized) Institutional loans Other state loans 7

MASFAA Financial Aid Presentation Over $68 Billion given out in Financial Aid in 1999-2000 Source: The College Board

Financial Aid Basic Premises MASFAA Financial Aid Presentation High School Financial Aid Presentation Financial Aid Basic Premises 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 12 9

Financial Aid BASIC FORMULA MASFAA Financial Aid Presentation High School Financial Aid Presentation Financial Aid BASIC FORMULA Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Aid Eligibility/Family Need 13 10

COST OF ATTENDANCE (COA) MASFAA Financial Aid Presentation High School Financial Aid Presentation COST OF ATTENDANCE (COA) Books Tuition and Fees Room and Board + + + Other Personal Expenses Supplies + + Transportation 14 11

The Expected Family Contribution MASFAA Financial Aid Presentation High School Financial Aid Presentation The Expected Family Contribution 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. EFC 16 12

Elements of Federal Methodology MASFAA Financial Aid Presentation Elements of Federal Methodology High School Financial Aid Presentation # in college Assets Income FAFSA Taxes Used to award all Federal Aid at 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 family The Financial Aid Funnel Expected Family Contribution (EFC) 18 15

Current Federal Methodology MASFAA Financial Aid Presentation Current Federal Methodology High School Financial Aid Presentation STUDENT Contribution (dependent) + PARENT Contribution 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 Student Income 50% after taxes and income protection allowance of $2500 Student Assets 35% EXPECTED FAMILY CONTRIBUTION 19 16

Institutional Methodology for Institutional Funds MASFAA Financial Aid Presentation High School Financial Aid Presentation Institutional Methodology for Institutional Funds 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 20 17

MASFAA Financial Aid Presentation High School Financial Aid Presentation Family Profile Oldest Parent’s Age: 50 Family Members: 4 Number in College: 1 Federal tax: 10% of AGI The Parent Contribution A Case Study 2000-2001 Federal Methodology 23 23 18

How Does the Formula Work? MASFAA Financial Aid Presentation High School Financial Aid Presentation How Does the Formula Work? COA - EFC = NEED COA $30,000 $25,000 Need EFC $20,000 $15,000 $10,000 $5,000 $0 Private A Private B State College/ University Community College COA $30,000 $25,000 $10,000 $5,000 24 19

The “Step” Approach to Awarding Financial Aid MASFAA Financial Aid Presentation High School Financial Aid Presentation The “Step” Approach to Awarding Financial Aid For Institutional Grants, Admissions Ranking can determine Financial Aid Awarded 20

The Financial Aid Barrel A Sample Financial Aid Award MASFAA Financial Aid Presentation The Financial Aid Barrel A Sample Financial Aid Award High School Financial Aid Presentation COA - EFC = Need $25,000 - 8,000 = 17,000 Unmet Need = $1,900 Work = $1,500 Work Study Loan = $2,600 Stafford Loan Gift Aid = $6,000 Grant + $5,000 Scholarship EFC = $8,000 21 21

Sources of Financial Aid Consider All Your Options! MASFAA Financial Aid Presentation High School Financial Aid Presentation Sources of Financial Aid Consider All Your Options! Federal Government State Government College / University Private Agencies (Kiwanis, Elks, church or synagogue group) Professional associations Parent’s employer 22

MASFAA Financial Aid Presentation ‘Financially’ Manageable During and AFTER the College years Look at your entire Financial Situation Estimate the ‘Total’ Cost of Education 4+ years of expenses STUDENT PARENT Make financial decisions that : 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

MASFAA Financial Aid Presentation High School Financial Aid Presentation “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) 24

Financial Aid Application Materials MASFAA Financial Aid Presentation Financial Aid Application Materials High School Financial Aid Presentation 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. 25

MASFAA Financial Aid Presentation High School Financial Aid Presentation Financial Aid VERIFICATION PROCESS 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 Could be asked to provide tax returns and other backup documents Be prepared to verify your information 26

The Financial Aid Calendar MASFAA Financial Aid Presentation The Financial Aid Calendar High School Financial Aid Presentation 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 27

The Financial Aid Calendar (continued) MASFAA Financial Aid Presentation High School Financial Aid Presentation 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 28

MASFAA Financial Aid Presentation “I need more help!...” MASFAA Financial Aid Presentation High School Financial Aid Presentation 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 31

Still more help on the WEB... MASFAA Financial Aid Presentation High School Financial Aid Presentation Still more help on the WEB... www.finaid.org www.fastweb.com Resources for: Financial Aid Scholarships College Information 33

HELPFUL HINTS IN COMPLETING THE FORMS MASFAA Financial Aid Presentation HELPFUL HINTS IN COMPLETING THE FORMS High School Financial Aid Presentation 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 30

Let’s Fill Out the Forms MASFAA Financial Aid Presentation High School Financial Aid Presentation 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 29

MASFAA Financial Aid Presentation High School Financial Aid Presentation THANK YOU! Questions? 38 34