Understanding Award Letters and Net Cost Anne Reed, New England School of Communications

Discuss what aid is making up the Award letter & how to compare We will be covering three major areas: Understanding and Comparing Award Letters What award letters may look like in 2013!

The process How do you GET an award letter? Student Files a FAFSA School determines eligibility using COA, EFC & Status Student receives award letter

Schools include tuition, fees, room, board, books, travel and miscellaneous expenses when determining eligibility Some of these costs are actual and some are simply estimates or averages and can be very “underestimated” (such as travel) When looking at costs, try to compare “apples to apples” Cost of Attendance (COA)

UNIVERSITY A Tuition $8400 Mandatory Fees$2500 Room/Board$9200 Total billed costs$20,100 Tuition$12,600 Mandatory fees$850 Room/Board$7950 Total billed costs$20,100 UNIVERSITY B Compare Apples to Apples My tuition is much less expensive Not so much…

Fall Spring Total Federal Pell Grant $ 2,775 $ 2,775 $ 5,550 Federal Supplemental Grant $ 500 $ 500 $ 1,000 Fed. Direct Staff. Loan (gross) $ 2,750 $ 2,750 $ 5,500 Federal Work Study $ 1,500 $ 1,500 $ 3,000 Federal Perkins Loan $ 1,000 $ 1,000 $ 2,000 Maine State Grant $ 500 $ 500 $ 1,000 College Grant $ 500 $ 500 $ 1,000 Total $ 9,025 $ 9,025 $19,050 Total Grants $8,550 Total Perkins/Stafford Loans $7,500 Total Work Study $3,000 Sample Award letter

Grants Grant NameWhat is it?How did I get it? PELL GrantFederal GrantEFC below 4995 Federal SEOG (Supplemental Opportunity Grant) Campus based aid (Fed funds/institutional funds EFC met school criteria & filed FAFSA early Maine GrantState GrantEFC below 5000 & filed FAFSA before May 1 State Grant Each state has their own criteria Institutional Grant Based on institution criteria (usually based on maintaining GPA

Tuition $8400 Mandatory Fees$2500 Room/Board$9200 Total billed costs$20,100 Minus Aid (total for year): Pell grant-$5550 SEOG -$1000 Maine Grant-$1000 College Grant-$1000 Cost before loans$11,550 Actual billed cost minus aid University A

COST OF ATTENDANCE MINUS GRANT AID GIVES STUDENTS A COMPARABLE COST OF ATTENDING THAT INSTITUTION. At this point look at Stafford Loan, Scholarships, paying out of pocket, etc Compare schools side by side

Loan TypeWho is the borrowerWho is the lender Federal loan? Credit based? StaffordStudentDept of Edu. (Servicer) YesNo PerkinsStudentThe SchoolYesNo Parent PLUS loan The ParentDept of Edu. (Servicer) Yes Grad PLUS loan StudentDept of Edu. (Servicer) YesNo Alternative Loan Student with a co- signer BankNoYes College LoanStudentThe SchoolNoMaybe Loans – when comparing What’s making up the award letter….

Focus on grants and federal loans Don’t include Work Study as it is not applied directly to the bill Don’t be fooled by schools who include large loans to fill need – all schools can offer PLUS and Alternative Loan eligibility How is my bill really being paid?

Harvard University $27.6B endowment Average loan debt = $11,780 Average need based gift aid = $41,507 Cost = $52, % of need met Boston College $1.3B endowment Average loan debt = $19,514 Average need based gift aid = $26,556 Cost = $54, % of need is met

Filling in the pieces What happens next? Be sure to read the materials that accompany the Award Letter – will provide many more details. READ EVERYTHING! If other loans are listed on the Award Letter, learn more about them: Interest rate/fees Deferment options Repayment options Approval criteria - credit based? Contact school to discuss remaining options

Questions to ask What will the next 4 years cost? Are the scholarships renewable? If scholarships are renewable, what is the criteria? What happens if the student receives outside scholarships, for example, from graduation? Will the financial aid award stay the same from year to year?

Many schools will ask you to accept or reject aid…. Good idea not to reject aid unless the student is absolutely sure he or she doesn’t want the aid: may not be able to get it back once rejected can always return loans during the year, even if already processed If circumstances have changed from what is on the FAFSA, the student should contact school to discuss an appeal.

Funded by Federal funds matched by the University based on financial need (from the FAFSA) Just because a student is awarded does not mean they will be hired – Just like a real job. Funds are not applied to student accounts – students receive a pay check Students are responsible for searching and applying for positions Federal Work Study

Award Letter October 22, 2012 Dear Student: This aid will self destruct in 6 years… New push to complete on time Lifetime limits: Stafford Loan Lifetime limit $31,000 for dependent students Pell Grant 600% Lifetime Eligibility used (roughly 6 years at full time) Maine Grant 24 points Lifetime Eligibility used (roughly 6 years at full time)

The interest rate on Direct Stafford loans 6.8% (changes yearly) The federal government pays the interest on subsidized loans while the student is enrolled at least half-time Origination fee is 1% Same with Parent PLUS loan – 4% origination fee Stafford Loan: Award letter may say $5500 -minus origination fee School actually receives $5446 (net) *changes yearly What you see may not be what you get…

Usually based on Full Time status What if my family member looses their job? What if I get an outside scholarship? What if my parent is denied the Parent PLUS loan? What if I just can’t afford to go to this school? Is this set in stone?

How much one year of school will cost; Financial aid options to pay this cost, with a clear differentiation between grants and scholarships, which do not have to be repaid, and loans, which do; The net costs after grants and scholarships are taken into account; Vital information about student results, including comparative information about default rates, graduation rates, and median debt levels for the school; And potential monthly payments for the federal student loans the typical student would owes after graduation. July 24 th Obama administration unveils the Shopping sheet in response to students with large debt Secretary of Ed Arne Duncan sent an open letter to college and university presidents, asking them to adopt the Shopping Sheet as part of their financial aid awards starting in the school year **Coincide with Principles of Excellence for veterans. The Shopping Sheet

The Shopping sheet

Questions Thank you! Anne Reed Director of Enrollment Management New England School of Communications