Financial Aid 101 welcome College Planning Center College planning guidance and education financing

Agenda Financial aid overview Terminology Types of financial aid Applying for financial aid Q&A

History of financial aid 1960s – Congress “Parents are responsible for the education of their children to the extent possible.”

What is financial aid? A source of money that helps students and/or parents fund a college education Grants Scholarships Student employment Loans

Types of financial aid Gift aid Awards do not need to be repaid Grants Scholarships Self help aid Adopts a self-investment philosophy Student loans Student employment

How financial aid is awarded Need based Awarded based on a family’s financial need Merit based Awarded for a talent: academic, athletic, etc.

Definition of need/eligibility Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need/Eligibility

Cost of Attendance (COA) Tuition and fees Room and board Books and supplies Transportation Personal expenses Miscellaneous

How is EFC calculated? Parent’s prior year income Student’s prior year income Value of parent’s assets Value of student’s assets Number in household Number in college Age of oldest parent

Expected Family Contribution EFC is constant Each factor has a different weight in determining EFC Both parents and students are expected to contribute to education costs

Need comparison

Financial aid packages Cost of Attendance$35,000 EFC$10,000 Financial Need$25,000 Financial Aid TypeCollege 1College 2College 3 Grants/Scholarships$12,000$18,000$21,000 Work-Study$1,000$1,500$2,000 Student Loans$3,500 $2,000 Total$16,500$23,000$25,000 Unmet Need/Gap$8,500$2,000$0 Example packages:

Unmet need Schools are not always able to offer as much financial aid as you may be eligible for When need is not fully met, there is said to be a “gap” Most schools do not cover 100% of the “gap” or remaining financial need

Paying tuition bills Savings & other assets Salary Payment plans Scholarships Parent and student education loans Home equity loans

Sources of financial aid Federal Grants, loans & work study State Grants & scholarships Institutional (college/university) Grants & scholarships Private Grants, scholarships, loans

Federal grants Federal Pell Grant Limited to undergraduates Maximum amount of $4,310 Need based Federal Supplement Education Opportunity Grant (FSEOG) Awarded first to undergraduate students with exceptional financial need Preference given to Pell Grant recipients $4,000 maximum award; $100 minimum award

Federal grants Academic Competitiveness Grant Available to Pell Grant recipients Must have successfully completed a “rigorous” high school program As established by state As recognized by the Dept. of Education On or after January 1, 2006 for 1 st year students and January 1, 2005 for 2 nd year students $750 for freshman Have not been previously enrolled in college $1,300 for sophomores Maintained GPA of 3.0 or higher during freshman year

Federal grants National SMART Grant Up to a $4,000 supplemental grant to Pell Grant recipients in 3 rd or 4 th year who are: Pursuing a major in one of the following Physical or life science Mathematics Engineering Computer science Technology “critical” foreign language Have obtained a GPA of 3.0 or higher during course of study in major

Federal work study Provides part-time employment Pay must be at least federal minimum wage and paid on an hourly basis Work-study job may be on or off campus Employer may be the college, a non-profit community agency, or profit organization Schools may have maximum hours per week rule

Long term loans: must be repaid with interest 5% fixed interest rate 10-year maximum repayment period Awarded based on need to undergrad & graduate students Each school has limited funds to award each year Your school is your lender Grace period = 9 months Annual maximum: $4,000 for undergraduates $6,000 for graduates Federal Perkins loan

Long-term loans: must be repaid with interest Interest rate: Fixed; 6.8% 10 year maximum repayment period $50.00 minimum monthly payment Fees: 1.5% origination fee; 1% default fee Loans enter repayment approximately 6 months after student leaves school Federal Stafford loan

Subsidized Federal government pays interest while student is in school and in their grace period Awarded to students who can prove financial need Unsubsidized Student is responsible for all interest charges accrued while in school Awarded to students who cannot prove financial need

Federal Stafford loan Year in School Annual Limit (Subsidized & Unsubsidized) Additional Unsubsidized Loan Limit (independent students only) First Year$3,500$4,000 Second Year$4,500$4,000 Third Year – Fifth Year$5,500$5,000 Graduate Students$8,500$12,000 Annual Loan Limits Aggregate Loan Limits Student TypeSubsidized Limit Subsidized & Unsubsidized Limit Dependent Undergrad$23,000 Independent Undergrad$23,000$46,000 Graduate Student$65,500$138,500

Federal PLUS loan For parents of dependent undergraduates and for graduate students Credit check required Interest rate: 8.5% fixed Fees: 3% origination fee; 1% default fee Repayment term: 10-years Minimum monthly payment: $50.00 Repayment begins 60 days after loan is fully disbursed Loan limit: cost of attendance minus financial aid received

Private sources of financial aid Outside scholarships & grants Community organizations Corporations Churches/religious foundations Visit your guidance office Use FREE scholarship search tools online Off-campus employment Equity loans/lines of credit

Private sources of financial aid Alternative student loans Fees and interest rates are typically based on applicant or co-applicant’s credit Rates & fees tend to be higher than Federal loan rates (PLUS, Stafford, Perkins)

Merit based aid Based on academic, athletic or other talents Awarded by school or outside organization Criteria for receiving merit based aid varies SAT score, class rank, GPA Check with admissions Student often needs to maintain certain requirements to keep the aid

Apply for a PIN at Complete the FAFSA REQUIRED by every school to qualify for financial aid Apply online at ASAP after January 1 Complete the CSS PROFILE, if required by your schools of choice STEP 1 Applying for financial aid

File any supplemental financial aid forms required by your school Let the financial aid office know of any special circumstances that may affect your family’s ability to fund your education Pay attention to financial aid deadlines at your school Send in any documents the financial aid office at your school(s) requires to complete your application STEP 2 Applying for financial aid

Look over Student Aid Report (SAR) Receive 2-3 weeks after completing the FAFSA Review all information for accuracy Information can be corrected if necessary Before correcting, contact the financial aid office Review CSS PROFILE acknowledgement report, if applicable STEP 3 Applying for financial aid

Review Financial Aid Package/Award Letter from school(s) Includes details of award: grants, scholarships, loans, and work-study Accept, deny or appeal any portion of the package Acceptance will safeguard the award Applying for financial aid STEP 4

Completing the FAFSA Read the instructions as you complete the FAFSA Fill in all the blanks (“n/a” or “0” when applicable) Ask questions when you don’t understand the instructions Make it a family event

Meeting a student’s needs Choose your college wisely Not all colleges will meet 100% of need Private colleges generally Meet a higher percentage of need Award a higher percentage of gift aid Many students can attend a private college for the same cost as a public university

Education pays off Average student loan amount for college graduates Average yearly income 2-year community college$8,700$34,860 4-year public college$17,100 $50,511 4-year private college$21,200 Source: 2002 National Student Loan Survey and U.S. Census Bureau

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