1 Celebrating 30 years of Excellence Planning, Saving & Paying for College College Financing MEFA’s Guide to

2 Massachusetts Educational Financing Authority Not-for-profit state authority that works to make higher education more accessible and affordable Created in 1982 by the State Legislature Helping families: o Plan: Extensive community outreach o Save: U.Fund ® and U.Plan ® college savings plans o Pay: Affordable fixed interest rate college loans for over 30 years Facts About MEFA

3 You Can Do This

4 Sign-up Videos/ Social Media mefa.org/seniors What’s Next: Your to-do list Tools & Resources e-Book Ask a MEFA Expert Guidance: Financial Aid Info & Tips

5 What is financial aid? How do students apply? How are financial aid decisions made? Financial aid awards Paying for college Free resources Agenda

6 Overview of Financial Aid Undergraduate Student Aid ($185.1 Billion) Source: The College Board, Trends in Student Aid 2012

7 Federal – Grants, work-study, loans, tax incentives Massachusetts – Grants, scholarships, tuition waivers, loans – College/University (institutional aid) – Grants, scholarships, loans Outside Agencies – Scholarships Sources of Financial Aid

8 Awarded in recognition of student achievements (academic, artistic, athletic, etc.) Applicants often compared against one another May or may not be renewable Not offered at every school Merit-Based Aid

9 Awarded based on family’s financial eligibility as determined by standardized formula Includes grants, loans and/or work-study Most federal, state and institutional aid is awarded based on financial eligibility Need-Based Aid

10 Free Application for Federal Student Aid (FAFSA) – Required by all colleges for federal and MA state aid – Open January 1 st : FAFSA.gov – Must sign with a PIN: PIN.ed.gov – IRS Data Retrieval Tool – available February 1 st – Requires data from all parents who live together, married or not The FAFSA Must be completed every year!

11 CSS/Financial Aid PROFILE ® – Some colleges require for institutional aid – $25 for 1st school, $16 for each additional – Online application required: CollegeBoard.org – Noncustodial Parent PROFILE required when applicable College Financial Aid Application – Required by some colleges – Usually part of the admissions packet Other Financial Aid Applications Don’t wait until you’re accepted to apply!

12 1. Colleges & state receive data electronically 2. You will receive (electronically or by mail): – Student Aid Report (SAR) – CSS/Financial Aid PROFILE ® acknowledgement report 3. Review both & keep for records 4. Colleges may request Verification documents 5.With any special circumstances, contact Financial Aid Office at each college What Happens After You Apply?

13 Total expenses for one year of college Cost of Attendance (COA)

14 Calculated amount the family has the ability to absorb for one year of college expenses Same federal formula used for every family Family has the primary responsibility for paying Not necessarily what the family will pay Expected Family Contribution (EFC) Visit mefa.org/seniors to use an EFC calculator

15 Federal & institutional formulas are different – Federal formula for MA & federal aid – Institutional formula for aid from some colleges Includes income & asset protection allowances Parent & student info treated differently Does not include personal debt (credit cards, auto loans or personal loans) EFC Formulas

16 Asset Impact on EFC Based on Federal Methodology Family AFamily BFamily C Parent Income$60,000 Parent Assets$0$75,000$150,000 EFC$4,227$5,461$10,815 Difference$1,234$6,588 An example. 4 in the family, 1 child in college:

17 Income Impact on EFC Family AFamily BFamily C Parent Income$60,000$100,000$150,000 Parent Assets$50,000 EFC$4,591$16,552$32,084 Difference$11,961$27,493 Based on Federal Methodology An example. 4 in the family, 1 child in college:

18 Cost of Attendance (COA) –Expected Family Contribution (EFC) = Financial Aid Eligibility Financial Aid Formula Colleges fill in Financial Aid Eligibility with financial aid from multiple sources

19 How the Formula Works Cost of Attendance

20 Financial Aid Awarding This example is an estimate only. Federal Work-Study $1,500 ANY college costs not covered by financial aid are the FAMILY’s responsibility! COA = $30,000 Unmet Need $3,000 EFC $5,000 Scholarship $7,500 Student Loan $5,500 Grant $7,500

21 Comparing Award Letters: Award Totals Vary COA: $30,000 EFC: $5,000 Total Eligibility: $25,000 College ACollege BCollege C Grants/Scholarships$18,000$15,000$10,000 Student Loans$5,500 Work-Study$1,500 Total$25,000$22,000$17,000 Unmet Need$0$3,000$8,000

22 COA: $30,000 EFC: $5,000 Total Eligibility: $25,000 Comparing Award Letters: Award Totals Are Equal College ACollege BCollege C Grants/Scholarships$15,000$5,000$0 Student Loans$5,500 Parent Loan$0$10,000$16,500 Work-Study$1,500 $0 Total$22,000 Unmet Need$3,000

23 How to Fill the Unmet Need Favorite College Balance Due$20,000 Past IncomeStudent Savings-$1,500 Parent Savings-$4,000 Present Income Student Contribution to Payment Plan -$1,000 Parent Contribution to Payment Plan -$3,500 Future IncomeEducation Loan-$10,000 $0 EXAMPLE

24 Student is the sole borrower No credit check Annual limits 3.86% fixed interest rate for Repayment – No payments due while enrolled – Approximately $300/month for 10 years for $27,000 debt Federal Direct Student Loans

25 Be a Wise Consumer! Interest rate and APR Fixed or variable interest rate – Fixed: stable, monthly payments – Variable: changes based on market conditions Primary borrower (student or parent) Start of loan repayment Monthly payment amount and years in repayment Alternative Loan Considerations

26 Free assistance in completing the FAFSA! Over 25 locations across Massachusetts Sunday, January 26, 2014 at 1:00 p.m. Sunday, February 23, 2014 at 1:oo p.m. Additional dates and all locations listed at fafsaday.org FAFSA Day Massachusetts

27 After The Acceptance Seminars 25 Locations across MA in late March/April One-on-one guidance Provides key, timely info on: – Understanding financial aid award letters – College bills and payment plans – Loan options (parent and student) – Working with the Financial Aid Office Register for MEFA s to receive location details Continued Spring Guidance

28 Research financial aid deadlines & requirements Partner with MEFA: – Sign up for MEFA s – Download the College Financing e-book – Bookmark mefa.org/seniors You Can Do This What You Can Do Now

29 Questions or Comments? Please take a moment to complete the seminar evaluation Presenter: Deb Marsella Thank You