1. Financial Aid 101

2. F. Duane Quinn Financial Aid Specialist

3. ……But Before We Start….
“When we talk about the Financial Aid Process, I really wish I understood How??…... Why??……”

4. The Higher Education Assistance Act of 1965
The laws which established student financial aid.
The law is “Reauthorized” every five years (Sort of!)
An opportunity for change and reform

5. General Categories of Aid
Merit Aid:
Colleges
Community Service Agencies
Web Searches
Need Based Aid
Most College Aid
Most Federal /State Aid

6. General Categories of Aid
Non-need based aid
PLUS Loans
Unsubsidized Loans
“Alternative Financing”
Parent / Student Alternative loans
Tax Credits

7. Theory (traditional)
Parents and students are responsible for financing education costs......…
Up to their ability.
Financial aid offers “Access and Choice”

8. Theory (traditional)
The student and her family will benefit the most from higher education and should pay for it...…
Savings
Working
Borrowing

9. Theory (modern)
Financial Aid is a tool used to craft and shape the first year class.
Governs how institutional funds are disbursed.
Federal / state aid follow traditional model.

10. A Student is “Dependent” until…
Age 24
Veteran of armed forces
Child whom he/she supports
A dependent who lives with student and whom he/she supports
Married Student
Graduate Student
Orphan or “Ward of the Court”
Homeless
Active Duty National Guard

11. Eligibility (traditional)
Cost less Family contribution = Eligibility for aid

12. Cost not just tuition Tuition + Room and Board or Commuter expenses
+ Books and supplies
+ Transportation expenses
+ Personal expenses
+ “Other” special costs

13. The Family Contribution
Not “extra” money.
Not “family savings”
The ability of both the parents and the student to absorb educational expenses over time.
It should represent a true sacrifice on the part of the family.

14. Hint: Know Your EFC
Calculators available: Net Cost Calculator on College web pages
Department of Education
College Board
Mapping Your Future

15. Different Ways to Apply for Aid
Paper FAFSA (Limited distribution)
Renewal FAFSA
FAFSA on the WEB

16. New for current year, “Prior/Prior”
In past family reported income from year just ending
Often “estimated” tax information, then correct after taxes completed
will use tax data from prior year filed taxes
FAFSA available October 1: Not January 1
Colleges may alter filing deadlines

17. Application Process STUDENT COLLEGES SAR Data Matches Fed. Processor
IRS Interface
College A
College B
Fed. Processor
FAFSA
College C
STUDENT
COLLEGES
SAR

18. The Student Aid Report SAR
Acknowledgment of processing
Read messages to assure properly processed
Review data; Use to correct or update data
Add additional Colleges
Web file = web SAR; Paper with = web SAR; Paper without = paper SAR

19. CSS PROFILE Supplemental Form
Required by some colleges to determine eligibility for college aid
Used by some for Early Decision Process

20. Eligibility
Cost less Family contribution = Eligibility for aid

21. Example of Two Schools cost $ 40,000 - F.C $ 8,000 = need $32,000
COLLEGE “A”
cost $ 40,000
- F.C $ 8,000
= need $32,000

22. Example of Two Schools cost $19,000 -F.C. $ 8,000 =need $ 11,000
COLLEGE “B”
cost $19,000
-F.C. $ 8,000
=need $ 11,000

23. Will Saving Effect My Eligibility for Aid? (federal)
Retirement plans are not reportable asset
Home equity not a reportable asset (federal)
Business with < 100 employees not reportable
Parent assets heavily protected for retirement
Do NOT save under student’s SSN… 20%

24. Asset Impact on EFC An example: 4 in the family, 1 child in college:
Family A
Family B
Family C
Combined Parent Income
$75,000
Combined Parent Assets $0
$150,000
EFC
$7,819
$10,208
$14,438
Difference
$2,389
$6,619
There is a generous parent asset protection allowance factored into the EFC formula.
While assets (current value of savings, checking accounts, investments, and reportable businesses and farms) are considered in the financial aid formula, assets have minimal impact to the EFC, as it is primarily an income-driven formula
Having saved for college or having other assets that you can use to help pay for college is a good thing; it gives families options for paying the balance due
Families in the audience who have saved for college should feel good about it!
All 529 plans are considered assets in the parents’ name and are treated in the same manner as every other parent asset.
Parents have to list the 529 assets for ALL children, because the beneficiary (the child) can be changed, so one child could hypothetically end up using all 529 plans
In this example:
An additional 75K in savings only increases the EFC by $2,389
An additional 150K in savings only increases the EFC by $6,619
Remember this is parental assets (up to 6%) while student assets would be assessed at a higher rate (20%)
Numbers were calculated using the U.S. Department of Education’s Federal Methodology
Based on Federal Methodology: Courtesy of MEFA (Massachusetts Educational Financing Authority)

25. Income Impact on EFC An example: 4 in the family, 1 child in college:
Family A
Family B
Family C
Combined Parent Income
$75,000
$100,000
$150,000
Combined Parent Assets
$50,000
EFC
$8,798
$17,245
$32,803
Difference
$8,447
$24,005
The EFC formula can be heavily income-driven
Income (all income, from taxable and non-taxable earnings and other sources) is assessed at a higher rate in the financial aid formula than assets
EFC can change from year to year when income increases due to a raise, etc.
In this example:
An additional 25K in income increases the EFC by $8,447
An additional 75K in income (from $75,000) increases the EFC by $24,005
Colleges don’t tell families how to meet their EFC. For example, with family B, the college wouldn’t require the family to use any of their reported assets for education expenses. This is an option the family may choose
Reminder, the EFC is determining how much the family can absorb in educational expenses over time. In many cases, families using multiple resources, which we will discuss later
Families should not use these charts to calculate their own EFC; instead they should utilize EFC calculators
Numbers were calculated using the U.S. Department of Education’s Federal Methodology
Based on Federal Methodology: Courtesy of MEFA (Massachusetts Educational Financing Authority)

26. So My Kid Is Just Going To Have to Borrow a Lot!
Federal limits on student loans for undergraduate dependent students
1st: $5,500.
2nd $6,500
3rd & 4th $7,500.
Not to exceed $31,500. (undergraduate dependent)

27. So My Kid Is Just Going To Have to get a lot of Scholarships!
The most competitive colleges do not give “merit” Aid. Private scholarships most often reduce financial aid dollar for dollar (loan first, so it is a good thing!)

28. The Financial Aid Package
GRANTS - “Free money” Never has to be repaid
WORK - An opportunity to earn college funds.
LOANS - Funds which must be repaid

29. The Financial Aid Package
cost
$40,000
$ 8,000.
F. C.

30. The Financial Aid Package
cost
$40,000
need = $32,000
$ 8,000.
F. C.

31. The Financial Aid Package
cost
$40,000
grant = $25,000 meet full need
$ 3,000
work
$4,000
loan
$ 8,000.
F. C.

32. The Financial Aid Package
cost
$40,000
unmet need “GAP”
$5,000
grant = $20,000
$3,000
work
$4,000
loan
$ 8,000.
F. C.

33. Where Ya’ Gonna Surf??? American Student Assistance
Department of Education
aid
College Board
Mapping Your Future
Financial Aid Information Page