1. Financial Aid: What You Need to Know South High School December 13, 2011 Sandy Sundstrom St. Olaf College

2. Agenda College Costs Types of Financial Aid Types of Aid Applications Family Contribution Ability to Pay Special Circumstances Loan Debt Financial Aid Award Letter Appeals

3. College Tuition Costs (2010-2011 annual tuition and fees for MN colleges) Private colleges: $30,411 Private career schools: $13,184 University of Minnesota: $12,288 Minnesota state universities: $6,895 MN community & technical colleges: $4,919 Source – MN Office of Higher Education

4. Cost of Attendance The cost of attending college includes more than just tuition and fees. Also included are: Room and Board Books and Supplies Transportation Personal Expenses

5. How Will We Pay For It? Past Earnings – Savings Current Earnings Future Earnings – borrowing Financial Aid

6. Ability to Pay To the extend they are able, parents have the primary responsibility to pay for their dependent children’s education. Students also have a responsibility to contribute to their educational costs. A family’s ability to pay for educational costs must be evaluated in an equitable and consistent manner.

7. Types of Financial Aid Gift Aid: Grants Scholarships Self-Help Aid: Loans Student Employment/Work Study

8. Where does financial aid come from? Federal Government State Government Colleges and Universities Private and public sources

9. Sources of Financial Aid SOURCE: The College Board, Trends in Student Aid 2010, Figure 2A.

10. Merit vs. Need-Based Merit  Often from the institution but can be from foundations, scholarship organizations, etc.  Have specific eligibility criteria Need-based  Calculated from financial aid application – evaluates family’s ability to pay for costs  Sources can be federal, state, institutional  Goal is to distribute limited resources in an equitable way  Provide a balance of gift aid and self-help aid

11. Institutional Aid varies by Institution Spectrum – some institutions (very selective) offer no merit and & lots of need-based aid, others (less selective) offer lots of merit aid but very little need- based aid. Institutions vary in ability to meet demonstrated need.

12. Apply for Financial Aid Federal Aid – Free Application For Federal Student Aid (FAFSA). Required by all schools; available at www.fafsa.gov www.fafsa.gov Complete school financial aid application (if required) High-cost private schools may require the PROFILE application. Required by some schools; available at www.collegeboard.com www.collegeboard.com Apply for scholarships both within and outside of the college/university

13. Meeting Deadlines is Essential Know each college’s priority deadlines  Read and retain all the communications you receive. Read each school’s website or contact each school’s Financial Aid Office  Merit scholarship deadlines  Admission deadlines  Financial Aid deadlines  Deadlines for supplemental documents – tax returns, W2s, etc.

14. Completing and processing the FAFSA is free! Never pay a fee to file the FAFSA. Complete the FAFSA after January 1 of your senior year Contact your school’s financial aid office - if you need help. FAFSA on the Web www.fafsa.gov

15. Put your name and SSN on FAFSA exactly how it appears on your social security card Refer to completed federal income tax return and consult instructions for proper line references If entry is zero or none, enter 0--don’t leave blank Enter school code(s) Student and one parent must both sign dependent student’s FAFSA Be careful…

16. 2011 At least 24 years old by December 31 st of the award year covered by the FAFSA Graduate or professional student Married Has legal dependents other than a spouse who receive more than one half of their support from the student Is an orphan, in foster care, or ward of the court On active duty or veteran of the U.S. Armed Forces Emancipated minor or in legal guardianship as determined by a court Has been determined to be homeless by an authorized official What makes a student “independent”?

17. Expected Family Contribution (EFC) The EFC is calculated from the information you provide on the FAFSA according to a formula established by law. You can get an estimate of your EFC using the FAFSA 4-caster tool at: www.fafsa.govwww.fafsa.gov

18. FAFSA data that has the most impact on EFC calculation Dependent Student Parents’ income and assets Household size Number of dependents attending college Student’s income and assets Independent Student Student’s (and spouse’s) income and assets Household size Number in household attending college

19. To Save or Not to Save In the Federal Formula:  For parents – value of retirement accounts and primary residence are not included  Other assets are protected in part (or full) by Education Savings and Asset Protection Allowance.  About 5.6% of parent net worth exceeding the allowance is included in EFC.

20. Savings Examples (Federal Formula) Example: Married parents, older spouse is 48, the allowance is $46,200. They have $100,000 in savings and investments. $100,000 – 46,200 = $53,800 X 5.6% = $3,012 is included in the EFC as parent contribution from assets. Example: Students have no Education and Savings Asset Protection Allowance. Assessment rate is 20%. If Student has $100,000 in savings, $20,000 is included in EFC as student contribution from assets.

21. How are Aid Awards Determined: Cost of Attendance (COA) - Expected Family Contribution (EFC) = Eligibility for need-based financial aid

22. Special Circumstances When the numbers don’t tell the whole story or situation has changed (or is expected to change)  Family situation  Fluctuating/One-time income  Change in employment  Medical/dental expenses  Marital status Must be able to provide documentation  Copies of bills, canceled checks, termination letters, etc.

23. 2011 Grants Federal Pell Grant: need-based; annual award range for a full-time student is $976 - $5,550 Federal SEOG Grant: limited funding; priority given to students with exceptional need; annual award range is $100 - $4,000 Minnesota State Grant: MN resident enrolled at eligible MN school; for students from low and moderate income families; annual award range is $100 - $9,444 Institutional Grant: college or university funds awarded to students with financial need

24. Student Employment/Work-Study  Part-time student employment  Earnings paid to student  Work-Study earnings not included when determining EFC on next year’s FAFSA

25. Types of Loans Interest RateRepaymentAdditional Info Federal Perkins Loan5% Fixed 9 months after school Federal Stafford Direct Loan Subsidized 3.4% Fixed Unsubsidized 6.8% Fixed 6 months after school Subsidized: no interest charged while in school Unsubsidized: interest accrues while in school Federal Parent PLUS Loan7.9% Fixed May be deferred until 6 months after school Interest accrues while student is in school Minnesota SELF LoanVariable rate12 months after school Must pay quarterly interest while in school Requires a co-signer Alternative/ Private LoansVariable rate Variable repayment terms Interest accrues while student is in school

26. How Much Is Too Much? For the Class of 2010, in Minnesota, the average indebtedness for 4- year college students was $29,058. 71% of graduates borrowed. (Source: The Project on Student Loan Debt, http://projectonstudentdebt.org) http://projectonstudentdebt.org Translates into a monthly payment of approximately $344/month for 10 years. (Source: http://www.finaid.org/calculators)http://www.finaid.org/calculators Graduated and income contingent payment plans available to reduce monthly payments. One rule of thumb: Student’s total borrowing shouldn’t exceed what he/she expects to make the first year out of school. $27,000 is the maximum a student can borrow through the Direct Stafford loan program (most utilized program). This is a family discussion and decision – how much should/can the student borrow, and how much should/can parents borrow?

27. Other Resources Reciprocity Programs Wisconsin, North and South Dakota, Manitoba Midwest Student Exchange Program (MSEP): Kansas, Michigan, Missouri, Nebraska Federal Tax Benefits for Higher Education Tuition and Fees Tax Deduction American Opportunity Tax Credit Student Loan Interest Deduction Lifetime Learning Tax Credit

28. Review Aid Awards Carefully Compare: Costs of Attendance (COA) Total amount of aid Types of aid offered Amount of gift aid (grant/scholarship) Amount of loan (interest rate, repayment terms, etc.) Ask Questions: Is the grant and/or scholarship renewable? What are the terms for renewing? (GPA, number of credits, course of study, etc.) Is the amount of work-study realistic? Will aid change from year to year? Will aid increase if COA increases?

29. Net Price Calculator Net Price Calculator: Provides estimated net price information to prospective students and their families based on the student’s individual circumstances. Tool to help families estimate their out of pocket expenses. Required by federal regulation. Must be posted on a school’s website by October 29, 2011

30. Net Price Calculator – Pros & Cons Pros You can get an estimate of how much it will cost to attend an institution much earlier in the process. When developing the college list you can compare estimates between schools. Cons Since institutions differ, formats for the NPC will differ...not always apples to apples. Fewer or more data elements may be required. Merit-based aid may or may not be included. Only represents first-year award. Special circumstances not considered.

31. Appeal the award if there is a valid reason Possibly valid reasons:  You have a unique family situation that isn’t evident from the FAFSA data.  Your family’s situation has changed since you completed the financial aid application Probably not valid reasons:  Another school gave me a better award.  I heard/read I should “negotiate.”  My parents are unwilling to provide their information/or unwilling to contribute.

32. 2011 Where can I get more information? U.S. Department of Education: www.ed.gov andwww.ed.gov www.college.gov Minnesota Office of Higher Education: www.ohe.state.mn.us Internet System for Education & Employment Knowledge: www.iseek.org FinAid! - The Financial Aid Information Page: www.finaid.org Minnesota Association of Financial Aid Administrators: www.mafaa.org www.mafaa.org The College Board: www.collegeboard.org

33. To Sum Up...  Apply for aid if you are concerned about covering costs  Paying for college is a team effort  Research institutional aid options  Meet deadlines  Understand the types of aid offered  Determine the “bottom line”  Borrow wisely  Inform the financial aid office if your situation changes Questions...