2. Financial Aid 101 Michigan Student Financial Aid Association Jo Cassar, St Clair County Community College Chiquita McKenzie-Bennett, Marygrove College Rick Shipman, Michigan State University

3. Slide 3 Financial Aid 101 – Agenda 1.Types and sources of financial aid 2.Cost of Attendance (COA) 3.Expected Family Contribution (EFC) 4.FAFSA - Free Application for Federal Student Aid 5.Financial need 6.Sample aid packages 7.Borrowing and defaults 8.Legislators in higher education

4. Slide 4 Types of Financial Aid 1.Types of Financial Aid Need-based –Financial need must be determined through reporting of income, asset and other data Non-need-based –Athleticism, artistry, academic strength, membership, etc.

5. Slide 5 Types of Financial Aid Scholarships –Gift money based on merit, skill, characteristics Grants –Gift money often based on financial need Loans –Typically due after graduation –Student and parent can borrow Employment –Hourly, stipend or in-kind compensation Tax Credits and Deductions

6. Slide 6 Sources of Financial Aid Federal government States Higher Education Institutions Private sources

7. Slide 7 Sources of Aid - Federal Government Largest source of financial aid Grants awarded primarily on the basis of financial need; loans do not require need Must apply every year using the Free Application for Federal Student Aid (FAFSA)

8. Slide 8 Sources of Aid - Federal Government Federal Pell Grant Federal Supplemental Educational Opportunity Grant Teacher Education Assistance for College and Higher Education Grant Federal Work-Study Federal Perkins Loan Subsidized and Unsubsidized Loans PLUS Loans

9. Slide 9 Sources of Aid - States Residency requirements Award aid on the basis of both merit and need Use information from the FAFSA Deadlines vary by state; March 1 st for MI

10. Slide 10 Sources of Aid - Higher Ed Institutions Academic merit awards Artistry awards Athletic aid Need based grants and loans Student employment

11. Slide 11 Sources of Aid - Private Sources Foundations, businesses, charitable organizations, high schools, employers Deadlines and application procedures vary widely Free search engines available to help

12. Slide 12 Financial Aid 101 2.Cost of Attendance –Cost is a determinant of financial need Tuition and fees Room and board Books Transportation Medical Personal/miscellaneous items

13. Slide 13 Cost of Attendance – MI 4 Year Publics

14. Slide 14 Cost of Attendance – MI Comm Colleges

15. Slide 15 Cost of Attendance – MI Private Colleges

16. Slide 16 Financial Aid 101 3.Expected Family Contribution –Financial circumstances are a determinant of need

17. Slide 17 Expected Family Contribution (EFC) Amount family can reasonably be expected to contribute Stays the same regardless of college Two components –Parent contribution for dependent students –Student contribution for all students Calculated using a federal formula and data collected in a federal application (FAFSA)

18. Slide 18 Financial Aid 101 4.Free Application for Federal Student Aid or the FAFSA

19. Slide 19 FAFSA Can be filed 1/1/12 to 6/30/13 for 2012-13 Measures family ability to pay Determines student eligibility through various federal database matches Can be filed online or by paper IRS data transfer available online

20. Slide 20 FAFSA – Database Matches Social Security Administration Department of Homeland Security Selective Service System Federal Debts Student also must disclose drug convictions

21. Slide 21 FAFSA – Collected Data Family size and number in college Income, taxes paid and other financial information Dislocated worker status Assets (but not primary home equity)

22. Slide 22 FAFSA – Verification Schools required to resolve discrepancies Usually related to income, taxes paid and retirement investment value Use IRS data for relevant items

23. Slide 23 FAFSA – Special Circumstances Cannot report on FAFSA Must contact college financial aid office –Change in employment status –Medical expenses not covered by insurance –Change in parent marital status –Unusual dependent care expenses –Student cannot obtain parent information

24. Slide 24 FAFSA – EFC by Income EFC = FAFSA Expected Family Contribution PELLPELL

25. Slide 25 Financial Aid 101 5.Financial Need –This is the difference between the Cost of Attendance and Expected Family Contribution –Need differences between schools is based on variation in COA since the EFC is the same across schools

26. Slide 26 Financial Need Cost of Attendance – Expected Family Contribution = Financial Need

27. Slide 27 Financial Need Marygrove MSU Resident MSU NonRes SC4 Resident SC4 NonRes COA$28,420$23,822$42,680$11,719$16,896 EFC$5,000 Need$23,420$18,822$37,680$6,719$11,896 COA$28,420$23,822$42,680$11,719$16,896 EFC$12,000 Need$16,420$11,822$30,680$0$4,896 COA$28,420$23,822$42,680$11,719$16,896 EFC$24,000 Need$4,420$0$18,680$0

28. Slide 28 Financial Aid 101 6.Sample Aid Packages –Schools use financial need with student characteristics and aid program eligibility rules to create a financial aid package –A student can receive drastically different aid packages at different schools

29. Slide 29 Sample Aid Packages

30. Slide 30 Sources of Aid – States - Michigan State of Michigan Budget2011-12 ProgramAllocationAward Maximum Tuition Incentive Program $30,100,000Variable Competitive Scholarship/Tuition Grant$16,208,500$575 Pub / $1512 Priv Gear Up Scholarships $1,500,000 $5,500 Robert C Byrd Honors Program $1,500,000Phased Out in 2012 Child of Veterans/Officers Survivor Grant $1,200,000 $2,800 Access Grant$0 Adult Part-Time Grant$0 Educational Opportunity Grant$0 MI Merit/Promise Award$0 MI Nursing Scholarship$0 Michigan Work-Study$0 Promise Grant$0

31. Slide 31 Sources of Aid – Federal Major Federal Aid Programs2011-12 ProgramAllocationAward Maximum ACG/SMART Grant$0 Pell Grant$41.4 B$5500 Supplemental Educ Opportunity Grant$0.7 B$4000 Teach Grant$24 M$4000 (undergrad) College Work Study$1 BVariable Perkins Loan$0$5500 (undergrad) Graduate PLUS LoanCOA less other aid Parent PLUS LoanCOA less other aid Stafford Loan$7500 (dep/undergrad)

32. Slide 32 Financial Aid 101 7.Borrowing and Defaults –Federal loans comprise the majority of financial aid used by students –Parents take out federal loans to cover their EFC or gaps between cost and aid –Some students use private loans –Student loan defaults are increasing

33. Slide 33 Borrowing and Defaults $23,082 = US Average $25,675 = Michigan 4 Year College Average 8.8% = National Default Rate 8.2% = Michigan College Default Rate

34. Slide 34 Percentage of Undergraduate Students Borrowing Federal Stafford Loans, 2000-01, 2005-06, and 2010-11 SOURCE: The College Board, Trends in Student Aid 2011, Figure 6.

35. Slide 35 Average Total Debt Levels of Bachelor’s Degree Recipients, Public Four-Year Colleges and Universities, in Constant 2010 Dollars, 1999-2000 to 2009-10 SOURCE: The College Board, Trends in Student Aid 2011, Figure 10A.

36. Slide 36 Average Total Debt Levels of Bachelor’s Degree Recipients, Private Nonprofit Four-Year Colleges and Universities, in Constant 2010 Dollars, 1999-2000 to 2009-10 SOURCE: The College Board, Trends in Student Aid 2011, Figure 10B.

37. Slide 37 State Grant Aid per Full-Time Equivalent Undergraduate, 2009-10 SOURCE: The College Board, Trends in Student Aid 2011, Figure 16B.

38. Slide 38 Distribution of Total Tax Savings from Education Tax Credits and Tuition Deductions by Adjusted Gross Income (AGI), 2008 and 2009 (and Average Tax Savings per Recipient) SOURCE: The College Board, Trends in Student Aid 2011, Figure 12A.

39. Slide 39 Financial Aid 101 8. Legislators in Higher Education –Most legislators were once college students –How do they compare to the average

40. Slide 40 Legislators in Higher Education Nation vs. Michigan –74.7% have baccalaureate or higher vs. 72.9% –79.6% went to public college vs. 88.8% –55.3% went to in-state school vs. 75.4% –17.2% went to law school vs. 13.5% “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

41. Slide 41 Legislators in Higher Education How educated are they? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

42. Slide 42 Legislators in Higher Education Where did they go to school? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

43. Slide 43 Legislators in Higher Education Where did everyone go to school? “Where Does Your Freshman Class Come From?”, The Chronicle of Higher Education, 10/29/11

44. Slide 44 Legislators in Higher Education What type of school did they attend? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

45. Slide 45 Legislators in Higher Education What type of school did everyone attend? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

46. Slide 46 Your MSFAA Presenters Jo Cassar Director of Financial Assistance & Services St Clair County Community College jcassar@sc4.edu Chiquita McKenzie-Bennett Financial Aid Counselor Marygrove College cmckenzie@marygrove.edu Rick Shipman Director of Financial Aid Michigan State University shipmanr@msu.edu