1. Financing Higher Education IBM4-3-13

2. Objectives Students will: Define Higher Education Define Higher Education Discuss Higher Education as an Investment Discuss Higher Education as an Investment Discuss the purpose of Higher Education Discuss the purpose of Higher Education Review the steps to financing Higher Education Review the steps to financing Higher Education Discuss Methods of Financing Higher Education Discuss Methods of Financing Higher Education Review Key terms associated with financing higher education Review Key terms associated with financing higher education

3. What is Higher Education? Higher education is the stage of learning that occurs at universities, academies, colleges, seminaries, and institutes of technology. Higher education also includes certain college-level institutions, such as vocational schools, trade schools, and career colleges, that award academic degrees or professional certifications. Higher education is the stage of learning that occurs at universities, academies, colleges, seminaries, and institutes of technology. Higher education also includes certain college-level institutions, such as vocational schools, trade schools, and career colleges, that award academic degrees or professional certifications. –it is viewed as post-secondary school education undertaken on a voluntary basis. –“Education is the most powerful tool you can use to change the world –Nelson Mandela”

4. Higher Education as an Investment Higher education can be an investment because it may be worth buying because it may be profitable or useful in the future. Higher education can be an investment because it may be worth buying because it may be profitable or useful in the future. After carefully weighing all the options and doing your research you and your family will decide if higher education is a good investment for you and how you will pay for it. After carefully weighing all the options and doing your research you and your family will decide if higher education is a good investment for you and how you will pay for it. –529 Savings Plans State-sponsored investment plans — officially called qualified tuition programs (QTP) — that help families save money for college. The plans have tax benefits so your savings can grow faster. The money in the accounts can be used only for education expenses. –529 Savings Plans State-sponsored investment plans — officially called qualified tuition programs (QTP) — that help families save money for college. The plans have tax benefits so your savings can grow faster. The money in the accounts can be used only for education expenses.

5. What’s the Purpose of Higher Education Higher Education has become an increasingly important avenue for career and salary advancement. Higher Education has become an increasingly important avenue for career and salary advancement. –A highly educated workforce supports a healthy economy. –College graduates have the potential for greater annual and lifetime earnings than high school graduates, and those benefits tend to increase over time.

6. What are the Steps to Financing Higher Education Research Schools Research Schools Apply for College Apply for College Fill out a Free Application for Federal Student Aid (FAFSA)-The free application form you submit to apply for federal financial aid. It is required for all students seeking federal student grants, work-study programs and loans. Most colleges require it as well. The FAFSA may also qualify you for state-sponsored financial aid. Fill out a Free Application for Federal Student Aid (FAFSA)-The free application form you submit to apply for federal financial aid. It is required for all students seeking federal student grants, work-study programs and loans. Most colleges require it as well. The FAFSA may also qualify you for state-sponsored financial aid. Find financial aid Find financial aid Apply for scholarships/choose a loan Apply for scholarships/choose a loan Compare cost of schools and choose a school Compare cost of schools and choose a school Attend College/Manage Your Money Attend College/Manage Your Money Graduate Graduate Pay back loans if you have any Pay back loans if you have any

7. Scholarships and Grants A scholarship A scholarship is an award of financial aid (money given or loaned to you to help pay for college) for a student to further their education. – –Scholarships are awarded based upon various criteria, which usually reflect the values and purposes of the donor or founder of the award. You don’t have to repay scholarship money. The most common scholarships may be classified as: The most common scholarships may be classified as: –Merit-based-based on a student's academic, artistic, athletic or other abilities –Need-based-based on the student and family's financial record –Student- specific-based upon gender, race, religion, family and medical history, or many other student-specific factors. –Career-specific- for students who plan to pursue a specific field of study or career path. –College-specific-offered by individual colleges and universities to highly qualified applicants. Grants are a type of financial aid that does not have to be repaid. Generally, grants are for undergraduate students, and the grant amount is based on need, cost of attendance, and enrollment status. Students must meet eligibility requirements to qualify, and this type of aid can come from multiple sources which include federal government, state government and the college of your choice. Grants are a type of financial aid that does not have to be repaid. Generally, grants are for undergraduate students, and the grant amount is based on need, cost of attendance, and enrollment status. Students must meet eligibility requirements to qualify, and this type of aid can come from multiple sources which include federal government, state government and the college of your choice.

8. Educational Loans For many students, borrowing money — also known as taking out a loan — is a way to make their college dreams come true. But unlike other types of financial aid, loans have to be repaid with interest — the fee you’re charged for borrowing the money. For many students, borrowing money — also known as taking out a loan — is a way to make their college dreams come true. But unlike other types of financial aid, loans have to be repaid with interest — the fee you’re charged for borrowing the money. The federal government, state governments, colleges and private organizations all provide college loans to students and parents. The federal government, state governments, colleges and private organizations all provide college loans to students and parents. –Need-Based Loans  Federal Perkins Loans are awarded by colleges to students with the highest need.  Federal Direct Subsidized Loans have a borrowing limit that increases for each year of school you complete. –Non-Need-Based Loans  Federal Direct Unsubsidized Loans allow you to add the interest fees to the amount you borrowed until after graduation. But this means you’ll actually end up owing more.  Federal parent PLUS Loans allow parents to borrow the total cost of college, minus any financial aid received.

9. Educational Loans Continued State Loans-The U.S. Department of Education's list of state higher-education agencies shows what state loans are available. These are not need-based or subsidized. State Loans-The U.S. Department of Education's list of state higher-education agencies shows what state loans are available. These are not need-based or subsidized. Private Loans Private Loans –In general, private loans are not subsidized or need-based. They also often require a parent to commit to repay the money if the student fails to. The interest rates of private loans vary: –Banks and other financial institutions usually have the highest interest rates. –Some private organizations and foundations offer lower interest rates. –Some colleges offer loans with interest rates that are lower than those for federal loans.

10. Important Definitions You may come across some unfamiliar terms as you start looking into and applying for financial aid. The terms below can help you. You may come across some unfamiliar terms as you start looking into and applying for financial aid. The terms below can help you. Defer: Some federal loans let you defer — or put off — paying the loan back until after you graduate. Defer: Some federal loans let you defer — or put off — paying the loan back until after you graduate. Interest rate: Interest is a fee you pay for borrowing money. Interest is charged regularly — usually once a month. This fee is equal to a percentage of the amount you borrowed. This percentage is called the interest rate. The higher your interest rate, the more you’ll owe over time. Interest rate: Interest is a fee you pay for borrowing money. Interest is charged regularly — usually once a month. This fee is equal to a percentage of the amount you borrowed. This percentage is called the interest rate. The higher your interest rate, the more you’ll owe over time. Need-based: The federal government offers need-based loans to students who cannot afford the cost of college. Eligibility for these loans is determined by the FAFSA. Need-based: The federal government offers need-based loans to students who cannot afford the cost of college. Eligibility for these loans is determined by the FAFSA. Subsidized: The federal government offers some subsidized loans. That means the government pays the interest on the loan while you’re in college. Subsidized: The federal government offers some subsidized loans. That means the government pays the interest on the loan while you’re in college.

11. Important Definitions Cont. Award Letter-The document you receive from a college that explains the terms of the financial aid that the college is offering you. The information includes the types and amounts of financial aid offered, what you’re expected to do to keep the award and a deadline for accepting the award. Award Letter-The document you receive from a college that explains the terms of the financial aid that the college is offering you. The information includes the types and amounts of financial aid offered, what you’re expected to do to keep the award and a deadline for accepting the award. Bursar-The college official responsible for handling billing and payments for tuition, fees, housing and other related expenses. Bursar-The college official responsible for handling billing and payments for tuition, fees, housing and other related expenses. Cost of Attendance-The total amount of college expenses before financial aid. Cost of attendance includes money spent on tuition and fees, room and board, books and supplies, and living expenses. Cost of Attendance-The total amount of college expenses before financial aid. Cost of attendance includes money spent on tuition and fees, room and board, books and supplies, and living expenses.

12. Important Definitions Cont. Demonstrated Need-The difference between your expected family contribution (EFC) and the total cost of attendance for a particular college. Demonstrated Need-The difference between your expected family contribution (EFC) and the total cost of attendance for a particular college. Expected Family Contribution (EFC)-A measure of your family’s financial strength. States and colleges use this number to help determine your financial aid award. The EFC is calculated using information you supply about your family’s financial circumstances. Expected Family Contribution (EFC)-A measure of your family’s financial strength. States and colleges use this number to help determine your financial aid award. The EFC is calculated using information you supply about your family’s financial circumstances. –Student Aid Report (SAR)-The report sent to your family after you submit the Free Application for Federal Student Aid (FAFSA) that tells you what your expected family contribution (EFC) is. Net Price-The full cost of attendance at a college minus the amount of gift aid a student receives. This is the true amount of money a student will pay to attend a college. Net Price-The full cost of attendance at a college minus the amount of gift aid a student receives. This is the true amount of money a student will pay to attend a college. Work-Study-A program that allows students to take a part-time campus job as part of their financial aid package. To qualify for the Federal Work-Study Program, which is funded by the government, you must complete the Free Application for Federal Student Aid (FAFSA). Some colleges have their own work-study programs. Work-Study-A program that allows students to take a part-time campus job as part of their financial aid package. To qualify for the Federal Work-Study Program, which is funded by the government, you must complete the Free Application for Federal Student Aid (FAFSA). Some colleges have their own work-study programs.

13. Closure What is higher education? What is higher education? Explain why you think higher education is an investment. Explain why you think higher education is an investment. What is the purpose of higher education? What is the purpose of higher education? What are the steps to financing higher education? What is a FAFSA? What are the steps to financing higher education? What is a FAFSA? Fully explain what a scholarships and grants are. Fully explain what a scholarships and grants are. What are the different types of scholarships available? What are the different types of scholarships available? What are the different entities that make loans available to students? Explain the different types of need-based loans and non- need-based loans. What are the different entities that make loans available to students? Explain the different types of need-based loans and non- need-based loans. What are some characteristics of private educational loans? What are some characteristics of private educational loans? What does it mean to defer a loan payment? What is a subsidized college loan? What is an award letter? What does it mean to defer a loan payment? What is a subsidized college loan? What is an award letter? How is your EFC, Cost of Attendance, demonstrated need and net price related? How is your EFC, Cost of Attendance, demonstrated need and net price related?