11/17/20061 College Financial Aid Process Presented by: Chris McGovern Bater, CFP Class of 1980...

11/17/2006 1

College Financial Aid Process

Presented by:Chris McGovern Bater, CFP

Class of 1980

Bronx HS of Science Alumni Mentor Program

11/17/2006 2

The Financial Aid Process

Dollars

Deadlines

Details


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College Costs College costs are up 35% over the past

5 years. Average Total Cost

Public $12,796 Private $30,365

However, 40% of all colleges cost $3,000 - $6,000 15% cost $18,000 - $30,000 Only 5% cost more than $30,000


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College Costs


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College Costs

The pool of financial aid isn't rising as fast as the average tuition.

More students chasing the funds 13.5 million submitted FASFA

applications in 2004, up nearly 30 percent from 2000

Less Merit Aid Although your chances increase if you

are in the top 20% of the incoming class


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College Costs

“Sticker Price” vs. Actual Cost after Grants

Total Cost Net Value ofCost of Aid Grants

Private $30,400 $21,400 $9,000

Public $12,800 $9,700 $3,100

Difference in Cost $17,600 $11,700


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Deadlines


JUNIOR YEAR SENIOR YEARJUL AUG SEP OCT NOV DEC JAN FEB MAR APRIL MAY JUNE

Capital GainsPSATResearch CollegesGuidance CounselorScholarship Search

Summer Job, Scholarship CredentialsApplicationsCalculate EFC

Scholarship ApplicationsACT/SATVisit CollegesAsk About Employer Tuition AssistanceFAFSA & CSS

College Financial Aid Apps.Receive SAR

Ask for Professional Judgment if Unusual Circumstances

College Admissions Notifications & DecisionsResearch Student Loans & ProvidersCollege Bills Arrive

Source: FastWeb College Gold - Paying for College

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Deadlines


SENIOR YEARJULY AUG SEPT OCT NOV DEC JAN FEB MAR APRIL MAY JUNE

Capital GainsPSATResearch CollegesGuidance CounselorScholarship Search

Summer Job, Scholarship CredentialsApplications EARLY REGULAR ROLLINGCalculate EFC

Scholarship ApplicationsACT/SATVisit CollegesAsk About Employer Tuition AssistanceFAFSA & CSS

College Financial Aid Apps.Receive SAR

Ask for Professional Judgment if Unusual Circumstances

College Admissions Notifications & DecisionsResearch Student Loans & ProvidersCollege Bills Arrive

Source: FastWeb College Gold - Paying for College

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Details

Three Types of Financial Aid Grants/Scholarships

42% of total aid Work Study Loans

52% of total aid


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Grants Federal

Pell Grant Federal Supplemental Education

Opportunity Grant Program State

Regents, etc. Private

Directly from the School Private Organizations National Merit Scholarship


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Grants Most Grants are NEED BASED

About 62 percent of all full-time college students receive grant aid. In 2005-06, aid in the form of grants and tax benefits averaged about $2,200 per student at two-year public colleges, over $3,100 at public four-year colleges, and about $9,000 per student at private four-year colleges.

How is “need” assessed?

FAFSA CSS


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Federal Student Aid SummaryFederal StudentAid Program Type of Aid Program Details Annual Award Limits

Federal Pell Grant Grant: does not have to be repaid

Available almost exclusively to undergraduates; all eligible students will receive the Federal Pell Grant amount they qualify for

$400 to $4,050 for 2006-07

Federal Supplemental Educational Opportunity Grant (FSEOG)

Grant: does not have to be repaid

For undergraduates with exceptional financial need; priority is given to Federal Pell Grant recipients; funds depend on availability at school

$100 to $4,000

Federal Work-Study Money is earned while attending school; does not have to be repaid

For undergraduate and graduate students; jobs can be on campus or off campus; students are paid at least federal minimum wage

No annual minimum or maximum award amounts

Federal Perkins Loan Loan: must be repaid Interest charged on this loan is 5 percent for both undergraduate and graduate students; payment is owed to the school that made the loan

$4,000 maximum for undergraduate students; $6,000 maximum for graduate and professional students; no minimum award amount

Subsidized Direct or FFEL Stafford Loan

Loan: must be repaid Subsidized: U.S. Department of Education pays interest while borrower is in school and during grace and deferment periods; you must be at least a half-time* student

$2,625 to $8,500, depending on grade level

Unsubsidized Direct or FFEL Stafford Loan

Loan: must be repaid Unsubsidized: Borrower is responsible for interest during life of the loan; you must be at least a half-time* student; financial need is not a requirement

$2,625 to $18,500, depending on grade level (includes any subsidized amounts received for the same period)

Direct or FFEL PLUS Loan Loan: must be repaid Available to parents of dependent undergraduate students who are enrolled at least half-time*

Maximum amount is cost of attendance* minus any other financial aid the student receives; no minimum award amount


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Applying for Aid

The financial-aid office at your school will use your EFC and other information to determine the amount of financial aid you are eligible to receive. A financial-aid award is determined by each school based on your eligibility and the cost of attendance for the program in which you are enrolled.

Apply even if chances seem slim


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Applying for Aid

Even if you are not eligible for federal aid, you may be eligible for state or school financial aid. This is another reason to complete the FAFSA regardless of what you think your chances are of qualifying for financial aid.

Parents should remember that student financial aid is not meant to provide a free ride. The system is set up to provide assistance to those who might not otherwise be able to attend college.


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FAFSA Free Application for Federal Student Aid

The FAFSA is used to calculate your EFC using the Federal Methodology

Used to qualify for Federal Aid and by State Schools

The result is the Student Aid Report (SAR) The SAR is used to calculate your EFC


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CSS Profile

College Scholarship Survey

The CSS PROFILE is used to calculate your EFC using the Institutional Methodology

Used by Private Schools


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Calculation of Financial Need

Cost of Attendance

- Expected Family Contribution

- Federal Pell Grant Eligibility

- Aid From Other Sources

------------------------------------------

Financial Need


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Expected Family Contribution

The percentage contributions for parents depend on their economic status and age. Lower-income families and older parents are expected to pay less; higher-income families with younger parents are expected to pay more.

Following percentages of income and assets be used for college expenses in any single year:

35% of a student's assets 50% of a student's income 2.6 - 5.6% of a parent's assets 22 - 47% of a parent's income

To maximize financial aid, it is far better for any savings to be in the parent's name than in the student's name.


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“Includable” Assets Mutual Funds Real Estate

Second home, vacation property, rental home, etc.

Stocks/Bonds Savings Savings Bonds Money Market UGMA's / UTMA's 529 plans Coverdell (ESA accounts) Education IRA’s


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“Includable” Assets

How to make includable assets non-includable? Pay off credit card debt Make a purchase of a car Defer receipt of income Prepay bills like mortgages Avoid realizing capital gains


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“Non-Includable” Assets Qualified Retirement Accounts

401(k) IRAs

Annuities

Capital Invested in Your Business

Home Equity -- It depends! The potential to borrow on the value of your

home is interpreted differently by different schools!


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FAFSA Getting ready:

The student's social security and driver's license numbers

The student's and parent's current financial statements and parent's mortgage information

Federal income tax returns for both the student and parent

PREPARE THESE ASAP !! Records of the student's and/or parent's untaxed

income, such as social security, veterans' benefits or welfare

Record of child support paid to or received by former spouse

The student's W-2 forms and other records of money earned


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FAFSA

Helpful Hints

Read the instructions carefully! Read the instructions carefully! Read the instructions carefully! Read the instructions carefully! Read the instructions carefully!


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Common Mistakes

1+1+1=4? Mathematical errors are common and unfortunately, the government's computers won't catch your mistakes.

Don't know? Don't leave it blank! That's right, even if the answer is zero, you must write in zero. A form will not be processed if there is an omitted field so for 100 questions, there have to be 100 answers.


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Common Mistakes

Inconsistency between forms. Inconsistency between federal forms. If your tax return and your financial aid forms don't match line for line, we guarantee you that someone will notice. When it comes to financial aid forms, you have a 1 in 3 chance of being audited (and you thought the IRS was determined to find cheaters!).

Same time next year? Well, yes and no. The FAFSA has to be submitted for each year in which you want to receive financial aid. However, don't just recycle last year's forms. The financial aid rules and regulations change yearly so any information more than a year old may be outdated. And whatever you do, make sure you aren't using an old form!


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Common Mistakes Deadlines. Forget mortgage payments, rent or utilities. Once

you decide to apply for financial aid, the most important deadlines you face are your financial aid applications. While you may be able to convince the electric company that you were out of town and the dog ate your statement, there is never any sympathy when it comes to late financial aid applications. Too many people want it badly enough to get their forms in on time.

And a bonus mistake: not applying for financial aid because you think you won't qualify. At a minimum, every U.S. Citizen is entitled to low-interest federal education loans like Stafford and PLUS and even families with six figure salaries are often eligible for need-based financial aid. But the government isn't going to offer you money unless you apply for it.


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Divorced & Single Parents Applying for Financial Aid

By federal law, the student applicant, his/her custodial natural parent, and stepparent (if the custodial parent has remarried) will prepare the FAFSA to apply for federal assistance.

Private Grants and Scholarships Contribution to College Clause in Custody Decree

This differs from state-to-state Non-Custodial Parent Profile Application

If a non-custodial parent is absent, some documentation must be presented.


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Loans

Students Stafford Loans Private Loans

Parents PLUS Loans


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Student Loans Stafford Loans

A Stafford loan is a government guaranteed loan offering low interest rates and deferred payment options. There are two types of Stafford loans – subsidized and unsubsidized.

To be eligible, you must: be a U.S. citizen or eligible non-citizen have a high school diploma or GED

certification not be in default on any other student loans be enrolled at least half time in an accredited

degree program Fill out the FAFSA Form


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Stafford Loans

How much can I borrow with a Stafford loan?

eligible dependent student: $2,625 freshman year $3,500 sophomore year $5,500 junior, senior, fifth year For a total of $23,000


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Stafford Loans

How much can I borrow with a Stafford loan?

eligible independent student: $6,625 freshman year $7,500 sophomore year $10,500 junior, senior, fifth year For at total of $46,000


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Stafford Loans What is “independent” ?

If I am supporting myself? -- No. You are independent if you:

Are 23 years of age or older Are a veteran of the U.S. Armed Forces Are a graduate or professional student Are married by the date you are applying

for financial aid Are a ward of the court or an orphan

without an adoptive parent or legal guardian

have legal dependents


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Stafford Loans What is the interest rate on a Stafford loan?

Stafford loan interest rates are fixed and are adjusted every July 1st (based on the 91-day Treasury Bill + 1.7% while you're in school, grace or deferment and + 2.3% during repayment).

Who offers Stafford loans? Each college selects a federal loan program - either

the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP). Both the FFELP and the FDLP offer Stafford loans. With FFELP, private lenders provide the loan funds. With FDLP, the government provides the loan funds.


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Negotiating Your Reward Package

Your financial aid package is based on standard formulas and numbers. It doesn't take into account any personal circumstances that may change the amount of your Expected Family Contribution or EFC. It is your job to make your case for the financial aid officials. The best way to do this is in person.


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Negotiating Your Reward Package

Be prepared to back up all your claims with paperwork, references, bank statements, etc. The more proof you can show, the better off you are.

Do not delay. Remember that funds are distributed on a rolling basis and the longer you decide to wait the less money will be available


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Scholarships

A lot of little awards that can add up to a lot.

Scholarship Search Engines www.scholarshipcoach.com www.financialaid.com/sse


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Scholarships Start Early – even before you have any

acceptances Never pay a fee to search or apply Apply year after year. Research new scholarship opportunities at your

college A scholarship may reduce other aid Lots of essays

Write an essay that demonstrates why you should win.

Don't think that it's impossible for you to win.


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Other Ways to Cut Costs The Tax Hope Credit *

can provide your family up to a $1,500 maximum tax credit per year per dependent student for two years.

Lifetime learning tax credit * a tax credit of 20% of the first $10,000 paid for

qualified tuition and related expenses. The maximum amount of credit you could claim for 2005 was $2,000 (20% of $10,000) for all students in the family.

Student loan interest deduction * If you took out student loans, you may be able to

deduct up to $2,500 in interest paid yearly.

* subject to income limitations


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Other Ways to Cut Costs

AP Credit CLEP Credit Co-op programs Tuition-free schools Combination undergraduate-

graduate degree (3/5 programs) Tuition payment plans


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Graduating with Debt

Being able to pay the tuition now may be the first thing on your mind.

What impact will graduating with debt have on your life after you graduate?


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Helpful Links www.findaid.org www.salliemae.com www.fastweb.com www.collegeboard.com/pay www.ed.gov/parents/college/pay http://financialplan.about.com/od/payingforcollege/ www.highered.nysed.gov/NYLearns/finances.htm www.students.gov/STUGOVWebApp/Public www.fafsa.ed.gov/ www.hesc.com/content.nsf/ www.petersons.com/ https://profileonline.collegeboard.com/index.jsp www.highered.nysed.gov/kiap/scholarships/home.htm www.campusdirt.com www.collegeboard.com/prod_downloads/press/cost06/trends_aid_06.pdf http://www.collegeboard.com/prod_downloads/press/cost06/

trends_college_pricing_06.pdf


11/17/20061 College Financial Aid Process Presented by: Chris McGovern Bater, CFP Class of 1980...

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