Chuck Moore, CCFC, CAMC, CAFC

Louisville, Kentucky

502-721-8646 ▪ tuition2@insightbb.com

www.collegeliteracyacademy.com

Will You Qualify For Financial Aid

What Is College Financial Aid

Student financial aid refers to funding intended to help students pay educational expenses including tuition and fees, room and board, and books/supplies, and miscellanious costs, for education at a college, university, or private school.

Financial aid may be classified into two types, merit-based or need-based.

Most student aid is provided by the federal government. Students received more than $109

billion in federal aid during the 2009–2010 academic year. Most federal student aid is awarded as grants and low-interest loans.

Where Does Most College Financial Aid Come Form

The Financial Aid Process

FAFSA and CSS Profile

• The FAFSA cannot be filed until after January 1 of the student’s senior year of high school. Furthermore, it must be filed each year the student is seeking financial assistance while in college.

• The Federal Methodology Formula that calculates the family’s EFC is based mainly on the parents’ and student’s income and assets minus certain deductions and allowances.

Completing The FAFSA

• Simple To Complete

• Complicated To Understand

FAFSA Formula Similar To Tax Formula

• Income Protection Allowance

• Asset Protection Allowance

• Employment Allowance

• Deductions For Certain Taxes Paid

Income Protection Allowance

Income Protection Allowance Example

AGI: $85,000

Number In Household 4

Number In College 1

Income Protection Allowance $33,300

Available Income $51,700

Asset Protection AllowanceMarried Single

Asset Protection Allowance Example

Oldest Parent 46

Allowance $44,000

Exposed Assets $20,000

Adjusted Available Assets $0

Employment Allowance Example

Number Of Parents Working 2

Lowest Earner Amount $26,000

Employment Allowance % 35%

Maximum Allowance $3,500

Tax Allowance Example

Federal Taxes $5,250

Social Security Taxes $6,120

State Taxes 4% $3,200

Total Tax Allowance $14,570

Total Allowance

Income Allowance $33,300

Asset Allowance $0

Employment Allowance $3,500

Tax Allowance $14,570

Total Allowances $51,370

Adjusted Available Income Of Parents

Total Income $85,000

Total Allowances -$51,370

Adjusted Available Income $33,630

Adjusted Available Income Of Parents

Adjusted Available Income Of Parents

Available Income $33,630

Adjustment Factor - 29,301

Adjustment Factor Left $4,329

Adjusted Available Income Of Parents

First $29,301 Assessed $7,926

Second $4,329 Assessed 47% +2,035

EFC Of Parents $9,961

Student’s EFC

First $4,500 - $0 (50% thereafter minus taxes)

Assets 20% (No Asset Protection Allowance)

Student’s Financial Need

Total Cost Of Attending $18,000

EFC Of Family - 9,961

Financial Need $8,039

FINANCIAL AID AVAILABLE

Federal Direct Student Loan

The federal loan programs include the Federal Direct Subsidized and Federal Direct Unsubsidized Loans, the Perkins Loan, and the Parent PLUS (Parental Loan for Undergraduate Students) Loan and Graduate PLUS (a loan for Graduate students).

Federal Direct Student Loan

Before the 2008 Act was passed student could borrow money at the following levels:

• $3,500 for the freshman year of college• $4,500 for the sophomore year of college• $5,500 for the junior and senior years of college - and• $4,000 for the fifth year of college

The total amount a student could borrow over a five-year period was a maximum of $23,000 for an undergraduate degree.

Federal Direct Stafford Student Loan

The new law has changed the borrowing limits for the Stafford Loans. Stafford Loans disbursed after July 1, 2008 will be increased by $2,000 per year. The new maximum annual Stafford Loan for an undergraduate dependent student for each year of college will be as follows:

• 1st year $ 5,500• 2nd year $ 6,500• 3rd and 4th year $ 7,500 per year• 5th year if needed $ 4,000

The total amount of undergraduate Stafford Loans (subsidized andunsubsidized) has been increased from $23,000 to $31,000 for adependent student and from $46,000 to $57,500 for an independentstudent.

Interest Rates on Federal Loans

For Subsidized Loans disbursed after July 1, 2008 the interest rates will be:

• Loans disbursed after July 1, 2008 and before July 1, 2009 will have a fixed interest rate of 6%• Loans disbursed after July 1, 2009 and before July 1, 2010 will have a fixed interest rate of 5.6%• Loans disbursed after July 1, 2010 and before July 1, 2011 will have a fixed interest rate of 4.5%• Loans disbursed after July 1, 2011 and before July 1, 2012 will have a fixed interest rate of 3.4%• Loans disbursed after July 1, 2012 will have a fixed interest rate of 6.8%

Interest Rates on Federal Unsubsidized Loans

All Unsubsidized Direct Student Loans will have a fixed interest rate of 6.8%

Federal Direct PLUS Loan

Parents with PLUS Loans disbursed after July 1, 2008 now have options when repaying their loan. Those options are:

• Payments can start within 60 days of the final disbursement of the loan or;

• The borrower can make interest only payments while the student is in school and start payments of principal and interest after the student leaves school or;

• The borrower can defer all payments until 6 months after the student leaves school. In this option the interest accrues and is added on to the loan when repayment begins

Federal Direct PLUS Loan

Interest Rates on Federal PLUS Loans

PLUS loans through the Direct Loan program have a fixed interest rate of 7.9%. This rate has been in

effect since July 1, 2006. (Previously, PLUS loans had variable interest rates (based on 52 week

T-bill rate + 3.10%) capped at 9%.)

FEDERAL CONSOLIDATION LOAN

If the student (parent) has no variable rate loans they would want to consolidate their federal loan before the 6 month grace period is up.

Use caution whenever consolidating a Perkins Loan

FEDERAL PERKINS LOAN

A federal Perkins loan is a low interest (5%) loan for undergraduate and graduate students with "exceptional" financial need.

Federal Perkins loans share many of the characteristics of subsidized Stafford loans. The most notable differences are no fees, a longer grace period, and school disbursement.

FEDERAL PERKINS LOAN

The amount of Perkins Loan you receive is determined by your school's financial aid office. The program limits

are $5,500 per year for undergraduate students and $8,000 per year for graduate students, with cumulative limits of $27,500 (5 years) for undergraduate loans and

$60,000 for undergraduate and graduate loans combined. Repayment starts 9 months after graduation,

unlike 6 months with direct Stafford Student loans

ALTERNATIVE STUDENT LOANS

Private Education Loans, also known as Alternative Education Loans, help bridge the gap between the actual cost of your education and the limited amount the government allows you to borrow in its programs. Private loans are offered by private lenders and there are no federal forms to complete. Eligibility for private student loans often depends on your credit score and interest rates and loan amount will vary from one lender to the other.

Pell Grant

Pell Grant $5,550 maximum

The maximum Pell Grant award for the 2010-11 award year (July 1, 2010 to June 30, 2011) is

$5,550. The amount you get, though, will depend not only on your financial need, but also on your costs to attend school, your status as a full-time

or part-time student, and your plans to attend school for a full academic year or less.

The maximum EFC that a student can have to

be Pell-eligible is $4,617

FSEOG Grant

FSEOG Grant

FSEOG is an undergraduate award to students with exceptional financial need. Federal Pell Grant

recipients receive priority for these awards. The FSEOG awards can range from $100 to $4,000 a

year but each school can establish it's own guidelines within these ranges.

Pell Grant Vs. The FSEOG Grant

Unlike Pell Grants, the amount of FSEOGs you receive depends not only on your financial need but, also, on the amount of other aid you get and the availability of funds at your school.

• Receiving other aid might reduce the amount of your FSEOG award.

• Not all schools participate in the FSEOG program.

• The school's financial aid office decides how to award these funds.

• Each school participating in FSEOG receives a certain amount of FSEOG funds each year from the U.S. Department of Education. When all of those funds have been disbursed for that award year, no more FSEOG awards can be made for that year.

Kentucky CAP

College Access Program (CAP)

The College Access Program (CAP) helps Kentucky's financially needy undergraduate students attend eligible public colleges and universities, proprietary schools, and technical colleges. CAP Grants may be awarded to Kentucky residents enrolled for at least six semester hours (half time) in academic programs that take at least two years to complete. To be considered for a CAP Grant, the total expected family contribution (EFC) toward the student's educational expenses cannot exceed $5,273.

The maximum award for the 2010-2011 academic year is $1,900 ($950 each semester).

Kentucky KTG

Kentucky Tuition Grant (KTG)

The Kentucky Tuition Grant (KTG) Program provides need-based grants to qualified Kentucky residents to attend the Commonwealth's independent colleges.

The program is designed to assist students with the higher tuition charges at the independent colleges. Students must be full-time undergraduates.

For the 2010-2011 academic year, KTG awards range from $200 to $2,964.

KEES Scholarship

Kentucky Educational Excellence Scholarship

KEES, is administered by the Kentucky Higher Education Assistance Authority (KHEAA), is funded by Kentucky Lottery proceeds. Students who try to get the most from high school by studying hard and making good grades (2.5 GPA or higher) can earn scholarships for college or technical school. A bonus is paid based on ACT and SAT test scores

Home school and GED graduates may earn awards based on their ACT scores.

KEES AmountsGPA2.50 2.60 2.70 2.75 2.80 2.90 3.00 3.10 3.20 3.25 3.30 3.40 3.50 3.60 3.70 3.75 3.80 3.90 4.00

ACT Score 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and above

Amount $3671107143179214250286321357393428464500

Amount$125150175187200225250275300312325350375400425437450475500

Bonus

Honors Scholarship

Robert C. Byrd Honors Scholarship

The federally funded Robert C. Byrd Honors Scholarship program provides scholarships to academically talented high school seniors, home school seniors, and GED graduates who show promise of continued excellence in postsecondary education.

Amount

Up to $1,500 per year for a total of four years. (Award amounts are contingent upon federal funding.)

Private College Incentive Scholarship

Scholarship Given Out By Private Colleges

Most private college will give out scholarships from their own funds to entice student to attend their institution. These funds NO NOT come from any state or federal financial aid funds. These funds could be based on Need or Merit

KHEAA Work-Study

Eligible Kentucky residents attending approved in-state postsecondary institutions. The jobs are provided by Kentucky employers, at least 75 percent of whom are private entities. The student must be enrolled or accepted for enrollment at least half-time, be making satisfactory academic progress, and not be in default on any financial obligation to KHEAA under any program administered by KHEAA.

Priority for jobs will be given to undergraduates. Students must be paid at least the federal minimum wage. KHEAA pays $2 per hour toward each individual's wages.

Federal Work Study

Student must: • Have financial need• Be a U.S. citizen or eligible non-citizen• Be enrolled in an eligible school• Be pursuing a degree or certificate

Award:

• Student must be paid at least the current federal minimum wage

• Total earnings cannot exceed cost of education minus other financial aid received

Educational Tax Credits And Deductions

American Opportunity $2,500

Lifetime Learning $2,000

Educational Tax Deduction $4,000 to $2,000

What Will The Student Qualify For In Financial Aid To Help Pay For A

Public Or Private College Or University

Student’s And Family Background

EFC Of Family $9,961

Financial Need $8,039

Student’s Scholarships $1,845

Student’s Attends State University

Total Cost Of Attending $18,000

EFC Of Family - 9,961

Financial Need $8,039

What Will Student Qualify For While Attending In State College

Direct Loans - $5,500

KEES Scholarship $1,845

American Opp. Tax Credit $2,500

Total $9,845

PLUS Loan Amount over other FA

Alternative Loan Amount can vary

Student’s Attends Private University

Total Cost Of Attending $38,000

EFC Of Family - 9,961

Financial Need $28,039

What Will Student Qualify For While Attending Private College

Direct Loans $5,500

KEES Scholarship $1,845

American Opp. Tax Credit $2,500

KTG Grant $2,964

College Incentive Scholarship $12,000

PLUS Loan $3,230

Total (100% of Need) $28,039

Student’s Attends Private University

Total Cost Of Attending $38,000

Financial Need $28,039

Total Financial Assistance $28,039

Left To Pay $ 9,961

BIG PROBLEM

HOW IS THIS FAMILY GOING TO PAY THEIR EXPECTED FAMILY CONTRIBUTION OF $9,961

This is 12% of Gross Income or;

15% of Net Income After Taxes

Chuck Moore, CCFC, CAMC, CAFC

Louisville, Kentucky

502-721-8646 ▪ tuition2@insightbb.com

www.collegeliteracyacademy.com