Grants Are

Grants Are Grants Are

Not EnoughNot Enough

Presented ByPresented By

California Association of Student California Association of Student Financial Aid Administrators Financial Aid Administrators

www.casfaa.org

California Community Colleges Student California Community Colleges Student Financial Aid Administrators Association Financial Aid Administrators Association www.cccsfaaa.org

California Lenders for Education California Lenders for Education www.clfe.org

AgendaAgenda

• Student Borrower StatisticsStudent Borrower Statistics

• Types of LoansTypes of Loans

• Life Cycle of a LoanLife Cycle of a Loan

2006/2007 Cost of Attendance 2006/2007 Cost of Attendance $229 Billion$229 Billion

$23

$74

$52

$80

Parent/Student Contributions

Federal Student Loans

Private Education Loans

Other

(Includes scholarships, grants, tax relief and other aid from states, colleges, employers and other

sources)

Source: Based on estimates by Octameron Associates, “Don’t Miss Out”, 29th Edition; College Board, “Trends in Student Aid”; and Sallie Mae. Includes tuition, room, board, transportation and miscellaneous costs for two and four year college degree granting programs.

In twenty years, the cost of tuition and fees has In twenty years, the cost of tuition and fees has doubled at private and public institutionsdoubled at private and public institutions

2006/2007 Cost of Attendance 2006/2007 Cost of Attendance $229 Billion$229 Billion

Source: College Board

In one year, private and public tuition, fees, In one year, private and public tuition, fees, room and board has increased by +6%room and board has increased by +6%

Western region public institutionsWestern region public institutions Lowest national tuition and feesLowest national tuition and fees Total COA greater than south and Total COA greater than south and

southwest regionssouthwest regions

• More than More than fifty percentfifty percent (50%) (50%) of all college students borrow of all college students borrow a student loana student loan

Source: College Board, Octameron Associates

Borrowing for College TodayBorrowing for College Today

Total 2006-2007 Total 2006-2007 federal loanfederal loan dollars borrowed by students dollars borrowed by students

139% increase in number of 139% increase in number of student loans in 10 years student loans in 10 years

20% increase in 2 years20% increase in 2 years



$74 BILLION DOLLARS$74 BILLION DOLLARS

Total 2006-2007 Total 2006-2007 private loanprivate loan dollars borrowed by studentsdollars borrowed by students





$23 BILLION DOLLARS$23 BILLION DOLLARS

• Students response to question:Students response to question: “List all types “List all types of loans that come to mind that people use to of loans that come to mind that people use to finance college education.”finance college education.”

How Prevalent Are Loans How Prevalent Are Loans In Paying For College?In Paying For College?

Source: First Marblehead Study

79% - Federal Student Loans79% - Federal Student Loans13% - Bank Loans (Private)13% - Bank Loans (Private) 7% - Home Equity Loans 7% - Home Equity Loans 4% - Grants 4% - Grants 5% - Personal Loans 5% - Personal Loans 2% - Scholarships 2% - Scholarships 1% - Work Study1% - Work Study

Parties Involved in Loan Parties Involved in Loan ProcessProcess

Student/Parent:Student/Parent: Student (or parent) enrolled in a Title IV Eligible Student (or parent) enrolled in a Title IV Eligible School at least half time; School at least half time; US Citizen or Permanent ResidentUS Citizen or Permanent Resident

SchoolSchool: Title IV Eligible School certified to offer : Title IV Eligible School certified to offer student loans by the US Department of Educationstudent loans by the US Department of Education

Lender:Lender: Source of funds for student loan for the Source of funds for student loan for the purpose of financing a post-secondary educationpurpose of financing a post-secondary education

Guarantor:Guarantor: State or private agency which repays the State or private agency which repays the lender if the borrower fails to make payments lender if the borrower fails to make payments resulting in defaultresulting in default

Types of LoansTypes of Loans

Federal Stafford LoansFederal Stafford Loans

• Offered by private lenders who Offered by private lenders who participate in the Federal Family participate in the Federal Family Education Loan Program (FFELP) or Education Loan Program (FFELP) or by the Federal Government in the by the Federal Government in the Direct Loan Program (DLP)Direct Loan Program (DLP)

More…More…

Academic LevelAcademic LevelDependent Dependent Student Student

Annual LimitsAnnual Limits

Independent Independent Student Student

Annual LimitsAnnual Limits

FreshmanFreshman $3,500$3,500 $7,500$7,500

SophomoreSophomore $4,500$4,500 $8,500$8,500

Junior/SeniorJunior/Senior $5,500$5,500 $10,500$10,500

Graduate/Graduate/ProfessionalProfessional

N/AN/A $20,500$20,500

Federal Stafford Student Loans borrowing limits Federal Stafford Student Loans borrowing limits established by the US Department of Educationestablished by the US Department of Education

Parent PLUS LoanParent PLUS Loan

• Option for parents of undergraduate Option for parents of undergraduate dependent studentsdependent students

• Loan funds borrowed by the parent to Loan funds borrowed by the parent to make up the gap up to make up the gap up to Cost of Cost of AttendanceAttendance less any other financial aid less any other financial aid


Graduate PLUS LoanGraduate PLUS Loan

• Option for graduate studentsOption for graduate students

• Used to finance the student’s Used to finance the student’s education, not to exceed the student’s education, not to exceed the student’s Cost of AttendanceCost of Attendance less any other less any other financial aidfinancial aid


Federal Perkins LoanFederal Perkins Loan • Campus-based student loan program, Campus-based student loan program,

limited funds available limited funds available

• Not all schools participate Not all schools participate

• Annual student borrowing limits:Annual student borrowing limits:

$4,000 Undergraduate Students $4,000 Undergraduate Students

$6,000 Graduate Students$6,000 Graduate Students


Private LoansPrivate Loans

• ““Credit-Based” loans with or without a Credit-Based” loans with or without a cosignercosigner

• Financing up to the Cost of AttendanceFinancing up to the Cost of Attendance

• Many must be certified by a school Many must be certified by a school officialofficial

• Varying interest rates and fees based Varying interest rates and fees based on credit rating on credit rating

• Deferred repayment options available Deferred repayment options available while the student attends schoolwhile the student attends school


Direct to Consumer (DTC) LoansDirect to Consumer (DTC) Loans • Credit-based borrowingCredit-based borrowing

• Student “self-certifies” their loan Student “self-certifies” their loan eligibility and need for the loaneligibility and need for the loan

• School is not typically involved in the School is not typically involved in the processprocess


Summary Types of LoansSummary Types of Loans

Federal Stafford Loans Federal Stafford Loans Federal Family Education Loan (FFEL) Federal Family Education Loan (FFEL)

Direct Lending (DL)Direct Lending (DL)

Federal PLUS LoansFederal PLUS LoansParent Parent GraduateGraduate

Federal Perkins LoanFederal Perkins Loan

Private LoansPrivate Loans

Direct to Consumer (DTC)Direct to Consumer (DTC)

CSU & CCC Unmet Need ComparisonCSU & CCC Unmet Need Comparison

Parents' Income & Cal Grant AssumptionCSU $30,000 Income, no Cal Grant

CCC $30,000 Income, no Cal Grant

On-campus Budget $16,752 $15,306

Parent Contribution $0 $0

Student Contribution $0 $0

Net Need $16,752 $15,306

Pell Grant $4,310 $4,176

Cal Grant A, B Fees $0 $0

Cal B Access $0 $0

SUG $2,772 $0

EOPG / BOG Fee Waiver $0 $600

SEOG $0 $750

Work-Study $3,000 $4,000

Perkins Loan $0 $0

Stafford Subsidized Loan $3,500 $3,500

Stafford Unsubsidized Loan $0 $0

PLUS Loan $0 $0

Total Aid Applied to Need $13,582 $13,026

Unmet Need $3,170 $2,280

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Life Cycle of a LoanLife Cycle of a Loan

Life Cycle of a Loan

In-School & Grace Period

Repayment

Application & Origination

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Student SubmitsFAFSA

School Certifies

Loan Eligibility

StudentCompletes

MPN

Application/Origination ProcessApplication/Origination Process

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Guarantor Issues

Guarantee toLender

Lender Disburses

Funds to School

Lender Approves

Loan


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School Credits/Pays

Borrower

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Student SubmitsFAFSA

School Certifies

Loan Eligibility

StudentCompletes

MPN


Guarantor Issues

Guarantee toLender

Lender Disburses

Funds to School

Lender Approves

Loan

School Credits/Pays

Borrower

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In-School/GraceIn-School/Grace

In-School Servicing•Entrance Counseling

•Enrollment Status Updates•Demographic Updates

•Loan Sales•Exit Counseling

Grace Period

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RepaymentRepayment

Repayment

•Payments•Paid in Full

•Deferment/Forbearance•Delinquency•Default

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Grants Are Not EnoughGrants Are Not Enough

Education is the most important investment any student will ever make during their lifetime

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EDUCATION EDUCATION is the bestis the best

INVESTMENTINVESTMENT

Today’s Children are California’s FutureToday’s Children are California’s Future

QUESTIONS?QUESTIONS?

Grants Are

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