college financial aid what's new what's changing
DESCRIPTION
What's new and changing in the world of financial aid in 2009. ( Presentation does not reflect changes under HCERA (Enactment of the Student Aid Provisions of the Health Care and EducationReconciliation Act of 2010), such as the change from FFELP to Direct Lending.)TRANSCRIPT
C. Claire Law, M.S. Certified Educational Planner
www.eduave.com
Financial Aid What’s New, What’s
Changing
Helping IECA Consultants help their client families
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Financial Aid: Past Present Future
Federal Methodology & Economics
How to Incorporate Financial Aid Services into Your Practice (forms)
Present and Future
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
2010 HCERA Enactment of the Student Aid Provisions of the Health Care and Education Reconciliation Act of 2010 (change from FFELP to Direct Lending)
2009 - The American Recovery and Reinvestment Act of 2009 was passed by the House and Senate on February 13, largely along party lines.
The Higher Education Opportunity Act of 2008Congress passed the Ensuring Continued Access
to Student Loans Act of 2008 to help avert a crisis in the FFEL program.
2005 Higher Education Reconciliation Act of 2005 (HERA 2005) cuts $12.7 billion from student aid: switches Stafford and PLUS interest rates to fixed rates
Federal Financial Aid: The Past
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Senator Pell Pres Ronald Reagan – “loans are financial aid”Reauthorization – every 4 yrsUntil 1988 colleges could choose IM/FM – before
UFObama 2010 – HCERA – Feds lend directly to
students through Stafford loan and sometimes Perkins, to parents through the PLUS loan. Loan rates are fixed. Aggregate amounts increase for Stafford.
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
To extent they are able, parents have primary responsibility to pay for dependent child’s education
Students have a responsibility to contribute to educational costs
Families should be evaluated in their present financial condition
Family’s estimated ability to pay educational costs must be evaluated in equitable manner.
Principles of Needs Analysis* *from NAFSAA-National Association for Student Financial Aid Administrators
2 methodologies / myriad packages
Federal Methodology (FM)-
Institutional Methodology (
Enrollment Management – the college perspective
When Professional Judgment?
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Definition of Need*
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Cost of attendance (COA)
– Expected family contribution (EFC)
= Need
*from NAFSAA-National Association for Student Financial Aid Administrators
Need Varies Based on Cost* *from NAFSAA-National Association for Student Financial Aid Administrators
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
X
Y
Z
Cost of Expected Family NeedAttendance Contribution (Variable) (Variable) (Constant)
1
2
3
EFC EFC
Basic Economic Principles*
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Looking at FAIRNESS Horizontal equity: the equal treatment
of people in similar situations.Vertical equity: treating people in
different circumstances in appropriately different ways.
ongoing debate about whether net price differentials should be based on ability to pay (need), on merit, or on willingness to pay.
Opportunity Cost (Source: Sandy Baum: Primer for Financial Aid Administrators) The College Board
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
DIFFERENT PRICES FOR DIFFERENT PEOPLE (Horizontal & Vertical Equity)
Sandy Baum’s Chart
Need Analysis Methodology
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Defining necessitiesSnapshot versus long-term fin capacityDefining living standardsTreatment of multiple children in collegeDefining incomeWhose income is relevant?
Need Analysis Methodology
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Allowances against incomeIncome protection allowanceTaxes paidEmployment allowance annual education
savings allowance & other allowances against income
Federal Methodology* *from NAFSAA-National Association for Student Financial Aid Administrators
Federal Methodology is a formula created by Congress
to determine the EFC.
EFC calculators:
http://www.finaid.org/calculators
www.collegeboard.com/parents/
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
What is Federal Financial Aid?
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Self-Help: Loans: Stafford (sub & unsub), PLUS, Perkins, Alternative (Major component of financial aid packages)
Gifts: Grants: Pell, SEOG (need-based), SMART & ACG (merit-based)
Self-help employment : Federal Work Study (FAFSA form is required)
Parents need the facts
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
1. What are the family’s values?2. Where does the family fit in within the
financial aid formulas?3. Where does the students fit in within the
academic applicant pool?4. What is their actual ability to pay? Their
actual EFC?
Role of Educational Consultant who offers financial aid advising
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing
Ideally, helps families understand their cost of college in Junior year.
Still based on college list, that has colleges that benefit their child academically, socially, affordable over the four years.
Be clear with families about what you as a consultant can/cannot do for them
Avoid this unhappy ending
IECA Fall Conference Charlotte November 2009Financial Aid: What's New & What's Changing