Financial Aid: An Overview A Presentation of

Introduction Tonight you will learn:

What Financial Aid is Sources of Financial Aid The formulas used in

determining your eligibility

When and how to apply Resources for more

information

Who Are You? Is this process new to you?

Where is your son or

daughter thinking about

attending college?

What is the cost of that

institution?

How will you pay for it?

Agenda

Learn the language: Review some simple vocabulary

Financial Aid Primer: Forms, Formulas and Funds

How do I apply? Financial Aid Calendar Review of the Forms

Grants, ScholarshipsFree Gifts Do not have to be repaid

LoansMoney that must be repaidBorrowed by student, parent, or both

Work StudyMoney student is given the

opportunity to earn

$$

IOU

What is Financial Aid?

Grants & Scholarships• Pell Grant

• MASSGrant

• SEOG

• Tuition Waiver

• Fee Grant

• Institutional Grant

• Private Scholarship

• Massachusetts Performance Bonus

Educational Loan Programs• Massachusetts No Interest Loan

• Federal Perkins Loan

• Federal Direct or Stafford Loan (subsidized or unsubsidized)

• Institutional loans

• Other state loans

6%4%4%

5%

11%

19%

52%

Federal LoansNon-Federal LoansOther Federal ProgramsFederal Campus-BasedState Grant ProgramsFederal Pell GrantsInstitutional & Other Grants

Over $68 Billion given out in Financial Aid in 1999-2000

Source: The College Board

STUDENTS have the primary responsibility for contributing to their education to the extent that they are able

PARENTS are responsible for contributing to their children’s education to the extent that they are able

FAMILIES with similar circumstances will be expected to contribute similar amounts to higher education; those with different circumstances will be expected to contribute different amounts

Financial Aid Basic Premises

Cost of Attendance (COA) - Expected Family Contribution (EFC)

= Financial Aid Eligibility/Family Need

Financial Aid BASIC FORMULA

Tuition and Fees

Tuition and Fees

Roomand

Board

Roomand

Board+

+

SuppliesSuppliesOther

Personal Expenses

Other Personal Expenses++

+Books

Transportation

COST OF ATTENDANCE (COA)

IS a measure of parent’s capacity over time to absorb educational costs

IS NOT a dollar amount expected from current income or assets.

IS NOT an estimate of “extra” cash available.

The Expected Family Contribution

Taxes

#

in f

amil

y

The Financial

Aid Funnel

Expected Family Contribution (EFC)

Used to award all Federal Aidat public and private schools

Uses both parent and student information (for dependent students)

Uses standard income and asset protection allowances

Does not consider HOME EQUITY or Qualified Retirement Assets

# in

colle

ge

Ass

ets

Income

FAFSA

Elements of Federal Methodology

Student Income 50% after taxes and income protection allowance of $2500

Student Assets 35%

EXPECTED FAMILY

CONTRIBUTION

STUDENT Contribution (dependent)

Parent Income 22-44% after taxes and income protection allowance

Parent Assets* 3-6% after asset protection allowance

* Retirement & Home Equity not included in federal formula

Divided by number in college

PARENT Contribution +

Current Federal Methodology

Used by colleges to give out their own money Formula could vary widely from school to school Generally includes more assets than the

Federal Methodology Home Equity often included

Often requires additional applications/forms

Institutional Methodology for Institutional Funds

23

Family Profile

Oldest Parent’s Age: 50Family Members: 4Number in College: 1Federal tax: 10% of AGI

The Parent Contribution A Case Study

$15,000 $50,300 $70,000 $100,000

Parents' AGI

$40,000 $1,716 $1,716 $2,236 $3,108

$60,000 $6,171 $6,171 $7,282 $8,974

$80,000 $13,160 $13,160 $14,271 $15,963

If Parents' Assets are:

Expected Parent Contribution will be:

2000-2001 Federal Methodology

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Private A

Need

EFC

COA - EFC = NEEDCOA

Private B StateCollege/

University

CommunityCollege

$25,000$30,000 $10,000 $5,000COA

$30,000

How Does the Formula Work?

The “Step” Approach to Awarding Financial Aid

For Institutional Grants, Admissions Ranking can determine Financial Aid Awarded

Unmet Need = $1,900

Work = $1,500 Work StudyLoan = $2,600 Stafford Loan

Gift Aid = $6,000 Grant + $5,000 Scholarship

EFC = $8,000

COA - EFC = Need $25,000 - 8,000 = 17,000

The Financial Aid BarrelA Sample Financial Aid Award

Sources of Financial AidConsider All Your Options!

Federal Government State Government College / University Private Agencies

(Kiwanis, Elks, church or synagogue group)

Professional associations

Parent’s employer

‘Financially’ Manageable During and AFTER

the College years

PARENTPARENT STUDENTSTUDENT

Will not jeopardize Financial Security Comfortable Retirement Educating other children other financial goals

Will not leave excessive debt Will not jeopardize financial

independence after graduation

Estimate the ‘Total’

Cost of Education4+ years of expenses

Estimate the ‘Total’

Cost of Education4+ years of expenses

Look at your entireFinancial Situation

Look at your entireFinancial Situation

Make financial decisions that :

“Insider” Tips

Find out the deadlines and comply! Keep copies of what you send. “Guess-timate” on your applications If you have questions, ask! Look at all of your financing options Don’t rule out a school just because of its cost Apply to one or two financially ‘safe’ school Think about how you (parent & student) will pay

your share of total college costs (2/4+ years)

Financial Aid Application Materials FAFSA - Free Application for Federal Student Aid

– Required by all colleges– Free form

PROFILE– Some colleges need this– Paid form

Institutional Application– One per school– Usually part of admissions packet

Business/Farm Supplement Non Custodial

Parent Statement Tax Return

REMEMBER! Forms must

be filed EVERY YEAR.

Financial Aid

Can be required by the federal government or by any institution

is carried out by the institutions involves documentation of data provided on the

application forms an award based on non-verified information is

subject to change after the information has been verified

VERIFICATION PROCESS

The Financial Aid Calendar

January (or earlier for Profile): Complete forms (BEST GUESS IS OK FOR INCOME)

February (or earlier for Profile): Many school’s deadlines for forms

Late February - March: Schools may call you with questions

End of March - Early April: Admissions and Financial Aid notification mailed

The Financial Aid Calendar (continued)

April: Compare award letters from different schools

May 1: DECISION DEADLINE - Tell all schools yes or no

May: Pay deposits (tuition, room and board) - about $500

June: Bill for the Fall semester, due by 8/1 or so

November - December: Bill for the Spring Semester

“I need more help!...” Higher Education Information Center

1(800) 442-1171 Federal Student Aid Center - FAFSA

Processing:1-800-4-FEDAID

College Scholarship Service - Profile Processing: (800) 778-6888

Each college’s financial aid office Your high school guidance office Your state legislator’s office

Still more help on the WEB... www.finaid.org

www.fastweb.com

Resources for:• Financial Aid • Scholarships• College Information

HELPFUL HINTS IN COMPLETING THE FORMS

• READ all the instructions

• Complete the ENTIRE form, unless specifically instructed to leave something blank

• Use number 2 pencil or a pen with black ink

• Read “When You Fill Out This Form” on page 2 of FAFSA

• Be sure to answer all questions on the form using information about the individual about whom the question is directed(e.g. Do not provide parent's social security number when asked to provide the student's social security number. )

• Use regular first-class mail. Sending the forms special delivery or by overnight mail or by any other special process to the P.O. Box indicated MAY DELAY RECEIPT of the forms by the processor

• Notify all of the financial aid offices of institutions to which student applies regarding any unusual or special family circumstances not already reflected on both of the forms

Let’s Fill Out the Forms

Free Application for Federal Student Aid (FAFSA)– http://www.fasfa.ed.gov/

Profile Registration Form – http://www.collegeboard.org/profile

THANK YOU!