Post on 23-Jan-2016
description
Chuck Moore, CCFC, CAMC, CAFC
Louisville, Kentucky
502-721-8646 ▪ tuition2@insightbb.com
www.collegeliteracyacademy.com
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 2010–2011 academic year. Most federal student aid is awarded as grants and low-interest loans.
Where Does Most College Financial Aid Come Form
Planning for College Should Be Analyzed
Just As Any Other Major Family Purchase
• Value vs. Return • Total Cost - 4 + Years• Name Brand Syndrome• Loans- Student &
Parent• Fit of College• Net Cost vs. Sticker
Price
WHY COLLEGE COST IS GOING UP… UNDERSTANDING THE PROBLEM
Most States Have Cut College And University Funding By Millions Of Dollars Over The Last Several Years - Therefore…
Tuition Costs Have Out Paced Inflation As Well As Family Income Over The Last 10 Years Due To Colleges Increasing Costs Because of Budget Cuts And Lack Of State Funding - However…
Need Based Financial Aid
FormulaFederal or Institutional
Family #1Total Financial
Need At All Colleges
Family #2Partial Financial
Need: At Some Colleges
Family #3Will Not QualifyAt Any Colleges
WHO HAS THE LEAST OUT-OF-POCKET EXPENSE
Three Types Of Financial Aid Families
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 -25,210
Available Income $59,790
Asset Protection Allowance Example
Oldest Parent 46
Allowance $42,300
Exposed Assets - 20,000
Adjusted Available Assets $0
Employment Allowance Example
Number Of Parents Working 2
Lowest Earner Amount $26,000
Employment Allowance % X 35%
$ 9,100
Maximum Allowance $ 3,500
Tax Allowance Example
Federal Taxes $5,250
Social Security Taxes 7.65% $6,120
State Taxes 4% (Varies By State) $3,200
Total Tax Allowance $14,570
Total Allowance
Income Allowance $25,790
Asset Allowance $0
Employment Allowance $3,500
Tax Allowance $14,570
Total Allowances $43,860
Adjusted Available Income Of Parents
Total Income $85,000
Total Allowances -$43,860
Adjusted Available Income $41,140
Adjusted Available Income Of Parents
Adjusted Available Income Of Parents
Available Income $41,140
Adjustment Factor - 29,601
Adjustment Factor Left $11,539
Adjusted Available Income Of Parents
First $29,601 Assessed $8,007
Second $11,539 Assessed 47% +5,423
EFC Of Parents $13,430
Student’s EFC
First $6,000 - $0 (50% thereafter minus taxes)
Assets 20% (No Asset Protection Allowance)
In our family example, student did not have income over $6,000 but had $5,000 in assets
Student’s Attends State University
Total Cost Of Attending $ 20,000
EFC Of Parents - 13,430
EFC Of Student ($5,000 Assets) - 1,000
Financial Need $ 5,570
What Will Student Qualify For While Attending In State College
Direct Loans - $5,500
American Opp. Tax Credit $2,500
PLUS Loan Amount over other FA
Alternative Loan Amount can vary
What Will Student Not Qualify For While Attending An In-State College
• PELL Grant
• FSEOG
• State Need-Based Grants
• Perkins Loan
• Federal & State Work-Study
What Parents And Students Should Do Before Appling For
Financial Aid
Develop A Plan!
Chuck Moore, CCFC, CAMC, CAFC
Louisville, Kentucky
502-721-8646 ▪ tuition2@insightbb.com
www.collegeliteracyacademy.com
www.gearup.ed.com