COST OF ATTENDANCE

Part II

BASIC NEED EQUATION

Cost of attendance (COA)

– Expected family contribution (EFC)

___________________________________

= Unmet Need

AWARDING

All ‘Gift Aid’ must be taken into account prior to awarding subsidized funding

Examples of ‘Gift Aid’ Pell FSEOG CAP KTG KEES Scholarships Company Reimbursement

AWARDING

Example $31,905 COA - 0 EFC What is the Unmet Need?

- 5,730 Pell Grant - 300 FSEOG - 1,900 CAP - 2,970 KTG - 500 Scholarship - 1,883 Company Reimbursement

What is the student’s remaining need?

PERKINS

The Federal Perkins Loan Program provides money for college or career school for students with financial need

Perkins Loans are low-interest federal student loans for undergraduate and graduate students

PERKINS

Available to undergraduate, graduate, and professional students with financial need

Interest rate for this loan is 5% Sullivan, Spencerian, and SCTD are the

lender Students make their payments to the school or

servicer Funds depend on the students financial need

and the availability of funds at each campus

PERKINS

Determining Eligibility Must be an undergraduate, graduate, or

professional student with exceptional financial need

Must be enrolled at least part-time Must be enrolled in a program that leads to a

degree or certificate awarded by the school

PERKINS

How much funding can a student borrow? Amount depends on the students financial need Amount of other aid a student receives Availability of funds at the campus Due to limited funds, not every student who

qualifies for a Perkins Loan will receive funding

PERKINS

Maximum eligibility amount Undergraduate

$5,500 per award year $27,500 aggregate loan limit

Graduate/Professional $8,000 per award year $60,000 aggregate loan limit

Note: Before awarding, check policy and availability of funds at your campus

DIRECT LOANS

What is a Federal Direct student loan? A federal student loan, made through the William

D. Ford Federal Direct Loan Program, for which eligible students and parents borrow directly from the U.S. Department of Education at participating schools.

Types of Direct Loans Direct Subsidized Loans Direct Unsubsidized Loans Direct PLUS Loans

DIRECT SUBSIDIZED LOAN

The school determines the amount a student can borrow, and the amount may not exceed their financial need.

The Department of Education (DOE) pays the interest on a Direct Subsidized Loan If the student is enrolled at least half-time For the first six months after the student leave

school (referred to as a grace period) During a period of deferment (a postponement of

loan payments) Note: Borrowers of subsidized Stafford Loans first disbursed on or after July 1, 2014 are once again eligible for an interest subsidy during the 6-month grace period. The subsidy during the grace period had been temporarily removed by the fiscal year 2012 budget bill for loans first disbursed on or after July 1, 2012, and before July 1, 2014.

DIRECT SUBSIDIZED LOAN

Determining Eligibility Must be enrolled at least half-time School must participate in the Direct Loan

Program Must be enrolled in a program that leads to a

degree or certificate awarded by the school Available ONLY to undergraduate students who

have financial need

DIRECT SUBSIDIZED LOAN

Is there a time limit to receive Subsidized loans? YES for first-time borrower on or after July 1,

2013 Limit on the maximum period of time, measured in

academic years, a student can receive Direct Subsidized loans

May not receive Direct Subsidized loans for more than 150 percent of the published length of the students program referred to as “maximum eligibility period”

Maximum eligibility period can change if the student changes to a program that has a different length

If the student receives Subsidized loans for one program and then changes to another program, the Subsidized loans received for the earlier program will count towards the new maximum eligibility period

DIRECT SUBSIDIZED LOAN

Examples: If a student is enrolled in a four-year bachelor’s

degree program, the maximum period for which they can receive Subsidized loans is six years (150 percent of 4 years = 6 years)

If the student is enrolled in a two-year associate degree program, the maximum period for which they can receive Subsidized loans is three years (150 percent of 2 years = 3 years)

DIRECT UNSUBSIDIZED LOAN

The school determines the amount a student can borrow based on their cost of attendance and other financial aid received

The student is responsible for paying the interest that accrues on a Direct Unsubsidized Loan during all periods

If a student opts not to pay the interest while in school and/or during grace periods and deferment or forbearance periods, the interest will accrue and capitalized

DIRECT UNSUBSIDIZED LOAN

Determining Eligibility Must be enrolled at least half-time School must participate in the Direct Loan

Program Must be enrolled in a program that leads to a

degree or certificate awarded by the school Are available to undergraduate and graduate

students No requirement to demonstrate financial need

Note: Maximum eligibility period does not apply to Unsubsidized loans

DIRECT LOAN LIMITSYear

Dependent Students (except students whose parents are unable to obtain PLUS Loans)

Independent Students (and dependent undergraduate students whose parents are unable to obtain

PLUS Loans)

First-Year Undergraduate Annual Loan Limit

$5,500—No more than $3,500 of this amount may be in subsidized loans.

$9,500—No more than $3,500 of this amount may be in subsidized loans.

Second-Year Undergraduate Annual Loan Limit

$6,500—No more than $4,500 of this amount may be in subsidized loans.

$10,500—No more than $4,500 of this amount may be in subsidized loans.

Third-Year and Beyond  Undergraduate Annual Loan Limit

$7,500—No more than $5,500 of this amount may be in subsidized loans.

$12,500—No more than $5,500 of this amount may be in subsidized loans.

Graduate or Professional Students Annual Loan Limit

Not Applicable (all graduate and professional students are considered independent)

$20,500 (unsubsidized only)

$57,500 for undergraduates—No more than $23,000 of this amount may be in subsidized loans.

$138,500 for graduate or professional students—No more than $65,500 of this amount may be in subsidized loans. The graduate aggregate limit includes all federal loans received for undergraduate study.

Notes:

Subsidized and Unsubsidized Aggregate Loan Limit

$31,000—No more than $23,000 of this amount may be in subsidized loans.

The aggregate loan limits include any Subsidized Federal Stafford Loans or Unsubsidized Federal Stafford Loans you may have previously received under the Federal Family Education Loan (FFEL) Program. As a result of legislation that took effect J uly 1, 2010, no further loans are being made under the FFEL Program.Effective for periods of enrollment beginning on or after J uly 1, 2012, graduate and professional students are no longer eligible to receive Direct Subsidized Loans. The $65,500 subsidized aggregate loan limit for graduate or professional students includes subsidized loans that a graduate or professional student may have received for periods of enrollment that began before J uly 1, 2012, or for prior undergraduate study.

Federal Student Aid - An Office of the U.S Department of Education. June 2013.

DIRECT PLUS LOAN

PLUS loans are federal loans that graduate students and parents of dependent undergraduate students can use to help pay for college or career school

PLUS loans can help pay for education expenses not covered by other financial aid

DIRECT PLUS LOAN

The U.S. Department of Education is the lender The borrower must not have an adverse credit

history Adverse Credit History - When determining whether a

borrower is ineligible for a PLUS Loan based on an adverse credit history, the Department obtains a credit report on the borrower from at least one national credit bureau. Adverse credit is defined in the regulations as the applicant being 90 days or more delinquent on a debt or having been subject in the last five years to a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of an FSA debt. The absence of any credit history is not considered adverse credit. (2013/2014 FSA Handbook)

The maximum loan amount is the student’s cost of attendance (determined by the school) minus any other financial aid received

DIRECT PLUS LOAN

Determining Eligibility Must be a graduate or professional degree

student Enrolled at least half-time in a program leading to a

degree or certificate Be the parent, biological, adoptive, or in some

cases, stepparent, of a dependent undergraduate student enrolled at least half-time Meet the general eligibility requirement for federal

student aid. If you are borrowing on behalf of your child, your child must also meet these requirements.

DIRECT PLUS LOAN

How do students/parents apply? Complete FAFSA Complete Credit Authorization form

If approved; Complete MPN Graduate or professional students will also be

required to complete Entrance Counseling

DIRECT PLUS LOAN

When does repayment begin? Direct PLUS Loan enters repayment once the loan

is fully disbursed Graduate/professional student loans will be placed

into deferment while the student is enrolled at least half-time and for an additional six months after they cease to be enrolled at least half-time

Parent borrower may contact their loan servicer to request a deferment Eligible while child is enrolled at least half-time May be eligible for an additional six months after child

ceases to be enrolled at least half-time During deferment interest will accrue. May choose to

pay the accrued interest or allow the interest to capitalize.

DIRECT LOAN INTEREST RATES

Direct Loan interest rates for 2014-15 4.66% for Direct Subsidized Loans and Direct

Unsubsidized Loans for undergraduate students 6.21% for Direct Unsubsidized Loans for

graduate/professional students 7.21% for parent and graduate PLUS Loans

Interest rates are effective for all Direct Loans with a first disbursement on or after July 1, 2014

PRIVATE LOANS

What is a private loan? A private student loan is a nonfederal loan issued

by a lender such as a bank, credit union or other financial institution. It is a loan that is made to a borrower expressly for postsecondary education expenses, regardless of whether the loan is provided through the educational institution that the student attends or directly to the borrower from the private educational lender.

Also referred to as Alternative Loan

PRIVATE LOANS

All Federal aid should be utilized first Help bridge the gap when Federal aid is not

enough to cover cost of a student education Student must apply with lender and be

approved

PRIVATE LOAN

Generally… Require payments while the student is still in

school Can have variable interest rates, some greater

than 18% Interest may accrue while the student is in

school May require an established credit record May need a co-signer to receive the best

possible rate Interest may not be tax deductible Cannot be consolidated into the federal loan

consolidation program May be prepayment penalty fees

PRIVATE LOANS

Disclosure requirements Provide the prospective borrower with the

information required by 15 U.S.C. 1638(e)(1) Federal [12 CFR 226.47(a) in the Federal Reserve System Truth in Lending regulations – provided by the lender

Inform the prospective borrower that she may qualify for FSA loans or other assistance from the FSA programs, and that the terms and conditions of an FSA loan may be more favorable than the provisions of private education loans

PRIVATE LOANS

Lenders that currently lend to Sullivan, Spencerian, and SCTD students Kentucky Advantage Education Loan

http://www.kheslc.com/kael_loans.html Smart Option Student Loan

https://www.salliemae.com/student-loans/

Note: Student have the right to choose any lender

AWARDING

Example: Grade Level 2

$12,500 COA - 2,500 EFC $10,000 Unmet Need

- 3,280 Pell Grant - 1,400 Scholarship - 900 Perkins - 1,800 FWS $ 2,620 Remaining Need

What amount can be awarded in subsidized funding?

SUBSTITUTING FOR THE EFC

May substitute certain types of aid for student’s EFC Direct unsubsidized loans Teach Grant funds PLUS loans State loans Private education loans Any other non-need-based loans

Annual loan limits still apply PLUS loans count toward neither annual nor

aggregate limits

SUBSTITUTING FOR THE EFC

Unsubsidized Stafford Loans can replace the EFC Example

$ 27,905 COA - 6,582 EFC

$ Unmet Need

- 4,000 Internal Scholarship - 5,000 External Scholarship - 5,550 Company Reimbursement - 2,970 KTG$ Remaining Need

What amount can be awarded in subsidized funding?

REFERENCES Cost of Attendance – Module 5 – NASFAA Core 2013-14 KHEAA – Kentucky Higher Education Assistance Authority. 2013.

https://www.kheaa.com/website/kheaa/home Federal Student Aid: An Office of the U.S. Department of Education.

June 2013. http://studentaid.ed.gov/types/loans/plus