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