College Financing 101: Smart Options for Your Child’s College Financing

Award letter questions?Visit www.studentchoice.org/scholarhelp

College Financing 101:Smart Options for Your Child’s College Financing

Presented by: Steve WynneAccount Executive – Client Relations and Education

Presented by: Ben CareyDirector | Strategic Partnerships


• Definitions• Types of Financial Aid Listed

– Scholarships and Grants– Federal Work Study Program– Federal Perkins Loan – Federal Direct Loans – Federal Direct PLUS Loan

Agenda

• Your Award Letter• How Much Do I Really Need• Appealing an Award Letter• Loan Options

2Credit Union Student Choice © 2013


Definitions


• Award Letter– also referred to as a financial aid package, contains the cost of attendance

and any financial aid offered to the student by the school. • Cost of Attendance (C.O.A.)

– the cost set by the school to cover student expenses. Includes tuition, fees, books, rent, food, misc. expenses, etc..

• Financial Aid– the offering of scholarships, grants, federal work study, and loans to assist

a student in meeting the cost of attendance.

– COA – EFC = Need – Offered Financial Aid = GAP!


Types of Financial Aid


• Scholarships and Grants• Federal Work Study• Federal Perkins Loan• Federal Direct Loans

–Subsidized–Unsubsidized

• Federal Direct PLUS Loans


• Free money from the government, state, and/or institution• Does not have to be repaid • Grants may have an obligation associated with acceptance. Failure

to meet obligation may require grant to be repaid. • Awarded based on need or merit• Awarded for a variety of reasons:

– Academics, sports, extra-curricular activities, etc.

Check with the Financial Aid Office for additional scholarships that may be available.


Scholarships and Grants


Verify• Are you willing to meet the requirements attached to

receiving this aid?

• Is the scholarship/grant renewable; not just made available for one year, but aid that will be carried over year after year?

• Compare award letters; different schools will award varying amounts of aid, compare the dollars award to make the right choice for student and family.


Scholarships and Grants


Federal Work Study


• Free money – kind of!

• First come – First serve – Financial Need

• Provides jobs to student with financial need

• Paid at least minimum wage

• Jobs are part time, usually on-campus

Didn’t receive Work Study?Check with the Financial Aid or Admissions Offices


• Loan is in the student’s name, made through the school’s financial aid office

• Awarded to students with exceptional financial need

• Maximum annual amount is $5.500

• Government pays interest while in school

Federal Perkins Loan

• Fixed interest rate of 5%

• no origination fee

• Once in repayment, pay school directly

• Standard repayment term is 10 years

• Grace period is 9 months



• William D. Ford Federal Direct Loan Program

• Loans are in the students name and funds come directly from the U.S. Department of Education

• Standard repayment term is 10 years with a 6 month grace period


Federal Direct Loans


Subsidized• Awarded to eligible students

based on financial need

• Government pays interest while in school

• Fixed interest rate of 3.86% plus 1.051% loan fee*

Unsubsidized• Awarded to all eligible

students, not based on need

• Students are responsible for interest, may defer

• Fixed interest rate of 3.86% plus 1.051% loan fee*

Federal Direct Loans


*First Disbursed between July 1, 2013 and June 30, 2014


YOUR AWARD LETTER




Award Letter Types

By Mail

By System

By Email


Award Letter Example


Federal Loan – Subsidized $3,500 Federal Loan – Unsubsidized $2,000 School Grant $1,500 State Scholarship $1,000Federal Work-Study $2,000

Total Award $10,000Cost of Attendance $20,138Remaining Need $10,138

University of Success


• Reports in the media of a widespread student debt crisis might be discouraging to someone considering financing a college education

• In reality, instances of students with excessive debt are rare:– 43.1% of students have $10K or less

in student loan debt– 4.2% of students have debt between

$75K and $150K– 1.2% have debt over $150K

Indebted Students, by Amount Owed

Federal Reserve Bank of New York statistics, as cited in The Myth of the Student Loan Crisis, Atlantic Magazine,

March 2013.


Student Indebtedness


How Much do you Really Need?


Consider:• Fixed Costs• Flexible Costs• Other Income• Appeals


Fixed Costs

Tuition $8,000+School Fees $1,000

Total Fixed $9,000



Flexible Costs

Rent – ($400 X 10) $4,000Food – ($300 X 10 months) $3,000Books - ($100 X 10 books) $1,000Cell Phone - ($50 X 10 months) $500Transportation - (ex: Bus pass @ $25/mo x 10mos.) $250.00

Total Flexible $8,750



Unmet Need

Fixed $9,000Flexible $8,750 Total Costs $17,750

Total Costs $17,750Total Award ($10,000)Remaining Need $7,750Need reduced by $2,388 (or $238 a month)



Monthly Budget


• $7,750 needed over a 10 month period– $775 month

• Consider other income before borrowing– Part time job– Assistance from family members/friends

• Consider school payment plans– School may offer a monthly payment plan for a small fee


Appealing your Award Letter


Reasons to appeal:• Change in employment/income• Medical bills• Divorce• Disability/death• High consumer debt


Appealing your Award Letter


• Each school will have their own process and procedures. Visit the school’s website for specific instructions on how to appeal.– Submit a letter– Appointment with FAO– Telephone interview


Remaining Need


• Savings Account• Retirement Account• 401K Plans• Home Equity Loans• Credit Cards• Private Loan Options


Federal Direct PLUS Loan


• Often listed on Award Letter

• Interest rate is fixed at 6.41%

• Bridges the gap between education costs and financial aid

• Credit based loan made to the biological, adoptive, or in some cases a step-parent of a dependent student for the purpose of meeting the cost of attendance.

• Origination fee of 4.204%


Federal Direct PLUS Loan


• Limit is the COA less any other Financial Aid

• Payments begin 60 days after first date of disbursement (can request deferment)

• No prepayment penalty

• Dependent students whose parent is denied may qualify for additional Federal Direct Loan limits


• Rate• Index – Prime or LIBOR (difference

of about 3%) • Margin - % added to index• Floor – Never go below

• Fees• Origination Fee – 0% to 3%

• Repayment Terms • 10 to 25 years

Private Loan Options


• Borrower Benefits• What’s in it for me? (W.I.F.M.)

• Co-Borrower OptionsFICO, Debt to Income ratio

• Payment Options • Full deferment • Principal & Interest• Good Faith Payments

What to Consider:


The Student Choice Solution

• Offered at NASA Federal Credit Union

• Can borrow up to $75,000 for an undergraduate degree

• Nearly 2,000 4-year, not-for-profit public and private colleges and universities who participate in the federal student aid programs – known as Title IV.




• Low Interest Rates (Based on LIBOR Index + Spread)

– Floor 6%

– Ceiling 18%

• NO origination or prepayment fees

• 20 or 25 year repayment (>< $40K) with max of $75,000• Full deferment available• Graduated Repayment• 0.25% rate discount for automatic repayment (ACH)



Forbearance

• Bankruptcy

• Death

• Economic hardship

• Natural disaster

• Late notification from school

• Military mobilization

Flexible Repayment Options

• Full deferment (maximum 5 years + 6 month grace)

• Interest only• Principal & Interest• Graduated repayment

available




Your Education/Application Web Site


To Apply Applicants Visit: www.nasafcu.studentchoice.org or call (866) 465-4841


Please contact us with any additional questions.Charlie Hudson

Business Development Account [email protected](888) 627-2328 Ext. 267

www.nasafcu.com/NASAGoddard

For more information or for any additional assistance in planning your college career visit:

www.nasafcu.studentchoice.org

You can also send questions [email protected]

Thank You for Attending


mailto:[email protected]

http://www.nasafcu.com/NASAGoddard

http://www.nasafcu.studentchoice.org/

mailto:[email protected]

College Financing 101: Smart Options for Your Child’s College Financing

Documents

Transcript of College Financing 101: Smart Options for Your Child’s College Financing