Understanding Financial Aid Awards and Communicating with Financial Aid Offices

1 • www.nacacnet.org

Welcome to Understanding Financial Aid Awards and Communicating

with Financial Aid Offices Presented by the

National Association for College Admission Counseling

Wednesday, April 15, 2009


Today’s Agenda •  Financial aid award letters •  Comparing financial aid award letters among

schools •  Prospects for standardization of award letters •  Communicating with financial aid offices •  Counseling considerations in the current

economic climate


Today’s Presenters •  Cedrick Andrews, Policy Associate,

The Institute for College Access and Success (TICAS)

•  Youlonda Copeland-Morgan, Associate Vice President for Enrollment Management and Director of Scholarships and Student Aid, Syracuse University


Today’s Presenters, cont. •  Barbara Hall, Senior Consultant, Murray &

Associates and the National Center for College Costs, and former Guidance Director and College Counselor at Bishop Dwenger High School, Fort Wayne, IN

•  Tim Christensen, Specialist on College Access and Success (moderator)


Components of Financial Aid Award Letters

•  Award letters are not standardized, so not all will contain each of these components

•  Cost of attendance (COA) – Tuition and fees – Room and board – Books and supplies


Components of Financial Aid Award Letters, cont.

•  Cost of attendance (COA), cont. – Health insurance/fees – Transportation – Personal



•  Cost of attendance (COA), cont. – May also include:

•  Dependent care •  Study abroad expenses •  Disability expenses •  Employment expenses for co-op study •  Loan fees



•  Take-away: Chapter on “Cost of Attendance (Budget) in the 2008-2009 Federal Student Aid Handbook at http://ifap.ed.gov/sfahandbooks/attachments/0809FSAHbkVol3Ch2Oct14.pdf



•  Possible issues with cost of attendance – Definitions of components not standardized – Cost categories not standardized – May not include all costs – May not be based on actual costs or may

not be most recent data



•  Expected family contribution (EFC) – Derived from information reported on Free

Application for Federal Student Aid – Generally consistent from school to school



•  Expected family contribution (EFC), cont. – May be increased by CSS Profile at some

schools – EFC may not be the total family

contribution •  Loans and work-study earnings are also a

contribution from the family



•  Financial aid – Gift aid – Self help aid

•  Need-based and non-need based federal loans •  Work-study employment •  Private (non-need-based) loans



•  Gift aid – Grants and scholarships – May come from federal, state, or

institutional sources – May be need-based or merit-based



•  Gift aid, cont. – Does not have to be repaid as long as

recipient meets requirements – May or may not be renewable



•  Federal need-based loans – Perkins – Subsidized Stafford

•  Features of need-based loans –  Low interest rates – Delayed repayment –  In-school interest subsidy



•  Federal non-need based loans – Unsubsidized Stafford – Parent PLUS – Grad PLUS



•  Federal non-need based loans, cont. – Higher interest rates

•  6.8 percent fixed rate for unsubsidized Stafford

–  Interest accrues during school and deferments – Payments on PLUS loans are due while the

student is in school



•  New repayment options are becoming available for most federal student loans –  Income-based repayment – Public service loan forgiveness



•  Take-away: Income-based repayment and public service loan forgiveness site at www.IBRinfo.org



•  Work-study employment – Must be willing to work during

academic year – Provides work experience – Research shows 10-15 hours/week

may have academic benefit – May reduce loan burden



•  Take-away: The financial aid chapter in NACAC’s Guide to the College Admission Process at

http://www.nacacnet.org/PublicationsResources/Marketplace/Pages/AdmissionGuide.aspx



•  Take-away: The National Association of Student Financial Aid Administrators’ “Student Aid Program Summary,” accessible from http://www.nasfaa.org/redesign/fanight.asp



•  Private Loans – Not really financial aid but a financing tool

like a home equity loan or credit card – Less available due to credit crunch



•  Private Loans, cont. – Only used as a last resort after other

financial aid options – Should have co-signer and be school

certified for best interest rates and terms



•  Take-away: The Institute for College Access and Success, Project on Student Debt’s “Questions to ask about private loans” at http://projectonstudentdebt.org/private_loan_questions.vp.html



•  Unmet need or “gapping” – May need to find alternative financing, such

as a private or home-equity loan •  Always give federal loans priority over private

loans and credit card debt – May be able to reduce expenses instead of

taking on private debt


Comparing Financial Aid Award Letters Among Schools

•  Why aid packages differ from institution to institution – Cost of attendance

•  Both categories and amounts may vary

– EFC •  May differ if institution is a CSS Profile user


Comparing Financial Aid Award Letters Among Schools, cont.

•  Why aid packages differ from institution to institution, cont. – Fund availability –  Institutional awarding policies



•  May be useful to subtract gift aid from cost of attendance – Difference may be met by a

combination of self-help aid (loans and work) and EFC

•  May be useful to aggregate grants vs. work-study vs. loans



•  Loan terms – May not be stated on award letter

•  Amount of unmet need or “gap”



•  Future aid packages – Renewability – Changes in proportion of grant vs. loan in

subsequent years – Probably not stated on award letter



•  Ideal (for student) treatment of outside scholarships – First—meeting unmet need – Then—reducing self help – As a last resort—reducing grant (but never

Pell Grant)



•  Take-away: NACAC’s “Student Bulletin: Understanding Your Financial Aid Award Letter” at http://www.nacacnet.org/PublicationsResources/Marketplace/Documents/LateHS.pdf



•  Non-financial considerations to bear in mind – School’s academic programs – School type and size – School’s culture and demographics – The best aid package may not be the

best school choice overall


Prospects for Standardization of Financial Aid Award Letters

•  Steps Congress and the U.S. Department of Education are pursuing

•  Steps institutions could take now – Prominently display most important and

useful information –  Include straightforward instructions and

helpful resources


Prospects for Standardization of Financial Aid Award Letters, cont.

•  Steps institutions could take now, cont. –  Include complete estimate of COA – Clearly distinguish gift aid from self help

and provide bottom line cost – Avoid jargon, acronyms and unexplained

terms



•  Steps institutions could take now, cont. – Encourage wise borrowing by disclosing

loan terms and conditions – Distinguish between costs the school will

bill the student for and those the student will have to pay on his/her own



•  Take-away: Mark Kantrowitz’s editorial on standardization of award letters in Inside Higher Ed at http://www.insidehighered.com/views/2007/06/22/kantrowitz


Communicating with Financial Aid Offices

•  Responsibilities of the aid office – Counseling – Need analysis – Awarding – Monitoring – May also have job placement and veterans

affairs responsibilities


Communicating with Financial Aid Offices, cont.

•  What financial aid administrators do – Helping professionals and experts on

student financing – Multiple constituencies to serve – Stewardship of taxpayer and institutional

dollars – Compliance with multiple agencies’ rules



•  Electronic communication – Email is good for routine correspondence – Do not encourage sending confidential

information via email, but it’s done •  Telephone

– Better for confidential conversation and persuasion, but write instead if it’s hard to get through



•  Written communication –  On-the-record (as is email) –  When documentation is desired or required

•  When a visit is desirable or necessary –  May wish to cultivate a relationship if

circumstances are complex –  May be required if other communications vehicles

are not effective



•  Proactive strategies –  Inform the aid office of outside awards

as soon as they are known –  Inform the aid office of any changes in

the family’s circumstances as soon as they occur



•  The appeals process – Appealing vs. negotiating awards

•  Most institutions will not negotiate, but some will—so ask away

•  Preparing for an appeal and presenting the case

– Documentation –  Be sincere and polite, not angry



•  Appeals and professional judgment – Professional judgment is authority to adjust

EFC due to exceptional circumstances •  Unemployment or reduced employment •  Student’s decision to leave workforce or reduce

hours to return to school (adult student) •  Costly medical situations •  Home foreclosure •  Other



•  Professional judgment, cont. – Often requires third-party documentation – Professional judgment is subject to certain

statutory limitations •  Special circumstances that distinguish one

student from a class of students •  No automatic categories of professional

judgment



•  A final word on appeals – Aid office workloads have increased;

staffing has not – Expect longer turnaround times on appeals



•  Take-away: Recent guidance on professional judgment from the U.S. Department of Education at http://www.ifap.ed.gov/dpcletters/GEN0904.html


Counseling Considerations in the Current Economic Climate

•  Practically speaking, there is nothing going on that can’t be dealt with – Eligibility may increase, particularly for

Pell Grants – Students may become eligible for

subsidized federal loans


Counseling Considerations in the Current Economic Climate, cont.

•  Counselors can help families manage expectations –  Institutional funds may be exhausted – All awards have a ceiling, either by rule

or policy – There isn’t enough money in the world to

provide a safety net for all



•  On an emotional level, counseling is much more challenging – Family circumstances may be dire – Be prepared to refer families to appropriate

financial and social services agencies and help them access services



•  On an emotional level, counseling is much more challenging – Be sympathetic, but also maintain appropriate

emotional detachment – Review and adhere to NACAC’s “Statement of

Principles of Good Practice”



•  Take-away: NACAC’s “Statement of Principles of Good Practice” at http://www.nacacnet.org/AboutNACAC/Policies/Documents/SPGP.pdf


Q & A •  Continue to submit questions via e-mail •  We will select those questions with the

broadest applicability •  An archive of today’s Webinar will be posted

on the NACAC Web site approximately one week from today

•  Thank you for participating in “Understanding Financial Aid Awards and Communicating with Financial Aid Offices”!

Understanding Financial Aid Awards and Communicating with Financial Aid Offices

Education

Transcript of Understanding Financial Aid Awards and Communicating with Financial Aid Offices