Financial Aid 101
A College Education Is
Affordable
OverviewNeed-based financial aidMerit-based scholarshipsAlternative financingAn insider’s list of consumer tips
Everything you Always Wanted to Know About Financial Aid
Primary responsibility to pay falls to the family Families contribute to the extent they’re able Income and assets reflect financial strength Similar treatment for similar circumstances Expect more from those with greater resources Unusual family circumstances considered
What are the guiding principles of need-based
aid?
Make education equally accessible to students Enable student to apply to first-choice collegeAttend college based on best fit
Why do schools award need-based financial aid?
How do students apply for need-based financial aid?
Federal formula◦ FAFSA (Free Application for Federal
Student Aid)
Institutional formula◦ CSS/Financial Aid PROFILE
At school’s discretion:◦ Noncustodial Parent PROFILE◦ Tax returns and W-2 forms◦ Institutional Application
IRS Data Retrieval
Families m
ust
reapply annually
What is “IRS Data Retrieval?” The ability to move federal income tax
data from the IRS database to the FAFSA
Can move the data at initial application or as an update/correction after FAFSA filed
Can move parent, student or both sets of tax data
Last completed tax year’s return(s) must be on file for IRS to retrieve data
Some tax filing situations cause Data Retrieval to not be usable
New for 2014-15: Who Is A Parent?
New Federal definition:◦“Beginning with the 2014-15 FAFSA,
dependent students will be required to include on the FAFSA income and other information from the dependent student’s legal parents (biological or adoptive) regardless of the parents’ marital status or gender, if those parents live together.”
COST OF EDUCATION- Family contribution
- Estimated financial assistance from outside resources
.= STUDENT’S FINANCIAL NEED
How is eligibility for financial aid determined?
Tuition and feesRoom and boardBooks and suppliesTransportationMiscellaneous personal expenses
What is included in the cost of education?
Health insuranceComputerSpecial needsChild care expenses
Are there other possible expenses?
Students can be self-supporting IF:
◦ They’re 24 years of age◦ They’re married◦ They’re pursuing a graduate degree◦ They’re in the Armed Forces or are a veteran◦ They have a child and provide more than 50% support◦ They’re orphaned or are/have been a foster child◦ They’ve been emancipated by a state court◦ They have a court-appointed legal guardian◦ They’re homeless or at risk of being homeless
Are there instances where a student is self-
supporting?
Parent contribution from income
Parent contribution from assets
Student contribution from income and assets
How is the family contribution determined?
How is parent contribution from income calculated?
Taxed Income
?
Total Income
Available Income
Untaxed Income
Portions of income removed from
calculation
Allowances
_ =
How is parent contribution from assets calculated?
Savings,Investments,Real Estate,
Business value,Home Equity
?
Assets
Assessment rate
Available Assets
Portions of AssetsRemoved from
calcualtion
Allowances
_ x =3% to 12%( )
How is total parent contribution calculated?
Available Income
Assessment Rate
Total ParentContribution
AvailableAssets
+ =22 – 47%( ) x
What if the family has more than one student enrolled?
# in college adjustment
1-?÷
Total ParentContribution
Parent Contributio
n per Student
=
How is student contribution calculated?
Total income minus anyallowances
Portion of Student Income
Student ContributionPortion of
Student Assets
+ =
How is family contribution calculated?
Parent ContributionPer Student
Family Contribution
(EFC)
Student Contribution
+ =
Three real Davidson families:◦Family A’s income=$135,000◦Family B’s income =$87,000◦Family C’s income = $61,000
All have roughly a $10,000 EFC How might this occur?
◦Hint: Remember the EFC formula variables we have just discussed
Pop Quiz: What income level might result in a $10,000 EFC?
Funds from sources other than the college/university◦Clubs and civic organizations◦Churches◦Employers◦Foundations
Certain types of benefits(military) Private gifts
What are outside resources?
Can…◦Meet unmet need◦Replace loans◦Replace student employment
Can’t… ◦Replace EFC in need-based award
What can outside scholarships do? What
can’t they do?
Recap: What is financial need?
Tuition
Parent Contribution
Costs (variable)
EFC Need (variable)
Personal Expenses
Books and Supplies
Transportation
Room and Board
Student Contribution
Estimated Financial Assistance from
Outside Resources
EFA
_ _ =
Gift aid Grants Scholarships
Self-help aid Employment Student loans
How is financial need met?
What might a sample aid package look like?
Davidson Private #1 Private #2 Public U.
Total Cost $57,608 $60,500 $42,000 $25,000 Family Contribution (EFC) $10,000 $10,000 $10,000 $10,000
Financial need $47,608 $50,500 $32,000 $15,000
Merit aid $0 $0 $12,000 $0
Need-based grant $45,508 $44,500 $10,000 $10,000
Student loan $0 $4,000 $5,500 $3,500
Work Study $2,100 $2,000 $2,000 $1,500
Total aid $47,608 $50,500 $29,500 $15,000
Unmet need $0 $0 $2,500 $0
Total paid $10,000 $10,000+loan
+interest$12,500+loan
+interest$10,000+loan
+interest
Institutional merit-based aidNeed not consideredProcedures for being considered vary◦Nomination◦Scholarship application◦Admission application
What are merit-based scholarships?
Awards made by athletics department
Annually renewableCan be full scholarships
◦Tuition, fees, room, board, booksCan be partial scholarships
◦Any amount less than full
What are athletic scholarships?
Is the scholarship renewable? If so, what are the requirements for renewal?
Will the scholarship affect need-based aid eligibility?
What questions should students ask about merit and athletic
awards?
Post 9/11 GI Bill benefits – transferable to the student
Employer benefitsSchool awards
What are awards of circumstance?
Pell Grant Supplemental Educational Opportunity Grant (SEOG)
Iraq and Afghanistan Service Grant Teacher Education Assistance for College and Higher Education (TEACH)
What Federal grants are available for students?
Federal Direct Stafford Loans Federal Direct PLUS Loans Federal Perkins Loans (at some institutions)
Private education loans Other
What loan options are there for college costs?
Summer/academic year student employment
529 savings plans, other savings plans
Payment plans
What other options can help a family pay for college?
Need-blind vs. need-sensitiveEarly Decision/Early ActionDifferential/preferential packaging
Deadlines are importantMay 1: National Candidate’s Reply Date
What are other things that students should know?
Net Price Calculator◦Found on individual college websites
◦Federally mandated ◦Family enters income and asset data
◦Net price based on one-year ◦Calculators differ by institution
How do Students Estimate the Cost of College?
Avoid scholarship programs and search services that charge fees
Financial aid consultants?Bargaining/negotiating?Know your loan types and terms
More consumer tips…
Appeal processes Institutions may choose to consider individual family circumstances at different times throughout year
Might affect a family’s funding options
Might not affect EFC
What if family circumstances change?
Income driven processNet Price CalculatorComponents of aid packagesCost DifferenceReapply annuallyBest fit for the student
What should families keep in mind as they move
forward?
www.davidson.edu School Web sites Federal government
www.fafsa.ed.gov The College Board
www.collegeboard.org College Foundation of North Carolina
www.CFNC.org SmartStudent Guide to Financial Aid
www.finaid.org Scholarship Web sites
On-line resources
College is an investment that lasts a lifetime.
Questions ???
Thank you !
Financial Aid 101
A College Education Is Affordable
Top Related