Financial Aid for College

1. Financial AidforCollege Laura Sutherland Assistant Director of Financial Aid Northwestern University

2. Tonight’s Program • Behind the scenes: How a college can help you • What exactly is financial aid • The financial aid “language” • Application process in a nutshell • How eligibility is determined and how it can vary from school to school • Other resources

3. The Relationship Between Financial Aid, Admissions, and the HS Counselor

4. The Financial Aid Office • Be committed to removing financial barriers • Be an advocate for the student at all levels • Educate students and families through quality consumer information • Provide services that do not discriminate • Maintain the highest level of professionalism

5. “A Partnership” • To the extent they are able, parents have primary responsibility to pay for their dependent children’s education • Students also have a responsibility to contribute to their educational costs • Families should be evaluated in their appropriate financial condition • A family’s ability to pay for educational costs must be evaluated in an equitable and consistent manner, recognizing that special circumstances can and do affect its ability to pay

6. Choosing a CollegeWhat college would be the best fit for you? • Program • Location • Size • Mix of Students • Academics • Extracurricular • Facilities • Financial Considerations

7. College Costs*2009-2010 • Two Year Public $14,285 • Four Year Public • Instate $19,388 • Out-of-State $30,916 • Four Year Private $39,028 *Source – Trends in Higher Education Series 2009, College Board

8. What are the costs? Tuition & Fees Room & Board Transportation Books & Supplies Miscellaneous Living Expenses + Cost of Attendance (COA)

10. What is Financial Aid? • Scholarships • Grants • Student Loans • Work-Study

11. Financial aid is available from three major sources:  U.S. Department of EducationThe federal agency that provides college funding in the form of grants, scholarships and loans.  States Most states have agencies that administer state scholarship and grant programs, college savings and prepaid tuition programs, and loans. (In IL it isISAC, the Illinois Student Assistance Commission)  Colleges and Universities Schools offer their own scholarship, grant, work-study and loan programs, with each college setting its requirements.

12. Two Categories of Aid • Merit-based • Need-based

13. Merit Scholarships Based on student achievements: • Academic • Extracurricular • Talent

14. Types of Need-Based Aid • Gift aid • Self-help aid

15. Gift aid vs. Self-Help • Scholarshipsgift aid • Grantsgift aid • Work-Studyself-help aid • Loansself-help aid These funds may be merit-based, need-based, or non-need-based.

16. Private Financial Aid Sources • Private Foundations • Civic Organizations • Scholarship Search Services • High School College Counseling Office

17. Who Receives Private Scholarships? • 2.3 million recipients • $3.3 billion awarded • $2,000 average award • 7% of undergraduates • 3% of total aid

18. Scholarship Scams • Consultants • Seminars • Warning Signs • WWW.FINAID.ORG

19. So . . . how does the process begin?

21. Free Application for Federal Student Aid (FAFSA) The FAFSA collects financial data such as income and asset equity, and student and family demographic information. It is used to determine the student’s eligibility by calculating an “index” # called the EFC (Expected Family Contribution) To apply for all federal and state aid, families must complete the...

22. Overview of the FAFSA • 2010-2011 available January 1 • 7 Steps • Submit it soon after January 1 • FAFSA4caster

23. FAFSA4caster • http://www.fafsa4caster.ed.gov/ • Instantly calculates a student's estimated eligibility for federal student aid and can be completed at any time • Automatically fills in half the questions on the FAFSA, making it easier for families to complete the real form during the student's senior year • Calculations for 12 different school scenarios, including four-year and two-year schools, public and private, in-state and out-of-state residency, and on-campus and off-campus housing.

24. FAFSA on the Web www.FAFSA.ed.gov PDF FAFSA www.Federal StudentAid.ed.gov Paper FAFSA 1-800-4-FED-AID Three Ways to Access the Free Application for Federal Student Aid

25. FAFSA on the Web (FOTW) • Available January 1 • English or Spanish • Skip logic and online editing • Electronic signature

26. www.pin.ed.gov

27. Student needs one ----- Parent needs one ----- Each one is different!

28. PIN E-mail Notification

30. Supplemental Financial Aid Applications The College Scholarship Service (CSS) Financial Aid PROFILE A college’s own application for financial aid Information from noncustodial parent Federal tax returns Other

31. CSS/Financial Aid PROFILE • Administered by the College Board, required by many private institutions • Similar to FAFSA • Additional questions about assets and expenses • www.profileonline.collegeboard.com

32. Special Situations Examples of items not on the FAFSA: income change (work, child support, SSBs, etc) large healthcare costs some educational costs support of extended family significant non-elective home repairs consideration will vary from school to school check with financial aid office for “how to” provide #s and explanation, and daytime phone

33. Expected Family Contribution • Your Expected Family Contribution or EFC is established by the federal processor. • Your EFC is the amount of money you and your parents can be expected to contribute to your college costs each year.

34. Expected Family Contribution • Contribution from Parental Income • Contribution from Parental Assets • Contribution from Student Income • Contribution from Student Assets

35. real estate (other than parents’ home) trust funds UGMA and UTMA accounts money market and mutual funds certificates of deposit stocks and stock options bonds and other securities Coverdell IRAs 529 plans owned by parents installment and land sale contracts commodities, etc. What are Parent Assets?

36. What are the Costs? Tuition and Fees Room and Board Transportation Books and Supplies + Miscellaneous Living Expenses =Cost of Attendance

37. The college determines eligibility for financial aid by: Cost of Attendance - Expected Family Contribution= Financial Need

38. The financial aid award letter or “package” Will contain a combination of: • scholarship, grant, loan and work-study funds Why might “packages” be different? • cost of attendance • scholarship criteria and availability • institutional philosophy and funding • federal funding levels

39. Comparing Financial Aid Award Letters • List the assumptions used to determine the COA (such as enrollment status, housing, fees, books, travel, etc.) • Clearly state what your family contribution is as well

40. Return the signed award letter to the college, if required.Meet the deadline!

41. Financial Planning • Estimate total costs for length of program • Develop a plan to fund and finance • How will you pay? • If you need to borrow understand your options • Educational loans, personal loans, home equity loans • Know the terms (read the fine print) • Apply to at least one “safe” school • Academics and affordability

42. Federal Stafford Loan • Low-interest loan the student takes out on his/her own behalf • The FAFSA must be completed • Interest Rate • Varies depending on subsidized or unsubsidized • Repayment begins 6 months after the student graduates or falls below half-time enrollment • Freshmen may borrow $5,500

43. Subsidized Need-based Federal government pays interest while student is in college and during grace/deferment periods. 2009-2010 5.6% 2010-2011 4.5% 2011-2012 3.4% Unsubsidized Not based on need Payment of interest is always student’s responsibility 2009-2010 6.8% (this will not change) Federal Stafford Loan(differences between 2 types)

44. Federal PLUS Loan • Parent is the borrower • Fixed interest rate, 8.5% • Maximum loan amount is the cost of attendance minus all financial aid received for the student • Approval subject to a credit check • Repayment begins within 60 days after the loan is disbursed

45. Private Loan Programs • Credit checks • Co-signer • Higher interest rates • Borrow cautiously

46. Loan Programs When evaluating loan options, consider… Source of Loan Subsidized vs. Unsubsidized Interest Rate Repayment ~ Grace Period Know … what you’re signing; what you promised; where your money goes; your loan limits; your rights and responsibilities; loan repayment, deferment & forbearance options; how to manage debt; “Entrance & Exit Counseling” requirements; the consequences of default; and who to contact.

47. More Ways to Finance Your Education • Tax Benefits for Education – Publication 970 • Hope Credit • Lifetime Learning Credit • Student Loan Interest Deduction

48. More… • IRA Early Withdrawal Provision for Education • No penalty for early withdrawal of IRA funds to pay qualified educational expenses. • Education IRA • Type of IRA in which contributions are made until the beneficiary reaches the age of 18. • Prepaid Tuition Programs • Tuition costs are rising at a faster pace than inflation so starting this program at any time can help reduce costs. • 529 Plans • Allows students of any age and their families to save money tax-free under Section 529 of the Internal Revenue Code. Plans vary from state to state.

49. Where to Look for • Your High School • A College’s Financial Aid Office • The Internet • www.collegezone.com • www.college.gov • www.finaid.org • www.studentaid.ed.gov

50. REMEMBER! • Plan ahead • Apply early • Read CAREFULLY • Meet deadlines • Keep copies