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Financial Aid 101

Financial Aid 101. A College Education Is Affordable. Everything you Always Wanted to Know About Financial Aid. Overview Need-based financial aid Merit-based scholarships Alternative financing An insider’ s list of consumer tips. What are the guiding principles of need-based aid?.

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Financial Aid 101

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  1. Financial Aid 101 A College Education Is Affordable

  2. Everything you Always Wanted to Know About Financial Aid Overview • Need-based financial aid • Merit-based scholarships • Alternative financing • An insider’s list of consumer tips

  3. What are the guiding principles of need-based 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

  4. Why do schools award need-based financial aid? • Make education equally accessible to students • Enable student to apply to first-choice college • Attend college based on best fit

  5. 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 must reapply annually

  6. 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

  7. 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.”

  8. How is eligibility for financial aid determined? COST OF EDUCATION - Family contribution - Estimated financial assistance from outside resources . = STUDENT’S FINANCIAL NEED

  9. What is included in the cost of education? • Tuition and fees • Room and board • Books and supplies • Transportation • Miscellaneous personal expenses

  10. Are there other possible expenses? • Health insurance • Computer • Special needs • Child care expenses

  11. Are there instances where a student is self-supporting? • 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

  12. How is the family contribution determined? • Parent contribution from income • Parent contribution from assets • Student contribution from income and assets

  13. How is parent contribution from income calculated? Total Income Untaxed Income Taxed Income Available Income Allowances ? Portions of income removed from calculation _ =

  14. How is parent contribution from assets calculated? Assets Savings, Investments, Real Estate, Business value, Home Equity Assessment rate Available Assets Allowances ? Portions of Assets Removed from calcualtion _ ( ) x = 3% to 12%

  15. How is total parent contribution calculated? Total Parent Contribution Available Income Assessment Rate Available Assets x = ( + ) 22 – 47%

  16. What if the family has more than one student enrolled? Total Parent Contribution # in college adjustment Parent Contribution per Student ÷ 1-? =

  17. How is student contribution calculated? Portion of Student Income Total income minus any allowances Student Contribution Portion of Student Assets + =

  18. How is family contribution calculated? Family Contribution (EFC) Parent Contribution Per Student Student Contribution + =

  19. Pop Quiz: What income level might result in a $10,000 EFC? • 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 wehave just discussed

  20. What are outside resources? • Funds from sources other than the college/university • Clubs and civic organizations • Churches • Employers • Foundations • Certain types of benefits(military) • Private gifts

  21. What can outside scholarships do? What can’t they do? • Can… • Meet unmet need • Replace loans • Replace student employment • Can’t… • Replace EFC in need-based award

  22. Recap: What is financial need? Costs (variable) PersonalExpenses Transportation Books and Supplies Room and Board EFC Need (variable) Tuition EFA Student Contribution Parent Contribution _ Estimated Financial Assistance from Outside Resources _ =

  23. How is financial need met? • Gift aid • Grants • Scholarships • Self-help aid • Employment • Student loans

  24. What might a sample aid package look like?

  25. What are merit-based scholarships? • Institutional merit-based aid • Need not considered • Procedures for being considered vary • Nomination • Scholarship application • Admission application

  26. What are athletic scholarships? • Awards made by athletics department • Annually renewable • Can be full scholarships • Tuition, fees, room, board, books • Can be partial scholarships • Any amount less than full

  27. What questions should students ask about merit and athletic awards? • Is the scholarship renewable? • If so, what are the requirements for renewal? • Will the scholarship affect need-based aid eligibility?

  28. What are awards of circumstance? • Post 9/11 GI Bill benefits – transferable to the student • Employer benefits • School awards

  29. What Federal grants are available for students? • Pell Grant • Supplemental Educational Opportunity Grant (SEOG) • Iraq and Afghanistan Service Grant • Teacher Education Assistance for College and Higher Education (TEACH)

  30. What loan options are there for college costs? • Federal Direct Stafford Loans • Federal Direct PLUS Loans • Federal Perkins Loans (at some institutions) • Private education loans • Other

  31. What other options can help a family pay for college? • Summer/academic year student employment • 529 savings plans, other savings plans • Payment plans

  32. What are other things that students should know? • Need-blind vs. need-sensitive • Early Decision/Early Action • Differential/preferential packaging • Deadlines are important • May 1: National Candidate’s Reply Date

  33. How do Students Estimate the Cost of College? • 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

  34. More consumer tips… • Avoid scholarship programs and search services that charge fees • Financial aid consultants? • Bargaining/negotiating? • Know your loan types and terms

  35. What if family circumstances change? • 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

  36. What should families keep in mind as they move forward? • Income driven process • Net Price Calculator • Components of aid packages • Cost Difference • Reapply annually • Best fit for the student

  37. On-line resources • 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

  38. College is an investment that lasts a lifetime. Questions ???

  39. Thank you ! Financial Aid 101 A College Education Is Affordable

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