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Financial Aid 101 Michigan Student Financial Aid Association Jo Cassar , St Clair County Community College Chiquita McK

Financial Aid 101 Michigan Student Financial Aid Association Jo Cassar , St Clair County Community College Chiquita McKenzie-Bennett, Marygrove College Rick Shipman, Michigan State University. Financial Aid 101 – Agenda. Types and sources of financial aid Cost of Attendance (COA)

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Financial Aid 101 Michigan Student Financial Aid Association Jo Cassar , St Clair County Community College Chiquita McK

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  1. Financial Aid 101 Michigan Student Financial Aid Association Jo Cassar, St Clair County Community College Chiquita McKenzie-Bennett, Marygrove College Rick Shipman, Michigan State University

  2. Financial Aid 101 – Agenda • Types and sources of financial aid • Cost of Attendance (COA) • Expected Family Contribution (EFC) • FAFSA - Free Application for Federal Student Aid • Financial need • Sample aid packages • Borrowing and defaults • Legislators in higher education

  3. Types of Financial Aid • Types of Financial Aid • Need-based • Financial need must be determined through reporting of income, asset and other data • Non-need-based • Athleticism, artistry, academic strength, membership, etc.

  4. Types of Financial Aid • Scholarships • Gift money based on merit, skill, characteristics • Grants • Gift money often based on financial need • Loans • Typically due after graduation • Student and parent can borrow • Employment • Hourly, stipend or in-kind compensation • Tax Credits and Deductions

  5. Sources of Financial Aid • Federal government • States • Higher Education Institutions • Private sources

  6. Sources of Aid - Federal Government • Largest source of financial aid • Grants awarded primarily on the basis of financial need; loans do not require need • Must apply every year using the Free Application for Federal Student Aid (FAFSA)

  7. Federal Pell Grant Federal Supplemental Educational Opportunity Grant Teacher Education Assistance for College and Higher Education Grant Federal Work-Study Federal Perkins Loan Subsidized and Unsubsidized Loans PLUS Loans Sources of Aid - Federal Government

  8. Sources of Aid - States • Residency requirements • Award aid on the basis of both merit and need • Use information from the FAFSA • Deadlines vary by state; March 1st for MI

  9. Sources of Aid - Higher Ed Institutions • Academic merit awards • Artistry awards • Athletic aid • Need based grants and loans • Student employment

  10. Sources of Aid - Private Sources • Foundations, businesses, charitable organizations, high schools, employers • Deadlines and application procedures vary widely • Free search engines available to help

  11. Financial Aid 101 • Cost of Attendance • Cost is a determinant of financial need • Tuition and fees • Room and board • Books • Transportation • Medical • Personal/miscellaneous items

  12. Cost of Attendance – MI 4 Year Publics

  13. Cost of Attendance – MI Comm Colleges

  14. Cost of Attendance – MI Private Colleges

  15. Financial Aid 101 • Expected Family Contribution • Financial circumstances are a determinant of need

  16. Expected Family Contribution (EFC) • Amount family can reasonably be expected to contribute • Stays the same regardless of college • Two components • Parent contribution for dependent students • Student contribution for all students • Calculated using a federal formula and data collected in a federal application (FAFSA)

  17. Financial Aid 101 • Free Application for Federal Student Aid or the FAFSA

  18. FAFSA • Can be filed 1/1/12 to 6/30/13 for 2012-13 • Measures family ability to pay • Determines student eligibility through various federal database matches • Can be filed online or by paper • IRS data transfer available online

  19. FAFSA – Database Matches • Social Security Administration • Department of Homeland Security • Selective Service System • Federal Debts • Student also must disclose drug convictions

  20. FAFSA – Collected Data • Family size and number in college • Income, taxes paid and other financial information • Dislocated worker status • Assets (but not primary home equity)

  21. FAFSA – Verification • Schools required to resolve discrepancies • Usually related to income, taxes paid and retirement investment value • Use IRS data for relevant items

  22. FAFSA – Special Circumstances • Cannot report on FAFSA • Must contact college financial aid office • Change in employment status • Medical expenses not covered by insurance • Change in parent marital status • Unusual dependent care expenses • Student cannot obtain parent information

  23. FAFSA – EFC by Income PEL L EFC = FAFSA Expected Family Contribution

  24. Financial Aid 101 • Financial Need • This is the difference between the Cost of Attendance and Expected Family Contribution • Need differences between schools is based on variation in COA since the EFC is the same across schools

  25. Financial Need Cost of Attendance –Expected Family Contribution = Financial Need

  26. Financial Need

  27. Financial Aid 101 • Sample Aid Packages • Schools use financial need with student characteristics and aid program eligibility rules to create a financial aid package • A student can receive drastically different aid packages at different schools

  28. Sample Aid Packages

  29. Sources of Aid – States - Michigan

  30. Sources of Aid – Federal

  31. Financial Aid 101 • Borrowing and Defaults • Federal loans comprise the majority of financial aid used by students • Parents take out federal loans to cover their EFC or gaps between cost and aid • Some students use private loans • Student loan defaults are increasing

  32. Borrowing and Defaults $23,082 = US Average $25,675 = Michigan 4 Year College Average 8.8% = National Default Rate 8.2% = Michigan College Default Rate

  33. SOURCE: The College Board, Trends in Student Aid 2011, Figure 6. Percentage of Undergraduate Students Borrowing Federal Stafford Loans, 2000-01, 2005-06, and 2010-11

  34. SOURCE: The College Board, Trends in Student Aid 2011, Figure 10A. Average Total Debt Levels of Bachelor’s Degree Recipients, Public Four-Year Colleges and Universities, in Constant 2010 Dollars, 1999-2000 to 2009-10

  35. SOURCE: The College Board, Trends in Student Aid 2011, Figure 10B. Average Total Debt Levels of Bachelor’s Degree Recipients, Private Nonprofit Four-Year Colleges and Universities, in Constant 2010 Dollars, 1999-2000 to 2009-10

  36. SOURCE: The College Board, Trends in Student Aid 2011, Figure 16B. State Grant Aid per Full-Time Equivalent Undergraduate, 2009-10

  37. SOURCE: The College Board, Trends in Student Aid 2011, Figure 12A. Distribution of Total Tax Savings from Education Tax Credits and Tuition Deductions by Adjusted Gross Income (AGI), 2008 and 2009 (and Average Tax Savings per Recipient)

  38. Financial Aid 101 8. Legislators in Higher Education • Most legislators were once college students • How do they compare to the average

  39. Legislators in Higher Education • Nation vs. Michigan • 74.7% have baccalaureate or higher vs. 72.9% • 79.6% went to public college vs. 88.8% • 55.3% went to in-state school vs. 75.4% • 17.2% went to law school vs. 13.5% “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

  40. Legislators in Higher EducationHow educated are they? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

  41. Legislators in Higher EducationWhere did they go to school? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

  42. Legislators in Higher EducationWhere did everyone go to school? “Where Does Your Freshman Class Come From?”, The Chronicle of Higher Education, 10/29/11

  43. Legislators in Higher EducationWhat type of school did they attend? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

  44. Legislators in Higher EducationWhat type of school did everyone attend? “How educated are state legislators?”, The Chronicle of Higher Education, 6/12/11

  45. Your MSFAA Presenters Jo Cassar Director of Financial Assistance & Services St Clair County Community College jcassar@sc4.edu Chiquita McKenzie-Bennett Financial Aid Counselor Marygrove College cmckenzie@marygrove.edu Rick Shipman Director of Financial Aid Michigan State University shipmanr@msu.edu

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