a college education is affordable. overview need-based financial aid merit-based scholarships ...

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