college financing 101: smart options for your child’s college financing
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College Financing 101: Smart Options for Your Child’s College Financing . Presented by: Steve Wynne Account Executive – Client Relations and Education. Presented by: Ben Carey Director | Strategic Partnerships. Agenda. Your Award Letter How Much Do I Really Need - PowerPoint PPT PresentationTRANSCRIPT
Award letter questions?Visit www.studentchoice.org/scholarhelp
College Financing 101:Smart Options for Your Child’s College Financing
Presented by: Steve WynneAccount Executive – Client Relations and Education
Presented by: Ben CareyDirector | Strategic Partnerships
Award letter questions?Visit www.studentchoice.org/scholarhelp
• Definitions• Types of Financial Aid Listed
– Scholarships and Grants– Federal Work Study Program– Federal Perkins Loan – Federal Direct Loans – Federal Direct PLUS Loan
Agenda
• Your Award Letter• How Much Do I Really Need• Appealing an Award Letter• Loan Options
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Award letter questions?Visit www.studentchoice.org/scholarhelp
Definitions
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• Award Letter– also referred to as a financial aid package, contains the cost of attendance
and any financial aid offered to the student by the school. • Cost of Attendance (C.O.A.)
– the cost set by the school to cover student expenses. Includes tuition, fees, books, rent, food, misc. expenses, etc..
• Financial Aid– the offering of scholarships, grants, federal work study, and loans to assist
a student in meeting the cost of attendance.
– COA – EFC = Need – Offered Financial Aid = GAP!
Award letter questions?Visit www.studentchoice.org/scholarhelp
Types of Financial Aid
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• Scholarships and Grants• Federal Work Study• Federal Perkins Loan• Federal Direct Loans
–Subsidized–Unsubsidized
• Federal Direct PLUS Loans
Award letter questions?Visit www.studentchoice.org/scholarhelp
• Free money from the government, state, and/or institution• Does not have to be repaid • Grants may have an obligation associated with acceptance. Failure
to meet obligation may require grant to be repaid. • Awarded based on need or merit• Awarded for a variety of reasons:
– Academics, sports, extra-curricular activities, etc.
Check with the Financial Aid Office for additional scholarships that may be available.
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Scholarships and Grants
Award letter questions?Visit www.studentchoice.org/scholarhelp
Verify• Are you willing to meet the requirements attached to
receiving this aid?
• Is the scholarship/grant renewable; not just made available for one year, but aid that will be carried over year after year?
• Compare award letters; different schools will award varying amounts of aid, compare the dollars award to make the right choice for student and family.
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Scholarships and Grants
Award letter questions?Visit www.studentchoice.org/scholarhelp
Federal Work Study
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• Free money – kind of!
• First come – First serve – Financial Need
• Provides jobs to student with financial need
• Paid at least minimum wage
• Jobs are part time, usually on-campus
Didn’t receive Work Study?Check with the Financial Aid or Admissions Offices
Award letter questions?Visit www.studentchoice.org/scholarhelp
• Loan is in the student’s name, made through the school’s financial aid office
• Awarded to students with exceptional financial need
• Maximum annual amount is $5.500
• Government pays interest while in school
Federal Perkins Loan
• Fixed interest rate of 5%
• no origination fee
• Once in repayment, pay school directly
• Standard repayment term is 10 years
• Grace period is 9 months
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Award letter questions?Visit www.studentchoice.org/scholarhelp
• William D. Ford Federal Direct Loan Program
• Loans are in the students name and funds come directly from the U.S. Department of Education
• Standard repayment term is 10 years with a 6 month grace period
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Federal Direct Loans
Award letter questions?Visit www.studentchoice.org/scholarhelp
Subsidized• Awarded to eligible students
based on financial need
• Government pays interest while in school
• Fixed interest rate of 3.86% plus 1.051% loan fee*
Unsubsidized• Awarded to all eligible
students, not based on need
• Students are responsible for interest, may defer
• Fixed interest rate of 3.86% plus 1.051% loan fee*
Federal Direct Loans
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*First Disbursed between July 1, 2013 and June 30, 2014
Award letter questions?Visit www.studentchoice.org/scholarhelp
YOUR AWARD LETTER
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Award letter questions?Visit www.studentchoice.org/scholarhelp
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Award Letter Types
By Mail
By System
By Email
Award letter questions?Visit www.studentchoice.org/scholarhelp
Award Letter Example
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Federal Loan – Subsidized $3,500 Federal Loan – Unsubsidized $2,000 School Grant $1,500 State Scholarship $1,000Federal Work-Study $2,000
Total Award $10,000Cost of Attendance $20,138Remaining Need $10,138
University of Success
Award letter questions?Visit www.studentchoice.org/scholarhelp
• Reports in the media of a widespread student debt crisis might be discouraging to someone considering financing a college education
• In reality, instances of students with excessive debt are rare:– 43.1% of students have $10K or less
in student loan debt– 4.2% of students have debt between
$75K and $150K– 1.2% have debt over $150K
Indebted Students, by Amount Owed
Federal Reserve Bank of New York statistics, as cited in The Myth of the Student Loan Crisis, Atlantic Magazine,
March 2013.
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Student Indebtedness
Award letter questions?Visit www.studentchoice.org/scholarhelp
How Much do you Really Need?
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Consider:• Fixed Costs• Flexible Costs• Other Income• Appeals
Award letter questions?Visit www.studentchoice.org/scholarhelp
Fixed Costs
Tuition $8,000+School Fees $1,000
Total Fixed $9,000
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Award letter questions?Visit www.studentchoice.org/scholarhelp
Flexible Costs
Rent – ($400 X 10) $4,000Food – ($300 X 10 months) $3,000Books - ($100 X 10 books) $1,000Cell Phone - ($50 X 10 months) $500Transportation - (ex: Bus pass @ $25/mo x 10mos.) $250.00
Total Flexible $8,750
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Award letter questions?Visit www.studentchoice.org/scholarhelp
Unmet Need
Fixed $9,000Flexible $8,750 Total Costs $17,750
Total Costs $17,750Total Award ($10,000)Remaining Need $7,750Need reduced by $2,388 (or $238 a month)
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Award letter questions?Visit www.studentchoice.org/scholarhelp
Monthly Budget
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• $7,750 needed over a 10 month period– $775 month
• Consider other income before borrowing– Part time job– Assistance from family members/friends
• Consider school payment plans– School may offer a monthly payment plan for a small fee
Award letter questions?Visit www.studentchoice.org/scholarhelp
Appealing your Award Letter
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Reasons to appeal:• Change in employment/income• Medical bills• Divorce• Disability/death• High consumer debt
Award letter questions?Visit www.studentchoice.org/scholarhelp
Appealing your Award Letter
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• Each school will have their own process and procedures. Visit the school’s website for specific instructions on how to appeal.– Submit a letter– Appointment with FAO– Telephone interview
Award letter questions?Visit www.studentchoice.org/scholarhelp
Remaining Need
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• Savings Account• Retirement Account• 401K Plans• Home Equity Loans• Credit Cards• Private Loan Options
Award letter questions?Visit www.studentchoice.org/scholarhelp
Federal Direct PLUS Loan
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• Often listed on Award Letter
• Interest rate is fixed at 6.41%
• Bridges the gap between education costs and financial aid
• Credit based loan made to the biological, adoptive, or in some cases a step-parent of a dependent student for the purpose of meeting the cost of attendance.
• Origination fee of 4.204%
Award letter questions?Visit www.studentchoice.org/scholarhelp
Federal Direct PLUS Loan
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• Limit is the COA less any other Financial Aid
• Payments begin 60 days after first date of disbursement (can request deferment)
• No prepayment penalty
• Dependent students whose parent is denied may qualify for additional Federal Direct Loan limits
Award letter questions?Visit www.studentchoice.org/scholarhelp
• Rate• Index – Prime or LIBOR (difference
of about 3%) • Margin - % added to index• Floor – Never go below
• Fees• Origination Fee – 0% to 3%
• Repayment Terms • 10 to 25 years
Private Loan Options
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• Borrower Benefits• What’s in it for me? (W.I.F.M.)
• Co-Borrower OptionsFICO, Debt to Income ratio
• Payment Options • Full deferment • Principal & Interest• Good Faith Payments
What to Consider:
Award letter questions?Visit www.studentchoice.org/scholarhelp
The Student Choice Solution
• Offered at NASA Federal Credit Union
• Can borrow up to $75,000 for an undergraduate degree
• Nearly 2,000 4-year, not-for-profit public and private colleges and universities who participate in the federal student aid programs – known as Title IV.
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Award letter questions?Visit www.studentchoice.org/scholarhelp
The Student Choice Solution
• Low Interest Rates (Based on LIBOR Index + Spread)
– Floor 6%
– Ceiling 18%
• NO origination or prepayment fees
• 20 or 25 year repayment (>< $40K) with max of $75,000• Full deferment available• Graduated Repayment• 0.25% rate discount for automatic repayment (ACH)
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Award letter questions?Visit www.studentchoice.org/scholarhelp
Forbearance
• Bankruptcy
• Death
• Economic hardship
• Natural disaster
• Late notification from school
• Military mobilization
Flexible Repayment Options
• Full deferment (maximum 5 years + 6 month grace)
• Interest only• Principal & Interest• Graduated repayment
available
The Student Choice Solution
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Award letter questions?Visit www.studentchoice.org/scholarhelp
Your Education/Application Web Site
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To Apply Applicants Visit: www.nasafcu.studentchoice.org or call (866) 465-4841
Award letter questions?Visit www.studentchoice.org/scholarhelp
Please contact us with any additional questions.Charlie Hudson
Business Development Account [email protected](888) 627-2328 Ext. 267
www.nasafcu.com/NASAGoddard
For more information or for any additional assistance in planning your college career visit:
www.nasafcu.studentchoice.org
You can also send questions [email protected]
Thank You for Attending
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