Mount St. Mary’s University

Mount de Sales Academy

Financial Aid NightDecember 2, 2015

DAVE REEDER — Director of Financial Aid

reeder@msmary.edu

Agenda Financial Aid Essentials & Timeline Definition of Financial Aid Definition of financial need and how it is

determined How to apply for financial aid, including how

to avoid errors. Description of major federal/state programs Additional resources

Essentials

Know what to file.Know when to file it.Call the college/university’s financial

aid office with any questions.

College/ Financial Aid Required Application FilingState Numbers & Contacts Applications Codes Deadlines

301-447-5207Mount St. Mary's University Director - Dave Reeder FAFSA 002086 1-MarEmmitsburg, MD Assoc. - Amy Wilkinson

Admissions & Financial Aid Timeline

Spring – November : College Search October – January : College Applications November – March : Admissions Decisions January – February : Financial Aid

Applications February – April : Financial Aid Decisions December – May 1st : College Choice

Agenda Financial Aid Basics and Timeline Definition of Financial Aid Definition of financial need and how it is

determined How to apply for financial aid, including how

to avoid errors. Description of major federal/state programs Additional resources

What is Financial Aid

Scholarships

Grants

Loans

Work Study

“Gift Aid”

“Self – help”

What is Financial Aid Merit-based Aid

Academic scholarships, athletic scholarships and other scholarships based solely on personal credentials

Used primarily by private schools to lower the sticker price & to improve institutional profile

Research college publications and web site for requirements.

Need-based AidBased on family’s ability to payGift aid – scholarships & grantsSelf-help aid – loans & work study

Agenda Financial Aid Basics and Timeline Definition of Financial Aid Definition of financial need and how it is

determined How to apply for financial aid, including how

to avoid errors. Description of major federal/state programs Additional resources

Calculating Financial Need

Cost of Attendance (COA)

– Expected Family Contribution (EFC)

= Financial Need

Cost of AttendanceTuition and fees

Room and board

Books and supplies/equipment, including computers

Transportation

Miscellaneous personal expenses

Loan fees

“Sticker Price” or “Direct Costs”

Expected Family Contribution

Determined by applications FAFSA – all schools

Profile – primarily private schools

Institutional form – check with school

EFC = Parents contribution + student’s contribution

Constant for all schools

Expected Family ContributionFactoring Different Costs

On-Campus On-Campus Commuter

Private Public Public

Costs $50,000 $18,000 $ 7,000

EFC $15,000 $15,000 $15,000

Need $35,000 $ 3,000 $ -0-

Expected Family ContributionParents’ Contribution

Total IncomeTaxable (adjusted gross income)

+ Non-taxable (child support, payments to tax-deferred pensions & savings plans … do not include social security benefits)

- Less excludable income (e.g. child support paid)

- Less taxes paid

- Less allowances

Expected Family ContributionParents’ Contribution

Contribution from AssetsCash, savings, checking

+ Net worth of investment farm/personal business with more than 100 employees

+ Investment/real estate equity (FAFSA excludes home equity

- Less asset protection allowance (determined by age of older parent) – SIGNIFICANTLY REDUCED

x Asset conversion rate (12%)

Expected Family ContributionEducation Savings Plans

Prepaid tuition plans allow a person to buy tuition credits or certificates, which count as units of attendance. The number of units doesn’t change, even though tuition will likely increase before the beneficiary gets to use the tuition credits. Prepaid tuition plans are to be included on the FAFSA as an asset of the plan owner.

State-sponsored college savings plans allow a benefactor to deposit money into an account that will be used for the beneficiary’s college expenses. The buyer does not prepurchase tuition credits as with a prepaid tuition plan. Rather, this type of plan is essentially a special savings account. The value of a college savings plan should be treated as an asset of the owner and not the beneficiary, because the owner can change the beneficiary at any time.

Expected Family ContributionEducation Savings Plans

Account TitleAccount Type

Whose Asset on FAFSA

Parent in trust for Child Totten Trust Parent

Child in trust for Parent Totten Trust Child

Parent and Child Joint Account Split Evenly

Child and Parent Joint Account Split Evenly

Parent as custodian for ChildCustodial Account

Child

Parent as trustee for ChildCustodial Account

Child

Expected Family ContributionParents’ Contribution

Parents’ Contribution divided among all children in college.

Expected Family ContributionStudent’s Contribution

Total Income less taxes paid

- Income protection allowance = $6,400

x 50% assessment rate

Assets

x 20% conversion rate

Expected Family ContributionEFC Calculator

FAFSA 4Caster – “raw” estimate; provides EFCwww.fafsa4caster.ed.gov

College Board (“Big Future”) – institutional methodology, longer to complete; provides EFCwww.bigfuture.collegeboard.org (Pay for College)

Aie.org – provides detailed output that shows how EFC was determinedwww.aie.org (Tools & Resources)

Agenda Financial Aid Basics and Timeline Definition of Financial Aid Definition of financial need and how it is

determined How to apply for financial aid, including how

to avoid errors. Description of major federal/state programs Additional resources

Applying for Need-Based AidFAFSA

Application for Federal aid Required by all schools Federal methodology

• Excludes home equity Can take up to 1 week to be processed on-line or 4

weeks via mail. Can’t be filed until after January 1 www.fafsa.ed.gov Call 1-800-4FEDAID for paper application

Applying for Financial Aidwww.fafsa.ed.gov

The FSA ID• This must be done prior to completing the FAFSA

• Apply online or by going online to FAFSA and starting a new application. You will be prompted to apply for an FSA ID at that time.

• Must apply for two FSA ID numbers-one for parent and one for the student.

• Only the FSA ID user may create his or her own FSA ID number.

https://studentaid.ed.gov/sa/fafsa/filling-out/fsaid

Applying for Financial AidIRS Data Retrieval

Parents who indicated they have filed their taxes will be directed to use the FAFSA-IRS Data Retrieval process.

Depending on timing, data may not be available.

Opportunity to update the FAFSA once taxes are complete.

Can opt to complete the FAFSA without Data Retrieval, but will likely be verified later.

Applying for Need-Based AidPROFILE or Institutional Application

Used primarily by private colleges Supplements information on FAFSA

• Monthly mortgage• Parents’ vocations• Complete listing of family members• Add’l expenses such as HS tuition and medical bills not covered by

insurance

Can file in the fall Must be filed on-line at www.collegeboard.com Registration fee, plus additional cost per school

Applying for Need-Based AidGeneral

Based on prior year’s income and current assets of parents and student

PAY ATTENTION TO DEADLINESBeware of processing timeProvide estimates if necessary to meet

deadlines

Special Conditions

Applying for Need-Based AidFAFSA – Frequent Errors

Divorced/remarried parent informationHousehold where student resides, including

stepparent.

Income earned by parents/stepparentsAdjusted Gross Income (AGI) from 1040’s

U.S. income taxes paidNot taxes withheld

Applying for Need-Based AidFAFSA – Frequent Errors

Household sizeDo not include children in graduate school or

who no longer live in the house.

Number in postsecondary educationOnly undergraduate siblings … no parents.

Real estate and investment net worthNet worth, meaning market value less debt.

Applying for Need-Based AidCh-ch-ch-changes

FAFSA Data – beginning with 2017-18 FAFSA, income will be reported from “prior-prior-year.” So, will be using 2015 income two years in a row.

FAFSA Date – Beginning in fall, 2016 FAFSA will become available in October of senior year in high school.

School listing – Students may list up to 10 schools on their FAFSA. Beginning in 2016-17, schools cannot see who the competition is.

Net Price Calculators

All schools must have a NPC on their website

Provides families with an idea of their financial aid package for that institution.

Varying levels of detail by school.

Schools with merit aid may ask more questions.

Agenda Financial Aid Basics and Timeline Definition of Financial Aid Definition of financial need and how it is

determined How to apply for financial aid, including how

to avoid errors. Description of major federal/state programs Additional resources

Sources of Aid

Colleges/universitiesFederal GovernmentState GovernmentPrivate/Local Scholarships

Federal/State ProgramsMaryland

For Maryland residents attending Maryland colleges. Education Asst. Grants – File FAFSA before March 1 Guaranteed Access Grants – Separate application.

Grants up to $17500 for students with extreme need. Senatorial Scholarships – Contact Senator’s office Delegate Scholarships – Contact each of three Delegates www.mhec.state.md.us – for additional programs

Federal/State ProgramsFederal Grants

FEDERAL• Pell Grant – EFC < $5,000• SEOG – must be Pell eligible

Federal/State ProgramsFederal Direct Student Loans

Repayment• Six month grace period• Minimum of 10 years to pay off

Entitlement with annual limits• Freshman: $5,500 (up to $3,500 subsidized)• Sophomores: $6,500 (up to $4,500 subsidized)• Juniors/Seniors: $7,500 (up to $5,500 subsidized)

Interest Rates• Fixed at 4.29%

Federal/State ProgramsFederal Direct Student Loans

Subsidized• Need-based• Government pays interest while in school

Unsubsidized• Student responsible for interest while in school• Can pay it as it accrues or capitalize• Additional entitlement for independent students

or dependent students whose parents are not able to borrow PLUS.

Federal/State ProgramsFederal Work Study

Need-based• Awarded by school• Amounts vary• Typically $1,000-$2,000 (7-15 hours/week)

Primarily on-campus employment• May be off-campus• Community service provisions• America Reads

Studies suggest higher GPA’s

Other Sources of Financial Aid PLUS Loan

• Loan in parents’ name• Interest fixed at 6.84%• Credit review• Extended payments enable cash flow• Can borrow up to the difference between costs and

financial aid• Repayment begins in first year

Payment Plan• Monthly payments over the course of the academic year

Other Sources of Financial Aid

Alternative Student Loans• Loan in student’s name• Interest rates higher than Federal loans• Co-signor typically required … at least

preferred.• Repay after graduation• Can borrow up to the difference between costs

and financial aid• Beware of total indebtedness.

Other Sources of Financial AidPrivate/Local Scholarships

Where to Look Mount de Sales website (College Counseling) Civic organizations (Elks, Rotary, Kiwanis, etc.) Private Companies, including parents’ employers Public Libraries www.fastweb.com

Avoid scams www.ed.gov/prog_info/SFA/LSA www.ftc.gov/bcp/conline/publs/alerts/ouchart.htm http://search.bbb.org/search.html If you have to pay for it, question it.

Other Sources of Financial AidPrivate/Local Scholarships

Inform Financial Aid Office of outside scholarships.

Could affect eligibility for federal need-based aid.

Some schools may reduce their institutional grants.

Agenda Financial Aid Basics and Timeline Definition of Financial Aid Definition of financial need and how it is

determined How to apply for financial aid, including how

to avoid errors. Description of major federal/state programs Additional resources

Financial Aid Resources

High School Guidance/Career OfficeCollege Financial Aid OfficeInternet

• www.msmary.edu• www.collegeboard.org• www.collegeexpress.com• www.finaid.org• www.fastweb.com • https://studentaid.ed.gov/sa/resources

Financial Aid Resources

www.msmary.edu/financialaidnight Presentation Grid (.pdf)Financial Aid Checklist (.pdf)Financial Aid Glossary (.pdf)Federal Student Aid Program Summary (.pdf)Sample Scholarship Letter (.pdf)Consultant and Scholarship Search Services Fact Sheet(.pdf)Cost Comparison (.xls)

Mount St. Mary’s University

Mount de Sales Academy

Financial Aid NightDecember 2, 2015

DAVE REEDER — Director of Financial Aid

reeder@msmary.edu