Financial Aid - Myths and Tips€¦ · Financial'Aid The'FAFSA The...

Financial'Aid:'Myths'and'Tips

Financial'AidPublished'Costs

• Myth– The'published'cost'represents'the'true'cost'of'a'college'or'university.

• The'Larger'Story– What'really'matters'to'the'student'is'the'amount'the'student'will'pay'for'college.

– This'is'called'“net'price.”


Net'Price'by'Income'1999<2012:'Public'Four<Year'Institutions


Net'Price'by'Cost'Private'Institutions

Financial'AidMortgage'Level'of'Debt

• Myth– Students'borrow'over'$100,000.

• The'Larger'Story– Only'4%'of'individuals'with'outstanding'student'debt'owe'$100,000'or'more.

– Most'had'pursued'advanced'degrees!'Trends'in'Student'Aid,'2013

Financial'AidMortgage'Level'of'Debt

Financial'AidStudent'Debt'Levels

• Myth– Student'debt'is'at'a'crisis'level.

• The'Larger'Story– More'students'are'going'to'college'and'therefore,'more'students'are'borrowing.

– Those'who'do'are'borrowing'more....

Financial'AidStudent'Debt'Levels

Financial'AidWho'Qualifies'for'Financial'Aid?

• Myth– Only'lowPincome'families'qualify'for'financial'aid.

• Truth– The'EFC'should'be'less'than'the'cost'of'attendance'for'a'student'to'qualify'for'need'or'meritPbased'aid.


Universal'Philosophy'• Students'and'their'family(ies)'have'the'primary'responsibility'to'pay'for'college.

• Sacrifice'is'assumed.• Financial'aid'assessment'is'NOT'a'cash'flow'analysis'but'rather'an'evaluation'of'an'individual'family’s'economic'strength.

• The'contribution'is'determined'by'a'standard'formula'that'assesses'a'family’s'ability'to'pay.

• Willingness'is'not'a'factor.


Tuition'and'fees Cost'of'living'in'dorms

Cost'of'meal'plans'on'campus

Allowance'forbooks'and'supplies

Allowance'forpersonal'expenses'and'a'few'meals'out

Allowance'fortransportation

+ +

Indirect'costs'that'may'not be'charged'by'the'college:'

+ +

Direct'costs'typically'charged'by'the'college:'

The'Expected'Family'Contribution'(EFC)'is'the'number'that'is'used'to'determine'students’'eligibility'for'federal'student'financial'aid.'

Many'states'also'use'the'EFC'to'determine'eligibility'for'state'aidZ'institutions'may'also'use'the'EFC'to'determine'eligibility'for'institutional'aid.

This'number'is'calculated'from'the'results'of'the'financial'information'the'student'and'family'provide'in'the'Free'Application'for'Federal'Student'Aid'(FAFSA).'

The'student's'EFC'is'reported'on'the'Student'Aid'Report'(SAR).


Financial'AidSaving'for'College'

• Myth– Saving'for'college'hurts'the'chances'of'getting'aid.

• Truth– If'you'save,'you'won’t'need'to'borrow'or'borrow'as'much!

– The'EFC'includes'only'5.64%'of'the'net'worth'of'assets'(after'allowances'for'retirement'and'emergencies'are'removed).

Financial'AidSaving'for'College'– How'is'Family'Contribution'Calculated?

Parent'Contribution

Family'Contribution'(EFC)

Student'Contribution

+ =

Financial'AidSaving'for'College'

What'if'the'family'has'more'than'one'student'enrolled?

#'in'college'adjustment

2÷

Total'ParentContribution

Parent'Contribution'per'Student

=

Financial'AidSaving'for'College'– Financial'Need

*Note:'This'is'not'the'same'as'the'student’s'bill'or'the'amount'a'family'will'actually'pay'for'the'student'to'attend'college.

Total'Cost'of'Attendance

Expected'Family'

Contribution'(EFC)*

Financial'Need

Financial'AidThe'FAFSA

• Myth– The$FAFSA$is$too$complex$and$takes$too$long$to$complete.

• Truth– For$most$first9time$filers,$the$FAFSA$takes$less$than$30$minutes$to$complete.

– Repeat$filers$spend$less$than$20$minutes$completing$the$FAFSA.


The FAFSA'may'be'filed'at'any'time'during'an'academic'year,'but'no'earlier'than'January'1st prior'to'the'academic'year'for'which'the'student'requests'aid.'

For'the'2016'< 2017'academic'year,'the'FAFSA'may'be'filed'beginning'January'1,'2016.'

While'most'colleges'set'FAFSA'filing'deadlines,'do'not'forget'to'check'for'state'filing'deadlines.'

Website:'https://fafsa.gov

Financial'AidThe'Federal'Student'Aid'LogPIn'– New'Process

▶ No'more'PIN!▶ Students'now'create'an'FSA'ID.

▶ Yes,'parents'also'create'their'own.

▶ Both'the'student'and'at'least'one'parent'will'use'their'individual'FSA'ID'to'electronically'sign'the'student’s'FAFSA.


▶ File$federal$tax$returns$as$soon$as$possible.▶ Notify$the$school$if$an$extension$is$filed.▶ Use$the$Data$Retrieval$Tool$(DRT)$to$update$any$estimates.

▶ Be$aware$of$the$school’s$deadlines.$Better$to$provide$estimated$information$than$miss$the$deadline.


The'FATAL'Mistakes

! DEADLINES'''!missing'application'dates'

!missing'admission'dates'

!missing'information

Financial'AidDebt'and'Cost

▶ Myth▶ Students$borrow$more$because$college$costs$more.

▶ Truth▶ College$does$ cost$more,$but$families$ are$also$less$prepared$to$pay$

for$college.$▶ Only$51%$of$college$bound$families$ saved$for$college

▶ Age$0$9 6$years$average$total$savings$9 $10,282▶ Age$7$9 12$years$average$total$savings$9 $16,498▶ Age$13$9 17$years$average$total$savings$9 $21,416

How$America$Saves$for$College$2014,$$Sallie$Mae

Financial'AidCost'Increases'– The'College

▶Myth▶ Students$borrow$more$because$college$costs$more.

▶ Truth▶ College$ costs$increased$due$to$the$cost$of$labor$and$other$

expenses.▶ Wages$ to$a$highly$educated$workforce▶ Expense$ increases$ are$also$outside$ the$inflation$rate

▶ Medical▶ Retirement$ (tied$to$wages)▶ Energy

Archibald$and$Feldman,$Forbes$8/12/2010

Financial'AidCost'Increases'– The'Student

▶Myth▶ Students$borrow$more$because$college$costs$more.

▶ Truth▶ Length$of$time$to$graduate

▶ 40%$of$undergraduate$graduate$in$4$years▶ 58%$of$undergraduate$graduate$in$5$years

▶ Loss$of$a$year’s$earnings

Financial'AidLess'Aid

▶Myth▶ There$is$less$aid$available.

▶ Truth▶ In$2013914,$over$$184,000,000,000$was$awarded$in$financial$aid$to$undergraduates.

▶ Grants$represented$57%$of$the$total$resources$awarded$to$the$student.▶Another$8%$are$given$to$the$family$in$tax$credits.

Trends$in$Student$Aid,$2014

To'learn'more,'visit:'Trends'in'Student'Aid'2014,'Trends'In'Higher'Education'Series,'College'Boardhttps://trends.collegeboard.org/

Financial'Aid2013P14'Undergraduate'Student'Aid'by'Source'and'Type'''''''

1%5%

6%

7%

8%

18%

21%

34%Federal'Loans'($62.9)

Institutional'Grants'($37.5)

Federal'Pell'Grants'($33.7)

Federal'Education'Tax'Credits'&'Deductions

($15.6)

Federal NonPPell'Grants'($13.4)

Private/EmployerGrants'($10.8)

State'Grants'($9.3)Federal'WorkPStudy'($0.9)

Financial'AidLoan'Repayment

▶Myth▶ Loans$are$too$hard$to$pay$back.

▶ Truth▶ Income$contingent$payment$plans$are$available.▶ PAYE$(Pay$As$You$Earn)$only$asks$for$payment$of$10%$of$a$borrower’s$net$income.

▶ Allows$the$borrower$to$opt$into$other$plans$without$a$penalty.

Financial'AidReturn'on'Investment

▶ Myth▶ The'return'on'a'college'degree' is'less'because'of'the'increase' in'the'cost'of'an'education.

▶ Truth▶ A college'degree' is'at'its'highest'premium.

▶ College' graduate'salaries'decreased'by'5%'during' the'Great'Recession,'while' those'without'a'degree'had'a'10'P 12%'decline.'

▶ The'number'of'college' graduates'getting'jobs'remain'steady'throughout'the'Great'Recession.

▶ Those'without'a'degree'experienced' 8'P 10%'unemployment.'

US'Bureau'of'Labor'of'Labor'Statistics

Financial'AidDegree'and'Unemployment

Financial'AidBait'and'Switch

▶Myth▶ Colleges$will$offer$grants$in$the$first$years$but$only$offer$loans$in$the$later$years.

▶ Truth▶ If$the$family’s$economy$remains$similar$from$year$to$year$and$the$student$makes$satisfactory$progress$towards$a$degree,$then$the$financial$aid$offered$in$the$first$year$will$be$renewed$annually.

Financial'AidBest'Practices

• Get'your'FSA'IDs'as'soon'as'possible.

• Attend'financial'aid'presentations'as'early'as'the'freshman'year'in'high'school.

• Always'ask'tough'questions'of'all'offices.P Why'does'your'college'cost'$_______?

• Ask'about'medians.P Averages'are'influenced'by'the'outliers.

• Complete'applications'before'the'earliest'deadline'and'know'all'deadlines.

Financial'AidBest'Practices

• Know' requirements'to'complete'awarding' and'disbursing– There’s'more'to'financial'aid'than'getting'the'award

• When'in'doubt,'ask'a'local' financial'aid'officer

• Keep'all'tax'records'up'to'date– File'as'early'as'possible

• When'possible,'use'the'Data'Retrieval'Tool

• Review' the'Student'Aid'Report'(SAR)– Results'from'filing'the'FAFSA

• Compare'awards– Look'at'the'percentages'for'each'type'of'financial'aid'being'offered

Financial'Aid'Tools'&'ResourcesTop'5'Things'Counselors'Should'Tell'Students'About'Financial'Aid

1. Never'rule'out'a'college'because'of'cost'alone.

2. Compare'costs'before'applying'— Net'price'calculators'can'provide'an'estimate'of'financial'aid'eligibility' and'remaining'college'costs.'Net'price'calculators'should'be'available'on'every'college's'website.'

3. Remember'to'apply'— FAFSA''deadlines'are'available'online'at'https://fafsa.ed.gov/deadlines.htm.' Many'colleges'and'universities'also'provide'funds'through'an'institutional' application,' the'CSS/Financial'Aid'PROFILE®,'and/or'a'state'application.

4. Get'advice'— The'financial'aid'office'at'local'colleges'often'provides'workshops'or'can'give'advice.

5. Compare'awards'— Look'at'grants,'loans,'and'parental' contributions'before'making'a'final'decision'on'a'college.'

Financial'Aid

Financial'Aid'Tools'and'Resources

Financial'AidTools'&'Resources

Financial'Aid'Tools'&'ResourcesNational'Scholarship'and'Grant'Resources'

http://www.fastweb.com/


https://bigfuture.collegeboard.org/scholarship<search


https://mycollegedollars.com/

To'learn'more,'visit:http://www.whitehouse.gov/issues/education/higherPeducation/collegePscorePcard

Financial'Aid'Tools'&'ResourcesCollege'Scorecard

Financial'Aid'Tools'&'Resources

Federal'Student'Aidhttps://studentaid.ed.gov/

FAFSA4casterhttps://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1

Federal'Student'Aid'Financial'Aid'Toolkithttp://www.financialaidtoolkit.ed.gov

BigFuturehttps://bigfuture.collegeboard.org/

Net'Price'Calculatorshttp://studentnpc.collegeboard.org/

▶ Specific'net'price'calculators'should'be'found'on'the'individual' college’s'website.

Financial'Aid'Tools'&'Resources

College'Comparison'Tools'College'Navigator'(NCES)'http://nces.ed.gov/collegenavigator/BigFuture'https://bigfuture.collegeboard.org/comparePcolleges

Financial'Aid'Shopping'Sheet'(US'Department'of'Education)http://www2.ed.gov/policy/highered/guid/aidPoffer/annotatedshoppingsheet.pdf

Award'Letter'Comparison'Toolshttps://bigfuture.collegeboard.org/payPforPcollege/financialPaidPawards/comparePaidPcalculator

Scholarship'and'Grant'Search'ToolsFastweb'http://www.fastweb.com/BigFuture'https://bigfuture.collegeboard.org/scholarshipPsearchMy'College'Dollars'https://mycollegedollars.hyfnrsx1.com/

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