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Financing Your Students Education08
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Financing Your Students Education08 Financing Your Students Education08 Presentation Transcript

  • Financing Your Student’s Education Carolyn E. Karno Manager, Early Awareness and College Planning
    • Early Awareness and College Planning Department
      • Free Services
        • College Planning Services
        • Financial Aid Assistance
        • Assistance with Aid Applications
        • One-on-One Advising
        • Workshops and Professional Development Programs
        • 1-866-752-6443
      • How much will it Cost?
      • What is Financial Aid?
      • Types of Financial Aid
      • The Financial Aid Formula
      • The Application
      • Financial Aid Packaging
      • Advice From Experts
      • Tuition and fees in Connecticut range from $2,800 to more than $36,000
        • Add $9,000 - $12,000 for room and board
        • Add approximately $1,000 for books
        • Don’t forget personal expenses
    College Costs
  • Types of Financial Aid 40% $97.1 Billion in Aid to Undergraduates in 2006-07 21% 13% 8% 7% 5% 5% Does not include private/state education loans estimated at $19 Billion – about 29% of loans taken out by undergraduates Source: The College Board, Trends in Student Aid 2007
      • Grants - Based on financial need
        • Federal
          • Pell Grant – maximum $4,310
            • Will increase to $4,800 in 2008
          • Academic Competitiveness/SMART
          • Supplemental Education Opportunity
        • State
          • CT Aid for Public Schools
          • CT Independent College State Grant
        • Institutional
    Gift Aid
      • Scholarships
        • Often referred to as merit aid
        • Based on talent or special ability
          • Academics
          • Athletics
          • Visual and Performing Arts
          • Leadership
          • Community Service
    Gift Aid
    • State Capitol Scholarship
      • Students must have either a score of at least 1800 on the SAT or be in the top 20% of their class
    • Institutional Scholarships
      • Some colleges provide merit based aid
    • Local and Community Scholarships
      • Check with the guidance office, chamber of commerce, civic organizations, churches, union
    Finding Scholarships
      • Beware of companies that promise to save you thousands of dollars in tuition by assisting with you your financial forms
      • Beware of companies that ask you for money up front to “hold” a scholarship
    • Don’t Get Scammed!
      • Federal Work-Study
        • Must complete the Free Application for Federal Student Aid (FAFSA) to be eligible
      • Institutional Work-Study
    Earn While You Learn
      • A FAFSA must be completed in order to receive a Stafford loan
      • Available directly through the federal government or through a lender
      • Depending on the amount of financial need, loans will either be:
        • Subsidized
          • Government pays the interest
        • Unsubsidized
          • Student is responsible for the interest
    Stafford Student Loans
    • Stafford Loans – Fixed rate of 6.8%
    Six month grace period and possible loan cancellation provisions As of July 2008, the rate will go down to 6.0% for subsidized loans $5,000 $5,500 Senior $5,000 $5,500 Junior $4,000 $4,500 Sophomore $4,000 $3,500 Freshman Additional Unsubsidized Base Limits
      • Maximum loan is $4,000 per year for undergraduates
      • Loan is provided through the school
      • Fixed interest rate of 5%
      • 9 month grace period
      • Possible cancellation provisions
    Perkin’s Loan
    • Parent loan for dependent undergraduate students
    • Also can be used by graduate students
    • Fixed Rate Loan
      • 8.5% under FFELP
      • 7.9% under Federal Direct Loan Program
    • 10-year standard repayment period
    • Repayment begins 60 days after final disbursement
    PLUS Loans
      • State Loan Programs
        • CT FELP
        • Fixed Interest Rate
        • Approval based on credit worthiness of co-borrower
      • Private Education Loans
        • Usually variable rates tied to PRIME or LIBOR
      • Institutional Loans
    Other Loans
      • Federal Loans do not require a co-borrower
      • Many FFELP lenders offer borrower benefits
        • Low or zero origination fees
        • Interest rate reductions for auto-debit
        • Interest rate reductions after a number of on-time payments
      • Private Loans do not require the completion of a FAFSA
    Are All Student Loans the Same?
      • Unlocking the Mystery of Financial Aid
    How Much Aid Will My Student Receive?
      • To the extent they are able parents have the primary responsibility to pay for their child’s education
      • Students also have the responsibility to contribute
      • A family’s estimated ability to pay must be evaluated in an equitable and consistent manner, recognizing that special circumstances may affect a family’s ability to pay
    Principles of Need Analysis
    • Federal Methodology
      • Income
      • Assets
      • Family Protection Allowances based on:
        • Family size
        • Number in college
        • State of residence
        • Age of older parent
        • Pension and home value is excluded
    • Institutional Methodology
      • May also consider:
        • Home value
        • Value of pension
        • Medical expenses
        • Private school tuition
        • Non-custodial parent information
    Expected Family Contribution
  • Determining Financial Need
      • Free Application for Federal Student Aid
      • Other Institutional Forms
      • www.fafsa.ed.gov
      • Used to calculated student’s EFC
      • Used to determine eligibility for federal and some state aid
      • Can not be completed until January 1, 2008
      • Must be submitted annually
      • Can be submitted electronically or by paper
    The FAFSA
      • Quickest processing time
      • Self-edits
      • FAFSA worksheet
      • Save and return
      • Electronic confirmation and follow-up
    FAFSA On The Web
      • Go to www.pin.ed.gov
        • Parent and student should sign up for a PIN
        • PIN will be used an your electronic signature
    Getting Started
      • 2007 tax return
      • 2007 W-2 forms or end of year pay stub
      • Most current records for investments
      • Record of untaxed income
      • Most recent bank statements
      • Social security numbers
      • Student’s driver’s license number
    Information Needed
      • Only biological or adoptive parents
      • In the case of divorce, the person who has the most physical custody of the student will complete
        • If that parent is remarried, the step parent will also complete
    Who Is Considered a Parent?
    • Section 1
      • Questions regarding student
        • age, DOB, address, license number
        • E-mail address
        • Marital status
        • Degree attainment
    Student Questions
    • Section 2
      • Dependency status
    • Section 4
      • Student Finances
    • Section 5
      • List of schools – up to 10 on the online application
    Student Questions
      • Section 3
        • Marital Status, tax information, income, DOB, SS numbers
        • Assets
          • 529 Plans are considered a parent asset
          • Coverdell is a parent asset
          • Custodial accounts are a student asset
          • List value of real estate other than primary residence
          • Value of retirement accounts are not reported
    Parent Information
    • Worksheet A
    • Earned income credit, untaxed social security, welfare benefits
    • Worksheet B
    • Amount contributed to your retirement, child support received, IRA deductions or distributions, other money received not reported elsewhere
    • Worksheet C
    • Child support paid, tax credits
    FAFSA Worksheets
      • Line by line copy of the information submitted
      • It will list a preliminary EFC
      • It will specify if student is eligible for a Pell and Academic Competitiveness Grants
      • You should review information and update as necessary
    Student Aid Report
      • Used by some independent colleges
        • More detailed information
        • Can be completed as early as October 1 st
        • Must be completed online
        • There is a charge
        • Non-custodial information may be required
    Other Forms
    • Some colleges will have a supplementary form
      • Sometimes used for “early decision” applicants
      • Often used by independent colleges that do not use the PROFILE
    Other Forms
      • Your student will receive an Award letter
        • May consist of gift aid and self-help
        • Awards may be adjusted upon verification
        • Most financial aid awards do not meet the full financial need of the student
    Your Student is Accepted to College
  • Sample Award Letter
    • School A = $15,000 School B = $33,000
    Gapping EFC $8,000 Scholarships $3,500 Loans $3,500 EFC $8,000 Scholarships $10,500 Loans $3,500 GAP $11,000
      • How does the financial aid office handle special circumstances?
      • How will private scholarships impact my aid package?
      • What are the requirements to keep my grants or scholarships?
    Questions for the Financial Aid Officer
    • Give your student an estimate of the amount you feel comfortable contributing towards his/her education
    • Speak to your child about the importance of applying to what you might consider a financially safe school
    • If your student intends to borrow, make sure he/she has a good understanding of the responsibilities
    Advice From the Experts
      • Pay expenses from current cash flow
      • Withdrawals from parent and student savings and investments
      • Use the proceeds from an inheritance or gifts from relatives
      • Withdrawals from college savings plan (529) or bonds
      • Tuition Payment Plans
      • Student and/or Parent Federal or loans
      • Alternative loans
      • Financing through a home equity loan or home refinance
      • Borrowing against a retirement account
      • Withdrawals from an IRA account
      • Maxing out credit cards
    How Do Families Pay for College?
    • Remember, College is an investment in your child’s future