The document discusses various topics related to paying for college including financial aid trends, regulatory updates, the current policy climate, and strategies for planning, saving, and paying for a college education. It provides information on federal and state financial aid programs, the FAFSA application process, verification procedures, and how different entities define college affordability. The document also includes case studies and strategies to help families understand their options for making college more affordable.

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Celebrating 30 years of Excellence
Planning, Saving & Paying for College
Financial Aid Trends and
Regulatory Updates
NPEA Conference April 2014

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• Massachusetts Educational Financing Authority
• Not-for-profit state authority that works to
make higher education more accessible and affordable
• Created in 1982 by the State Legislature
• Helping families:
o Plan: Extensive community outreach
o Save: U.Fund® and U.Plan® college savings plans
o Pay: Affordable fixed interest rate college loans for
over 30 years
Facts About MEFA

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• Private non-profit organization based in Boston, MA
• Public purpose mission = empower students to
successfully manage and repay their college loan debt
• Provides student loan education and advocacy
• Develops financial competencies through innovative
web-based tools and trusted, neutral advice
• All free of charge to students and alumni
Facts About ASA

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• President is concerned about accountability and
student debt
• Federal Government is concerned about
transparency
• Families are concerned about costs
• Institutions are concerned about helping
students enroll and complete and funding levels
Current Climate

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• Paying for Performance
– College rating system determining aid funding
– Aid to students based on student performance
• Promoting Innovation and Competition
– Encourage online courses & innovative learning
• Ensuring that Student Debt Remains Affordable
– Cap repayment at 10% of monthly income
– Outreach
A Better Bargain for the Middle Class:
Making College More Affordable

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• Grants vs. Loans
• Federal Methodology
– FAFSA
• Independent Student/Dependency Overrides
• Citizen/Eligible-Non Citizen
• Verification – IRS Data Retrieval
How Does The Government Define Affordability?

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Overview of Financial Aid
Undergraduate Student Aid 2011-12 ($185.1 Billion)
Source: The College Board, Trends in Student Aid 2012

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• Student is the borrower – no credit check
• Annual limits: $5,500 for freshman year
• Fixed interest rate changes annually: 3.86% for 2013-14
• Two types:
– Subsidized – Interest accrues after graduation
– Unsubsidized – Interest accrues immediately
• 1.072% fee deducted from loan amount
• Promissory Note & Entrance Counseling: StudentLoans.gov
• No payments while in school
• Several repayment options: StudentAid.gov
Federal Direct Student Loans

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• Free Application for Federal Student Aid (FAFSA)
– Required by all colleges for federal and MA state aid
– Open January 1st: FAFSA.gov
– Must sign with a PIN: PIN.ed.gov
– IRS Data Retrieval Tool – available February 1st
– Requires data from all parents who live together, married or not
The FAFSA
Must be
completed
every year!

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• Auto Zero EFC income cutoff remains $24,000 or less
• Skip logic
• Defining Parents:
– All parents who live together, married or not
– Same-sex parents
– No noncustodial parents
• The PIN
– Requires a SSN – parents without should sign the signature page
• IRS Data Retrieval – available Feb 2nd
FAFSA: Reminders & Updates
New!

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Federally Independent Students
• 24 or older
• Married
• Graduate Student
• Active duty in U.S. Armed
Forces
• Veteran of U.S. Armed
Forces
• Provide more than half of
support for children or
dependents
• In foster care any time after age
13 or parents are deceased
• Emancipated minor
• In legal guardianship
• Homeless, risk of being
homeless, or unaccompanied
youth
• No Parent Information Collected
• Criteria:

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Dependency Overrides
Students who do not qualify:
• Parents refuse to financially contribute or provide data
• Parents do not claim the student as a tax dependent
• Student demonstrates total self-sufficiency
Students who may qualify:
• Abusive household
• Abandonment
• Incarceration or institutionalization of both parents
• Parents lacking the physical or mental capacity to raise the child
• Parents’ whereabouts unknown
• Parents’ extended hospitalization

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Dependency Overrides
Students should submit to each school:
• A letter of explanation
• Relevant documentation (court, medical, police,
financial)
• At least one third-party letter from non-family
member: member of clergy, lawyer, social worker,
etc.

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• U.S. nationals
• U.S. permanent residents with Form I-551, I-151, or I-551C
• Those with Arrival-Departure Record (I-94) from U.S. Citizen and
Immigration Services (USCIS) showing Refugee, Asylum Granted, Cuban-
Haitian Entrant (Status Pending), Conditional Entrant (if issued before
April 1, 1980), or Parolee (paroled at least one year and intending to become
a U.S. citizen or permanent resident).
• Those who hold a T-visa or have parents with a T-1 visa.
• Any “battered immigrant-qualified alien” or a child of such a person under
the Violence Against Women Act.
• Citizens of the Federated States of Micronesia, the Republic of the Marshall
Islands, or the Republic of Palau.
Eligible Non-Citizens

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Verification
• Colleges verify accuracy of FAFSA data
• Students selected by Department of Education
• In 2013-14, of 18.8million FAFSAs, 5.7million were selected
• Customized
• Additional documentation collected
• New in 2013-14: High school completion
Identity/statement of educational purpose
• New in 2014-15: Removed SNAP-only group
Household Resources: if insufficient
income reported for family size

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Verification Acceptable Documentation
• Tax return items:
− IRS Data Retrieval Tool (unchanged data)
− IRS Tax Return Transcript via Get Transcript
− Provides immediate PDF of tax return transcript
− Paper tax returns only accepted for amended, foreign, identity
theft victims, and authentication difficulties
• All other items:
– Verification Worksheet provided by the institution
– Possible additional documentation
• Free tax prep for low-income families:
irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers
New!

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IRS Data Retrieval Tool
• 9 million folks used it in 2012-13
• When can it NOT be used:
– Married individuals who file married filing separately or
head of household tax returns
– Change in the marital status after the end of tax year
– Amended Tax Returns
– Foreign Tax Returns (even if U.S. return is also filed)
– Filers with Tax ID Number (TIN)
– FAFSA and tax return address do not match

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• Institutional Methodology
– CSS PROFILE
• Professional Judgment
• Need-Based Aid
• Merit-Based Aid
How Do Colleges Define Affordability?

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Cost of Attendance (COA)
– Expected Family Contribution (EFC)
= Financial Aid Eligibility
Financial Aid Formula
Colleges fill in Financial Aid Eligibility with
financial aid from multiple sources

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• CSS/Financial Aid PROFILE®
– Some colleges require for institutional aid
– $25 for 1st school, $16 for each additional
– Online application required: CollegeBoard.org
– Noncustodial Parent PROFILE required when applicable
• College Financial Aid Application
– Required by some colleges
– Usually part of the admissions packet
Other Financial Aid Applications
Don’t wait
until you’re
accepted to
apply!

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CSS/Financial Aid PROFILE
• For institutional aid
• More detailed questions:
o untaxed income, home, expenses, household, special
• Customized based on registration & college selection
• Noncustodial PROFILE & waivers
• Updates sent to colleges on paper
• PROFILE FAQs and Glossary
• Customer Service:
o 305-829-9793
o help@cssprofile.org
MEFA PROFILE webinar on Trainings & Events page

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PROFILE Participating Institutions and Programs

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• $25 first school, $16 each additional
• Fee waivers
– Automatically granted based on family finances
– For first-time, undergraduate applicants
– Parents must live in the U.S. and not be self-employed
– Automatic for orphans & wards of the court
– Covers up to 8 institutions
• Fee Payment Codes
– Purchased by colleges and organizations for students
– Each pays for one college
– Limit of 16 per year
PROFILE Costs

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Changes in circumstance, special situations not already
reported, and requests for additional funds (appeals)
should be submitted to the Financial Aid Office to include:
• Letter of explanation
• Documentation (bills, financial statements, medical
records, layoff notices, final paystubs)
• Summary of current financial plan
Special Circumstances/Appeals

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• Awarded based on family’s financial eligibility
as determined by standardized formula
• Includes grants, loans and/or work-study
• Most federal, state and institutional
aid is awarded based on financial eligibility
Need-Based Aid

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• Awarded in recognition of student achievements
(academic, artistic, athletic, etc.)
• Applicants often compared against one another
• May or may not be renewable
• Not offered at every school
Merit-Based Aid

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• What College Gives Me The Most Free Money?
– Grants
– Scholarships*
• Unclaimed Scholarship Myth They Tell Their Child
– There s tons of FREE MONEY out there!!
• Focus on current student, not others next in line to
go to college, or current student s possible grad
study
*average 3rd party award = $500-$2500
How Do Parents Define Affordability?

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Calculating the Balance Due: Direct vs. Indirect Costs
Direct Costs: Billed from the
college:
– Tuition
– Fees
– Room
– Board/Meal Plan
– Health Insurance
Indirect Costs: Incidentals
throughout enrollment:
– Books
– Transportation
– Laptop
– Personal expenses

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Comparing Award Letters: Award Totals Vary
COA: $30,000 EFC: $5,000 Total Eligibility: $25,000
College A College B College C
Grants/Scholarships $18,000 $15,000 $10,000
Student Loans $5,500 $5,500 $5,500
Work-Study $1,500 $1,500 $1,500
Total $25,000 $22,000 $17,000
Unmet Need $0 $3,000 $8,000

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• Types of aid:
1. Grants/Scholarships
2. Work-study
3. Loans
• Not all financial aid award
letters are the same
• Financial aid could be from
federal, state & college
sources
• Formally accept all or part
of the financial aid award by
May 1st
This example is an estimate only.
Understand Your Financial Aid Award

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• Deadlines and application requirements are IMPORTANT
• Most applications are due in Feb or March, before the admissions
decisions are mailed
• Estimate information if necessary
• Use online options whenever possible
• Apply every year
• KNOW YOUR NUMBER!
– Stick to your family’s definition of affordability
Applying for Aid: What Parents Need to Know

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• Small Business Owner – $50,000 yearly income
• Family Size = 6
• Limited assets
• 1 child in college in 2014-2015
• Currently debating where to send his son:
• In state - $22,500; received $20,500 in aid
• Out of state - $43,000; received $43,000 in aid
• Q: Where should he send his son to college?
Case Study - Evan

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A ‘Full Ride’ Isn’t Always What It Seems
In-State Out-of-State Private
Grants/Scholarships $13,550 $18,280 $20,780
Student Loans/Work
Study
$7,000 $5,500 $7,800
PARENT LOAN $0 $20,056 $0
Total $20,550 $43,836 $28,580
Unmet Need $2,039 $0 $23,420

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– Saving for college means no financial aid.
– It s not worth saving for college if I can t
save the entire cost.
– Times are tough. I can t save at all.
Myths about saving for college

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Expected Family Contribution (EFC)
35
+ + + =
$
Parent
Income
0% to 47% of
adjusted gross
income minus
all taxes and
allowances
50% over
$6,130
20% of all
assets
3% to 5.6% of
nonretirement
assets
• 529 College
Savings Plans
• Brokerage and/or
mutual funds
• Coverdell
Education
Savings
Accounts
• Prepaid Tuition
Programs
• UGMA/UTMA
accounts
• Other savings
$
Parent
Assets
$
Student
Income
$
Student
Assets $ EFC

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An example. 4 in the family, 1 child in college:
Income & Asset Impact on EFC
Family A Family B Family C Family D
Income $40,000 $60,000 $60,000 $60,000
Assets $0 $0 $30,000 $60,000
EFC $934 $4,227 $4,227 $4,939
Difference $3,293 $3,293 $4,005
Based on 2014-15 Federal Methodology

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*Based on 10 years at
an interest rate of 7%.
This example is an
estimate only and
market conditions
may change.
Saving vs. Borrowing

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Strategies for Saving
• Start saving as early as
possible. Use time to your
advantage.
• Use automatic transfers
• Get the word out and let your
family and friends know they
may contribute or open a
plan up on behalf of your
child.
• Involve your child in the
process. There are great
savings tools for kids online.

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How Do Students Define Affordability?

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• Family size – 4
• Family yearly income – $12,887
• Kenny = only student in college 2011-2012
• Sought help in deciding where to go to college:
• In state - $4,500; received $5,500 in aid
• Out of state - $39,170; received $34,150 in aid
• Q: Where should he go to college?
Case Study - Kenny

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Strategies for College Affordability
• Use tools to identify
‘affordable’ schools
• Prioritize saving
• Apply for scholarships
• Use payment plan
• Graduate in fewer
semesters
• Choose a specific
major for its career
prospects
• Work while in school*
• Rent textbooks
• Live at home
• Understand your
student loan options
*don t sacrifice grades for
earnings – students are better
off going to school part-time if
working is priority or necessity

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• Online tool in graphic format
• Compare colleges:
o Average net price
o Graduation rate
o Loan default rate
o Median loan borrowing
• Coming soon: alumni
employment
College Scorecard
CollegeCost.ed.gov/Scorecard/

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Financial Aid Shopping Sheet
• Provides institution’s cost
and student’s financial
aid
• Intended to illustrate net
price (for comparison)
• School data: grad rate,
loan default rate, median
borrower debt
• 2nd page added for
2014-15 with glossary
• Used by 1,937 institutions

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FinancialAidToolkit.ed.gov
Financial Aid Toolkit
• New tool for counselors and educators
• Financial aid information, outreach tactics & resources
• New tools will continually be posted
New!

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Tools and Resources – DURING COLLEGE
• Q: How does your program support students
during college?
– Does your program offer alumni support?
– How is it working? Areas for improvement?
• Q: How do you support students during college?
– What resources/recommendations do you give
them?
– Do you just have contact with the student or do you
have contact with the parent as well?

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• Online college search tool
• General institutional info: admission requirements,
academic programs, graduation rate, average net price,
loan default rate
• Can save a search and return to it later
• Can compare schools side by side
• CollegeNavigator/gov
College Navigator

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• Online tool – on each institution’s website
• Provides personal, estimated net college price
• Questions about finances and academics
• Displays federal & institutional aid
• Merit-based aid may be calculated
Net Price Calculators

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• In-State College graduate
• $30,000 yearly income
• Family Size = 1
• $45,000 in FEDERAL student loan debt
• Currently wrestling with how to repay her loans:
• Standard repayment = $518/month
• Income-based repayment = $166/month
Q: Which repayment plan should she choose?
Case Study – Chelsea

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Loan Repayment Comparison
Standard
Repayment
Income-­‐Based
Repayment
Monthly
Payment
$518
$166
Repayment
Term
10
years
25
years
Total
Interest
$17,143
$65,854
Total
Paid
$62,143
$95,564
Source: Texas Guaranteed Student Loan Corporation (TGSLC)

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Tools and Resources – AFTER COLLEGE
• KNOW WHAT YOU OWE!
– www.nslds.ed.gov
– www.studentloans.gov
• Income Based Repayment – www.ibrinfo.org
• Public Service Loan Forgiveness –
www.studentaid.ed.gov
• Potential tuition reimbursement/loan
forgiveness employer benefit

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• Loan Counseling Demos: Entrance, Exit, & Financial
Awareness (FACT)
– Understand your loans
– Manage your spending
– Plan to repay
– Avoid default
– Make finances a priority
• Students with loans can log-in for personalized info
• Repayment Estimator without log-in
StudentLoans.gov
New!

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• Full of information on all federal financial aid programs
• Repayment Estimator
• 1-800-4-Fed-Aid
Studentaid.gov
New!

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Thank You
Questions? Contact Us:
Julie Shields-Rutyna
jshields-rutyna@mefa.org
617-224-4839
www.mefa.org
Kevin Fudge
kfudge@asa.org
617-728-4649
www.asa.org