PRESENTER USC Lancaster Kenneth T. Cole USC Director of Financial AidLANCASTER
Education as an Investment Calculating College Costs Reading an Award Letter Comparing Colleges by Costs and Awards Determining How Much You Should Borrow
Tuition Room Books & Total 4 Year Cost & Fees & Supplies Annual (assuming 7% increase/year) Board CostUSC Lancaster $6,252 $6,840 $1600 $14,692 $71,000(2 year Public)York Tech. $3,496 $7,200 $1,200 $11,896 NA(2 year Tech)USC Columbia $10,168 $6,556 $1600 $18,324 $81,000(4 year Public)Clemson Univ. $12,668 $7,228 $1090 $20,986 $93,000(4 year Public)Coker College $22,200 $6,950 $1,000 $30,150 $130,000(4 year Private)
Median Annual Salary for workers with ◦ No HS Diploma $13,000 ◦ High School Diploma $21,079 ◦ Associate’s Degree $30,937 ◦ Bachelor’s Degree $40,166 About $20,000 a year for a Bachelor’s DegreeSource:U.S. Census Bureaus annual survey comparing earnings with education levels. Based on 2005 year data.“Study Shows Higher Salaries for College Grads”, by Howard Schneider; Washington Post Staff Writer Thursday, March 15, 2007; 10:00 AM
What is the cost of education? ◦ 2 year degree $29,384 ◦ 4 year degree $81,000 ◦ Not considering what Financial Aid might pay What you could earn in 30 years? ◦ Without a School Diploma $632,370 ◦ With a 2 year Degree $928,110 ◦ With a 4 year Degree $1,204,498 What the degree is worth? ◦ 2 year degree $266,356 ◦ 4 year degree $491,128 College is an Investment that has a 600% return
Is 4 years of hard work worth $500,000 to you?
Notification: ◦ Paper Award Letter ◦ E-mail notification (with secure link) Most award information is now online You should: ◦ Read Awards Terms and Conditions ◦ Accept loans if you want them ◦ Complete additional forms: State Grant Affidavits Student Loan Promissory Notes and Entrance Counseling Work Study Job Applications and Interviews
4 parts ◦ Estimated Cost of Attendance (COA or Budget) ◦ Expected Family Contribution (EFC from FAFSA) ◦ Calculated Need ◦ Awards Award name 1st Term award Amount 2nd Term award Amount Total Award Amount Enrollment Status used for award (usually full-time) Total Term Awards Total Yearly Awards Summer is usually not included in initial award.
Need Calculation Cost of $17720Estimated Cost of Attendance $17720 AttendanceExpected Family Contribution $ 1000 Tuition & Fees $6500Need $16720 Books & Supplies $1320Total Awards* $14100 Room & Board $7100Unmet Need $ 2620 Transportation $1800Award Fall Fall Spring Spring Total Decision Amount Enrollment Amount Enrollment Award (Accept/ Status Status Decline)PELL $2300 12 (full) $2300 12 (full) $4600 naLIFE $2500 12 (full) $2500 12 (full) $5000 naSub $1750 12 (full) $1750 12 (full) $3500LoanUnsub $1000 12 (full) $1000 12 (full) $2000Loan* * Unsub loans can be used to “offset” the EFC. So, in this case only $1000 of the Unsub loan was counted against Need.
Give you an example of an “average” student’s costs and awards who is similar to you. It will ask: ◦ If you are filing a FAFSA ◦ Your age ◦ Your living arrangements ◦ Your state residency status ◦ Your marital status ◦ If you support any children ◦ Number of people in your Household ◦ Of those, the number attending college ◦ Family Income Range It will give you: ◦ Estimated Cost of Attendance (COA) ◦ Estimated Total Grants ◦ Estimated Net Price (COA-Estimated Grants) It does NOT tell you: ◦ What YOU are really eligible for ◦ What YOU will really pay
You must determine seven things: ◦ Actual Expenses ◦ Living/Transportation Expenses ◦ Cost of Attendance (COA or budget) ◦ Family Contribution (EFC) ◦ Need ◦ Total Aid Offered ◦ Unmet Cost (budget less scholarships and grants) ◦ Loans Remember: Tuition, Fees, Books and Dorms are usually only charged 1 semester at a time. You may need to calculate
Actual Expenses include: ◦ Tuition ◦ Fees ◦ Books ◦ SuppliesTuition Offset: ◦A scholarship/grant provided from institutional funds towards the cost of Tuition and Fees. ◦Large expensive colleges often offer an “offset” based on your academics and/or need. ◦These are usually Institutional awards that reduce the costs before other aid applies. ◦Tuition Offsets reduce Actual Expenses
Living/Transportation Expenses: ◦ Room (dorm; apartment, deposits, utilities) ◦ Board (meal plan, eating out, cooking, snacks) ◦ Personal (laundry, toiletries, clothing, furniture) ◦ Emergencies (car repairs, medical issues, clothing) ◦ Daily Travel (bus fare; bike; insurance, gas, parking) ◦ Vacation Travel (car, flights, gas, food)◦ Cost of Attendance (budget): ◦ Actual Expenses + Living/Transportation Expenses◦ Need: ◦ Cost of Attendance - Family Contribution = Need ◦ Need limits grants, work-study and subsidized loans
Total Aid Offered Scholarships (except Tuition Offsets) Grants (except Tuition Offsets) Loans (you have a choice to accept or decline these) Workstudy (student must work to earn this money) Cost of Attendance – Scholarships & Grants= Unmet Cost Unmet Cost is your actual “out of pocket expense” Options: ◦ Student Loans to pay one time fees, or keep in savings for monthly bills ◦ Working a Job to cover monthly bills and save for up coming big bills Family Support College savings plans, car insurance, gas money, food, etc…
Total Resources= Federal Pell Grant State Scholarships Scholarships from Sponsors (those not from colleges) Federal Loans ($5500 as Freshman) Savings Plans Cash and other assets For Each College, determine: Cost of Attendance – Total Resources = Unmet Cost of College Subtract Institutional Grants and Scholarships = Actual Cost Use that to compare and determine which college you can afford.
Will you need to borrow a student loan? Example of a fairly inexpensive school Tuition + Fees + Books + Supplies $6000 + $500 + $1200 + $120 Need Grants Scholarships Need Grants and Only Only ScholarshipsActual Costs $7,820 $7,820 $7,820LIFE - $5,000 $5,000 $0Pell - $5,550 $0 $5,550Lottery - $0 $0 $950Unmet Costs $0 $2,820 $1,320
Calculate your anticipate Loans ◦ Determine how much you must borrow each year ◦ Add 20% to the total 12% for cost increases 8% for accrued loan interest ◦ This is how much you will have borrowed at this college. ◦ The undergraduate loan limit is $31,000 ◦ You can also borrow private student loans, but it is discouraged.
Your debt-to-income ratio can be a valuable number -- some say as important as your credit score. Its exactly what it sounds: the amount of debt you have as compared to your overall income. Lenders look at this ratio when they are trying to decide whether to lend you money or extend credit. Monthly Debt payments/ Monthly income=DTI You want to keep your “DTI” below 36%
If you borrowed $31,000 in student loans, your monthly payments would be $400; and if you paid a typical house payment of $1000 and a typical car loan of $400 monthly; and if you wanted to maintain a DTI of no more than 36% (to keep good credit); then, you would need a monthly income of about $5000, or about a $60,000 annual income. Your student loan would therefore be about 51% of your annual income. Hence, we recommend...
Don’t borrow More in student loans than half of your anticipatedannual income for your career!
Research your career field: Career Starting Income Rec. Limit ◦ Attorney: $100,000 $50,000 ◦ Software Developer: $92,000 $46,000 ◦ Finance Manager: $85,000 $42,500 ◦ Construction: $70,000 $35,000 ◦ Mechanical Engineer: $65,000 $32,500 ◦ Operations Manager: $60,000 $30,000 ◦ Human Resources Manager:$60,000 $30,000 ◦ Bank Manager: $55,000 $27,500 ◦ Executive Assistant: $47,000 $23,500 ◦ Accounts Payable Specialist:$37,000 $18,500
Thank you for your attention! Contact Us!USC LancasterKenneth Cole BY MAIL: PO Box 889 Lancaster, SC 29721 BY PHONE: (803) 313-7068 Visit Us: 127 Starr Hall, Hubbard Drive BY WEB: http://usclancaster.sc.edu/A presentation like this is available at the USC Lancaster Financial Aid Office Website