FINANCIAL AID STRATEGY                    presentsWhat every parent needs to know about financial aid             www.fina...
1.    College Statistics   TOPICS2.    College Facts3.    College Costs4.    Financial Aid5.    529 Plans6.    UTMA/UGMA7....
Our PhilosophyAn excerpt from a quote by the Honorable Learned Hand, U.S.Appeals Court Judge, Helvering v Gregory, 69F.2D,...
Sharing Our Knowledge• Our goal today is to  educate you as to the  rules of the game and  how to win.• The common theme a...
GPA, Class Ranking, SAT & ACT             Scores Matter•   All of the above have a major impact on both Merit Awards and A...
Ugma/Utma owned by the student•   Beginning with the 2009-2010 school year, student- and UGMA/UTMA-    owned 529 accounts ...
529 plans held by parents or other           non-beneficiary• A 529 account owned by a  parent for a dependent student  is...
College Statistics•   Nationwide there are 2533    accredited four year colleges.•   There are 1683 accredited two-    yea...
College StatisticsGraduation Rates for Undergraduates: •   Four years       35.3%       •   Public                 27.9%  ...
College FactsFinancial Aid Many families qualify for financial aid  even though they think they earn too  much money. Ma...
College CostsAnnual College Costs•   Average Public University - $15,000•   Average Private University - $30,000•   Many P...
College CostsFinancial Aid….the breakdown Need based financial aid includes:      -Grants (free money)      -Loans (pay i...
College CostsFinancial Aid – Need Based The Needs Based Formula      COA (Cost of Attending)    - EFC (Expected Family Co...
Effective Family Contribution The Importance of EFC   Qualifying factor for the majority of financial aid   Directly de...
Methodologies Used to Determine EFCThe Federal Formula (FAFSA)•   Used by 89% of all 2533 colleges•   99.7% of Public Coll...
The BreakdownEFC as determined by FAFSA   –   Parent contribution from income 22%-47%   –   Parent contribution from asset...
FORMS   FAFSA (Free Application for Student Aid)• The FAFSA form is used to collect the family’s financial  information (w...
FORMSABOUT FAFSA• Assesses liquid funds-cash,savings,checking accounts,C.D.s,money  market,stocks,bonds,mutual funds & ren...
Divorced/Separated ParentsClarifying the facts for students ofdivorced or separated parents:•   Question: Who’s informatio...
FAFSA Multiple Students• Parent contribution is split  equally• Does not require both  students to attend the same  colleg...
Forms / Institutional Methodology•   CSS Profile is used to collect the financial    data( www.collegeboard.com)•   Used b...
Sources of Financial AidOver 90% of all financial aid is from:• Federal Government• State Government• Endowment funds (pri...
Sources of Financial Aid/ Federal                 GovernmentStafford Loan:•   Student loan•   No credit check•   Deferred ...
LoansPlus Loans•   Parent loan•   No deferred payment•   Always unsubsidized•   10 year repayment•   Can be used toward EF...
Sources of Financial Aid / Private UniversitiesEndowment funds•    Often offer 70% -100% of familys need•    Offer the mos...
Sticker Shock•     A common mistake most parents make is allowing the “sticker price” to influence      their decision by ...
Appealing a Financial Aid AwardAppealing• The first award may or may not be  the last offer• Follow each school’s appeal  ...
Still Confused ?        http://www.financialaidstrategy.com
So Where Do You Go For Help• Well you could seek out assistance from your local  college financial aid office but that is ...
What you can expect to gain from a       confidential personal evaluation•    EFC Analysis•   Current & Best case scenario...
Contact Us1-800-698-1994Financial Aid Strategy (FAS)255 Park Avenue Suite 1104Worcester Ma. 01609http://www.financialaidst...
THANK YOUWe hope thispresentation hasbeen helpful and thatyou now have a bettergrasp of the collegefinancial aid process. ...
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What Parents need to know about College Financial Aid

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Our goal today is to educate you as to the rules of the game and how to win. The common theme all parents share is to send their children to the best college that they can afford in order to give their child a leg up in life without jeopardizing their retirement.

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What Parents need to know about College Financial Aid

  1. 1. FINANCIAL AID STRATEGY presentsWhat every parent needs to know about financial aid www.financialaidstrategy.com
  2. 2. 1. College Statistics TOPICS2. College Facts3. College Costs4. Financial Aid5. 529 Plans6. UTMA/UGMA7. GPA,SATs.ACT8. Expected Family9. Contribution (EFC)10. Understanding Financial Aid Forms11. Sources of Financial Aid12. Financial Aid Statistics13. Awards & Appeals14. Summation http://www.financialaidstrategy.com
  3. 3. Our PhilosophyAn excerpt from a quote by the Honorable Learned Hand, U.S.Appeals Court Judge, Helvering v Gregory, 69F.2D, 809(1934)…..“Over and over again the courts have said there is nothing sinister inso arranging ones affairs as to keep taxes as low as possible.Everyone does it, rich and poor alike and all do right, for nobodyowes any public duty to pay more than the law demands. Taxes areenforced exactions, not voluntary contributions. To demand more inthe name of morals is mere cant.”The same can be said about college financial aid planning in somuch as there is nothing sinister in arranging ones affairs assuch to keep tuition costs as low as possible. Everyone doesit, rich and poor alike. http://www.financialaidstrategy.com
  4. 4. Sharing Our Knowledge• Our goal today is to educate you as to the rules of the game and how to win.• The common theme all parents share is to send their children to the best college that they can afford in order to give their child a leg up in life without jeopardizing their retirement. http://www.financialaidstrategy.com
  5. 5. GPA, Class Ranking, SAT & ACT Scores Matter• All of the above have a major impact on both Merit Awards and Acceptance into the University of your Choice……•• A Helpful Hint regarding taking the SATs………..• Did you know that College Board reports only the “highest score” for each section of the SAT…?• Therefore if your student takes the SAT test 3 times but concentrates his/her studies to only 1 section at a time he/she will increase the likelihood of much higher scores …•• Hypothetical example….•• SAT #1 Math score 610 Critical Reading 0 Writing 0• SAT #2 Critical reading 625 Math 0 Writing 0• SAT #3 Writing 640 Math 0 Critical reading 0• College Board would report your SAT scores as 1875 http://www.financialaidstrategy.com
  6. 6. Ugma/Utma owned by the student• Beginning with the 2009-2010 school year, student- and UGMA/UTMA- owned 529 accounts are to be reported as parental assets, if the student files the FAFSA as a dependent and has to include parent assets and income. This treatment confers a financial aid benefit as the parental rate of 5.64% is considerably less prejudicial than the 20% rate on non-529 assets owned by the student. *This rule does NOT apply to private universities….. http://www.financialaidstrategy.com
  7. 7. 529 plans held by parents or other non-beneficiary• A 529 account owned by a parent for a dependent student is reported on the federal financial aid application (FAFSA) as a parental asset. Parental assets are assessed at a maximum 5.64% rate in determining the students Expected Family Contribution (EFC). *This rule does NOT apply to private universities http://www.financialaidstrategy.com
  8. 8. College Statistics• Nationwide there are 2533 accredited four year colleges.• There are 1683 accredited two- year colleges.• Four year colleges: 2533 • Public 639 (25%) • Private 1894 (75%) • Non-profit (80%)• Two year colleges: 1683 • Public 1061 (63%) • Private 622 (37%) • Non-profit (18%) Source: National Center for Education Statistics http://www.financialaidstrategy.com
  9. 9. College StatisticsGraduation Rates for Undergraduates: • Four years 35.3% • Public 27.9% • Private 50.2% • Private Non-profit 22.1% • Five years 52.3% • Public 48.3% • Private 61% • Private Non-profit 26.9% • Six years 57.1% • Public 54.1% • Private 64% • Private Non-profit 29.1% Source: National Center for Education Statistics http://www.financialaidstrategy.com
  10. 10. College FactsFinancial Aid Many families qualify for financial aid even though they think they earn too much money. Many families qualify for financial aid even though they have substantial equity – almost 90% of colleges don’t care. Many families can send their child to a private college for less money “out-of- pocket” than a public school. There are 75 colleges that meet 100% of a family’s financial need. http://www.financialaidstrategy.com
  11. 11. College CostsAnnual College Costs• Average Public University - $15,000• Average Private University - $30,000• Many Private Universities < $45,000• Annual costs increasing @ 6% per yr.• Direct costs: -Tuition and fees -Room and board• Indirect costs: -Books -Living expenses -Transportation http://www.financialaidstrategy.com
  12. 12. College CostsFinancial Aid….the breakdown Need based financial aid includes: -Grants (free money) -Loans (pay it back…with interest) -Work study (earn it) *Parents most often equate financial aid solely to grant (free) money, but work study programs and loans are also included. Merit based financial aid includes: -Grants/Scholarships only http://www.financialaidstrategy.com
  13. 13. College CostsFinancial Aid – Need Based The Needs Based Formula COA (Cost of Attending) - EFC (Expected Family Contribution) = Financial NeedExample: $41,000 (COA) - $16,000 (EFC) = $25,000 (NEED) http://www.financialaidstrategy.com
  14. 14. Effective Family Contribution The Importance of EFC  Qualifying factor for the majority of financial aid  Directly determines eligibility of family  EFC can sometimes be lowered IF you understand how the calculation works ahead of time Financial Aid Eligibility  You will not qualify for need based financial aid if....  Your EFC is greater than COA (cost of attendance) unless you receive merit based money and in some instances “research scholarships http://www.financialaidstrategy.com
  15. 15. Methodologies Used to Determine EFCThe Federal Formula (FAFSA)• Used by 89% of all 2533 colleges• 99.7% of Public College (637 of 639)• 86% of Private Colleges (1628 of 1894)The Institutional Formula(CSS Profile)• 11% of colleges (268 of 2533) require it• Local examples….Boston College, Boston University, Brandeis University, Bentley, College of the Holy Cross, Brown University• Highly Selective http://www.financialaidstrategy.com
  16. 16. The BreakdownEFC as determined by FAFSA – Parent contribution from income 22%-47% – Parent contribution from assets 2.6%- 5.6% – Student contribution from income 50% – Student contribution from assets 20%Other variables – # of household members – # of family members currently attending college http://www.financialaidstrategy.com
  17. 17. FORMS FAFSA (Free Application for Student Aid)• The FAFSA form is used to collect the family’s financial information (www.fafsa.ed.gov)• The U.S. Government Dept. of Education determines a family’s EFC• Used by all accredited Public & Private Colleges and Universities• It is required in order to qualify for Federal and State financial aid, grants and loans http://www.financialaidstrategy.com
  18. 18. FORMSABOUT FAFSA• Assesses liquid funds-cash,savings,checking accounts,C.D.s,money market,stocks,bonds,mutual funds & rental or other property• Does not assess Primary Residence home equity• Does not assess Retirement funds 401k, 403b.IRA’s• Everyone should submit a FAFSA form regardless of income & assets• WHY?• Qualification for loan programs• Insurance for appeals• Often required for Merit aid http://www.financialaidstrategy.com
  19. 19. Divorced/Separated ParentsClarifying the facts for students ofdivorced or separated parents:• Question: Who’s information goes on the FAFSA?• Answer: Whichever parent the student lived with the most during the base year defined as physical custody for 6 months+ 1 day• The base year is the year before high school graduation• Seniors 2012• Juniors 2013• Sophomores 2014• Freshman 2015• Assets are valued as of the date on which you sign off on and submit the financial aid form http://www.financialaidstrategy.com
  20. 20. FAFSA Multiple Students• Parent contribution is split equally• Does not require both students to attend the same college• The younger student typically qualifies for more need based financial aid• Student contribution is not split http://www.financialaidstrategy.com
  21. 21. Forms / Institutional Methodology• CSS Profile is used to collect the financial data( www.collegeboard.com)• Used by some (Primary) and 268 Private colleges to distribute endowment funds• In addition to (not in lieu of) the Fafsa form• Several Public schools began using this form beginning in the 2005-06 academic year• More assets are assessable• Primary residence home equity is considered• Younger siblings assets• Small business value• These assessment often result in an EFC which is “much higher” than the Fafsa calculation• Required by most Private schools• Asks for additional information• Typically an easier form to understand (1-2 pages) http://www.financialaidstrategy.com
  22. 22. Sources of Financial AidOver 90% of all financial aid is from:• Federal Government• State Government• Endowment funds (private colleges)STATS• Federal aid 66%• Endowment aid 19%• State aid 6%• Employer provided aid 6%• VA 2%• Private scholarships 1% http://www.financialaidstrategy.com
  23. 23. Sources of Financial Aid/ Federal GovernmentStafford Loan:• Student loan• No credit check• Deferred payments• Subsidized or unsubsidized• 10 year repayment• Entitlement program• Loan limits 5500/5500/6500/7500 http://www.financialaidstrategy.com
  24. 24. LoansPlus Loans• Parent loan• No deferred payment• Always unsubsidized• 10 year repayment• Can be used toward EFC “gas”Federal Work StudyProgram (FWS)• Colleges determine qualification• Pays part of student wages• Helps build work experience• Does not impact financial aid• Wages are subject to income tax http://www.financialaidstrategy.com
  25. 25. Sources of Financial Aid / Private UniversitiesEndowment funds• Often offer 70% -100% of familys need• Offer the most grant (free) money• Often offer merit-based aidFinancial aid statistics• Some schools meet 90% or more of need• Some schools meet 50% or even less of needExampleCOA= $45,000EFC= $14,000NEED=$31,000XYZ University meets 65% of need:$31,000(need) x 65%=$20,150(award)ABC University meets 45% of need:$31,000(need) x 45%=$13,950(award)XYZ University (unmet need) $31,000 x 35%= $10,850ABC University (unmet need) $31,000 x 55%= $17,050At XYZ University it would cost you:$14,000(EFC) + $10,850(unmet need)= $24,850At ABC University it would cost you:$14,000(EFC) +$17,050(unmet need)= $31,050 http://www.financialaidstrategy.com
  26. 26. Sticker Shock• A common mistake most parents make is allowing the “sticker price” to influence their decision by simply avoiding those schools that carry a high price tag.• Don’t let this happen to you! The example below illustrates the actual cost of attending a private “more expensive school” vs. attending a public “less expensive school”. *(2009 tuition costs)College of the Holy Cross COA=$43,181 EFC= $14,000 Need=$26,181 Holy Cross meets 100% of need of which 75% is Gift aid Gift= $19635 ($26,181 x 75%) Money you do not have to pay back Loan= $6546( 25% of $26,181unmet need) EFC=$14,000 Loan= $6546+ Total=$20,546 Actual out of pocket costsUniversity of Massachusetts Amherst COA=$19,246 EFC= $14,000 Need=$5246 UMASS Amherst meets 82% of need of which 40% is gift aid Gift = $1720 ($5246 x 40%) Money you do not have to pay back Loan=$3526 unmet need EFC=$14,000 Loan=$3526 Total=$17,526 Actual out of pocket costs *THE DIFFERENCE=$3020 more to attend Holy Cross at $43,181 vs. UMASS at $19, 246
  27. 27. Appealing a Financial Aid AwardAppealing• The first award may or may not be the last offer• Follow each school’s appeal procedure• Base appeal on situations related to “mis-awards” or “special circumstancesSpecial Circumstances• Loss of employment or dramatic reduction in parent’s or student’s income/assets• Reduction in child support or social security benefits• Financial responsibility for elderly parents• Unusual medical/dental expenses not covered by insurance http://www.financialaidstrategy.com
  28. 28. Still Confused ? http://www.financialaidstrategy.com
  29. 29. So Where Do You Go For Help• Well you could seek out assistance from your local college financial aid office but that is like going to the IRS for help to reduce your income taxes• Or you could ask your high school guidance counselor for their help but with a workload of hundreds of students do you really think they have the time or even the expertise to deal with your specific situation• Maybe even spend hours on end scouring the internet doing research and looking for answers• Better yet contact us……….. http://www.financialaidstrategy.com
  30. 30. What you can expect to gain from a confidential personal evaluation• EFC Analysis• Current & Best case scenarios• Federal & Institutional methodologies• Find out now exactly how much financial aid your student will be eligible for• Evaluation of assets• Impact of those assets on financial aid eligibility• College profile report• Learn your asset protection allowance• Identify which assets /income are affecting your EFC• Discuss strategic solutions to maximize the amount of financial aid which you can receive• Create an action plan for paying college costs• Discuss our fee structure which includes all of the above http://www.financialaidstrategy.com
  31. 31. Contact Us1-800-698-1994Financial Aid Strategy (FAS)255 Park Avenue Suite 1104Worcester Ma. 01609http://www.financialaidstrategy.com
  32. 32. THANK YOUWe hope thispresentation hasbeen helpful and thatyou now have a bettergrasp of the collegefinancial aid process. http://www.financialaidstrategy.com

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