Financing Your Students Education08


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Financing Your Students Education08

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