Trends in F A for Counselors


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Trends in F A for Counselors

  1. 1. Trends in Financial Aid How to Help Families Prepare Carolyn E. Karno Manager, Early Awareness and College Planning
  2. 2. Basic Premise <ul><li>A college education can be assessable and affordable for the vast majority of students who complete a college preparatory program in high school. </li></ul>
  3. 3. Access and Affordability Issues <ul><li>College costs </li></ul><ul><li>Trends </li></ul><ul><li>Who is going to pay? </li></ul><ul><li>What amount of debt is considered reasonable? </li></ul><ul><li>How counselors can help </li></ul>
  4. 4. Tuition and Fees <ul><li>Tuition and fees in Connecticut range from approximately $2,800 - $36,870 </li></ul><ul><ul><li>Community Colleges $2,828 </li></ul></ul><ul><ul><li>Central CSC - $6,734 </li></ul></ul><ul><ul><li>UConn - $8,852 </li></ul></ul><ul><ul><li>Trinity - $36,870 </li></ul></ul>
  5. 5. Current Trends <ul><li>44% of students who enroll in college do not graduate after six years </li></ul><ul><li>Many students who don’t earn degrees are burdened with significant college debt </li></ul><ul><li>Half of all college freshmen are taking at least one remedial course </li></ul>Source: College Board Connection: April 2008
  6. 6. Current Trends – Public Institutions <ul><li>Admission to four year schools has gotten more competitive </li></ul><ul><li>Graduation rates at many state institutions need improvement </li></ul>4-Years 5-Years 6-years 2005 CT Graduation Rates Source: CT. Department Of Higher Ed. As reported To IPEDS, Spring 2006 Information on entering Freshmen in 1999* 40% 31% 11% CCSU 35% 28% 10% WCSU 36% 30% 12% SCSU 43% 39% 25% ECSU 72% 69% 50% UConn
  7. 7. Current Trends at Private Schools <ul><li>College costs continue to rise an average of 6% per year </li></ul><ul><li>Many elite private institutions are replacing loans with grants for low-moderate income families </li></ul><ul><li>Students at private colleges receive an average of $5 in institutional aid for every $1 received from the federal government* </li></ul><ul><li>Private colleges tend to have higher four, five, and six-year graduation rates </li></ul>Source: “Aid to College Students”; New York Times, 3/26/08
  8. 8. Current Trends – Merit Aid <ul><li>High income students tend to get the bulk of merit awards </li></ul><ul><li>From 1994 to 2004 </li></ul><ul><ul><li>Students from families in the top income quartile ($111,000 or more) received three times as much merit aid as students from the lowest quartile ($38,000 or less) </li></ul></ul>Source: The Chronicle of Higher Education, February 2, 2007, reporting on a study by Eduventures
  9. 9. Results of Trends <ul><li>Students are taking longer to graduate </li></ul><ul><li>Student borrowing is increasing </li></ul><ul><ul><li>Average debt for public college graduate is approximately $17,000 </li></ul></ul><ul><ul><li>Average debt for private college graduate is $28,000 </li></ul></ul><ul><li>Non-federal loans played the biggest role for students enrolled in private colleges with approximately one third of their loans coming from the private sector.* </li></ul><ul><ul><li>This did not include parent borrowing </li></ul></ul>Source: Trends in Student Aid 2007: The College Board
  10. 10. Who is Going to Pay? <ul><li>Sole responsibility of the parent </li></ul><ul><li>Sole responsibility of the student </li></ul><ul><li>Shared responsibility of the parents and student </li></ul>
  11. 11. How Much Will You Pay Toward Your Kids’ College? <ul><li>ABC World News Poll February 2007 </li></ul><ul><ul><li>Nine in 10 parents say it is likely that their children will go to a 4-year college </li></ul></ul><ul><ul><li>48% noted that they are behind in saving for it </li></ul></ul><ul><ul><li>Only two in 10 plan to pay for the entire cost </li></ul></ul><ul><ul><li>More than four in 10 are counting on scholarships and grants </li></ul></ul>ALL MOST SOME LITTLE/ NONE
  12. 12. Who is most likely to get gift aid? <ul><li>Most federal need-based aid goes to students in the lowest income quadrille </li></ul><ul><ul><li>The amount received can be greatly increased if the student qualifies for the Academic Competitiveness or SMART grants </li></ul></ul><ul><li>Merit aid tends to go to students who are the most academically/athletically, artistically competitive regardless of financial need </li></ul>Source: U.S. News and World Report, Paying for College Sept. 10, 2007
  13. 13. Before the College Search Begins <ul><li>Students should have an idea of the amount their parents are willing to contribute </li></ul><ul><ul><li>Will impact the list of potential schools </li></ul></ul><ul><li>For those students who plan to borrow, they should begin examining potential careers </li></ul><ul><ul><li>Can impact the amount of debt a student should have </li></ul></ul>
  14. 14. Are Students Concerned About Debt? <ul><li>According to a recent survey by Key Bank, students ranked “curriculum” as the most important factor when choosing a college. </li></ul><ul><li>Only 12% selected a school based on affordability </li></ul>51% 18%
  15. 15. Should Students Be Concerned? <ul><li>Although college graduates tend to earn more than high school graduates, almost 1 in 3 Americans in his/her twenties is a college drop out. </li></ul><ul><ul><li>What happens to them? </li></ul></ul><ul><ul><ul><li>Young adults 18-24 are most likely to hold minimum-wage jobs </li></ul></ul></ul>Source: Generation Debt: Why Now is a Terrible Time to be Young; Anya Kamenetz
  16. 16. The Impact of Changing Demographics <ul><li>In the 1970’s the nation’s largest private employer was General Motors </li></ul><ul><ul><li>Paid an average of $17.50 per hour in today’s dollars </li></ul></ul><ul><li>Today, the largest employer is Walmart </li></ul><ul><ul><li>Average pay is $8.00 per hour </li></ul></ul><ul><ul><li>Many of these young adults are part of the working poor </li></ul></ul>Source: Generation Debt: Why Now is a Terrible Time to be Young; Anya Kamenetz
  17. 17. What Students Should Know About Debt <ul><li>Students should know how to estimate how much debt is reasonable </li></ul><ul><ul><li>Most lenders advise students not to exceed 15% of their anticipated income </li></ul></ul><ul><ul><li>A good rule of thumb is that the manageable debt load for a student is about the same as a student’s anticipated starting salary </li></ul></ul>
  18. 18. Student Borrowing <ul><li>Students should borrow from the federal student loan program before looking at any alternative loans </li></ul><ul><li>Students should borrow as little as possible during their first two years </li></ul><ul><ul><li>Students who make it through the first two years are more apt to graduate and should be able to handle increased debt </li></ul></ul>
  19. 19. Student Loan Advisor <ul><li>Student Loan Advisor at </li></ul><ul><ul><li>Field of Study/Career: If you've selected Other , what is the current starting salary for your field? </li></ul></ul><ul><ul><li>Expected Graduation Year: </li></ul></ul><ul><ul><li>Educational Debt-to-Income Ratio: Can choose 10 to 15% </li></ul></ul><ul><ul><li>Loan Interest Rate: </li></ul></ul><ul><ul><li>Loan Term (Years):   </li></ul></ul><ul><ul><li>Calculate </li></ul></ul>
  20. 20. What Can Families Afford to Pay? <ul><li>One third rule </li></ul><ul><ul><li>Families should have saved at least one third of the anticipated cost of a child’s education </li></ul></ul><ul><ul><li>One third will come from current cash flow </li></ul></ul><ul><ul><li>One third will come from parent and student borrowing </li></ul></ul>Loans
  21. 21. Ways Families Pay for College <ul><li>Current cash flow </li></ul><ul><ul><li>Tuition payment plan </li></ul></ul><ul><li>Parent and student savings and investments </li></ul><ul><li>Inheritance or gifts </li></ul><ul><li>College savings plans (529) or ESA </li></ul><ul><li>Federal student and/or parent loans </li></ul><ul><li>Private education loans </li></ul><ul><li>Home Equity loans </li></ul><ul><li>Borrowing against a retirement account </li></ul><ul><li>Withdrawals from an IRA account </li></ul><ul><li>Credit cards </li></ul><ul><li>Second job </li></ul><ul><li>Postponing Retirement </li></ul>
  22. 22. How Counselors Can Help <ul><li>Integrate financial literacy into your program </li></ul>
  23. 23. How Counselors Can Help <ul><li>Make sure your students know the answers to the following questions: </li></ul><ul><ul><li>Did you complete the FAFSA? </li></ul></ul><ul><ul><li>What is your Family’s Expected Family Contribution? </li></ul></ul><ul><ul><li>Are you eligible for a Pell grant? </li></ul></ul><ul><ul><li>Are there any other financial aid forms required at the schools on your list? - DEADLINES </li></ul></ul><ul><ul><li>Are you eligible for an ACG? </li></ul></ul><ul><ul><li>Do you know what your parent(s) can contribute towards your education? </li></ul></ul>
  24. 24. Financing Questions <ul><li>What is the cost of attendance of the colleges on your list? </li></ul><ul><li>What percentage of need does each school meet? </li></ul><ul><li>Do you have a list of grants and scholarships that you will pursue? </li></ul>
  25. 25. Financing Questions <ul><li>Do you know how long it will take to pursue a degree? </li></ul><ul><li>Do you have any back-up schools on your list – schools you can afford with limited financial aid ? </li></ul>
  26. 26. Financing Check List <ul><li>Comparison of award letters </li></ul><ul><ul><li>Use College Cost Comparison Worksheet at </li></ul></ul>
  27. 27. CSLF Bottom Line Work Sheet
  28. 28. <ul><li>Bottom Line: Students need to know if borrowing is a wise investment for their future? </li></ul>
  29. 29. ? Questions