Seminar: Financing Your Education


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It’s no secret that postsecondary education is an investment, but do you find yourself asking how much it will really cost and wondering how you will pay for it?

We’ll help you determine the true cost of education after high school and go over all your options for payment – from scholarships and grants to financial aid and student loans. We’ll also cover the topic of timing – when you should begin looking into your options and what to expect from the application process.

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  • Thanks for having me!

  • I definitely want this to be a fun and interactive session, but there’s a lot of material to cover in this hour. I’ll do my best to tell some jokes, so if you could please laugh… that would be great. Like just then… that was a joke.

    If you see me glancing back at the clock a lot, it’s not because I have a hot date to get to … just making sure we stay on track for time.

  • <Run Animations>

    How many of you are considering college after high school?
    I’d imagine you’re all considering college, if you’re here… what grade level are you?

    What are some of the reasons why you make the decision to go to college? Why do you think college is a good idea?
  • Statistically, attending college appears to positively impact earning potential.

    This study, (conducted by the Bureau of Labor Statistics) shows that someone with a Bachelor’s degree earns about $30K more per year than someone with a High School diploma or equivalent.
  • It also appears that earning a college degree might protect you from job loss in tough economic times, according to this study by Georgetown University.

    This slide, (in the white segment) shows job losses from the recent recession (Dec 07 – June 10) and then the recovery (grey segment) thru March ‘12.

    Blue line = high school diploma or less, lost 5.6 million jobs in the recession and ANOTHER 230,000 in the recovery.
    Red line = Associates degree or some college education, who lost 1.75 million jobs in the recession gained 1.6M of those back in the recovery.
    Green line = Bachelor’s degree or better, who GAINED 187,000 job in the recession and another 2M jobs in the recovery.

    It’s certainly a valid choice for those of you who prefer to start getting a jump on your career versus going to school. There is absolutely nothing wrong with that. You just have to choose the thing that is right for you.

  • Clearly, it’s worth it, but I know you’ve all heard the bad news. The environment & economy that you’re entering college in IS very different than even 15 years ago, when I entered college. It’s more expensive to go to college, it’s more expensive to live (in general) AND there is uncertainty about the job market when you’re done. Don’t let that deter you!
    College can be a really fun & rewarding time in your life for learning, self-discovery, & making life-long friends & memories. After having gone thru it myself, I would never tell anyone in your place not to go for it, if that’s what you think is going to be best for you.

    The decision to go to college can by complicated by the financial commitment that’s involved. It can be stressful (as a family) to think of the expense, the debt piling up, and the unknown of when it comes time to repay. With some knowledge & preparation, you CAN make it happen.

    So, the question I hope to answer for you today is …How will you pay for it?? There are really three options when it comes to money that will fund a college education…

    <Animations 1-3>

    Saved Money – Your money that’s already in the bank
    Free Money - Money you’re given that you don’t have to give back!
    Borrowed Money – Someone else’s money that you have to pay back with interest

    I’m going to touch on each of these today but we’ll spend most of our time talking about the Money you will BORROW.
  • You might be wondering… where do other families get the money to pay for college?

    In this study done by Sallie Mae, looking at 100% of the total cost spent on a college education (which is represented by this pie chart)… how much of the cost would a typical family pay with saved money, free money, and borrowed money.

    Blue segments represent saved money, about 38%
    Purple segments represent borrowed money, about 27%
    Yellow& green segments represent free money, about 35%

    So, if your entire college education cost $10K, the average family in America would have $3800 saved, would borrow $2700, and would get $3500 from free sources like scholarships.

    If only a college education cost $10K!
  • As we look at these how you’re going to get the money you need to pay for college, there are four important steps to follow.

    PREPARE – Know your stuff & what you’re getting in to
    APPLY for financial aid
    RECEIVE your money
    REPAY your loan

    I’ll show you what I mean with the simplest option – SAVED MONEY
  • So, here are our four steps (prepare, apply, receive, repay) and now we’re talking about your saved money.

    <Animation 1>

    Saving is all about preparation!

    Get advice on how to save – I’ll come back to that.

    <Animation 2-4>

  • Don’t save by yourself! Work with someone who knows how to get the most from saving.

    Unfortunately, (because savings interest rates are so low right now) saving isn’t as simple as putting your money in the bank (although that’s an important first step).

    Let me give you an example…

    <Animations 1-5>
    $100 Initial Deposit
    + $50 per month
    @ .15% interest
    for 18 years
    = $11,049.16 (About $150 in interest)
  • Same exact example, just changing the interest rate (you’re contributing the same amount of money)

    $100 + $50 per month for 18 years @ 3% interest = $14,468.50 ($3800 in interest earned)

    Now, I added this message primarily for the parent seminar HOWEVER, no one would deny the importance of YOU understanding and having a plan for your financial future. Essentially, college is when you embark on your financial independence… the more you understand, the more in control you are of your financial future.

    Find someone you trust to work with who can help you understand how to save and create a plan for making your money grow. If you’re not already working with someone, most financial institutions in this area will have financial planners on staff, who are there to help set you on the right path to saving for whatever your goal is.

    So, that’s your saved money. Put it away early, often, and save smart!
  • Now, let’s discuss the “Free” money that you can get for college.

    Scholarship money will come from 3 sources:
    Private Organizations
    State Funding
    Institutional “merit” scholarships from your school

    How do you get the most from these sources?
  • <Animation 1>
    Do your best in school:
    The truth is, if you really want to “PREPARE” to be a good candidate to receive free financial aid (scholarships), you have to do well and apply yourself in school. That means, studying & getting good grades, participating in sports & extra-curriculars (whatever you enjoy), and staying out of trouble. I’m surely not the first person to tell you that!

    The goal is to make yourself someone that the college WANTS as a part of their student body. The more they want you, the more of a “merit” scholarship you’re likely to get., which is money you don’t have to pay back. You will receive a new financial aid package from your college each year, so doing your best doesn’t end in high school!

    Private organizations are also going to looking at your high school “resume” to determine their scholarships recipients. The more you’re involved, the better!

    <Animation 2 & 3>
    Look for private scholarship opportunities everywhere; first year and beyond. Some scholarships will be HEAVILY applied for & others not. IE: At Prospera, we offer 2 $500 scholarships… we had 10 applicants this year. Before taking the time to complete a scholarship app, you might see if you can find out how many applicants there were last year. That might give you a better feel for which you want to spend more time with.
  • OK… here’s our other steps for Scholarships (apply, receive, repay)

    APPLY - Fill out as many applications as you can!

    RECEIVE - Some scholarships will be paid directly to your school account, some right to you, and some to you after you show proof of paying for school. Some scholarships might require that you maintain a certain GPA, so watch that carefully!

    REPAY – Not needed!

  • Another source of fee money would be Federal grants, which is aid from the government that doesn’t have to be repaid.

    To apply for all: Must complete the FAFSA (Will talk about more later)

    Amount of grant depends on your financial need, cost of attendance, & enrollment status

    Pell Grants –Based on financial need
    Awarded only to undergrads

    FSEOG – Undergrad students with exceptional need (those with the lowest Expected Family Contribution)
    Not all schools participate in this program
    First-come, first served

    TEACH – Must complete specific course-work to become a teacher and then teach 4 years in a high-need field at an elementary or secondary school that serves low-income families

    Iraq & Afgh – For students not eligible for Pell Grant whose parent died as a result of service performed in Iraq or Afghanistan after 9/11
  • A final source of “free” federal aid money is Work-study – money you earn to pay for your education.

    Is this free money? That’s debatable b/c you will work to EARN the money while going to school.

    <Animation 1> With Federal work-study, your school is basically guaranteeing you a part-time job so that you can earn money to pay for expenses.
    <Animations 2 & 3> Since this money is paid to you as a paycheck, it’s more likely you will use this money for daily expenses like books, travel, etc and NOT toward tuition, room and board.

    Example of work-study might be working in the cafeteria, making copies in the registrars office, or working as a part of the campus initiative to call alumni for donations to the school scholarship program.

    <Animation 4> Important considerations…

    Any questions about the Saved or Free Money categories, before we start talking about the BORROWED MONEY!
  • Federal government is the main provider of financial aid for college.

    <Animations 1-3>
  • Why would you take a loan from the federal government instead of going to your local bank or credit union?

    <Animation 1>

    <Animation 2>
  • Let’s talk about some important ways that you can start preparing EARLY to get the most from your Federal Student Loans.

    The Department of Education offers some really amazing online tools to help you make an informed decision when it comes to the cost of college. These tools will help you to:

    <Animations 1-4>
  • Costs vary GREATLY from college to college, so it’s important to KNOW YOUR COLLEGE!

    One of the recommendations often made when you’re starting the process of determining which college is right for you, is to know how much each college will cost, and compare.

    When comparing college cost, keep in mind that college costs are not just tuition, housing, and food but also include books, school supplies, fees, equipment, room materials, travel, parking, and other misc expenses. So, how do you find out what this stuff is going to cost?

    Research can begin ANY TIME! If you’re a sophomore and thinking… I want to go to UW Madison… why not go and check it out?

    <Animation 1> College Affordability & Transparency Center run by the Department of Education offers 3 tools that I would highly recommend!
    College Scorecard
    College Navigator
    Net Price Calculator

    I’m going to show these sites… the next couple slides will give you the printed details.
  • College Scorecard: Find out more about a college’s affordability & value compared against national averages
  • College Navigator:

    Use this tool after you’ve narrowed down your choice to several
  • Also, it’s important to KNOW YOUR EMPLOYMENT OUTLOOK, because student loan payments should be a small percentage of your salary after you graduate.

    This site could be useful regardless of where you’re at in the process!

    If you’ve not decided what you want to do with your life you can search for careers with:
    The highest median pay for 2012
    Projected number of new jobs
    Projected growth rate
    Or, search by a particular job
  • In understanding student loans, it’s important to know how a loan works and some terms that you will hear often.

    Now, this is going to be a very simple explanation...

    <Animation 1>

    <Animation 2 & 3>
  • Subsidized & Unsubsidized are terms you will often hear when discussing student loans…

    <Animations 1 & 2>
  • So… let me give you a couple examples of how these all work together and what kind of costs they create.

    Let’s imagine you have a student attending college this fall.

    You take out a loan for $5000, which is disbursed (paid to) to your college in the fall.
    No origination fee. You get $5000 & the value of the loan is $5000.

    This loan is subsidized (DOE pays the interest while you’re in school and until 6 months after graduation)

    In January 2019, (when you have to start paying this loan back) you will owe $5000. The interest that you’re responsible for starts accruing in Jan 2019.

  • Again, imagine you have a student attending college this fall.

    You take out a loan for $5000, which is paid out this fall.

    1% origination fee. You get $4950 toward college expenses but the value of the loan that you have to pay back is $5000.

    This loan is unsubsidized (Interest accrues right away and you have to pay it). 5% interest on $5000 equals appx $21/month.

    You decide to make monthly interest only payments while in school. ($21 per month)

    Assuming the student attend for 4 years with a 6 month grace period after graduation… in January 2019, (when you have to start paying this principal back) you will have paid $1145 in interest and will owe $5000.
  • OK… last example… you have a student attending college this fall.

    You take out a loan for $5000, which is paid to the college in fall.

    1% origination fee. You get $4950 toward college expenses but the value of the loan that you have to pay back is $5000.

    This loan is unsubsidized (Interest accrues right away and you have to pay it). 5% interest on $5000 equals appx $21/month.

    You decide let that interest capitalize onto the principal and you make no interest payments while in school.

    <Animation 2 > After 54 months, that capitalized interest will have added $1258 to the principal of your loan

    <Animation 3> Assuming the student attends for 4 years with a 6 month grace period after graduation… in January 2019, (when you have to start paying this principal back) you will have paid $0 in interest and will owe $6258

    So, the capitalizing of that interest added another $100 to the cost of the interest over those 4.5 years. Allowing the interest to capitalize on an unsubsidized loan is the more expensive repayment CHOICE you can make with student loans.

  • UNDERSTANDING THE FINANCIAL AID OPTIONS available is an important step in preparing as well.

    The Federal government doesn’t allow anyone to borrow as much as they need, without setting limits.

    <Animations 1-3>
  • Now that you have a better idea of how those loans work and some of the terms, let’s talk about the specific options:

    First, is the Federal Perkins Loan

    <Animation 1>
    Not all college participate. Funds are awarded depending on financial need and availability of funds.

    <Animation 2-4>
  • Next, is the Federal Stafford Loan program
  • The Stafford Loan program offers both Subsidized and unsubsidized options.
  • Depending on your need, you may receive both subsidized and unsubsidized loans for the same enrollment period, but the total amount may not exceed the annual loan limit.
  • The government places limits on how much a STUDENT can borrow for their education. Also, federal student loans are awarded based on NEED, which not all families will qualify for.

    So, what if the amount of federal aid & scholarships awarded to the student isn’t enough to cover the cost of education?

    Using this simple example, you can see how different Federal student aid awards would first be subtracted from the annual cost of admission before determining the remaining balance that needs to be funded by the family.

    If the family doesn’t have this cash available, there are other options for borrowing, even when the STUDENT isn’t allowed to borrow anymore on their own.

  • The Federal government offers the DIRECT PLUS Loan
    <Run Animations>
  • I wanted to give one example of a private loan option that is comparable to the federal PLUS loan. I have some info available OR contact your financial institution.

    <Animation 1> Rate is based on creditworthiness. Consumer chooses whether they’d like the fixed or variable rate.

    Other benefits like Upromise account.

    Not saying this is a better option for you than the PLUS loan. IF you’re a parent considering a PLUS loan, I would recommend that you check something like this out. Depending on your credit score, you MIGHT qualify for a rate lower than the PLUS loan, with NO origination fee, and the benefits like Co-Signor release and 2% back in the Upromise account which are things you can’t get with the Federal PLUS loan.

    A Home Equity Line of Credit might also be a good option now b/c of low mortgage loan rates.
  • Getting close now to moving out of the preparation phase!

    It’s never too early to see what you’re aid you’re likely to qualify for…
    The Dept of Ed offers a calculator that would help you ESTIMATE the federal aid you will receive, even before you can really apply.

    To get an estimate on how much aid you will get, use
  • Applying is a fairly simple process: Complete the FAFSA

    <Animations 1-5>

    Complete the FAFSA even if you don’t expect to qualify for need-based grants and loans. You’ll also be considered for Unsubsidized Stafford & Direct PLUS Loans, which are not based on financial need.

    You will need some documents to assist in filling out the FAFSA:
    Driver’s License
    W-2 forms
    Federal income tax returns
    Bank statements
    The same documents for your parents

  • After you submit your FAFSA you will get a (SAR) Student Aid Report.

    <Animations 1 & 2>

    SAR will come by email in 3-5 days if you provided an email address with your FAFSA
    SAR will come by paper in 7-10 days with no email address.

    <Animation 3>
    Make corrections online at

    <Animations 4 & 5>
  • The EFC (Expected Financial Contribution) is used to determine your federal student aid.

    <Animations 1-4>
  • Getting closer now to accepting…

    <Animations 1-3>

    Get a breakdown of the direct expenses (tuition, room & board, and fees) and estimates of indirect expenses (travel, books, etc) for one year of college.
    Don’t take out more loans than you need to!

    <Animation 4>

    Know how much in scholarships and grants you’ve been awarded.
    Pay close attention to loan interest rates, terms, repayment amounts, & total.

    If your family ‘s share of college cost is still more than they can afford, consider a PLUS or private-sourced loan.
  • Disbursement is when you receive you receive the money from your loans, scholarships, and grants.

    <Animations 1-3>
  • Once damaged, credit rating takes time to repair!

    Don’t ignore Debt – It won’t go away!

    There are many ways to get help if you’re struggling (Deferrment, Forebearance, consolidation, & possibly loan cancelation)

    If you can’t make your payments, don’t ignore the problem! Contact your servicer immediately!

  • You choose your repayment plan based on the total you’ve borrowed after college is done & you can switch repayment plans depending on your circumstances.

    <Animations 1-4>

    While this all sounds really intimidating, the great news is that student loans offer very flexible and forgiving repayment options. Essentially, your loan servicer will work with you to make arrangements that work for you to repay them in some form, even If that isn’t what you’d initially agreed on when you started school.

    I’ll say again, the WORST thing you can do is to ignore this obligation and think it will go away. It won’t!
  • Again, it is NOT the loan servicers responsibility to track you down if you move or leave school. It is YOUR responsibility to work with them until the loan is completely repaid.
  • Seminar: Financing Your Education

    1. 1. May 27th, 2014
    2. 2. Presented By: Shonna Prickette – Training & Development Manager
    3. 3. INTRO Handouts are yours Sources are sited Resources used are cataloged on several slides at the end Ask questions! Goal of today is to prevent this feeling…
    4. 4. Source: Bureau of Labor Statistics; Current Population Survey, unpublished tables, 2012
    5. 5. Source: Carnevale, Anthony P., Jayasundera, Tamara, and Cheah, Ban. (2012). The College Advantage: Weathering the Economic Storm. Georgetown University: The Center on Education and the Workforce.
    6. 6. $$ SAVED MONEY $$ $$ FREE MONEY $$ Scholarships & Grants $$ BORROWED MONEY $$ Federal or Private Loans
    7. 7. Source: Sallie Mae; Go to: for this study & more information on how America pays for college.
    8. 8.  Start early, save whatever you can  It’s not too late to start now  Keep saving as long as you can  Change your spending habits  GET ADVICE ON HOW TO SAVE* No Need! It’s already yours! No need!
    9. 9. $100 = Initial Deposit + $50 = Monthly Deposit X .15% = Interest Rate X 18 = Years of contribution Balance ($150 gain)
    10. 10. $100 = Initial Deposit + $50 = Monthly Deposit X 3% = Interest Rate X 18 = Years of contribution Balance ($3800 gain)
    12. 12.  Do your best in school  SAT/ACT scores are important  Begin research early – spring junior year  Look everywhere & keep looking  Local businesses  State college funding programs  On-line Databases
    13. 13. Utilize your resources  Guidance Counselor  On-line Databases contain info on millions of scholarships worth BILLIONS of dollars     College Financial Aid Office
    14. 14.  Fill out as many as you can  Don’t miss the deadlines Based on terms of the scholarship No need! (the best part)
    15. 15. Federal Pell Grant Undergrad, up to $5,730 (2014-2015 award year) Fed Supplemental Ed Opportunity Grant (FSEOG) Undergrads with exceptional financial need, up to $4,000 TEACH Grant  Elementary or secondary school teacher  Must teach full-time in a designated teacher shortage area  4 year commitment, up to $16,000 Iraq & Afghanistan Service Grant  Parent passed away as a result of military service after 9/11
    16. 16. Guaranteed employment while you’re in school On campus – usually work for your school Off-Campus – usually private non-profit or public agency You will earn at least minimum wage Employer must pay you at least once a month, directly Important considerations:  Will work interfere with studies or sports commitments?  Do I want to work while in school?  Could I get a higher paying part-time job elsewhere?
    17. 17. What is a federal student loan?  Money from the government that’s repaid WITH INTEREST  Helps you pay for educations expenses at an eligible college, tech school, vocational school, or grad school Who gets aid?  Every student, regardless of age or family income  Must meet some basic eligibility requirements  14 MILLION students currently receive aid How much aid is available?  More than $150 BILLION is available every year
    18. 18. WHY FEDERAL STUDENT LOANS?  Lower interest rates  Flexible repayment options  Longer repayment terms  Tax-deduction of interest paid When considering your options to borrow for a college education, it’s recommended that you exhaust federal funds before private loans!
    20. 20. COLLEGE AFFORDABILITY & TRANSPARENCY CNTR  US Department of Education  1. College Scorecard 2. College Navigator 3. Net Price Calculator
    21. 21.  COLLEGE SCORECARD  Basic, quick comparison  Enter the name of the college to see:  Typical Cost  Graduation Rate  Loan Default Rate  Median Borrowing
    22. 22.  COLLEGE NAVIGATOR  In-depth analysis  Enter the name of the college to see:  Tuition, fees, net price, & financial aid  Faculty & enrollment numbers  Ethnicity & gender  Programs, majors, varsity athletic teams  Crime stats
    23. 23.  NET PRICE CALCULATOR CENTER  Links to Net Price Calculator on college site  Enter the following info for personalized analysis of your cost & an estimated financial aid package:  ACT/SAT scores, GPA, & high school rank  Student Tax info  Parents Tax info  Family Assets
    24. 24.  OCCUPATIONAL OUTLOOK HANDBOOK  Bureau of Labor Statistics  Guide to career info on hundreds of occupations  At, search by:  Highest median pay for 2012  Projected # of new jobs  Projected growth rate  Job Category
    25. 25. HOW DOES A LOAN WORK?  A loan is a borrowing agreement made between two parties, where one party lends money to another party who agrees to repay the borrowed money on specific terms, with interest.  A loan is made up of 2 components:  PRINCIPAL = Original amount borrowed  INTEREST /FEES = Expenses paid by the borrower Interest is calculated (compounded) monthly. With student loans, the interest can be paid right away, or CAPITALIZED (added to the unpaid principal).
    26. 26. WHAT IS A “SUBSIDIZED” STUDENT LOAN?  Subsidized =  US Dept of Ed. pays the interest while: o You’re in school ½ time o During your grace period o During periods of deferment  Unsubsidized =  You pay the interest during ALL periods: o Interest accrues as soon as the loan is disbursed o You can choose to pay the interest while in school o You can choose to capitalize the interest
    27. 27. WHAT IS A “LOAN ORIGINATION FEE”?  Basically, a processing fee  Some federal loans have origination fees  Fee is subtracted from the loan amount before disbursement o Your loan is $1,000 with a 1% origination fee o $1000 (amount borrowed) - $10 (1% origination fee) = $990 o $1000 is the amount you pay back
    28. 28. $5000 Principal - $0 Origination Fee $5000 Value of Loan X $0 Interest rate of 5% (Subsidized) Need to repay, starting Jan, 2019 Loan = No Origination Fee, 5% Interest Rate, Subsidized
    29. 29. $5000 Principal - $50 1% Origination Fee (you get $4950) $5000 Value of loan $21.21 Monthly Interest @ 5% (Unsubsidized) X 54 Number of mths in school & grace period What you’ve paid by Jan, 2019 Need to repay, starting Jan, 2019 Loan = 1% Origination Fee, Unsubsidized, Interest only payments @ 5%
    30. 30. $5000 Principal - $50 1% Origination Fee (you get $4950) $5000 Value of loan $1258 Total of 5% Interest compounded monthly; capitalized to the principal for 54 months What you’ve paid by Jan, 2019 Need to repay, starting Jan, 2019 Loan = 1% Origination Fee, Unsubsidized, Capitalized interest @ 5%
    31. 31.  HOW MUCH CAN A STUDENT BORROW?  How much you get depends on:  Financial Need  Cost of Attendance  Enrollment Status (F/T vs. P/T)  There are limits:  Annual (per year)  Aggregate (total)  The limits depend on:  Year in school  Dependant Status
    32. 32. FEDERAL PERKINS LOAN:  Awarded for exceptional financial need 5% Fixed Annual Interest Rate No Origination Fee $5,500 per year limit ($27,500 maximum)  Unsubsidized  You pay all the interest  Student is the borrower Loan is in student’s name  College is the lender
    33. 33. FEDERAL STAFFORD LOAN (DIRECT):  Largest Student Loan Program 3.86% Fixed Annual Interest Rate 1.072% Origination Fee  Student is the borrower Loan is in student’s name – School determines how much you can borrow  US Dept of Education is the lender
    34. 34. SUBSIDIZED STAFFORD LOAN:  Slightly better terms: Available to undergrad students  Must demonstrate financial need  US DOE pays the interest while in school UNSUBSIDIZED STAFFORD LOAN:  Available to undergrad & grad students  No need to demonstrate financial need You pay the interest during all periods
    35. 35. SUBSIDIZED & UNSUBSIDIZED STAFFORD LOANS:  BORROWING LIMITS:  YEAR 1 = $5,500 ($3,500 Subsidized)  YEAR 2 = $6,500 ($4,500 Subsidized)  YEAR 3 = $7,500 ($5,500 Subsidized)  BEYOND = $7,500 ($5,500 Subsidized)  TOTAL LIMITS = $31,000 ($23,000 Subsidized)
    36. 36. WHAT ABOUT THE REST? $12,000 = Annual Net Cost of Attendance - $2,000 = Perkins Loan - $4,500 = Stafford Loan - $1,000 = Private Scholarships - $1,000 = Work-Study = $3,500 = REMAINING BALANCE
    37. 37. FEDERAL DIRECT PLUS LOAN:  Used to borrow the remainder of cost  Parent is the borrower Approval based on credit history  No need to demonstrate financial need 6.41% Fixed Annual Interest Rate 4.288% Origination Fee Borrow up to 100% of cost of attendance  No aggregate limits  Unsubsidized  US Dept of Education is the lender  Loan cannot be transferred to student
    38. 38. SALLIE MAE SMART OPTION STUDENT LOAN:  Used to borrow the remainder of cost  Student/Co-Signor is borrower Approval based on credit history  No need to demonstrate financial need 5.75-12.88% Fixed Annual Interest Rate 2.25-9.88% Variable Annual Interest Rate NO Origination Fee Borrow up to 100% of cost of attendance – No limits  Unsubsidized  Sallie Mae is the lender  Co-Signor release = Loan can be transferred to student
    39. 39.  How much federal aid will we receive?  Must complete Free Application for Federal Student Aid (FAFSA) for official eligibility   Early eligibility indicator  For anyone not ready to file an official FAFSA  Provides an estimate
    40. 40.  The FAFSA determines your eligibility for federal loans, grants, work-study, & some state & institutional aid.  It’s the ONLY way to apply for federal student aid  It’s REQUIRED if you want federal financial aid  Completed online at  Complete ASAP after Jan. 1 of the year you’ll start school b/c aid might be awarded as first-come, first-served
    41. 41.  The Student Aid Report (SAR) summarizes the info you provided on the FAFSA & will contain your Expected Family Contribution (EFC).  SAR is returned 3-10 days after FAFSA is submitted  Review the SAR carefully to make sure it’s correct  Colleges listed on your FAFSA will also receive your SAR  From this point, stay in contact with your college’s aid office as they will put together your aid package
    42. 42. Expected Family Contribution (EFC) is calculated based on the info you reported on the FAFSA, according to a legal formula.  EFC will appear on your SAR  Income, assets, family size, & # attending college are considered in the formula  EFC is used to determine need for federal student aid • Cost of attendance – EFC = Financial Need
    43. 43.  EVALUATE YOUR AWARD  After admissions letter arrives (April), college will put together an award package & send an award letter.  Award letter shows COMPLETE aid package  Grants, scholarships, work-study from all souces  Not obligated to accept all aid offered  Evaluate the award, your need, & compare it to other colleges. Then decide which to accept.
    44. 44.  WHAT CAN YOU USE STUDENT LOAN MONEY FOR?  To pay for education expenses at the school that awarded your loan. Contact the financial aid office with questions.  Tuition  Room & Board  Supplies & Equipment  Child care expenses  Transportation  Personal PC
    45. 45.  ACCEPT YOUR AID PACKAGE  Sign the award letter and return it to the school for processing.  The financial aid office at your college will guide you thru the paperwork which includes signing a promissory note, (you PROMISE to repay your loans according to the terms)  College is required to provide entrance counseling
    46. 46.  DISBURSEMENT  Most student loan funds will go directly to the college or come directly from the college  You will be paid thru the college in at least 2 installments (semesters)  College will use aid money first to pay for tuition, fees, room, board, and other expenses on your student account. If any aid money remains, you will receive the funds by check
    47. 47.  CANCELLATION  Before loan money is disbursed, you may cancel all or part of your loan by notifying the school.  After the loan is disbursed, you may cancel all or part of the loan within certain time frames  Promissory note will explain procedures for cancelling loans
    48. 48.  MOST STUDENT LOANS HAVE GRACE PERIODS  Not REQUIRED to make payments while enrolled in school  Grace periods allow you to get financially settled: • Perkins = 9 months • Stafford = 6 months • PLUS = No grace period REMEMBER: Unsubsidized loans start to accrue interest as soon as the loan is disbursed which will be capitalized onto the principal, unless you choose to pay the interest charges while in school!
    49. 49. Student loans are LEGAL obligations! Student loans are borrowed money (in your name) that MUST be repaid just like car loans & home mortgages. You MUST repay a student loan ever if your circumstances become difficult. Non-payment of student loans has serious consequences (legal default on a loan) and will negatively affect your credit rating.
    50. 50.  Standard Fixed monthly payment, $50 minimum, 10-year term  Graduated Monthly payment starts low & increases, 10-year term  Extended Fixed or graduated payments Must have more than $30,000 in Direct Loans 25-year term  Income Sensitive or Contingent Income-based repayment options
    51. 51.  Loan servicer will give you a repayment schedule: When first payment is due Number & Frequency of payments Amount of each payment  You will be notified if your servicer changes  The loan is YOUR responsibility! Make payments regardless of receiving billing notices You must pay even if you aren’t getting reminders Notify your loan servicer when you change your address
    52. 52.  National Student Loan Data System:  Dept of Ed’s central database for student aid Access & retrieve your student loan data  Repayment Estimator 
    53. 53.  FINANCIAL AID PROCESS INFOGRAPHIC   “FUNDING YOUR EDUCATION – Guide to Federal Student Aid” Document   Checklists to begin preparing from Elementary school to 12th grade 
    54. 54.  Scholarship Opportunities: – – –  College Scorecard, College Navigator, and Net Price Calculator –  Labor Statistics Occupational Outlook Hndbk –
    55. 55.  Free Application for Federal Student Aid – –  Sallie Mae Smart Option Student Loan – Contact your financial institution  National Student Loan Data System –  Repayment Estimator –