Transcript Things You Should Know About Financing College

A College Education Is
Affordable
Overview
 Need-based
financial aid
 Merit-based scholarships
 Alternative financing
 An insider’s list of consumer tips
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Primary responsibility to pay falls to the family
Families contribute to the extent they’re able
Income and assets reflect financial strength
Similar treatment for similar circumstances
Expect more from those with greater resources
Unusual family circumstances considered
 Make
education equally accessible to students
 Enable student to apply to first-choice college
 Attend college based on best fit
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Federal formula
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Institutional formula
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At school’s discretion:
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IRS Data Retrieval
◦ FAFSA (Free Application for Federal
Student Aid)
◦ CSS/Financial Aid PROFILE
◦ Noncustodial Parent PROFILE
◦ Tax returns and W-2 forms
◦ Institutional Application
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The ability to move federal income tax
data from the IRS database to the FAFSA
Can move the data at initial application
or as an update/correction after FAFSA
filed
Can move parent, student or both sets
of tax data
Last completed tax year’s return(s) must
be on file for IRS to retrieve data
Some tax filing situations cause Data
Retrieval to not be usable
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New Federal definition:
◦ “Beginning with the 2014-15 FAFSA,
dependent students will be required to
include on the FAFSA income and other
information from the dependent
student’s legal parents (biological or
adoptive) regardless of the parents’
marital status or gender, if those
parents live together.”
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COST OF EDUCATION
Family contribution
Estimated financial assistance
from outside resources
.
= STUDENT’S FINANCIAL NEED
 Tuition
and fees
 Room and board
 Books and supplies
 Transportation
 Miscellaneous
personal expenses
 Health
insurance
 Computer
 Special needs
 Child care expenses
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Students can be self-supporting IF:
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They’re 24 years of age
They’re married
They’re pursuing a graduate degree
They’re in the Armed Forces or are a veteran
They have a child and provide more than 50% support
They’re orphaned or are/have been a foster child
They’ve been emancipated by a state court
They have a court-appointed legal guardian
They’re homeless or at risk of being homeless
 Parent
contribution from
income
 Parent contribution from
assets
 Student contribution from
income and assets
Total Income
Available
Income
Allowances
Taxed Income
_
Portions of income
removed from
calculation
=
?
Assets
Assessment
rate
Savings,
Investments,
Real Estate,
Business value,
Home Equity
(
Available
Assets
Allowances
_
Portions of Assets
Removed from
calcualtion
) x
3% to 12%
=
?
Total Parent
Contribution
Available
Income
Assessment
Rate
Available
Assets
(
+
) x
22 – 47%
=
Total Parent
Contribution
# in college adjustment
÷
1-?
=
Parent
Contribution
per Student
Portion of
Student Income
Total income
minus any
allowances
Student
Contribution
Portion of
Student Assets
+
=
Family
Contribution
(EFC)
Parent
Contribution
Per Student
Student
Contribution
+
=
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Three real Davidson families:
◦ Family A’s income=$135,000
◦ Family B’s income =$87,000
◦ Family C’s income = $61,000
All have roughly a $10,000 EFC
How might this occur?
◦ Hint: Remember the EFC formula variables
we have just discussed
Funds from sources other than the
college/university
◦ Clubs and civic organizations
◦ Churches
◦ Employers
◦ Foundations
 Certain types of benefits(military)
 Private gifts
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 Can…
◦ Meet unmet need
◦ Replace loans
◦ Replace student employment
 Can’t…
◦ Replace EFC in need-based
award
Costs (variable)
Personal Expenses
Transportation
Books and Supplies
EFC
Room and Board
Need (variable)
EFA
Student Contribution
Tuition
_
Parent Contribution
_
Estimated Financial
Assistance from
Outside Resources
=
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Gift aid
 Grants
 Scholarships
Self-help aid
 Employment
 Student loans
Davidson
Private #1
Private #2
Public U.
Total Cost
$57,608
$60,500
$42,000
$25,000
Family Contribution (EFC)
$10,000
$10,000
$10,000
$10,000
Financial need
$47,608
$50,500
$32,000
$15,000
$0
$0
$12,000
$0
$45,508
$44,500
$10,000
$10,000
$0
$4,000
$5,500
$3,500
$2,100
$2,000
$2,000
$1,500
$47,608
$50,500
$29,500
$15,000
$0
$0
$2,500
$0
$10,000
$10,000+loan
+interest
$12,500+loan
+interest
$10,000+loan
+interest
Merit aid
Need-based grant
Student loan
Work Study
Total aid
Unmet need
Total paid
 Institutional
merit-based aid
 Need not considered
 Procedures for being considered vary
◦ Nomination
◦ Scholarship application
◦ Admission application
 Awards
made by athletics
department
 Annually renewable
 Can be full scholarships
◦ Tuition, fees, room, board, books
 Can
be partial scholarships
◦ Any amount less than full
Is the scholarship renewable?
 If so, what are the
requirements for renewal?
 Will the scholarship affect
need-based aid eligibility?
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 Post
9/11 GI Bill benefits –
transferable to the student
 Employer benefits
 School awards
Pell Grant
 Supplemental Educational Opportunity
Grant (SEOG)
 Iraq and Afghanistan Service Grant
 Teacher Education Assistance for
College and Higher Education (TEACH)
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Federal Direct Stafford Loans
 Federal Direct PLUS Loans
 Federal Perkins Loans (at some
institutions)
 Private education loans
 Other
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 Summer/academic
year
student employment
 529 savings plans, other
savings plans
 Payment plans
 Need-blind
vs. need-sensitive
 Early Decision/Early Action
 Differential/preferential
packaging
 Deadlines are important
 May 1: National Candidate’s Reply
Date
 Net
Price Calculator
◦ Found on individual college websites
◦ Federally mandated
◦ Family enters income and asset data
◦ Net price based on one-year
◦ Calculators differ by institution
 Avoid
scholarship programs
and search services that
charge fees
 Financial aid consultants?
 Bargaining/negotiating?
 Know your loan types and
terms
Appeal processes
 Institutions may choose to consider
individual family circumstances at
different times throughout year
 Might affect a family’s funding
options
 Might not affect EFC
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 Income
driven process
 Net Price Calculator
 Components of aid packages
 Cost Difference
 Reapply annually
 Best fit for the student
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www.davidson.edu
School Web sites
Federal government
www.fafsa.ed.gov
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The College Board
www.collegeboard.org
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College Foundation of North Carolina
www.CFNC.org
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SmartStudent Guide to Financial Aid
www.finaid.org
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Scholarship Web sites
Questions ???
Financial Aid 101
A College Education Is
Affordable