Transcript No Slide Title

Financial Aid
for College
Laura Sutherland
Assistant Director of Financial Aid
Northwestern University
Tonight’s Program

Behind the scenes: How a
college can help you

What exactly is financial aid

The financial aid “language”

Application process in a nutshell

How eligibility is determined and
how it can vary from school to
school

Other resources
The Relationship Between Financial Aid,
Admissions, and the HS Counselor
The Financial Aid Office
Be
committed to removing financial barriers
Be
an advocate for the student at all levels
Educate
students and families through quality
consumer information
Provide
services that do not discriminate
Maintain
the highest level of professionalism
“A Partnership”
 To
the extent they are able, parents have primary
responsibility to pay for their dependent children’s education
 Students
also have a responsibility to contribute to their
educational costs
 Families
should be evaluated in their appropriate financial
condition
A
family’s ability to pay for educational costs must be
evaluated in an equitable and consistent manner,
recognizing that special circumstances can and do affect its
ability to pay
Choosing a College
What college would be the best fit for you?
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Program
Location
Size
Mix of Students
Academics
Extracurricular
Facilities
Financial
Considerations
College Costs*
2009-2010
Two Year Public
 Four Year Public
 Instate
 Out-of-State
 Four Year Private

$14,285
$19,388
$30,916
$39,028
*Source – Trends in Higher Education Series 2009, College Board
What are the costs?
Tuition & Fees
Room & Board
Transportation
Books & Supplies
+
Miscellaneous Living Expenses
Cost of Attendance (COA)
What is Financial Aid?

Scholarships

Grants

Student Loans

Work-Study
Financial aid is available from
three major sources:
 U.S. Department of Education
The federal agency that provides college funding in the form
of grants, scholarships and loans.
 States
Most states have agencies that administer state scholarship
and grant programs, college savings and prepaid tuition
programs, and loans. (In IL it is ISAC, the Illinois Student
Assistance Commission)
 Colleges and Universities
Schools offer their own scholarship, grant, work-study and
loan programs, with each college setting its requirements.
Two Categories of Aid
Merit-based
Need-based
Merit Scholarships
Based on student achievements:

Academic

Extracurricular
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Talent
Types of Need-Based Aid
 Gift
aid
 Self-help
aid
Gift aid vs. Self-Help
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Scholarships
Grants
Work-Study
Loans
gift aid
gift aid
self-help aid
self-help aid
These funds may be merit-based,
need-based, or non-need-based.
Private Financial Aid
Sources

Private Foundations

Civic Organizations

Scholarship Search Services

High School College Counseling Office
Who Receives Private
Scholarships?

2.3 million recipients
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$3.3 billion awarded
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$2,000 average award
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7% of undergraduates
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3% of total aid
Scholarship Scams
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Consultants
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Seminars
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Warning Signs
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WWW.FINAID.ORG
So . . . how does the
process begin?
To apply for all federal and state aid,
families must complete the...
Free Application for Federal
Student Aid (FAFSA)
The FAFSA collects financial data such as
income and asset equity, and student
and family demographic information. It
is used to determine the student’s
eligibility by calculating an “index” #
called the EFC (Expected Family
Contribution)
Overview of the FAFSA
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2010-2011 available January 1
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7 Steps
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Submit it soon after January 1
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FAFSA4caster
FAFSA4caster
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http://www.fafsa4caster.ed.gov/
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Instantly calculates a student's estimated eligibility for federal
student aid and can be completed at any time
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Automatically fills in half the questions on the FAFSA, making it
easier for families to complete the real form during the student's
senior year
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Calculations for 12 different school scenarios, including four-year
and two-year schools, public and private, in-state and out-of-state
residency, and on-campus and off-campus housing.
Three Ways to Access the
Free Application for Federal Student Aid

FAFSA on the Web
www.FAFSA.ed.gov
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PDF FAFSA
www.Federal StudentAid.ed.gov
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Paper FAFSA
1-800-4-FED-AID
FAFSA on the Web
(FOTW)
 Available January 1
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English or Spanish
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Skip logic and online editing
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Electronic signature
www.pin.ed.gov
Student
needs
one
----Parent
needs
one
----Each
one is
different
PIN E-mail Notification
Supplemental Financial Aid
Applications
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The College Scholarship
Service (CSS) Financial Aid
PROFILE
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A college’s own
application for financial
aid
Information from
noncustodial parent
Federal tax returns
Other
CSS/Financial Aid PROFILE
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Administered by the College Board,
required by many private institutions
Similar to FAFSA
Additional questions about assets and
expenses
www.profileonline.collegeboard.com
Special Situations
Examples of items not on the FAFSA:
 income change (work, child support, SSBs, etc)
 large healthcare costs
 some educational costs
 support of extended family
 significant non-elective home repairs
 consideration will vary from school to school
 check with financial aid office for “how to”
 provide #s and explanation, and daytime phone
Expected Family
Contribution

Your Expected Family Contribution or
EFC is established by the federal
processor.

Your EFC is the amount of money
you and your parents can be
expected to contribute to your
college costs each year.
Expected Family
Contribution
Contribution
 Contribution
 Contribution
 Contribution

from
from
from
from
Parental Income
Parental Assets
Student Income
Student Assets
What are Parent Assets?
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real estate (other than
parents’ home)
trust funds
UGMA and UTMA
accounts
money market and
mutual funds
certificates of deposit
stocks and stock options
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bonds and other
securities
Coverdell IRAs
529 plans owned by
parents
installment and land
sale contracts
commodities, etc.
What are the Costs?
Tuition and Fees
Room and Board
Transportation
Books and Supplies
+Miscellaneous Living
Expenses
=Cost of Attendance
The college determines eligibility
for financial aid by:
Cost of Attendance
-
Expected Family Contribution
= Financial Need
The financial aid award
letter or “package”
Will contain a combination of:
• scholarship, grant, loan and work-study funds
Why might “packages” be different?
• cost of attendance
• scholarship criteria and availability
• institutional philosophy and funding
• federal funding levels
Comparing Financial Aid Award Letters
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List the assumptions used to determine the
COA (such as enrollment status, housing,
fees, books, travel, etc.)
Clearly state what your family contribution
is as well
Return the signed award letter
to the college, if required.
Meet the
deadline!
Financial Planning
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Estimate total costs for length of program
Develop a plan to fund and finance
 How will you pay?
If you need to borrow understand your options
 Educational loans, personal loans, home equity
loans
 Know the terms (read the fine print)
Apply to at least one “safe” school
 Academics and affordability
Federal Stafford Loan
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Low-interest loan the student takes out on
his/her own behalf
The FAFSA must be completed
Interest Rate
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Varies depending on subsidized or unsubsidized
Repayment begins 6 months after the student
graduates or falls below half-time enrollment
Freshmen may borrow $5,500
Federal Stafford Loan
(differences between 2 types)
Subsidized
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Need-based
Federal government pays
interest while student is in
college and during
grace/deferment periods.
2009-2010 5.6%
2010-2011 4.5%
2011-2012 3.4%
Unsubsidized
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Not based on need
Payment of interest is
always student’s
responsibility
2009-2010 6.8% (this will
not change)
Federal PLUS Loan
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Parent is the borrower
Fixed interest rate, 8.5%
Maximum loan amount is the cost of
attendance minus all financial aid
received for the student
Approval subject to a credit check
Repayment begins within 60 days after
the loan is disbursed
Private Loan Programs
Credit checks
 Co-signer
 Higher interest rates
 Borrow cautiously

Loan Programs
When evaluating loan options, consider…
Source
of
Loan
Subsidized
vs.
Unsubsidized
Interest
Rate
Repayment
~
Grace
Period
Know
… what you’re signing; what you promised; where your money goes; your
loan limits; your rights and responsibilities; loan repayment, deferment &
forbearance options; how to manage debt; “Entrance & Exit Counseling”
requirements; the consequences of default; and who to contact.
More Ways to Finance Your
Education
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Tax Benefits for Education – Publication
970
Hope Credit
Lifetime Learning Credit
Student Loan Interest Deduction
More…
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IRA Early Withdrawal Provision for Education
 No penalty for early withdrawal of IRA funds to pay qualified
educational expenses.
Education IRA
 Type of IRA in which contributions are made until the
beneficiary reaches the age of 18.
Prepaid Tuition Programs
 Tuition costs are rising at a faster pace than inflation so
starting this program at any time can help reduce costs.
529 Plans
 Allows students of any age and their families to save money
tax-free under Section 529 of the Internal Revenue Code.
Plans vary from state to state.
Where to Look for

Your High School
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A College’s Financial Aid Office
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The Internet

www.collegezone.com

www.college.gov

www.finaid.org

www.studentaid.ed.gov
REMEMBER!
Plan ahead
 Apply early
 Read CAREFULLY
 Meet deadlines
 Keep copies

10 tips on Financial Aid
1. Every student should apply for aid —regardless of family income. The
financial aid office needs the Free Application for Federal Student Aid, or
FAFSA, to process a loan, even for students who don't qualify for needbased aid. And, if a student's financial situation changes, the financial aid
office cannot offer aid without that form.
2. Deadlines matter. Students have to apply for aid each year, and they must
do so on time. First-year students need to understand that different colleges
may have different deadlines.
3. All aid applications are not the same. All colleges require the FAFSA.
About 250 colleges require the CSS/Financial Aid Profile, a form that asks
for more information than is included on the federal form. State grants and
outside scholarships may also require additional paperwork.
4. Students should know what colleges mean by "family contribution."
This figure is what a college determines a family can contribute based on
the FAFSA, sometimes combined with information from a CSS/Financial Aid
Profile. The dollar amount is not necessarily what the family will pay, since
students don't all spend the same amount of money on items like housing. It
could also vary from college to college.
5. Students should be aware of what is included in the cost of
attendance. This figure includes tuition, fees, housing, and indirect costs
like books, supplies, and transportation. The actual cost paid for some of
these items will vary from student to student.
10 tips on Financial Aid
6.
Eligibility and need aren't always the same. If a student meets the criteria
for a federal Pell Grant, the college has to award it. But the college may
determine that a student who is eligible for a Pell Grant on paper doesn't
demonstrate the level of need to get other institutional need-based aid.
7. There is a big difference between need-based and merit aid. Merit aid is
almost always tied to academic performance, and some is tied to specific
criteria like having a certain major or being from a certain part of the
country. Need-based aid is determined solely from families' documented
financial situations.
8. There are different forms of aid. Students can receive federal, state, and
institutional aid. Aid can come in the form of grants, loans, or work. And
yes, financial aid offices view loans as a form of aid.
9. Award letters vary. Be sure to note whether aid is in the form of grants or
loans and whether it is renewable from year to year.
10. Award letters can be appealed. If a family knows or expects its financial
situation will change, it should talk it over with the financial aid office. Most
offices can help a family with special circumstances—an issue many expect
to see happen more in a year like this one.
Questions