Financial Aid 101 welcome College Planning Center College planning guidance and education financing.

Financial Aid 101welcome

College Planning CenterCollege planning guidance and education financing

Agenda

• Financial aid overview

• Terminology

• Types of financial aid

• Applying for financial aid

• Q&A

History of financial aid

• 1960s – Congress

• “Parents are responsible for the education of their children to the extent possible.”

What is financial aid?

• A source of money that helps students and/or parents fund a college education

• Grants

• Scholarships

• Student employment

• Loans

Types of financial aid

• Gift aid

Awards do not need to be repaid• Grants

• Scholarships

• Self help aid

Adopts a self-investment philosophy• Student loans

• Student employment

How financial aid is awarded

• Need based

• Awarded based on a family’s financial need

• Merit based

• Awarded for a talent: academic, athletic, etc.

Definition of need/eligibility

Cost of Attendance (COA)

- Expected Family Contribution (EFC)

= Financial Need/Eligibility

Cost of Attendance (COA)

• Tuition and fees

• Room and board

• Books and supplies

• Transportation

• Personal expenses

• Miscellaneous

How is EFC calculated?

• Parent’s prior year income

• Student’s prior year income

• Value of parent’s assets

• Value of student’s assets

• Number in household

• Number in college

• Age of oldest parent

Expected Family Contribution

• EFC is constant

• Each factor has a different weight in determining EFC

• Both parents and students are expected to contribute to education costs

Need comparisonNeed comparison

Financial aid packages

Cost of Attendance $35,000

EFC $10,000

Financial Need $25,000

Financial Aid Type College 1 College 2 College 3

Grants/Scholarships $12,000 $18,000 $21,000

Work-Study $1,000 $1,500 $2,000

Student Loans $3,500 $3,500 $2,000

Total $16,500 $23,000 $25,000

Unmet Need/Gap $8,500 $2,000 $0

Example packages:

Unmet need

• Schools are not always able to offer as much financial aid as you may be eligible for

• When need is not fully met, there is said to be a “gap”

• Most schools do not cover 100% of the “gap” or remaining financial need

Paying tuition bills

• Savings & other assets

• Salary

• Payment plans

• Scholarships

• Parent and student education loans

• Home equity loans

Sources of financial aid

• Federal• Grants, loans & work study

• State• Grants & scholarships

• Institutional (college/university)• Grants & scholarships

• Private• Grants, scholarships, loans

Federal grants

Federal Pell Grant• Limited to undergraduates• Maximum amount of $4,310• Need based

Federal Supplement Education Opportunity Grant (FSEOG)• Awarded first to undergraduate students with exceptional

financial need• Preference given to Pell Grant recipients• $4,000 maximum award; $100 minimum award

Federal grants

Academic Competitiveness Grant• Available to Pell Grant recipients• Must have successfully completed a “rigorous” high school

program• As established by state• As recognized by the Dept. of Education• On or after January 1, 2006 for 1st year students and January 1,

2005 for 2nd year students• $750 for freshman

• Have not been previously enrolled in college• $1,300 for sophomores

• Maintained GPA of 3.0 or higher during freshman year

Federal grants

National SMART Grant• Up to a $4,000 supplemental grant to Pell Grant recipients in 3rd

or 4th year who are:• Pursuing a major in one of the following

• Physical or life science• Mathematics• Engineering• Computer science• Technology• “critical” foreign language

• Have obtained a GPA of 3.0 or higher during course of study in major

Federal work study

• Provides part-time employment

• Pay must be at least federal minimum wage and paid on an hourly basis

• Work-study job may be on or off campus

• Employer may be the college, a non-profit community agency, or profit organization

• Schools may have maximum hours per week rule

• Long term loans: must be repaid with interest

• 5% fixed interest rate

• 10-year maximum repayment period

• Awarded based on need to undergrad & graduate students

• Each school has limited funds to award each year

• Your school is your lender

• Grace period = 9 months

• Annual maximum: $4,000 for undergraduates

$6,000 for graduates

Federal Perkins loan

• Long-term loans: must be repaid with interest

• Interest rate: Fixed; 6.8%

• 10 year maximum repayment period

• $50.00 minimum monthly payment

• Fees: 1.5% origination fee; 1% default fee

• Loans enter repayment approximately 6 months after student leaves school

Federal Stafford loanFederal Stafford loan

Federal Stafford loan

• Subsidized• Federal government pays interest while student is in

school and in their grace period

• Awarded to students who can prove financial need

• Unsubsidized• Student is responsible for all interest charges accrued

while in school

• Awarded to students who cannot prove financial need

Federal Stafford loan

Year in SchoolAnnual Limit

(Subsidized & Unsubsidized)Additional Unsubsidized Loan Limit

(independent students only)

First Year $3,500 $4,000

Second Year $4,500 $4,000

Third Year – Fifth Year $5,500 $5,000

Graduate Students $8,500 $12,000

Annual Loan Limits 2007-2008

Aggregate Loan Limits

Student Type Subsidized LimitSubsidized

& Unsubsidized Limit

Dependent Undergrad $23,000 $23,000

Independent Undergrad $23,000 $46,000

Graduate Student $65,500 $138,500

Federal PLUS loan

• For parents of dependent undergraduates and for graduate students

• Credit check required

• Interest rate: 8.5% fixed

• Fees: 3% origination fee; 1% default fee

• Repayment term: 10-years

• Minimum monthly payment: $50.00

• Repayment begins 60 days after loan is fully disbursed

• Loan limit: cost of attendance minus financial aid received

Private sources of financial aid

• Outside scholarships & grants

• Community organizations

• Corporations

• Churches/religious foundations

• Visit your guidance office

• Use FREE scholarship search tools online

• Off-campus employment

• Equity loans/lines of credit

Private sources of financial aid

• Alternative student loans

• Fees and interest rates are typically based on applicant or co-applicant’s credit

• Rates & fees tend to be higher than Federal loan rates (PLUS, Stafford, Perkins)

Merit based aid

• Based on academic, athletic or other talents

• Awarded by school or outside organization

• Criteria for receiving merit based aid varies

• SAT score, class rank, GPA

• Check with admissions

• Student often needs to maintain certain requirements to keep the aid

• Apply for a PIN at www.pin.ed.gov

• Complete the FAFSA • REQUIRED by every school to qualify for financial aid

• Apply online at www.fafsa.ed.gov ASAP after January 1

• Complete the CSS PROFILE, if required by your schools of choice

STEP 1

Applying for financial aidApplying for financial aid

• File any supplemental financial aid forms required by your school

• Let the financial aid office know of any special circumstances that may affect your family’s ability to fund your education

• Pay attention to financial aid deadlines at your school

• Send in any documents the financial aid office at your school(s) requires to complete your application

STEP 2

Applying for financial aidApplying for financial aid

• Look over Student Aid Report (SAR)

• Receive 2-3 weeks after completing the FAFSA

• Review all information for accuracy

• Information can be corrected if necessary

• Before correcting, contact the financial aid office

• Review CSS PROFILE acknowledgement report, if applicable

STEP 3

Applying for financial aidApplying for financial aid

• Review Financial Aid Package/Award Letter from school(s)

• Includes details of award: grants, scholarships, loans, and work-study

• Accept, deny or appeal any portion of the package

• Acceptance will safeguard the award

Applying for financial aidApplying for financial aid

STEP 4

Completing the FAFSA

• Read the instructions as you complete the FAFSA

• Fill in all the blanks (“n/a” or “0” when applicable)

• Ask questions when you don’t understand the instructions

• Make it a family event

Meeting a student’s needs

• Choose your college wisely

• Not all colleges will meet 100% of need

• Private colleges generally

• Meet a higher percentage of need

• Award a higher percentage of gift aid

• Many students can attend a private college for the same cost as a public university

Education pays offEducation pays off

Average student loan amount for college graduates

Average yearly income

2-year community college $8,700 $34,860

4-year public college $17,100$50,511

4-year private college $21,200

Source: 2002 National Student Loan Survey and U.S. Census Bureau

Any questions or to set up an appointment callThe College Planning Center of RI

at 401-736-3170