How it All Works… Scholarships and Financial Aid.

How it All Works…

Scholarships

and

Financial Aid

For copies of the

PowerPoint

Email

[email protected]

College Financial Aid Brochures

Types of Financial Aid

• Scholarships• Grants• Work• Loans• Tax Credits

• The American Opportunity Credit

Sources of Financial Assistance

• FEDERAL

• STATE

• INSTITUTIONAL

• PRIVATE

• FAMILY

How the Average Family Pays

Sources of Financial Assistance

• Institutionally Funded Aid

• Primary Aid Source at Privates

• Philosophies Differ

• Endowment vs. Discount

How Eligibility is Determined

• Academic/Merit

• Performance/Talent

• Eligibility/Need-based

How Eligibility is Determined

Academic/Merit

• Based on student performance, not financial status

• SAT/ACT, Class Rank, HS GPA

• Can be very competitive, or not

• Generally tied to tuition

How Eligibility is Determined

Performance/Talent

• Usually requires an audition

• Very competitive

• NCAA - Division I, II, III

Ncaa.org

Universities are like airlines.

We all overbook!

An important Hint

How Eligibility is Determined

Need-Based Aid

• Federal

• Eligibility calculated using methodology approved by Congress

• Most common method at majority of universities

• Institutional

• May be calculated using CSS Profile methodology at some private universities

• Both measure a family’s ability to pay, not their willingness to pay

Applying for Need-Based Aid

Need-Based Aid

• Forms

• FAFSA

• CSS Profile

• Institutional Aid/Scholarship Application

Calculating “Need”

Cost of Attendance

- Expected Family Contribution (EFC)

= Need

Determining Eligibility

• Tuition & Fees

• Residence Hall & Meals

• Books & Supplies

• Travel Expenses

• Study Abroad

• Personal Expenses

Cost of Attendance

Calculating “Need”

Cost of Attendance

- Expected Family Contribution (EFC)

= Need

Determining Eligibility

Want to know the secret of the EFC?

AAI ASSESSMENT RATES

INCOME EXCLUSIONS

(child support paid, taxable aid, tuition tax credits)

U.S. INCOME TAX

F.I.C.A. TAX

STATE AND OTHER TAXES

EMPLOYMENT ALLOWANCE

INCOME PROTECTION ALLOWANCE

TOTAL INCOME

PARENTS’ INCOME*

TAXABLE INCOME

UNTAXED INCOME AND BENEFITS

AVAILABLE INCOME

ADJUSTED AVAIL. INCOME

TOTAL PARENTS’ CONTRIBUTION

PARENTS’ CONTRIBUTION FOR

STUDENT

NUMBER OF DEPENDENT CHILDREN IN

COLLEGE

INCOME SUPPLEMENT

(NOT LESS THAN ZERO)

ASSET PROTECTION ALLOWANCE

12% CONVERSION RATE

BUSINESS OR NON-FAMILY FARM ADJUSTMENT

DISCRETIONARY NET WORTH

NET WORTH

PARENTS’ ASSETS**

CASH/BANK ACCOUNTS

INVESTMENTS AND OTHER REAL ESTATE EQUITY

NON-SMALL BUSINESS OR NON-FAMILY FARM NET

WORTH

* Federal need analysis provisions provide an “ automatic zero EFC treatment for families with parental AGI of $ 20,000 or less if

the parents are non-tax filers or file a 1040A or 1040EZ, or file a 1040 and receive federal means-tested benefits (TANF, SSI,

free or reduced price lunch, food stamps or WIC).

** If the parents are non-tax filers, or file an IRS 1040A or EZ, or file an IRS 1040 and receive federal means-tested benefits, and the

parents’ AGI is less than $ 50,000, no assets are included in the methodology

Parents of dependent studentsFederal Methodology (FM)

DISCRETIONARY NET WORTH

529 Savings Plans

Pre-Paid Tuition and/or Savings

Plans

• Plans held by parents :– reported on the (FAFSA) as a parental asset, assessed

at a maximum 5.64% rate

• Plans owned by the student:– are to be reported as parental assets

• Plans owned by grandparents, others:– distribution is reported as untaxed income, resulting

in a severe reduction in eligibility for need-based aid

Vertical

Horizontal

Equity in Awarding

Financial Need and Admission

• Need Blind– Students are admitted without regard to ability to pay.– Need Conscious– Need Sensitive

• Meeting Need – supplying sufficient gift aid to equal COA minus EFC.– Often less than what parents expect,

sometimes limited to “full – tuition”– Very few universities capable of doing this

Less Expensive School

Cost of attendance $13,000EFC $10,000Need $ 3,000

Need-Based Grant -$ 2,000 Loan -$ 1,000 -$ 3,000

More Expensive School

Cost of attendance $26,000EFC $10,000Need $16,000

Academic Scholarship -$ 8,000Need-Based Grant -$ 2,000Work Study -$ 2,000Student Loan -$ 4,000

-$16,000

Packaging Financial Aid

Less Expensive School

Cost of attendance $13,000Parent Loan (PLUS) $10,000Need $ 3,000

Need-Based Grant -$ 2,000 Loan -$ 1,000 -$ 3,000

More Expensive School

Cost of attendance $26,000Parent Loan (PLUS) $10,000Need $16,000

Academic Scholarship -$ 8,000Need-Based Grant -$ 2,000Work Study -$ 2,000Student Loan -$ 4,000

-$16,000

Packaging Financial Aid

Net Price Calculators

The Higher Education and Opportunity Act of 2008 (HEOA) requires all post secondary institutions that enroll first-time, full-time students and participate in the Title IV programs to provide a Net Price Calculator on its website by Oct. 29, 2011.

Purpose– “to help current and prospective students, families, and other consumers estimate the individual net price of an institution of higher education for a student.

2

Net Price Calculators

• Net Price Calculators must provide at least the following information:

• Estimated total price of attendance• Estimated tuition and fees• Estimated room and board• Estimated books and supplies• Estimated other expenses (including personal

expenses and transportation)• Total estimated merit and need-based grant • Estimated net price (price minus grant aid)

2

Net Price Calculators

Net Price Calculators

Net Price Calculators

Net Price Calculators

Academic Social

Financial

The Best

Fit

Which School is Right For You?

www.collegeboard.com

www.finaid.org

www.fafsa.ed.gov

www.fastweb.org

www.irs.gov/pub/irs-pdf/p970.pdf

www.studentaid.ed.gov

Important Links

Mike [email protected]