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FINANCIAL AID INFORMATION SESSION
Montclair Kimberley Academy December 4, 2014 Jason Shumaker Senior Associate Director Lehigh University
Seminar Topics • Financial Aid Principles • Sources and Types of Financial Aid • Financial Aid Application Materials • What’s the EFC and how is it determined? • What is the Cost of Attendance • The Financial Aid Formula • Example Financial Aid Awards • Loan Considerations • Resources/Questions
Principles of Financial Aid
• 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
• 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 a family’s ability to pay
Sources of Financial Aid • Federal
• Grants, work-study, loans
• State • Grants, scholarships, tuition waivers
• College/University (institutional aid) • Grants, scholarships, loans, work opportunity
• Outside Scholarships/Resources
Types of Financial Aid • Gift Aid
• Grants • Scholarships
• Self Help • Loans • Work Opportunities
Gift Aid/Grants • Federal Grants (Need Based Aid)
• Determined By Completing the FAFSA • Pell Grants/SEOG
• State Grants (Need Based Aid) • Determined By Information Submitted on the FAFSA
• PHEAA State Grant
• Institutional Grants • Can be need based or merit-based
• Private Sources (Need/Merit Based Aid)
Need-based Aid • Awarded based on family’s financial need
determined by standardized formula • Includes grants, loans and/or work-study • All federal and most state and college/institutional
aid awarded based on need
Merit-based Aid • Often distributed in recognition of student achievements • Applications are often compared against other students
who apply • May or may not be renewable • May be separate application from admissions or need-
based financial aid
Self-Help • Student Loans
• Direct Loan • Perkins Loan • Ins3tu3onal Loans
• Parent/Private Loans • Parent PLUS • Private/Alterna3ve Loans
• Work Study • Federal • Ins3tu3onal
Financial Aid Applications • Free Application for Federal Student Aid (FAFSA)
• Required by all colleges for federal and most state aid • Free form • Must be completed each year • Online application recommended • Both Student and Parent can sign this form using an Electronic PIN
• Apply for PINs at www.pin.ed.gov • CSS/Financial Aid PROFILE®
• Some colleges require this form for institutional aid • Cost associated • Online application required
• College Financial Aid Application • Required by some colleges • Usually part of the admissions packet
• Supplemental Forms • Noncustodial Parent • Business/Farm • Institutional Forms
Expected Family Contribution (EFC) • Family has the primary responsibility for contributing to
the student’s education • An estimate of how much a family is expected to
contribute toward student’s education for one year • EFC consists of a Parent’s Contribution (PC) and a
Student’s Contribution (SC). • Calculated with a formula that’s the same for every family • Federal EFC vs Institutional EFC
Factors That Determine the EFC
• Parent Income and Assets (PC) • Student Income and Assets (SC) • Family Size/Number in College
• Includes income and asset protection allowances • Does not include personal debt such as credit cards,
auto or personal loans
• Many More…
Methodologies for Determining EFC
Federal Methodology • FAFSA/Federal Form • EFC Determines Eligibility for
Federal and State Funds • Formula Created By Congress To
Determine EFC • Required By All Schools If You
Are Applying For Federal Aid • Custodial Parent Only
Institutional Methodology • CSS/Institutional Form • EFC Determines Eligibility for
Institutional Aid • Variation of FAFSA Formula;
May Include or Exclude Assets or Allowances
• Not A Requirement For Every School
• Custodial and Noncustodial Parent Information
Special Circumstances • If you experience a change in financial
circumstances, be sure to notify your financial aid office.
• Qualifying changes include, but are not limited to:
• Loss of Job or Significant Reduction in Pay • Extreme Healthcare Costs • Change in Household Size • Change in Number of College Students
Cost of Attendance (COA) DIRECT COSTS
Ø Tui3on & Fees Ø Room & Board Ø Books & Supplies
INDIRECT COSTS
Ø Transporta3on Ø Personal Expense Ø Loan Related Fees Ø Disability-‐Related
Expenses
*These Amounts Equal The School’s COA
*COA will vary between Schools
Financial Aid Formula Cost of Attendance (COA)
– Expected Family Contribution (EFC) _________________________________
= Financial Aid Eligibility/Financial Need
$50,000 (COA) – $15,000 (EFC)
_________________________________ = $35,000 Financial Need
How the Formula Works C
ost o
f Atte
ndan
ce
Financial Aid Awarding COA
$50,000 – EFC
$15,000 _____________________________ = Financial Need
$35,000 – Scholarships/Grants
$25,000 – Student Loan
$5,500 – Federal Work-Study
$1,500 _____________________________ = Unmet Need
$3,000
Unmet Need $3,000
Federal Work Study $1,500
Student Loan $5,500
Grant $12,500
Scholarship $12,500
EFC $15,000 Cos
t of A
ttend
ance
(CO
A)
Example 1: Financial Aid Package
School A COA: $50,000 -‐EFC: $15,000 Financial Need: $35,000 -‐Subsidized Loan: $ 3,500 -‐Work Study: $ 1,500 -‐Perkins Loan: $ 1,700 -‐Ins3tu3onal Grant: $28,300 Remaining Need: $ 0
School B COA: $16,000 -‐EFC: $15,000 Financial Need: $ 1,000 -‐Subsidized Loan: $ 1,000 Remaining Need: $ 0
Student would be eligible to borrow addi3onal $2,000 Unsubsidized Loan under both scenarios.
Should I Apply For Aid?
• The only cost to complete the FAFSA is 3me.
• You can calculate an es3mated EFC on the College Board Website using the EFC calculator • If your es3mated EFC is lower than the school’s cost of a]endance, you may be eligible for need-‐based aid
Net Price Calculator • Federal Mandate • This is not an application for admission or financial aid.
You must still submit the regular financial aid application materials by the deadlines.
• The results will only be as reliable as the data you provide.
• The net price calculator will only give you an estimate of your net price and aid eligibility. The financial aid office has the final word on your financial aid award.
• If a student's parents are divorced, separated or never married or if any family members have business or real estate ownership, the accuracy of the NPC lessens.
How to Pay the EFC/Unmet Need: “Net Cost”
Favorite College
Balance Due $20,000 Past Income Student Savings -$1,500
Parent Savings -$4,000
Present Income Student Contribution to Payment Plan -$1,000
Parent Contribution to Payment Plan -$3,500
Future Income Education Loan -$10,000
$0
EXAMPLE
Factors to Consider When Choosing a Loan
• What is the interest rate and APR? • Is the interest rate fixed or variable? • Who is the primary borrower (student or parent)? • When does the loan repayment begin? • How much will the monthly payment be? • How many years will you be making payments? • What will my salary be after college?
Resources – StudentAid.gov •
Resources (continued) • Financial aid office/website/counselor • Fastweb.com – for outside scholarship search • Net Price Calculator.
Parting Tips • Don’t pay for financial aid help • Avoid Being Scammed • Keep the Student Informed • Take Responsibility • If you are not sure – ASK! • DEADLINES, DEADLINES, DEADLINES!
Thank you. Questions? Jason Shumaker Lehigh University 610-758-5068 [email protected]
Optional Slides • Self Help Details • Overview of Financial Aid Administered Nationally • Federal Financial Aid Eligibility • Determining Dependency • What you Need to Complete the Application • Income/Asset Impact on EFC • Comparing Award Letters
Self-Help – Student Loans • Direct Loan • Amount is Capped -‐ Based on Grade Level
• Subsidized (need-‐based) vs. Unsubsidized (Non need-‐based)
• Perkins Loan • Based on Need • Amount Determined By School
• Ins3tu3onal Loans • Not Offered at all Universi3es
Self-Help – Parent/Private Loans • Parent PLUS Loan • Loan in Parent’s Name/Based on Parent’s Credit
• Can Borrow up to the COA minus any Financial Aid Received
• Private Loans • Based on Student’s Credit • Will Most Likely Require Co-‐Signer • Interest Rate Fluctuates • Can Borrow up to COA minus any Financial Aid Received
Self-Help – Work Study • Federal Work Study
• Based on Financial Need • Wages are subsidized by government • Student will receive a paycheck; Funds may or may not come off of Tui3on Bill (depending on ins3tu3on)
Overview of Financial Aid Undergraduate Student Aid 2011-12 ($185.1 Billion)
Source: The College Board, Trends in Student Aid 2012
Federal Eligibility Requirements
• Be a U.S. Citizen or eligible non-citizen
• Have a High School Diploma or equivalent
• Be Enrolled in a certificate, diploma or degree program
• Males between the ages of 18 & 25 must register with Selective Service
• Not be convicted of any offense under federal or state law involving possession or sale of a controlled substance while you were receiving federal student aid (grants, loans and/or work study)
• Never defaulted on a prior student loan
Determining Dependency • Dependent vs Independent • Federal vs Institutional
• Were you born before January 1, 1992?
• Will you be working on a Master’s or Doctorate Program?
• Are you married? Do you have any children or other dependents who received more than 50% of their support from you?
• Are both of your parents deceased or are you/were you a ward/dependent of the court?
• Are you currently serving on active duty (for purposes other than training) or are you a veteran of the US Armed Forces?
• Are you deemed emancipated by the courts?
• Are you unoccupied youth who is homeless?
What Will You Need?
� Student’s & Parent’s Biographical Information (i.e. DOB, SSN…)
� Student’s & Parent’s Most Recent Tax Returns & W-2s (i.e. 2014 taxes for the 2015-2016 Year)
� Any Untaxed Income Amounts (i.e. Child Support, Social Security Benefits…)
� Student’s & Parent’s Asset Information (i.e. Investment Value, Balance in Cash, Savings, Checking Accounts…)
� Other Misc. Information
Income Impact on EFC
Family A Family B Family C
Parent Income $60,000 $100,000 $150,000
Parent Assets $50,000 $50,000 $50,000
EFC $4,591 $16,552 $32,084
Difference $11,961 $27,493
Based on 2014-15 Federal Methodology
- Parent assets remains level, income increase. - 4 in the family, 1 child in college:
Asset Impact on EFC
Based on 2014-15 Federal Methodology
Family A Family B Family C
Parent Income $60,000 $60,000 $60,000
Parent Assets $0 $75,000 $150,000
EFC $4,227 $5,461 $10,815
Difference $1,234 $6,588
- Parent income remains level, assets increase - 4 in the family, 1 child in college:
Example 2: Financial Aid Package
School A COA: $50,000 -‐EFC: $40,000 Financial Need: $10,000 -‐Subsidized Loan: $ 3,500 -‐Work Study: $ 1,500 -‐Perkins Loan: $ 1,000 -‐Ins3tu3onal Grant: $ 4,000 Remaining Need: $ 0
School B COA: $16,000 -‐EFC: $40,000 Financial Need: Nega3ve Remaining Need: $ 0 *Can borrow $3,500
Unsubsidized Loan (not based on need)
*Eligible for Merit Aid only
Student would be eligible to borrow addi3onal $2,000 Unsubsidized Loan under both scenarios.
Comparing Award Letters – Award Totals Vary
COA: $30,000 EFC: $5,000 Total Need: $25,000
College A College B College C Grants/Scholarships $18,000 $15,000 $10,000 Student Loans $5,500 $5,500 $5,500 Work Study $1,500 $1,500 $1,500 Total $25,000 $22,000 $17,000 Unmet Need $0 $3,000 $8,000
Comparing Award Letters – Award Totals Are Equal COA: $30,000 EFC: $5,000 Total Need: $25,000
College A College B College C Grants/Scholarships $15,000 $5,000 $0 Student Loans $5,500 $5,500 $5,500 Parent Loan $0 $10,000 $16,500 Work Study $1,500 $1,500 $0 Total $22,000 $22,000 $22,000 Unmet Need $3,000 $3,000 $3,000
