Award letter questions? Visit College Financing 101: Understanding Your Award Letter Presented by: Steve Wynne Account

Award letter questions?Visit www.studentchoice.org/scholarhelp

College Financing 101:Understanding Your Award Letter

Presented by: Steve WynneAccount Executive – Client Relations and Education

Presented By: Tracie McGetrickStrategic Partnerships


Definitions

2Credit Union Student Choice © 2015

• Award Letter– Also referred to as a financial aid package and contains the cost of

attendance and any financial aid offered to the student by the school

• Cost of Attendance (COA)– The cost set by the school to cover student expenses, which includes

tuition, fees, books, rent, food, misc. expenses, etc.

• Financial Aid– The offering of scholarships, grants, federal work study and loans to assist

a student in meeting the cost of attendance


Scholarships – amounts vary – begin as early as 11th grade• Awarded based on need or merit• Awarded for a variety of reasons: academics; sports; extra-

curricular activities; community service; hobbies; writing skills

Resources include• High School Guidance Counselor• On-line Search Engines

– Fastweb.com– Finaid.org– College board.org

• iPhone and Android app (New – as seen on Shark Tank)– Scholly

Scholarships



• Follow all instructions• Use Reference Letters• Highlight Any Community

Involvement and Charity Work

• Include Job History• Essays = TEE: Time Energy

and Effort• Beware of scams!

Scholarship Tips



Top 5 Scholarship Mistakes

1. Only applying for private scholarships In every state, there are local scholarships that are awarded based on

the residency of a student. 41 of 50 states offer (CT, LA, ME, MI, MS, NE, NH, NM, WV)

2. Applying for too few scholarships

3. Not following instructions and other application mistakes

4. Not paying attention to deadlines

5. Looking for scholarships for only a few weeksSource: StudentScholarshipSearch.com



We’ve applied…

We’ve been accepted…

Now what?

Financial Aid Overview



The only way to access most financial aid is by completing

the FAFSA(Free Application for Federal Student Aid)

How Does it All Begin?



FAFSA - Free Application for Federal Student Aid

• Begin as early as January 1st of upcoming current school term through June 30th of ending school term. Check with your State and college for additional deadlines

• Submit application on-line (99%) at www.fafsa.ed.gov – or through the mail (not recommended)

• Must apply annually

Beware of scams!

FAFSA Process



• Submit the FAFSA– Online 2-3 weeks to process– Paper 4-6 weeks to process

• Student receives SAR (Student Aid Report)– Summarizes info on FAFSA– Provides EFC (Expected Family Contribution)

• School receives ISIR (Institutional Student Information Record) 10 to 14 days after FAFSA submitted– Summarizes information on student’s FAFSA– All schools listed on FAFSA receive ISIR School uses information coupled

with application to determine student’s financial need and creates an award letter

FAFSA Process



• School sends Award Letter to student– Financial aid award package– Sent directly to student– Review and decide which awards to accept

• Unmet need– Savings Account– College Savings Plan– Home Equity Line– Credit Cards– 401K– PLUS Loans – Private Loans

FAFSA Process



YOUR AWARD LETTER




Award Letter Types

By Mail

By System

By Email


Types of Financial Aid


• Scholarships and Grants• Federal Work Study• Federal Perkins Loan• Federal Direct Loans

–Subsidized–Unsubsidized – not an award

• Federal Direct PLUS Loans – not an award


• Free money from the government, state, and/or institution• Does not have to be repaid • Grants may have an obligation associated with acceptance; failure

to meet obligation may require grant to be repaid • Awarded based on need or merit

– Federal Grants based primarily on financial need

• Awarded for a variety of reasons: – Academics, sports, extra-curricular activities, etc.

Check with the Financial Aid Office for additional scholarships that may be available.


Scholarships and Grants


Verify• Are you willing to meet the requirements attached to

receiving this aid?

• Is the scholarship/grant renewable; not just made available for one year, but aid that will be carried over year after year?

• Compare award letters- different schools will award varying amounts of aid, compare the dollars award to make the right choice for student and family.


Scholarships and Grants


Federal Work Study


• Free money – kind of!

• First come – First serve – Financial Need

• Provides jobs to student with financial need

• Paid at least minimum wage

• Jobs are part time, usually on-campus

Didn’t receive Work Study?Check with the Financial Aid or Admissions Offices


• Loan is in the student’s name, made through the school’s financial aid office

• Awarded to students with exceptional financial need

• Maximum annual amount is $5,500

• Government pays interest while in school

Federal Perkins Loan

• Fixed interest rate of 5%

• No origination fee

• Once in repayment, pay school directly

• Standard repayment term is 10 years

• Grace period is 9 months



• William D. Ford Federal Direct Loan Program

• Loans are in the students name and funds come directly from the U.S. Department of Education

• Standard repayment term is 10 years with a 6 month grace period


Federal Direct Loans


Subsidized

• Awarded to eligible students based on financial need

• Government pays interest while in school

• Fixed interest rate of 4.66% plus 1.051% loan fee*

Unsubsidized

• Awarded to all eligible students, not based on need

• Students are responsible for interest, may defer

• Fixed interest rate of 4.66% plus 1.051% loan fee*

*First Disbursement between July 1, 2014 and June 30, 2015

Federal Direct Loan



Federal Direct Loan Limits

Freshman $3,500Sophomore

$4,500Juniors & Seniors $5,500

Dependent Student Freshman $5,500Sophomore $6,500Juniors & Seniors $7,500

Independent StudentFreshman $9,500Sophomore

$10,500Juniors & Seniors $12,500

Subsidized Unsubsidized



Award Letter Example


Federal Loan – Subsidized $3,500 Federal Loan – Unsubsidized $2,000 School Grant $1,500 State Scholarship $1,000Federal Work-Study $2,000

Total Award $10,000Cost of Attendance $20,000Remaining Need $10,000

University of Success


How Much Do You Really Need?


Consider:• Fixed Costs• Flexible Costs• Appeals• Other Income• Tuition Payment Plans


Fixed Costs vs. Flexible Costs

Tuition $8,000+School Fees $1,000

Total Fixed $9,000

Total Flexible $11,000



Total Flexible Costs $11,000

Rent – ($500 X 10) $5,000

Food – ($300 X 10 months)$3,000

Books - ($200 X 10 books)$2,000

Personal Expenses - ($75 10 months)$750

Transportation - (ex: Bus pass @ $25/mo x 10mos.) $250.00

Total Flexible Costs $8,750

Rent – ($400 X 10)

$4,000Food – ($300 X 10 months)

$3,000Books - ($100 X 10 books)

$1,000Personal Expenses - ($50 X 10 months)

$500Transportation - (ex: Bus pass @ $25/mo

x 10mos.) $250.00


Flexible Costs


(New) Unmet Need

Fixed $9,000Flexible $8,750 Total Costs $17,750

Total Costs $17,750Total Award ($10,000)Remaining Need $7,750

Need reduced by $2,250 (or $225 a month)



Appealing your Award Letter


Reasons to appeal:• Change in employment/income• Medical bills• Divorce• Disability/death• High consumer debt


Appealing your Award Letter


Each school will have their own process and procedures. Visit the school’s website for specific instructions on how to appeal.

– Submit a letter– Appointment with Financial Aid Office (FAO)– Telephone interview


Remaining Need


• $7,750 needed over a 10 month period– $775 month

• Consider other income before borrowing– Part time job– Assistance from family members/friends

• Consider school payment plans– School may offer a monthly payment plan for a small fee


A tuition payment plan is a short-term interest-free solution that takes your school bill and splits it into smaller amounts, payable over a number of months.

• Plans are offered by most schools• Sometimes managed through an outside company• Administered through the campus billing office• Small semester or annual fees will apply• Look on your school’s website or contact the financial aid office for your

school-specific details

Tuition Payment Plans



Why use a tuition payment plan?• Budget first, borrow wisely - before considering any student loan,

families should utilize current income or savings with a payment plan, or use a payment plan in combination with a student loan

• More time to pay - spreading your tuition payments over several months, you “pay as you go”

• No interest charges – why take out a loan and pay interest if you can use a payment plan!

Tuition Payment Plans



• Often listed on Award Letter

• Interest rate is fixed at 7.21%*

• Bridges the gap between education costs and financial aid

• Credit based loan made to the biological, adoptive, or in some cases a step-parent of a dependent student for the purpose of meeting the cost of attendance.

• Origination fee of 4.204%

Federal Direct PLUS Loan


*First Disbursed between July 1, 2014 and June 30, 2015


Federal Direct PLUS Loan


• Limit is the COA less any other Financial Aid

• Payments begin 60 days after first date of disbursement (can request deferment)

• No prepayment penalty

• Dependent students whose parent is denied may qualify for additional Federal Direct Loan limits


• Rate• Index – Prime or LIBOR

(difference of about 3%) • Margin - % added to index• Floor – Never go below

• Fees• Origination Fee – 0% to 3%

• Repayment Terms • 10 to 25 years

Private Loan Options


• Borrower Benefits• What’s in it for me? (W.I.F.M.)

• Co-Borrower Options• FICO, Debt to Income ratio

• Payment Options • Full deferment • Principal & interest• Good faith payments

What to Consider:


• Line of Credit Structure– $75,000 maximum

• Rates – LIBOR + 3.69% - 4.43%; Floor 6.00%

• No upfront or backend fees• Flexible in-school payment

options– Full deferment (5 years plus 6

mos. Grace)– Interest Only– Principle and Interest

• Borrower Benefits– 0.25% interest rate reduction

for ACH

• Repayment Terms– 20 or 25 years depending on

balance at graduation– Graduated Repayment

Option

NASA Federal Credit Union Student Choice Solution




Student Indebtedness

• Total student debt has more than doubled from 2005 to 2012 ($463B to $963B)

• 2013 average borrower debt:• 4 year Public = $25,000• 4 year Private = $29,900(includes federal and private loans from borrowers attending not-for-profit institutions only)

• 88% of borrowers have less than $50,000 in total education debt

Source: The College Board, Trends in Student Aid 2013



Where to Find Information

Start at : NASA FCU Home Page URL



Where to Find Information

Click over to: CU Student Choice URL



Thank you for Attending

For more information or for any additional assistance in planning your college career visit:

http://nasafcu.studentchoice.org/

800-322-8816





Thank you for Attending

Tracie McGetrickStrategic Partnerships, CU Student Choice

Please contact us with any additional questions.

Submit questions to:[email protected]

or visit:www.studentchoice.org/scholarhelp

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Documents

Award letter questions? Visit College Financing 101: Understanding Your Award Letter Presented by: Steve Wynne Account