Understanding Award Letters and Net Cost

Anne Reed, New England School of Communications

Discuss what aid is making up the Award letter & how to compare

We will be covering three major areas:

Understanding and Comparing Award Letters

What award letters may look like in 2013!

The processHow do you GET an award letter?

Student Files a FAFSA

School determines eligibility

using COA, EFC & Status

Student receives

award letter

• Schools include tuition, fees, room, board, books, travel and miscellaneous expenses when determining eligibility

• Some of these costs are actual and some are simply estimates or averages and can be very “underestimated” (such as travel)

• When looking at costs, try to compare “apples to apples”

Cost of Attendance(COA)

UNIVERSITY A• Tuition $8400• Mandatory Fees $2500• Room/Board $9200

• Total billed costs $20,100

• Tuition $12,600• Mandatory fees $850• Room/Board $7950

• Total billed costs $20,100

UNIVERSITY B

Compare Apples to Apples

My tuition is much less expensive

Not so much…

Fall Spring Total

Federal Pell Grant $ 2,775 $ 2,775 $ 5,550 Federal Supplemental Grant $ 500 $ 500 $ 1,000Fed. Direct Staff. Loan (gross) $ 2,750 $ 2,750 $ 5,500Federal Work Study $ 1,500 $ 1,500 $ 3,000 Federal Perkins Loan $ 1,000 $ 1,000 $ 2,000Maine State Grant $ 500 $ 500 $ 1,000College Grant $ 500 $ 500 $ 1,000Total $ 9,025 $ 9,025 $19,050

Total Grants $8,550Total Perkins/Stafford Loans $7,500Total Work Study $3,000

Sample Award letter

GrantsGrant Name What is it? How did I get it?

PELL Grant Federal Grant EFC below 4995

Federal SEOG (Supplemental Opportunity Grant)

Campus based aid (Fed

funds/institutional funds

EFC met school criteria & filed FAFSA early

Maine Grant State Grant EFC below 5000 & filed FAFSA before May 1

State Grant State Grant Each state has their own criteria

Institutional Grant Institutional Grant

Based on institution criteria (usually based on maintaining GPA

• Tuition $8400• Mandatory Fees $2500• Room/Board $9200

• Total billed costs $20,100

• Minus Aid (total for year):• Pell grant -$5550• SEOG -$1000• Maine Grant -$1000• College Grant -$1000• Cost before loans $11,550

Actual billed cost minus aidUniversity A

• COST OF ATTENDANCE

• MINUS GRANT AID • GIVES STUDENTS A COMPARABLE COST OF ATTENDING THAT INSTITUTION.

• At this point look at Stafford Loan, Scholarships, paying out of pocket, etc

Compare schools side by side

Loan Type Who is the borrower

Who is the lender

Federal loan?

Credit based?

Stafford Student Dept of Edu.

(Servicer)

Yes No

Perkins Student The School Yes No

Parent PLUS loan

The Parent Dept of Edu.

(Servicer)

Yes Yes

Grad PLUS loan

Student Dept of Edu.

(Servicer)

Yes No

Alternative Loan

Student with a co-signer

Bank No Yes

College Loan Student The School No Maybe

Loans – when comparing What’s making up the award letter….

Focus on grants and federal loans

Don’t include Work Study as it is not applied directly to the bill

Don’t be fooled by schools who include large loans to fill need – all schools can offer PLUS and Alternative Loan eligibility

How is my bill really being paid?

2.1 GrantsLoansbalance after aid

Harvard University$27.6B endowment

Average loan debt = $11,780Average need based gift aid = $41,507

Cost = $52,652100% of need met

Boston College$1.3B endowmentAverage loan debt = $19,514Average need based gift aid = $26,556Cost = $54,528100% of need is met

Filling in the piecesWhat happens next?

Be sure to read the materials that accompany the Award Letter – will provide many more details. READ EVERYTHING!

If other loans are listed on the Award Letter, learn more about them:• Interest rate/fees• Deferment options• Repayment options• Approval criteria - credit based?

Contact school to discuss remaining options

Questions to ask What will the next 4 years cost?

Are the scholarships renewable?

If scholarships are renewable, what is the criteria?

What happens if the student receives outside scholarships, for example, from graduation?

Will the financial aid award stay the same from year to year?

Many schools will ask you to accept or reject aid…. Good idea not to reject aid unless the student is absolutely sure he or she doesn’t want the aid:

• may not be able to get it back once rejected • can always return loans during the year, even if already

processed

If circumstances have changed from what is on the FAFSA, the student should contact school to discuss an appeal.

Funded by Federal funds matched by the University based on financial need (from the FAFSA)

Just because a student is awarded does not mean they will be hired – Just like a real job.

Funds are not applied to student accounts – students receive a pay check

Students are responsible for searching and applying for positions

Federal Work Study

980,354,000980,492,000 980,

492,

000

980,

492,

000

978,

531,

016

Federal Spending2007 2008 2009 2010 2011

•Award Letter

October 22, 2012

• Dear Student:

• This aid will self destruct in 6 years…

New push to complete on time

Lifetime limits:Stafford Loan

Lifetime limit $31,000 for dependent studentsPell Grant

600% Lifetime Eligibility used (roughly 6 years at full time)

Maine Grant24 points Lifetime Eligibility used

(roughly 6 years at full time)

• The interest rate on Direct Stafford loans 6.8% (changes yearly)

• The federal government pays the interest on subsidized loans while the student is enrolled at least half-time

• Origination fee is 1%

• Same with Parent PLUS • loan – 4% origination fee

Stafford Loan:

Award letter may say $5500

-minus origination fee

School actually receives $5446 (net)

*changes yearly

What you see may not be what you get…

Usually based on Full Time statusWhat if my family member looses their job?What if I get an outside scholarship?What if my parent is denied the Parent PLUS loan?What if I just can’t afford to go to this school?

Is this set in stone?

How much one year of school will cost;

Financial aid options to pay this cost, with a clear differentiation between grants and scholarships, which do not have to be repaid, and loans, which do;

The net costs after grants and scholarships are taken into account;

Vital information about student results, including comparative information about default rates, graduation rates, and median debt levels for the school;

And potential monthly payments for the federal student loans the typical student would owes after graduation.

July 24th Obama administration unveils the Shopping sheet in response to students with large debtSecretary of Ed Arne Duncan sent an open letter to college and university presidents, asking them to adopt the Shopping Sheet as part of their financial aid awards starting in the 2013-14 school year

**Coincide with Principles of Excellence for veterans.

The Shopping Sheet

The Shopping sheet

QuestionsThank you!

Anne ReedDirector of Enrollment

ManagementNew England School of

Communications