Cracking the Mystery of Financial Aid
Eileen Doyle Crane, Utah Valley University
Stephen Brown, Fordham University
Introduction
Financial aid world is highly developed industry
Rules and regulations are set by Congress and
the U.S. Department of Education
Schools have their own policies
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Many are different; many change as needed
Need-based aid versus Merit-based aid
Negotiation
Topics of Discussion
Federal Aid
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FAFSA
Direct Student Loans, subsidized and unsubsidized
Perkins Loans
Work Study
Income-based Repayment
Loan Forgiveness
Private Educational Lenders
Loan Limits
Credit Issues
Cost of Attendance (COA)
Disbursement of Funds
Debt Load
Salary Data
Repayment Issues and Impacts
Scholarships and Grants
Loan Repayment Assistance Programs (LRAP)
FAFSA
Free Application for Federal Student Aid
Basic federal need analysis document
Available on the Web
 www.fafsa.gov
FREE – No cost to student
All graduate & professional students are independent
 Parental info not required for federal aid
 May be required for high-cost private schools
Complete student (and spouse) section ASAP after January
1st
FAFSA
1st Step: Apply for a PIN online www.pin.ed.gov/



Collect income, tax, asset information
Calculate federal taxes early
A PIN number will be emailed to you; save it in a safe place
Specify up to 10 schools; check correct codes
Student Aid Report (SAR) data will be posted on your
FAFSA account; check for accuracy; correct as needed
If applying to more than ten law schools, add new schools
above the ten initial listed after your SAR posted
Federal Aid Programs

Federal Direct Stafford Loans: Subsidized and
Unsubsidized

Federal Direct Grad Plus Loan Program

Federal Perkins Loans

Federal Work Study

Federal Loan Consolidation
Federal Stafford Loans
Total of $20,500 per year
Interest rate fixed at 6.8%
6-Month grace period after enrollment
ends
1/2% origination/ 0% guarantee fees
If you fail to make first 12 payments on
time, origination fee goes up to 1%
Stafford Loans
Subsidized
Taxpayers pays
interest while
student in
school
Maximum of
$8,500 per year
Unsubsidized
Interest accrues
while student in
school
Maximum of
$20,500 less
Subsidized
Stafford
Perkins Loans
Federally guaranteed
Campus Based

May not be offered by all schools
5% fixed interest
9-month grace period
Maximum $6,000 annually
Federal Work Study
Campus-based program
Some law schools do not offer this in the first year
of law school
Hourly wage for work
Need-based program
On campus or off campus sites
Minimum wage or higher
Cost of Attendance
Each law school prepares a budget for single students
Budget includes: tuition and fees, books, room and board,
transportation, insurance, child care (some, not all), and
personal needs
Financial aid administrators may alter budget for unusual
situations
Creating a relationship with FA administrators to
understand your particular situation is always good; they
are happy to meet with students
Federal Grad Plus Loans
All loan programs are built on the back of the
Stafford Loans—up $20,500 available per year
Grad Plus Loans--difference between COA and
the portion of the $20,500; no cap on borrowing
Loans will only be given up to COA; if you need
more money, it must come from other sources
Terms:
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7.9% interest
2 ½ % origination fee
Interest accrues while student in school
Absence of bad credit required
Absence of Bad Credit
No account currently 90 days past-due
Any account included in this
No write-offs, charge-offs, bankruptcies,
or foreclosures allowed
More detail: www.studentloans.ed.gov
Private Loans
Schools are required to encourage students to
borrow through federal program
Credit- based
Signature- no collateral
Market rate interest - no cap
Variable interest rate
Guarantee fees
Co-Signor options/requirements
Capitalization may be monthly, quarterly
Pay monthly in order to avoid capitalization
Credit
Is an important issue in law school
finance for public and private
schools
If your credit is bad, you may not be
able to borrow GradPlus or private
loans
If you need GradPlus or private loans for
graduate school and have bad credit
You may not be able to attend!!
Nationally, 15-20% rejection
rate for bad credit
Likely to increase!
Credit Issues
Consumer Debt
Credit Bureaus and what they do

You are entitled to one free credit report per year; get it early
in case there are issues to address
Credit Scoring
If possible, consider borrowing only for tuition, fees,
and books
Credit Reporting Agencies
 Experian
 www.experian.com
Trans Union
 www.transunion.com
Equifax
 www.equifax.com
 Annual credit report
 www.annualcreditreport.com
Disbursement of Funds
Two times per year at beginning of semester after
schools subtract tuition
You receive the money AFTER you have moved
to graduate school
Must live within COA and loan amounts
Graduate Student Borrowing
Graduate
Education
Debt
All Education
Debt
Graduate &
Professional
Degrees
% Borrowing
Cumulative Debt
% Borrowing
Cumulative Debt
Total
60.1%
$37,067
70.1%
$42,406
Master’s
58.4%
$26,895
69.3%
$32,858
Doctoral
51.0%
$49,007
58.3%
$53,405
Professional
86.5%
$82,688
88.4%
$93,134
MBA
53.0%
$35,525
63.6%
$41,687
MSW
76.5%
$37,136
81.0%
$37,029
PhD
40.0%
$36,917
46.8%
$41,540
EdD
53.4%
$49,050
65.7%
$47,725
Law
87.7%
$70,933
89.7%
$80,754
Medicine
95.0%
$113,661
95.0%
$125,819
http://www.finaid.org/loans
/
Physician Salary Data
Type of
Practice
Lowest
Reported
Mean
Reported
Highest
Reported
Family
Practice
$128,000
$204,000
$299,000
Internal
Medicine
$154,000
$176,000
$245,000
Cardiologist
$268,000
$403,000
$811,000
General
Surgeon
$226,000
$291,000
$520,000
http://www.studentdoc.com/salaries.html
Legal Salary Data
Median Hourly
$51.97
Mean Hourly
$57.40
Mean Annual
$119,390
Hourly Wage
10%
$24.32
25%
$33.61
50%
$49.26
75%
>$70
90%
>$70
25%
$69,910
50%
$102,470
75%
>$145,600
90%
>$145,600
Annual Wage
10%
$50,580
Department of Labor, Bureau of Labor Statistics www.bls.gov
Average MBA Starting Salaries
by School
Ranking
Business
School
Applicants
Accepted
Median Total
Pay Package
1
Harvard
15%
130,000
2
Stanford
10%
130,00
3
Penn
19%
145,000
4
MIT
20%
113,500
5
Northwestern
24%
133,000
6
Chicago
NA
136,000
7
Dartmouth
20%
109,000
8
UC Berkeley
17%
118,000
9
Columbia
17%
144,000
10
NYU
20%
128,000
11
Michigan
28%
104,000
12
Duke
37%
114,000
13
Virginia
41%
121,000
14
Cornell
36%
117,000
15
Yale
22%
115,00
http://www.admissionsconsultants.com/mba/compensation.asp
Repayment Details
Repayment begins 6 months after graduation
Equation-- $12 X $1,000 (6.8%/7.9% interest) = Payment
Current average indebtedness–
 Law
$ 100,000
 Medicine
$ 139, 517
 Business
$ 35,525
Repayment for $100K= $144,000; Monthly payment $1200
Ten-year standard (can go to 20 or IBR) repayment time frame
No penalties for early payoff
Repayment Impacts
Debt #1 impact on job choice
Lifestyle choices: before, during, & after law school
2006 Study:

55% of graduates in repayment report feeling burdened by their debt,
especially law graduates

Up from 50% in 1997
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54% report that they would have borrowed less had they known the extent of
the burden
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15% report that the benefits of borrowing were out-weighed by the burden of
repayment
IBR
Repayment Impacts
How much will this really cost?
Can I afford it?
Repayment options/incentives
10-, 15-, 20-, 25-, and 30-year repayment plans may be
available
Be careful of stretching it out: when you should be
preparing for retirement, you may still be paying off your
college debt AND you may have children in college
Debt Management Software
Access Group Advisor
1-800-282-1550
 www.accessgroup.org

Nellie Mae EDvisor
1-800-EDU-LOAN
 www.nelliemae.org
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Scholarships Information
School Catalogues—Institutional
scholarships
www.fastweb.com
www.finaid.org
LRAP
Loan Repayment Assistance Programs
Awarded post-graduation
To grads who work in public interest jobs, as defined by their
school
May be given as a grant or a loan
Loan may be forgiven, after certain number of years of working
in job
____ programs nationally
Not available at all schools
Law School LRAP Programs
Public interest jobs
Equal Justice Works—former National
Association of Public Interest Law
www.equaljusticeworks.org
High-cost schools pay all/part of loan payments
for certain period
Limited funds and job descriptions
Be Creative!!
If you’re paying on your own, and someone want to
help you, let them pay one bill while you’re in
school (phone, texts, rent, gas, travel, clothes, etc.)
Creative entertainment; Find free things to do!
Insurance is a MUST!! One medical event could
lead to bankruptcy. Stay on parents’ plan, if
possible.
Holiday presents: textbooks, phone cards, clothes,
necessities