MEFA’s Guide to
College Financing
Today’s Presenter: Joe Farragher, Ed.D.
Celebrating 30 years of Excellence
Planning, Saving & Paying for College
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Facts About MEFA
• Massachusetts Educational Financing Authority
• Not-for-profit state authority that works to
make higher education more accessible and affordable
• Created in 1982 by the State Legislature
• Helping families:
o Plan: Extensive community outreach
o Save: U.Fund® and U.Plan® college savings plans
o Pay: Affordable fixed interest rate college loans for
over 30 years
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You Can Do This
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mefa.org/seniors
Videos/
Social
Media
What’s
Next: Your
to-do list
Next
Guidance:
Financial Aid
Info & Tips
Slide
Tools &
Resources
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mefa.org/seniors
Email
Signup
What’s
Next: Your
to-do list
e-Book
Tools &
Resources
Ask a
MEFA
Expert
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Agenda
• What is financial aid?
• How do students apply?
• How are financial aid decisions made?
• Financial aid awards
• Paying for college
• Free resources
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Overview of Financial Aid
Undergraduate Student Aid 2011-12 ($185.1 Billion)
Source: The College Board, Trends in Student Aid 2012
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Sources of Financial Aid
• Federal
– Grants, work-study, loans, tax incentives
• Massachusetts
– Grants, scholarships, tuition waivers, loans
– www.osfa.mass.edu
• College/University (institutional aid)
– Grants, scholarships, loans
• Outside Agencies
– Scholarships
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Merit-Based Aid
• Awarded in recognition of student achievements
(academic, artistic, athletic, etc.)
• Applicants often compared against one another
• May or may not be renewable
• Not offered at every school
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Need-Based Aid
• Awarded based on family’s financial eligibility
as determined by standardized formula
• Includes grants, loans and/or work-study
• Most federal, state and institutional
aid is awarded based on financial eligibility
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The FAFSA
• Free Application for Federal Student Aid (FAFSA)
–
–
–
–
–
Required by all colleges for federal and MA state aid
Open January 1st: FAFSA.gov
Must sign with a PIN: PIN.ed.gov
IRS Data Retrieval Tool – available February 1st
Requires data from all parents who live together, married or not
Must be
completed
every year!
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Other Financial Aid Applications
• CSS/Financial Aid PROFILE®
– Some colleges require for institutional aid
– $25 for 1st school, $16 for each additional
– Online application required: CollegeBoard.org
– Noncustodial Parent PROFILE required when applicable
– 31 MA Colleges and Universities
• College Financial Aid Application
– Required by some colleges
– Usually part of the admissions packet
Don’t wait
until you’re
accepted to
apply!
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What Happens After You Apply?
1. Colleges & state receive data electronically
2. You will receive (electronically or by mail):
– Student Aid Report (SAR)
– CSS/Financial Aid PROFILE® acknowledgement report
3. Review both & keep for records
4. Colleges may request Verification documents
5.With any special circumstances, contact Financial Aid
Office at each college
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Cost of Attendance (COA)
Total expenses for one year of college
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Expected Family Contribution (EFC)
• Calculated amount the family has the ability to absorb
for one year of college expenses
• Same federal formula used for every family
• Family has the primary responsibility for paying
• Not necessarily what the family will pay
Visit mefa.org/seniors to use an EFC calculator
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EFC Formulas
• Federal & institutional formulas are different
– Federal formula for MA & federal aid
– Institutional formula for aid from some colleges
• Includes income & asset protection allowances
• Parent & student info treated differently
• Does not include personal debt
(credit cards, auto loans or personal loans)
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Asset Impact on EFC
An example. 4 in the family, 1 child in college:
Parent Income
Parent Assets
EFC
Family A
Family B
Family C
$60,000
$60,000
$60,000
$0
$75,000
$150,000
$4,227
$5,461
$10,815
$1,234
$6,588
Difference
Based on 2014-15 Federal Methodology
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Income Impact on EFC
An example. 4 in the family, 1 child in college:
Family A
Family B
Family C
Parent Income
$60,000
$100,000
$150,000
Parent Assets
$50,000
$50,000
$50,000
$4,591
$16,552
$32,084
$11,961
$27,493
EFC
Difference
Based on 2014-15 Federal Methodology
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Financial Aid Formula
Cost of Attendance (COA)
– Expected Family Contribution (EFC)
= Financial Aid Eligibility
Colleges fill in Financial Aid Eligibility with
financial aid from multiple sources
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Cost of Attendance
How the Formula Works
$50,000
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Eligibility
EFC
College A
College B
College C
College D
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Financial Aid Awarding
COA =
$30,000
Unmet Need
$3,000
Federal
Work-Study
$1,500
Student Loan $5,500
Grant
$7,500
Scholarship
$7,500
EFC
$5,000
EFC =
$5,000
ANY college costs not covered by financial aid are the FAMILY’s
This example is an estimate only.
responsibility!
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Comparing Award Letters: Award Totals Vary
COA: $30,000
EFC: $5,000
Total Eligibility: $25,000
College A
College B
College C
$18,000
$15,000
$10,000
Student Loans
$5,500
$5,500
$5,500
Work-Study
$1,500
$1,500
$1,500
$25,000
$22,000
$17,000
$0
$3,000
$8,000
Grants/Scholarships
Total
Unmet Need
Family Pays?
$6,500
$9,500
$14,500
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Comparing Award Letters: Award Totals Are Equal
COA: $30,000
EFC: $5,000
Total Eligibility: $25,000
College A
College B
College C
$15,000
$5,000
$0
$5,500
$5,500
$5,500
Parent Loan
$0
$10,000
$16,500
Work-Study
$1,500
$1,500
$0
$22,000
$22,000
$22,000
$3,000
$3,000
$3,000
Grants/Scholarships
Student Loans
Total
Unmet Need
Family Pays?
$9,500
$19,500
????
????
$24,500
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UMass-Amherst
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Bentley University
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How to Fill the Unmet Need
Favorite
College
EXAMPLE
Balance Due
Past Income
Present Income
Future Income
$20,000
Student Savings
-$1,500
Parent Savings
-$4,000
Student Contribution
to Payment Plan
-$1,000
Parent Contribution
to Payment Plan
-$3,500
Education Loan
-$10,000
$0
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Federal Direct Student Loans
• Student is the sole borrower
• No credit check
• Annual limits
• 3.86% fixed interest rate for 2013-14
• Repayment
– No payments due while enrolled
– Approximately $300/month for 10 years for $27,000 debt
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Alternative Loan Considerations
Be a Wise Consumer!
• Interest rate and APR
• Fixed or variable interest rate
– Fixed: stable, monthly payments
– Variable: changes based on market conditions
• Primary borrower (student or parent)
• Start of loan repayment
• Monthly payment amount and years in repayment
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FAFSA Day Massachusetts
Free assistance in completing the FAFSA!
• Over 25 locations across Massachusetts
• Sunday, January 26, 2014 at 1:00 p.m.
• Sunday, February 23, 2014 at 1:oo p.m.
• Additional dates and all locations listed at
fafsaday.org
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Continued Spring Guidance
After The Acceptance Seminars
• 25 Locations across MA in late March/April
• One-on-one guidance
• Provides key, timely info on:
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Understanding financial aid award letters
College bills and payment plans
Loan options (parent and student)
Working with the Financial Aid Office
• Register for MEFA emails to receive location details
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What You Can Do Now
• Research financial aid deadlines & requirements
• Partner with MEFA:
– Sign up for MEFA emails
– Download the College Financing e-book
– Bookmark mefa.org/seniors
• Net Price Calculator Site:
– http://collegecost.ed.gov/netpricecenter.aspx
• You Can Do This
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Thank You
Questions or Comments?
Please take a moment to complete the seminar
evaluation
Presenter:
Joe Farragher, Ed.D.
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