Navigating College Financial Aid
Program Analysis
Dr. Herm Davis
301-548-9423
hdcfaces@comcast.net
www.drhermdavis.com
COLLEGE SELECTION PROCESS
1)
2)
3)
4)
Quality of Education
Happiness
Security and Health
Affordability
4-year College Graduation Comparison Chart
www.collegeresults.org
(1 of 2)
College or University
2012
4-Year
Grad Rate
% Pell
Recipients
Among
Freshman
Estimated
median
SAT/ACT
State
Size
(Undergrad
FTE)
Duke University
87.3%
14.3%
1440
NC
6,665
Wake Forest University
82.8%
14.2%
1325
NC
4,738
Georgetown University
89.4%
15.9%
1395
DC
7,385
Loyola University Maryland
79.2%
14%
1190
MD
3,832
Johns Hopkins University
86.4%
12.8%
1400
MD
5,820
University of North Carolina
at Chapel Hill
76.2%
19.7%
1305
NC
17,768
Vanderbilt University
86.6%
14.4%
1445
TN
6,770
Carnegie Mellon University
71%
13%
1400
PA
5,830
4-year College Graduation
Comparison Chart (2 of 2)
College or University
4-Year
Grad
Rate
% Pell Recipients
Among
Freshman
Estimated
median
SAT/ACT
State
Size
(Undergrad
FTE)
University of Maryland-College Park
63.2%
14.7%
1290
MD
25,407
Pennsylvania State UniversityMain Campus
65.4%
15.3%
1195
PA
38,136
Ohio State University, Main
52.6%
21.4%
1265
OH
40,461
Salisbury University
48.4%
18.5%
1145
MD
7,500
North Carolina State University
at Raleigh
39.3%
22.4%
1185
NC
23,105
Towson University
39%
21.7%
1080
MD
17,988
Hood College
49.3%
34.1%
1085
MD
1,394
East Carolina University
32.8%
33.4%
1035
NC
19,600
University of South CarolinaColumbia
53%
19.9%
1185
SC
21,319
How to start the Financial Aid Process –
KNOW your 4 worst enemies!
Enemy #1 – Cost of Attendance
Enemy #2 – Missed deadlines
Two main reasons:
“Student must be admitted before filing for aid” – WRONG!
“Parents must have their Federal income taxes submitted” – WRONG!
Enemy #3 – Self discrimination
Two main reasons:
“We make too much to file for aid” – WRONG!
“We can’t afford a private college” – WRONG!
Enemy #4 – Your College Student
•
Student needs to check college’s financial aid website
•
Parents need to obtain their student’s ID and password
University of Pennsylvania –
Average Freshman Awards by Family Income
Aided Freshmen by Family Income
Class of 2018 (entering September 2014)
Income
Median Total
Awards
Percent of Applicants
Offered Aid
$0 - 39,999
$63,040
99%
$40,000 - 69,999
$59,888
99%
$70,000 - 99,999
$53,230
97%
$100,000-129,999
$45,255
99%
$130,000-159,999
$35,400
88%
$160,000-189,999
$29,240
93%
$190,000-219,999
$25,380
67%
$220,000 and up*
$21,355
18%
* Most who qualify have more than one child in college.
Many factors other than income are considered. Therefore, individual awards vary based on
individual circumstances. Families with non-typical financial situations (such as business
owners, parents who are self-employed, owners of real estate other than their primary home,
and divorced parents) are more likely to receive non-typical awards.
FAFSA Forms Analysis
► Free
Application for Federal Student Aid
(FAFSA)
► CSS
Profile
► Institutional
► Verification
Aid Application (IAA)
Work Sheet (VWS)
Free Application for Federal Student
Aid (FAFSA)
► www.fafsa.gov
► Cost:
Free
► Submit for each student per year
immediately after Jan. 1st.
► PIN Required to sign electronically
► www.pin.ed.gov
► fafsa4caster.ed.gov
FORMS PROCESSING
Step 1: Apply for a PIN
►
When?
ASAP (before submitting the FAFSA)
►
How?
Sign on to “PIN.ED.GOV”
►
Why?
The PIN is an electronic signature for the FAFSA and is required by both the
student and one parent . Both PINs will need to sign the FAFSA before it can be
submitted to the processor.
►
Who?
Each student in the family applying for financial aid and one parent.
►
How often? One time, it will be active for the period of time the student is in college.
►
Comment(s):
- If there are two students attending college, each will need their own
PIN. However, the parent’s PIN can be used for both students.
- When applying for a PIN, you will be able to assign your own number.
- The same PIN number can be chosen for all family applicants.
FORMS PROCESSING
Step 2: FILING THE FAFSA
►
When? After January 1st, 2015.
►
How?
Sign on to - “FAFSA.GOV” and the electronic application will be available.
There is no paper FAFSA.
►
Who?
Each student in the family attending college
Whose information will be used?
►
- The Student will have to list his/her wages, savings and other assets.
►
- The Parent(s) will have to list their wages, savings and other assets.
►
CSS Profile
► https://profileonline.collegeboard.com
► Cost
is $25 for the initial application fee and
and one college and $16 to add each
institution
► CSS Non-Custodial Parent Profile cost is also
$25 for the initial application fee and $16 to
add each institution
► CSS
IDOC (Institutional Documentation
Service)
►
Comment(s):
►
1. If the parent is single, then the parent where the student resides more than 50% of
the time will be the parent who will need to complete the FAFSA.
►
2. If the parent, where the student is residing, should remarry, then the new stepparent’s wages and assets will need to be included on the FAFSA.
►
3. Excluded Assets
a. equity in the home
b. retirement accounts (annuities, 401k, C.D. etc.)
c. business values unless the business employs over 100 employees.
FORMS PROCESSING
Step 3: FAFSA DISCUSSION and TIME TABLE
►
January 1 and after

►
a.The FAFSA should be submitted by February 15th to meet all deadlines and no later than
March 1st. The FAFSA is used by all state scholarship programs and their deadline for filing is
normally March 1st.
b.You don’t have your taxes done yet? No problem, just use estimated income for 2013 using
your last year’s 1040 or your pay check receipts as a guide.
March 1st and after
Updating the FAFSA, now that you have your taxes completed, open up the FAFSA and make
your adjustments from your submitted taxes.
►
April 1st and after
Verification process- If the student’s FAFSA has been flagged for verification, it will require the
parent’s to update their FAFSA using the:
a. IRS DATA RETRIEVAL TOOL, instructions will be on the FAFSA. (or)
b. By calling the IRS (1-800-829-1040) and using the IRS INCOME TAX TRANSCRIPT.
ONLINE FAFSA Flow
FAFSA entered by
Student/Parent
Student
Student Aid Report
SAR
School
ISIR
Individual Student
Information Report
Central
Processor
Student
Corrections
1.
4.
2.
5.
3. __ 6.
10.__
7.__
8.__
9.__
School
Award “Package”
Process
Maryland State Scholarship
Include a Maryland College
on the FAFSA
School
Award Letter Sent
to Student
FAFSA- Student Resources
FAFSA- Parent(s) Resources
FAFSA Preparation
Question?
What is the value of your
cash, checking, savings
account?
What is the Value of
investment accounts
excluding all retirement
accounts?
What is the value of your
business account
(excluding a family farm or
family business with <100
FT employees)?
Student
$ 10,000
Parent
$ 20,000
$ 6,000
$ 50,000
$
$
20%
Age
APA
Asset Protection Allowance
Age of older
parent as of
12/31/14
Allowance if there
are 2 parents
Allowance if there
is only one parent
40
$25,100
$6,800
44
$27,500
$7,400
48
$30,300
$8,100
50
$31,800
$8,500
52
$33,500
$8,900
54
$35,400
$9,300
56
$37,300
$10,000
60
$41,700
$10,800
64
$46,700
$11,900
65 and over
$48,100
$12,300
Example: If the age of the older parent is 50 and 2 parents are in the household:
The asset protection allowance is $31,800
EFC FORMULA
EFC = Expected Family Contribution
(ESC-I)
Expected Student Contribution from Income
+ (ESC-A) Expected Student Contribution from Assets
+ (EPC-I)
Expected Parent Contribution from Income
+ (EPC-A) Expected Parent Contribution from Assets
= (EFC)
[Expected Family Contribution]
FAFSA / CSS Profile
Preparation and Analysis
FAFSA
Step-by-step Preparation
CSS Profile
Step-by-step Preparation
CSS Profile
Step-by-step Preparation
Federal Methodology
Institutional Methodology
Consensus Methodology
Item Analysis
Item Analysis
Item Analysis
Student’s Income
Student’s Income
Student’s Income
Student’s Assets
Student’s Assets
Student’s Assets
Parent’s Income
Parent’s Income
Business/Farm Income
Untaxed Social Security Income
Parent’s Income
Business/Farm Income
Untaxed Social Security Income
Parent’s Assets
Including:
- Home Equity
-Retirement Plans
-Business and Farm Assets
Parent’s Assets
Including:
-NO Untaxed Social Security
Parent’s Assets
-Business and Farm Assets
-NO Home Equity
-NO Retirement Plans
1.2 x AGI x 5 %
-Retirement Plans
-Business and Farm Assets
Number in College
Number in College
Number in College
Special Circumstances
Non-Custodial Profile
Non-Custodial Profile
Award Calculation
LC
MC 1
MC 2
HC
COA
$16,000
$25,000
$50,000
$60,000
-EFC
$14,000
$14,000
$14,000
$14,000
= NEED
$2,000
$11,000
$26,000
$42,000
Concensus Methodology
HOME EQUITY VERSUS PERCENTAGE OF AGI
Home equity is only a concern for students planning to attend a college using the
CSS Profile. When the home equity value is calculated by the CSS Profile processor
it is calculated at 5%. Assuming the parent’s income (AGI) is $90,000 and equity
in the home is $500,000 would result in the following:
IE: Equity of $500,000 X 5% = $25,000
However, many of these high costs private colleges have replaced the home equity
assessments to a percentage of the parent’s adjusted gross income (AGI). This
percentage may vary from school to school from 1.2 to 3 times the AGI.
IE: AGI of $90,000 X 1.2 = $108,000
In this example, the school would reduce the equity of $500,000 to $180,000 and
apply the 5 % calculation..
IE: $108,000 X 5% = $ 5,600
Treatment of the AGI in this manner has reduced the EFC by $ 19,000.
RESOURCE ANALYSIS
Self Help Programs (Awarded before gift aid)
Work-study or student employment programs: federal and college.
Loans: Direct Loans, PLUS Loans and Private Loans –
borrowed money that you must pay back, usually with interest.
Gift Aid Programs – “Free Money”
Grants – Need Based
Money you don’t have to repay, typically based on financial need.
Scholarships – Merit and May be Need Based
Institutional, State and Private
Free money awarded usually based on your area of study or merit.
Federal Loans: The smart way to borrow
► Federal
Direct Loans
Subsidized Direct Loans
►Based
solely on financial need
►Federal government pays the interest while you are
in school
Unsubsidized Direct Loans
►All eligible students can receive them, regardless of
income or assets
►You’re responsible for paying the interest while in
school.
Federal Direct Loan Limits
Year
Dependent Undergraduates
Subsidized + Unsubsidized = Total
Independent
Undergraduates
Graduate and
Professional
Students
$20,500 –
Only
Unsubsidized
Loans
First Year
$3,500 + $2,000 = $5,500
$9,500
Second Year
$4,500 + $2,000 = $6,500
$10,500
Third Year
$5,500 + $2,000 = $7,500
$12,500
Fourth Year
$5,500 + $2,000 = $7,500
$12,500
Total
amount you
can borrow
$27,000
$45,000
______________
Interest Rates
– SEE Next Slide
Federal Direct Loan Interest Rates
Loan Type
Current Interest Rates
( NOT Fixed rates)
Undergraduate Direct
Subsidized and Unsubsidized
Loans
From 3.9 %
Currently
4.66%
Not to exceed 8.25%
Graduate Direct Unsubsidized
Loan
From 5.4%
Currently
6.21%
Not to exceed 10.5%
Direct PLUS Loan
(Parent Loan for Undergraduate
Students)
From 6.4%
Currently
7.21%
Not To exceed 10.5%
Federal Pell Grant = $5,730
Federal Direct PLUS Loans
► Enable
parents or stepparents (whose
information is reported on the FAFSA) to
borrow up to the cost of attendance.
 Minus any other aid the student may receive
 Legal guardians cannot borrow PLUS loans .
Components for Discussion
1 – Overview
2 – Forms Analysis
3 – Process Analysis
4 – FAFSA / CSS Profile Preparation & Analysis
5 – Resource Analysis
6 – Award Analysis
The Award Process
► Colleges
assign each student a password and user
name after the admissions applications are
received. The user name and password is
assigned to allow students to monitor their
admissions application, financial aid status,
academic record and billing statements.
► The
financial aid offices uses this process to
communicate with the students regarding their
financial application status.
(The Award Process Continued)
►
After each college receives the aid
application/documents it will post receipt of the
document on the student’s financial aid page.
1. The posting will tell the student the status of
the document received regarding its fulfillment.
2. If the college requires additional information, it
will post the listing on the student’s aid page.
(PROBLEM: Student fails to monitor his/her
financial aid page in order to take further action
and thus complete the aid application process.)
(The Award Process Continued)
► After
the student meets all requirements for awarding, the
aid office will post the award on the student’s account.
1. The awards will be posted for the student to accept or
decline.
2. If accepted, the student will be instructed regarding any
additional action to be taken.
(Note: A student should check his/her college email
account as well as their personal email account and regular
U.S.P.S)
(Problem: Student fails to monitor his/her financial aid page
to either accept or decline awards. In addition, even after
accepting, many times the student fails to complete the
award process by not fulfilling the loan application process.)
FAFSA Forms Analysis
► Free
Application for Federal Student Aid
(FAFSA)
► CSS
Profile
► Institutional
► Verification
Aid Application (IAA)
Work Sheet (VWS)
Institutional Supplemental Forms
► Institutional
Aid Application (IAA)
“Institutional Funding Form”
Financial Aid Form found on college
financial aid website
► Verification
Work Sheet (VWS)
-IRS Data Retrieval Tool (DRT) FAFSA Update
-VWS Form + w-2’s +IRS Tax Transcript
IRS ph: 1-800-908-9946
Process Analysis
► Online
processing
► How colleges receive data
► How to correct data
► EFC Formula
► Awarding of Aid Formula
FAFSA Preparation
-Who fills out the FAFSA?
Parent(s) of the student, where the student
has resided more than 50% of time of the
calendar year.
- Who’s information do you use?
Parent(s) who are married or remarried OR
Single, Divorced, Separated or Widowed?
FAFSA Preparation
► Student
Financial Information
“As of today, what is your (student’s) total
current balance of cash, savings and checking
account(s)?”
“As of today, what is the net worth of your
(student’s) investments, including real
estate…”
FAFSA Preparation
► Parent(s)
Financial Information
“As of today, what is the parent’s total current balance of
cash, savings and checking account(s)?”
“As of today, what is the net worth of the parent’s
investments, including real estate? (Don’t include the home in
which your parents live. Net worth means current value
minus debt.)”
“As of today what is the net worth of your parent’s current
business and/or Investment farms? (Don’t include a family
farm or family business with <100 FT employees)”
(Resource Analysis Continued)
► Academic
Common Market
“College 411” Guide http://www.mhec.state.md.us
► Innovative
Opportunities
“Best College Deals” -www.petersons.com
► College
Graduation Rates by years of study
www.collegeresults.org
►
Net Price Calculator
http://netpricecalculator.collegeboard.org/
Navigating College Financial Aid
Program Analysis
Dr. Herm Davis
301-548-9423
hdcfaces@comcast.net
ww.drhermdavis.com