Financial Aid
Financial Aid
Financial Aid Myths and Tips
Financial Aid
Published Costs
• Myth
– The published cost represents the true cost of a
college or university.
• The Larger Story
– What really matters to the student is the amount the
student will pay for college.
– This is called “net price.”
Financial Aid
Published Costs
Net Price by Income 1999-2012: Public Four-Year Institutions
Financial Aid
Published Costs
Net Price by Cost Private Institutions
Financial Aid
Mortgage Level of Debt
• Myth
– Students borrow over $100,000.
• The Larger Story
– Only 4% of individuals with outstanding student debt
owe $100,000 or more.
– Most had pursued advanced degrees!
Trends in Student Aid, 2013
Financial Aid
Mortgage Level of Debt
Financial Aid
Student Debt Levels
• Myth
– Student debt is at a crisis level.
• The Larger Story
– More students are going to college and
therefore, more students are borrowing.
– Those who do are borrowing more....
Financial Aid
Student Debt Levels
Financial Aid
Student Debt Levels
Financial Aid
Who Qualifies for Financial Aid?
• Myth
– Only low-income families qualify for financial
aid.
• Truth
– The EFC should be less than the cost of
attendance for a student to qualify for need or
merit-based aid.
Financial Aid
Who Qualifies for Financial Aid?
Universal Philosophy
• Students and their family(ies) have the primary responsibility to pay
for college.
• Sacrifice is assumed.
• Financial aid assessment is NOT a cash flow analysis but rather an
evaluation of an individual family’s economic strength.
• The contribution is determined by a standard formula that assesses
a family’s ability to pay.
• Willingness is not a factor.
Financial Aid
Who Qualifies for Financial Aid?
Financial Aid
Who Qualifies for Financial Aid?
Direct costs typically charged by the college:
Tuition and
fees
+
Cost of living in dorms
Cost of meal plans on
campus
+
Indirect costs that may not be charged by the college:
Allowance for
books and supplies
Allowance for
personal expenses
+ and a few meals out
+
Allowance for
transportation
Financial Aid
Who Qualifies for Financial Aid?
The Expected Family Contribution (EFC) is the number that is used
to determine students’ eligibility for federal student financial aid.
Many states also use the EFC to determine eligibility for state aid;
institutions may also use the EFC to determine eligibility for
institutional aid.
This number is calculated from the results of the financial information
the student and family provide in the Free Application for Federal
Student Aid (FAFSA).
The student's EFC is reported on the Student Aid Report (SAR).
Financial Aid
Saving for College
• Myth
– Saving for college hurts the chances of getting
aid.
• Truth
– If you save, you won’t need to borrow or borrow
as much!
– The EFC includes only 5.64% of the net worth of
assets (after allowances for retirement and
emergencies are removed).
Financial Aid
Saving for College – How is Family Contribution Calculated?
Family
Contribution
(EFC)
Parent
Contribution
Student
Contribution
+
=
Financial Aid
Saving for College
What if the family has more than one student enrolled?
Total Parent
Contribution
# in college adjustment
÷
2
=
Parent
Contribution
per Student
Financial Aid
Saving for College – Financial Need
Total Cost of
Attendance
Expected
Family
Contribution
(EFC)*
Financial
Need
*Note: This is not the same as the student’s bill or the amount a family
will actually pay for the student to attend college.
Financial Aid
The FAFSA
• Myth
– The FAFSA is too complex and takes too long to
complete.
• Truth
– For most first-time filers, the FAFSA takes less than
30 minutes to complete.
– Repeat filers spend less than 20 minutes
completing the FAFSA.
Financial Aid
The FAFSA
The FAFSA may be filed at any time during an academic
year, but no earlier than January 1st prior to the academic
year for which the student requests aid.
For the 2016 - 2017 academic year, the FAFSA may be
filed beginning January 1, 2016.
While most colleges set FAFSA filing deadlines, do not
forget to check for state filing deadlines.
Website: https://fafsa.gov
Financial Aid
The Federal Student Aid Log-In – New Process
▶
No more PIN!
▶
Students now create
an FSA ID.
▶
Yes, parents also
create their own.
▶
Both the student and
at least one parent
will use their
individual FSA ID to
electronically sign
the student’s FAFSA.
Financial Aid
The FAFSA
▶
▶
▶
▶
File federal tax returns as soon as possible.
Notify the school if an extension is filed.
Use the Data Retrieval Tool (DRT) to update any
estimates.
Be aware of the school’s deadlines. Better to provide
estimated information than miss the deadline.
Financial Aid
The FAFSA
The FATAL Mistakes
 DEADLINES
 missing application
dates
 missing admission
dates
 missing information
Financial Aid
Debt and Cost
▶
Myth
▶
▶
Students borrow more because college costs more.
Truth
▶
College does cost more, but families are also less prepared to pay
for college.
▶ Only 51% of college bound families saved for college
▶ Age 0 - 6 years average total savings - $10,282
▶ Age 7 - 12 years average total savings - $16,498
▶ Age 13 - 17 years average total savings - $21,416
How America Saves for College 2014, Sallie Mae
Financial Aid
Cost Increases – The College
▶
Myth
▶
▶
Students borrow more because college costs more.
Truth
▶
College costs increased due to the cost of labor and other
expenses.
▶ Wages to a highly educated workforce
▶ Expense increases are also outside the inflation rate
▶ Medical
▶ Retirement (tied to wages)
▶ Energy
Archibald and Feldman, Forbes 8/12/2010
Financial Aid
Cost Increases – The Student
▶
Myth
▶
▶
Students borrow more because college costs more.
Truth
▶
Length of time to graduate
▶
40% of undergraduate graduate in 4 years
▶
58% of undergraduate graduate in 5 years
▶
Loss of a year’s earnings
Financial Aid
Less Aid
▶
Myth
▶
▶
There is less aid available.
Truth
▶
▶
In 2013-14, over $184,000,000,000 was awarded in
financial aid to undergraduates.
Grants represented 57% of the total resources awarded to
the student.
▶ Another 8% are given to the family in tax credits.
Trends in Student Aid, 2014
Financial Aid
2013-14 Undergraduate Student Aid by Source and Type
Federal Work-Study ($0.9)
State Grants ($9.3)
1%
5%
Private/Employer Grants ($10.8)
6%
Federal Non-Pell Grants ($13.4)
7%
Federal Loans ($62.9)
34%
8%
18%
Institutional Grants ($37.5)
21%
To learn more, visit:
Trends in Student Aid 2014, Trends In Higher Education Series, College Board
https://trends.collegeboard.org/
Federal Education Tax
Credits & Deductions
($15.6)
Federal Pell Grants ($33.7)
Financial Aid
Loan Repayment
▶
Myth
▶
▶
Loans are too hard to pay back.
Truth
▶
Income contingent payment plans are available.
▶
PAYE (Pay As You Earn) only asks for payment of 10% of a
borrower’s net income.
▶
Allows the borrower to opt into other plans without a
penalty.
Financial Aid
Return on Investment
▶
Myth
▶
▶
The return on a college degree is less because of the increase in
the cost of an education.
Truth
▶
A college degree is at its highest premium.
▶
College graduate salaries decreased by 5% during the Great
Recession, while those without a degree had a 10 - 12%
decline.
▶
The number of college graduates getting jobs remain steady
throughout the Great Recession.
▶
Those without a degree experienced 8 - 10% unemployment.
US Bureau of Labor of Labor Statistics
Financial Aid
Degree and Unemployment
Financial Aid
Bait and Switch
▶
Myth
▶
▶
Colleges will offer grants in the first years but only offer
loans in the later years.
Truth
▶
If the family’s economy remains similar from year to year
and the student makes satisfactory progress towards a
degree, then the financial aid offered in the first year will
be renewed annually.
Financial Aid
Best Practices
•
Get your FSA IDs as soon as possible.
•
Attend financial aid presentations as early as the freshman year in
high school.
•
Always ask tough questions of all offices.
- Why does your college cost $_______?
•
Ask about medians.
- Averages are influenced by the outliers.
•
Complete applications before the earliest deadline and know all
deadlines.
Financial Aid
Best Practices
•
Know requirements to complete awarding and disbursing
– There’s more to financial aid than getting the award
•
When in doubt, ask a local financial aid officer
•
Keep all tax records up to date
– File as early as possible
•
When possible, use the Data Retrieval Tool
•
Review the Student Aid Report (SAR)
– Results from filing the FAFSA
•
Compare awards
– Look at the percentages for each type of financial aid being offered
Financial Aid Tools & Resources
Top 5 Things Counselors Should Tell Students About Financial Aid
1.
Never rule out a college because of cost alone.
2.
Compare costs before applying — Net price calculators can provide an estimate of
financial aid eligibility and remaining college costs. Net price calculators should be available on
every college's website.
3.
Remember to apply — FAFSA
4.
Get advice — The financial aid office at local colleges often provides workshops or can give
deadlines are available online at
https://fafsa.ed.gov/deadlines.htm. Many colleges and universities also provide funds through an
institutional application, the CSS/Financial Aid PROFILE®, and/or a state application.
advice.
5.
Compare awards — Look at grants, loans, and parental contributions before making a final
decision on a college.
Financial Aid
Financial Aid
Tools & Resources
Financial Aid Tools and Resources
Financial Aid Tools & Resources
National Scholarship and Grant Resources
http://www.fastweb.com/
Financial Aid Tools & Resources
National Scholarship and Grant Resources
https://bigfuture.collegeboard.org/scholarship-search
Financial Aid Tools & Resources
National Scholarship and Grant Resources
https://mycollegedollars.com/
Financial Aid Tools & Resources
College Scorecard
To learn more, visit:
http://www.whitehouse.gov/issues/education/higher-education/college-score-card
Financial Aid Tools & Resources
Federal Student Aid
https://studentaid.ed.gov/
FAFSA4caster
https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e1s1
Federal Student Aid Financial Aid Toolkit
http://www.financialaidtoolkit.ed.gov
BigFuture
https://bigfuture.collegeboard.org/
Net Price Calculators
http://studentnpc.collegeboard.org/
▶
Specific net price calculators should be found on the individual college’s website.
Financial Aid Tools & Resources
College Comparison Tools
College Navigator (NCES) http://nces.ed.gov/collegenavigator/
BigFuture https://bigfuture.collegeboard.org/compare-colleges
Financial Aid Shopping Sheet (US Department of Education)
http://www2.ed.gov/policy/highered/guid/aid-offer/annotatedshoppingsheet.pdf
Award Letter Comparison Tools
https://bigfuture.collegeboard.org/pay-for-college/financial-aid-awards/compare-aid-calculator
Scholarship and Grant Search Tools
Fastweb http://www.fastweb.com/
BigFuture https://bigfuture.collegeboard.org/scholarship-search
My College Dollars https://mycollegedollars.hyfnrsx1.com/
Financial Aid