financial aid. financial aid myths and tips financial aid published costs myth –the published cost...

Financial Aid

Financial Aid

Financial Aid Myths and Tips

Financial AidPublished 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 AidPublished Costs

Net Price by Income 1999-2012: Public Four-Year Institutions

Financial AidPublished Costs

Net Price by Cost Private Institutions

Financial AidMortgage 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 AidMortgage Level of Debt

Financial AidStudent 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 AidStudent Debt Levels

Financial AidStudent Debt Levels

Financial AidWho 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 AidWho 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 AidWho Qualifies for Financial Aid?

Financial AidWho Qualifies for Financial Aid?

Tuition and fees

Cost of living in dormsCost of meal plans on

campus

Allowance forbooks and supplies

Allowance forpersonal expenses

and a few meals out

Allowance fortransportation

+ +

Indirect costs that may not be charged by the college:

+ +

Direct costs typically charged by the college:

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 AidWho Qualifies for Financial Aid? 

Financial AidSaving 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 AidSaving for College – How is Family Contribution Calculated?

Parent Contribution

Family Contribution

(EFC)

Student Contribution

+ =

Financial AidSaving for College

What if the family has more than one student enrolled?

# in college adjustment

2÷

Total ParentContribution

Parent Contribution per Student

=

Financial AidSaving for College – 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.

Total Cost of Attendance

Expected Family

Contribution (EFC)*

Financial Need

Financial AidThe 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 AidThe 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 AidThe 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 AidThe 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 AidThe FAFSA

The FATAL Mistakes

DEADLINES missing application

dates missing admission

dates missing information

Financial AidDebt 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 AidCost 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 AidCost 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 AidLess 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

To learn more, visit: Trends in Student Aid 2014, Trends In Higher Education Series, College Board

https://trends.collegeboard.org/

Financial Aid2013-14 Undergraduate Student Aid by Source and Type

1%5%

6%

7%

8%

18%

21%

34%Federal Loans ($62.9)

Institutional Grants ($37.5)

Federal Pell Grants ($33.7)

Federal Education Tax Credits & Deductions

($15.6)

Federal Non-Pell Grants ($13.4)

Private/Employer Grants ($10.8)

State Grants ($9.3)Federal Work-Study ($0.9)

Financial AidLoan 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 AidReturn 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 AidDegree and Unemployment

Financial AidBait 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 AidBest 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 AidBest 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 & ResourcesTop 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 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.

4. Get advice — The financial aid office at local colleges often provides workshops or can

give advice.

5. Compare awards — Look at grants, loans, and parental contributions before making a

final decision on a college.

Financial Aid

Financial Aid Tools and Resources

Financial AidTools & Resources

Financial Aid Tools & ResourcesNational Scholarship and Grant Resources

http://www.fastweb.com/

Financial Aid Tools & ResourcesNational Scholarship and Grant Resources

https://bigfuture.collegeboard.org/scholarship-search

Financial Aid Tools & ResourcesNational Scholarship and Grant Resources

https://mycollegedollars.com/

To learn more, visit:http://www.whitehouse.gov/issues/education/higher-education/college-score-card

Financial Aid Tools & ResourcesCollege Scorecard

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