how it all works… scholarships and financial aid
TRANSCRIPT
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How it All Works…
Scholarships
and
Financial Aid
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College Financial Aid Brochures
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Types of Financial Aid
• Scholarships• Grants• Work• Loans• Tax Credits
• The American Opportunity Credit
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Sources of Financial Assistance
• FEDERAL
• STATE
• INSTITUTIONAL
• PRIVATE
• FAMILY
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How the Average Family Pays
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Sources of Financial Assistance
• Institutionally Funded Aid
• Primary Aid Source at Privates
• Philosophies Differ
• Endowment vs. Discount
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How Eligibility is Determined
• Academic/Merit
• Performance/Talent
• Eligibility/Need-based
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How Eligibility is Determined
Academic/Merit
• Based on student performance, not financial status
• SAT/ACT, Class Rank, HS GPA
• Can be very competitive, or not
• Generally tied to tuition
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How Eligibility is Determined
Performance/Talent
• Usually requires an audition
• Very competitive
• NCAA - Division I, II, III
Ncaa.org
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Universities are like airlines.
We all overbook!
An important Hint
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How Eligibility is Determined
Need-Based Aid
• Federal
• Eligibility calculated using methodology approved by Congress
• Most common method at majority of universities
• Institutional
• May be calculated using CSS Profile methodology at some private universities
• Both measure a family’s ability to pay, not their willingness to pay
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Applying for Need-Based Aid
Need-Based Aid
• Forms
• FAFSA
• CSS Profile
• Institutional Aid/Scholarship Application
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Calculating “Need”
Cost of Attendance
- Expected Family Contribution (EFC)
= Need
Determining Eligibility
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• Tuition & Fees
• Residence Hall & Meals
• Books & Supplies
• Travel Expenses
• Study Abroad
• Personal Expenses
Cost of Attendance
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Calculating “Need”
Cost of Attendance
- Expected Family Contribution (EFC)
= Need
Determining Eligibility
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Want to know the secret of the EFC?
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AAI ASSESSMENT RATES
INCOME EXCLUSIONS
(child support paid, taxable aid, tuition tax credits)
U.S. INCOME TAX
F.I.C.A. TAX
STATE AND OTHER TAXES
EMPLOYMENT ALLOWANCE
INCOME PROTECTION ALLOWANCE
TOTAL INCOME
PARENTS’ INCOME*
TAXABLE INCOME
UNTAXED INCOME AND BENEFITS
AVAILABLE INCOME
ADJUSTED AVAIL. INCOME
TOTAL PARENTS’ CONTRIBUTION
PARENTS’ CONTRIBUTION FOR
STUDENT
NUMBER OF DEPENDENT CHILDREN IN
COLLEGE
INCOME SUPPLEMENT
(NOT LESS THAN ZERO)
ASSET PROTECTION ALLOWANCE
12% CONVERSION RATE
BUSINESS OR NON-FAMILY FARM ADJUSTMENT
DISCRETIONARY NET WORTH
NET WORTH
PARENTS’ ASSETS**
CASH/BANK ACCOUNTS
INVESTMENTS AND OTHER REAL ESTATE EQUITY
NON-SMALL BUSINESS OR NON-FAMILY FARM NET
WORTH
* Federal need analysis provisions provide an “ automatic zero EFC treatment for families with parental AGI of $ 20,000 or less if
the parents are non-tax filers or file a 1040A or 1040EZ, or file a 1040 and receive federal means-tested benefits (TANF, SSI,
free or reduced price lunch, food stamps or WIC).
** If the parents are non-tax filers, or file an IRS 1040A or EZ, or file an IRS 1040 and receive federal means-tested benefits, and the
parents’ AGI is less than $ 50,000, no assets are included in the methodology
Parents of dependent studentsFederal Methodology (FM)
DISCRETIONARY NET WORTH
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529 Savings Plans
Pre-Paid Tuition and/or Savings
Plans
• Plans held by parents :– reported on the (FAFSA) as a parental asset, assessed
at a maximum 5.64% rate
• Plans owned by the student:– are to be reported as parental assets
• Plans owned by grandparents, others:– distribution is reported as untaxed income, resulting
in a severe reduction in eligibility for need-based aid
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Vertical
Horizontal
Equity in Awarding
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Financial Need and Admission
• Need Blind– Students are admitted without regard to ability to pay.– Need Conscious– Need Sensitive
• Meeting Need – supplying sufficient gift aid to equal COA minus EFC.– Often less than what parents expect,
sometimes limited to “full – tuition”– Very few universities capable of doing this
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Less Expensive School
Cost of attendance $13,000EFC $10,000Need $ 3,000
Need-Based Grant -$ 2,000 Loan -$ 1,000 -$ 3,000
More Expensive School
Cost of attendance $26,000EFC $10,000Need $16,000
Academic Scholarship -$ 8,000Need-Based Grant -$ 2,000Work Study -$ 2,000Student Loan -$ 4,000
-$16,000
Packaging Financial Aid
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Less Expensive School
Cost of attendance $13,000Parent Loan (PLUS) $10,000Need $ 3,000
Need-Based Grant -$ 2,000 Loan -$ 1,000 -$ 3,000
More Expensive School
Cost of attendance $26,000Parent Loan (PLUS) $10,000Need $16,000
Academic Scholarship -$ 8,000Need-Based Grant -$ 2,000Work Study -$ 2,000Student Loan -$ 4,000
-$16,000
Packaging Financial Aid
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Net Price Calculators
The Higher Education and Opportunity Act of 2008 (HEOA) requires all post secondary institutions that enroll first-time, full-time students and participate in the Title IV programs to provide a Net Price Calculator on its website by Oct. 29, 2011.
Purpose– “to help current and prospective students, families, and other consumers estimate the individual net price of an institution of higher education for a student.
2
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Net Price Calculators
• Net Price Calculators must provide at least the following information:
• Estimated total price of attendance• Estimated tuition and fees• Estimated room and board• Estimated books and supplies• Estimated other expenses (including personal
expenses and transportation)• Total estimated merit and need-based grant • Estimated net price (price minus grant aid)
2
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Net Price Calculators
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Net Price Calculators
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Net Price Calculators
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Net Price Calculators
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Academic Social
Financial
The Best
Fit
Which School is Right For You?
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www.collegeboard.com
www.finaid.org
www.fafsa.ed.gov
www.fastweb.org
www.irs.gov/pub/irs-pdf/p970.pdf
www.studentaid.ed.gov
Important Links
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Mike [email protected]