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TRANSCRIPT
Navigating College Financial Aid
Program Analysis
Dr. Herm Davis
301-548-9423
[email protected] www.drhermdavis.com
COLLEGE SELECTION PROCESS
1) Quality of Education 2) Happiness 3) Security and Health 4) 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 University-
Main 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 Carolina-
Columbia 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 Aid Application (IAA)
►Verification 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 step-
parent’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
Student Student Aid Report
S A R
FAFSA entered by Student/Parent
Central Processor
Student Corrections
School Award “Package”
Process
School ISIR Individual Student Information Report 1. 4. 7.__ 2. 5. 8.__ 3. __ 6. 9.__ 10.__
School Award Letter Sent
to Student
Maryland State Scholarship
Include a Maryland College on the FAFSA
FAFSA- Student Resources
FAFSA- Parent(s) Resources
FAFSA Preparation Question? Student Parent
What is the value of your cash, checking, savings account?
$ 10,000 $ 20,000
What is the Value of investment accounts excluding all retirement accounts?
$ 6,000 $ 50,000
What is the value of your business account (excluding a family farm or family business with <100 FT employees)?
$ $
20% Age APA
Asset Protection Allowance
Example: If the age of the older parent is 50 and 2 parents are in the household: The asset protection allowance is $31,800
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
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
Federal Methodology
CSS Profile Step-by-step Preparation
Institutional Methodology
CSS Profile Step-by-step Preparation
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
-NO Untaxed Social Security
Parent’s Income Business/Farm Income Untaxed Social Security Income
Parent’s Income Business/Farm Income Untaxed Social Security Income
Parent’s Assets
-Business and Farm Assets -NO Home Equity
-NO Retirement Plans
Parent’s Assets Including: - Home Equity -Retirement Plans -Business and Farm Assets
Parent’s Assets Including: 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
First Year
$3,500 + $2,000 = $5,500 $9,500 $20,500 – Only Unsubsidized Loans ______________ Interest Rates – SEE Next Slide
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
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 Aid Application (IAA)
►Verification 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
[email protected] ww.drhermdavis.com