understanding financial aid awards and communicating with financial aid offices

1 • www.nacacnet.org

Welcome to Understanding Financial Aid Awards and Communicating

with Financial Aid Offices Presented by the

National Association for College Admission Counseling

Wednesday, April 15, 2009


Today’s Agenda •  Financial aid award letters •  Comparing financial aid award letters among

schools •  Prospects for standardization of award letters •  Communicating with financial aid offices •  Counseling considerations in the current

economic climate


Today’s Presenters •  Cedrick Andrews, Policy Associate,

The Institute for College Access and Success (TICAS)

•  Youlonda Copeland-Morgan, Associate Vice President for Enrollment Management and Director of Scholarships and Student Aid, Syracuse University


Today’s Presenters, cont. •  Barbara Hall, Senior Consultant, Murray &

Associates and the National Center for College Costs, and former Guidance Director and College Counselor at Bishop Dwenger High School, Fort Wayne, IN

•  Tim Christensen, Specialist on College Access and Success (moderator)


Components of Financial Aid Award Letters

•  Award letters are not standardized, so not all will contain each of these components

•  Cost of attendance (COA) – Tuition and fees – Room and board – Books and supplies


Components of Financial Aid Award Letters, cont.

•  Cost of attendance (COA), cont. – Health insurance/fees – Transportation – Personal



•  Cost of attendance (COA), cont. – May also include:

•  Dependent care •  Study abroad expenses •  Disability expenses •  Employment expenses for co-op study •  Loan fees



•  Take-away: Chapter on “Cost of Attendance (Budget) in the 2008-2009 Federal Student Aid Handbook at http://ifap.ed.gov/sfahandbooks/attachments/0809FSAHbkVol3Ch2Oct14.pdf



•  Possible issues with cost of attendance – Definitions of components not standardized – Cost categories not standardized – May not include all costs – May not be based on actual costs or may

not be most recent data



•  Expected family contribution (EFC) – Derived from information reported on Free

Application for Federal Student Aid – Generally consistent from school to school



•  Expected family contribution (EFC), cont. – May be increased by CSS Profile at some

schools – EFC may not be the total family

contribution •  Loans and work-study earnings are also a

contribution from the family



•  Financial aid – Gift aid – Self help aid

•  Need-based and non-need based federal loans •  Work-study employment •  Private (non-need-based) loans



•  Gift aid – Grants and scholarships – May come from federal, state, or

institutional sources – May be need-based or merit-based



•  Gift aid, cont. – Does not have to be repaid as long as

recipient meets requirements – May or may not be renewable



•  Federal need-based loans – Perkins – Subsidized Stafford

•  Features of need-based loans –  Low interest rates – Delayed repayment –  In-school interest subsidy



•  Federal non-need based loans – Unsubsidized Stafford – Parent PLUS – Grad PLUS



•  Federal non-need based loans, cont. – Higher interest rates

•  6.8 percent fixed rate for unsubsidized Stafford

–  Interest accrues during school and deferments – Payments on PLUS loans are due while the

student is in school



•  New repayment options are becoming available for most federal student loans –  Income-based repayment – Public service loan forgiveness



•  Take-away: Income-based repayment and public service loan forgiveness site at www.IBRinfo.org



•  Work-study employment – Must be willing to work during

academic year – Provides work experience – Research shows 10-15 hours/week

may have academic benefit – May reduce loan burden



•  Take-away: The financial aid chapter in NACAC’s Guide to the College Admission Process at

http://www.nacacnet.org/PublicationsResources/Marketplace/Pages/AdmissionGuide.aspx



•  Take-away: The National Association of Student Financial Aid Administrators’ “Student Aid Program Summary,” accessible from http://www.nasfaa.org/redesign/fanight.asp



•  Private Loans – Not really financial aid but a financing tool

like a home equity loan or credit card – Less available due to credit crunch



•  Private Loans, cont. – Only used as a last resort after other

financial aid options – Should have co-signer and be school

certified for best interest rates and terms



•  Take-away: The Institute for College Access and Success, Project on Student Debt’s “Questions to ask about private loans” at http://projectonstudentdebt.org/private_loan_questions.vp.html



•  Unmet need or “gapping” – May need to find alternative financing, such

as a private or home-equity loan •  Always give federal loans priority over private

loans and credit card debt – May be able to reduce expenses instead of

taking on private debt


Comparing Financial Aid Award Letters Among Schools

•  Why aid packages differ from institution to institution – Cost of attendance

•  Both categories and amounts may vary

– EFC •  May differ if institution is a CSS Profile user


Comparing Financial Aid Award Letters Among Schools, cont.

•  Why aid packages differ from institution to institution, cont. – Fund availability –  Institutional awarding policies



•  May be useful to subtract gift aid from cost of attendance – Difference may be met by a

combination of self-help aid (loans and work) and EFC

•  May be useful to aggregate grants vs. work-study vs. loans



•  Loan terms – May not be stated on award letter

•  Amount of unmet need or “gap”



•  Future aid packages – Renewability – Changes in proportion of grant vs. loan in

subsequent years – Probably not stated on award letter



•  Ideal (for student) treatment of outside scholarships – First—meeting unmet need – Then—reducing self help – As a last resort—reducing grant (but never

Pell Grant)



•  Take-away: NACAC’s “Student Bulletin: Understanding Your Financial Aid Award Letter” at http://www.nacacnet.org/PublicationsResources/Marketplace/Documents/LateHS.pdf



•  Non-financial considerations to bear in mind – School’s academic programs – School type and size – School’s culture and demographics – The best aid package may not be the

best school choice overall


Prospects for Standardization of Financial Aid Award Letters

•  Steps Congress and the U.S. Department of Education are pursuing

•  Steps institutions could take now – Prominently display most important and

useful information –  Include straightforward instructions and

helpful resources


Prospects for Standardization of Financial Aid Award Letters, cont.

•  Steps institutions could take now, cont. –  Include complete estimate of COA – Clearly distinguish gift aid from self help

and provide bottom line cost – Avoid jargon, acronyms and unexplained

terms



•  Steps institutions could take now, cont. – Encourage wise borrowing by disclosing

loan terms and conditions – Distinguish between costs the school will

bill the student for and those the student will have to pay on his/her own



•  Take-away: Mark Kantrowitz’s editorial on standardization of award letters in Inside Higher Ed at http://www.insidehighered.com/views/2007/06/22/kantrowitz


Communicating with Financial Aid Offices

•  Responsibilities of the aid office – Counseling – Need analysis – Awarding – Monitoring – May also have job placement and veterans

affairs responsibilities


Communicating with Financial Aid Offices, cont.

•  What financial aid administrators do – Helping professionals and experts on

student financing – Multiple constituencies to serve – Stewardship of taxpayer and institutional

dollars – Compliance with multiple agencies’ rules



•  Electronic communication – Email is good for routine correspondence – Do not encourage sending confidential

information via email, but it’s done •  Telephone

– Better for confidential conversation and persuasion, but write instead if it’s hard to get through



•  Written communication –  On-the-record (as is email) –  When documentation is desired or required

•  When a visit is desirable or necessary –  May wish to cultivate a relationship if

circumstances are complex –  May be required if other communications vehicles

are not effective



•  Proactive strategies –  Inform the aid office of outside awards

as soon as they are known –  Inform the aid office of any changes in

the family’s circumstances as soon as they occur



•  The appeals process – Appealing vs. negotiating awards

•  Most institutions will not negotiate, but some will—so ask away

•  Preparing for an appeal and presenting the case

– Documentation –  Be sincere and polite, not angry



•  Appeals and professional judgment – Professional judgment is authority to adjust

EFC due to exceptional circumstances •  Unemployment or reduced employment •  Student’s decision to leave workforce or reduce

hours to return to school (adult student) •  Costly medical situations •  Home foreclosure •  Other



•  Professional judgment, cont. – Often requires third-party documentation – Professional judgment is subject to certain

statutory limitations •  Special circumstances that distinguish one

student from a class of students •  No automatic categories of professional

judgment



•  A final word on appeals – Aid office workloads have increased;

staffing has not – Expect longer turnaround times on appeals



•  Take-away: Recent guidance on professional judgment from the U.S. Department of Education at http://www.ifap.ed.gov/dpcletters/GEN0904.html


Counseling Considerations in the Current Economic Climate

•  Practically speaking, there is nothing going on that can’t be dealt with – Eligibility may increase, particularly for

Pell Grants – Students may become eligible for

subsidized federal loans


Counseling Considerations in the Current Economic Climate, cont.

•  Counselors can help families manage expectations –  Institutional funds may be exhausted – All awards have a ceiling, either by rule

or policy – There isn’t enough money in the world to

provide a safety net for all



•  On an emotional level, counseling is much more challenging – Family circumstances may be dire – Be prepared to refer families to appropriate

financial and social services agencies and help them access services



•  On an emotional level, counseling is much more challenging – Be sympathetic, but also maintain appropriate

emotional detachment – Review and adhere to NACAC’s “Statement of

Principles of Good Practice”



•  Take-away: NACAC’s “Statement of Principles of Good Practice” at http://www.nacacnet.org/AboutNACAC/Policies/Documents/SPGP.pdf


Q & A •  Continue to submit questions via e-mail •  We will select those questions with the

broadest applicability •  An archive of today’s Webinar will be posted

on the NACAC Web site approximately one week from today

•  Thank you for participating in “Understanding Financial Aid Awards and Communicating with Financial Aid Offices”!