Financial Aid: An Overview A Presentation of

1. Financial Aid: An Overview A Presentation of

2. Introduction Tonight you will learn: • What Financial Aid is • Sources of Financial Aid • The formulas used in determining your eligibility • When and how to apply • Resources for more information

3. Who Are You? • Is this process new to you? • Where is your son or daughter thinking about attending college? • What is the cost of that institution? • How will you pay for it?

4. Agenda • Learn the language: Review some simple vocabulary • Financial Aid Primer: Forms, Formulas and Funds • How do I apply? • Financial Aid Calendar • Review of the Forms

5. $$ What is Financial Aid? • Grants, Scholarships • Free Gifts • Do not have to be repaid • Loans • Money that must be repaid • Borrowed by student, parent, or both • Work Study • Money student is given the opportunity to earn IOU

6. Grants & Scholarships • Pell Grant • MASSGrant • SEOG • Tuition Waiver • Fee Grant • Institutional Grant • Private Scholarship • Massachusetts Performance Bonus

7. Educational Loan Programs • Massachusetts No Interest Loan • Federal Perkins Loan • Federal Direct or Stafford Loan (subsidized or unsubsidized) • Institutional loans • Other state loans

8. Over $68 Billion given out in Financial Aid in 1999-2000 Source: The College Board

9. Financial Aid Basic Premises • STUDENTS have the primary responsibility for contributing to their education to the extent that they are able • PARENTS are responsible for contributing to their children’s education to the extent that they are able • FAMILIES with similar circumstances will be expected to contribute similar amounts to higher education; those with different circumstances will be expected to contribute different amounts

10. Financial Aid BASIC FORMULA Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Aid Eligibility/Family Need

11. Books COST OF ATTENDANCE (COA) Tuition and Fees Room and Board + + + Other Personal Expenses Supplies + + Transportation

12. The Expected Family Contribution • IS a measure of parent’s capacity over time to absorb educational costs • IS NOT a dollar amount expected from current income or assets. • IS NOT an estimate of “extra” cash available. EFC

13. # in college Income Assets FAFSA Elements of Federal Methodology Taxes # in family • Used to award all Federal Aidat public and private schools • Uses both parent and student information (for dependent students) • Uses standard income and asset protection allowances • Does not consider HOME EQUITY or Qualified Retirement Assets The Financial Aid Funnel Expected Family Contribution (EFC)

14. Student Income 50%after taxes and income protection allowance of $2500 Student Assets 35% Parent Income22-44%after taxes and income protection allowance Parent Assets*3-6%after asset protection allowance* Retirement & Home Equity not included in federal formula Divided by number in college Current Federal Methodology STUDENT Contribution (dependent) + PARENT Contribution EXPECTED FAMILYCONTRIBUTION

15. Institutional Methodology for Institutional Funds • Used by colleges to give out their own money • Formula could vary widely from school to school • Generally includes more assets than the Federal Methodology Home Equity often included • Often requires additional applications/forms

16. Family Profile Oldest Parent’s Age: 50 Family Members: 4Number in College: 1 Federal tax: 10% of AGI The Parent Contribution A Case Study 2000-2001 Federal Methodology 23

17. Need EFC How Does the Formula Work? COA - EFC = NEED COA $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 Private A • Private B StateCollege/University CommunityCollege COA $30,000 $25,000 $10,000 $5,000

18. The “Step” Approach to Awarding Financial Aid For Institutional Grants, Admissions Ranking can determine Financial Aid Awarded

19. Unmet Need = $1,900 Work = $1,500 Work Study Loan = $2,600 Stafford Loan Gift Aid = $6,000 Grant + $5,000 Scholarship EFC = $8,000 The Financial Aid BarrelA Sample Financial Aid Award COA - EFC = Need $25,000 - 8,000 = 17,000

20. Sources of Financial AidConsider All Your Options! • Federal Government • State Government • College / University • Private Agencies (Kiwanis, Elks, church or synagogue group) • Professional associations • Parent’s employer

21. ‘Financially’ Manageable During and AFTERthe College years Look at your entireFinancial Situation Estimate the ‘Total’ Cost of Education 4+ years of expenses STUDENT PARENT Make financial decisions that : • Will not jeopardize • Financial Security • Comfortable Retirement • Educating other children • other financial goals • Will not leave excessive debt • Will not jeopardize financial independence after graduation

22. “Insider” Tips • Find out the deadlines and comply! • Keep copies of what you send. • “Guess-timate” on your applications • If you have questions, ask! • Look at all of your financing options • Don’t rule out a school just because of its cost • Apply to one or two financially ‘safe’ school • Think about how you (parent & student) will pay your share of totalcollege costs (2/4+ years)

23. REMEMBER! Forms must be filed EVERY YEAR. Financial Aid Application Materials • FAFSA - Free Application for Federal Student Aid • Required by all colleges • Free form • PROFILE • Some colleges need this • Paid form • Institutional Application • One per school • Usually part of admissions packet • Business/Farm Supplement • Non Custodial Parent Statement • Tax Return

24. Financial Aid VERIFICATION PROCESS • Can be required by the federal government or by any institution • is carried out by the institutions • involves documentation of data provided on the application forms • an award based on non-verified information is subject to change after the information has been verified

25. The Financial Aid Calendar • January (or earlier for Profile): Complete forms (BEST GUESS IS OK FOR INCOME) • February (or earlier for Profile): Many school’s deadlines for forms • Late February - March: Schools may call you with questions • End of March - Early April: Admissions and Financial Aid notification mailed

26. The Financial Aid Calendar (continued) • April: Compare award letters from different schools • May 1: DECISION DEADLINE - Tell all schools yes or no • May: Pay deposits (tuition, room and board) - about $500 • June: Bill for the Fall semester, due by 8/1 or so • November - December: Bill for the Spring Semester

27. “I need more help!...” • Higher Education Information Center 1(800) 442-1171 • Federal Student Aid Center - FAFSA Processing:1-800-4-FEDAID • College Scholarship Service - Profile Processing: (800) 778-6888 • Each college’s financial aid office • Your high school guidance office • Your state legislator’s office

28. Still more help on the WEB... www.finaid.org www.fastweb.com • Resources for: • Financial Aid • Scholarships • College Information

29. HELPFUL HINTS IN COMPLETING THE FORMS • READ all the instructions • Complete the ENTIRE form, unless specifically instructed to leave something blank • Use number 2 pencil or a pen with black ink • Read “When You Fill Out This Form” on page 2 of FAFSA • Be sure to answer all questions on the form using information about the individual about whom the question is directed(e.g. Do not provide parent's social security number when asked to provide the student's social security number. ) • Use regular first-class mail. Sending the forms special delivery or by overnight mail or by any other special process to the P.O. Box indicated MAY DELAY RECEIPT of the forms by the processor • Notify all of the financial aid offices of institutions to which student applies regarding any unusual or special family circumstances not already reflected on both of the forms

30. Let’s Fill Out the Forms • Free Application for Federal Student Aid (FAFSA) • http://www.fasfa.ed.gov/ • Profile Registration Form • http://www.collegeboard.org/profile

31. THANK YOU! Questions?