College Financing 101: Smart Options for Your Child’s College Financing

1. College Financing 101:Smart Options for Your Child’s College Financing Presented by: Steve Wynne Account Executive – Client Relations and Education Presented by: Ben Carey Director | Strategic Partnerships

2. Agenda • Your Award Letter • How Much Do I Really Need • Appealing an Award Letter • Loan Options • Definitions • Types of Financial Aid Listed • Scholarships and Grants • Federal Work Study Program • Federal Perkins Loan • Federal Direct Loans • Federal Direct PLUS Loan

3. Definitions • Award Letter • also referred to as a financial aid package, contains the cost of attendance and any financial aid offered to the student by the school. • Cost of Attendance (C.O.A.) • the cost set by the school to cover student expenses. Includes tuition, fees, books, rent, food, misc. expenses, etc.. • Financial Aid • the offering of scholarships, grants, federal work study, and loans to assist a student in meeting the cost of attendance. • COA – EFC = Need – Offered Financial Aid = GAP!

4. Types of Financial Aid • Scholarships and Grants • Federal Work Study • Federal Perkins Loan • Federal Direct Loans • Subsidized • Unsubsidized • Federal Direct PLUS Loans

5. Scholarships and Grants • Free money from the government, state, and/or institution • Does not have to be repaid • Grants may have an obligation associated with acceptance. Failure to meet obligation may require grant to be repaid. • Awarded based on need or merit • Awarded for a variety of reasons: • Academics, sports, extra-curricular activities, etc. Check with the Financial Aid Office for additional scholarships that may be available.

6. Scholarships and Grants Verify Are you willing to meet the requirements attached to receiving this aid? Is the scholarship/grant renewable; not just made available for one year, but aid that will be carried over year after year? Compare award letters; different schools will award varying amounts of aid, compare the dollars award to make the right choice for student and family.

7. Federal Work Study Free money – kind of! First come – First serve – Financial Need Provides jobs to student with financial need Paid at least minimum wage Jobs are part time, usually on-campus Didn’t receive Work Study? Check with the Financial Aid or Admissions Offices

8. Federal Perkins Loan • Fixed interest rate of 5% • no origination fee • Once in repayment, pay school directly • Standard repayment term is 10 years • Grace period is 9 months • Loan is in the student’s name, made through the school’s financial aid office • Awarded to students with exceptional financial need • Maximum annual amount is $5.500 • Government pays interest while in school

9. Federal Direct Loans William D. Ford Federal Direct Loan Program Loans are in the students name and funds come directly from the U.S. Department of Education Standard repayment term is 10 years with a 6 month grace period

10. Federal Direct Loans Subsidized Unsubsidized Awarded to all eligible students, not based on need Students are responsible for interest, may defer Fixed interest rate of 3.86% plus 1.051% loan fee* • Awarded to eligible students based on financial need • Government pays interest while in school • Fixed interest rate of 3.86% plus 1.051% loan fee* *First Disbursed between July 1, 2013 and June 30, 2014

11. Your Award Letter

12. Award Letter Types By System By Mail By Email

13. University of Success Award Letter Example Federal Loan – Subsidized $3,500 Federal Loan – Unsubsidized $2,000 School Grant $1,500 State Scholarship $1,000 Federal Work-Study $2,000 Total Award $10,000 Cost of Attendance $20,138 Remaining Need $10,138

14. Student Indebtedness • Reports in the media of a widespread student debt crisis might be discouraging to someone considering financing a college education • In reality, instances of students with excessive debt are rare: • 43.1% of students have $10K or less in student loan debt • 4.2% of students have debt between $75K and $150K • 1.2% have debt over $150K Indebted Students, by Amount Owed Federal Reserve Bank of New York statistics, as cited in The Myth of the Student Loan Crisis, Atlantic Magazine, March 2013.

15. How Much do you Really Need? Consider: Fixed Costs Flexible Costs Other Income Appeals

16. Fixed Costs Tuition $8,000 + School Fees $1,000 Total Fixed $9,000

17. Flexible Costs Rent – ($400 X 10) $4,000 Food – ($300 X 10 months) $3,000 Books - ($100 X 10 books) $1,000 Cell Phone - ($50 X 10 months) $500 Transportation - (ex: Bus pass @ $25/mo x 10mos.) $250.00 Total Flexible $8,750

18. Unmet Need Fixed $9,000 Flexible $8,750 Total Costs $17,750 Total Costs $17,750 Total Award ($10,000) Remaining Need $7,750 Need reduced by $2,388 (or $238 a month)

19. Monthly Budget • $7,750 needed over a 10 month period • $775 month • Consider other income before borrowing • Part time job • Assistance from family members/friends • Consider school payment plans • School may offer a monthly payment plan for a small fee

20. Appealing your Award Letter Reasons to appeal: Change in employment/income Medical bills Divorce Disability/death High consumer debt

21. Appealing your Award Letter • Each school will have their own process and procedures. Visit the school’s website for specific instructions on how to appeal. • Submit a letter • Appointment with FAO • Telephone interview

22. Remaining Need Savings Account Retirement Account 401K Plans Home Equity Loans Credit Cards Private Loan Options

23. Federal Direct PLUS Loan • Often listed on Award Letter • Interest rate is fixed at 6.41% • Bridges the gap between education costs and financial aid • Credit based loan made to the biological, adoptive, or in some cases a step-parent of a dependent student for the purpose of meeting the cost of attendance. • Origination fee of 4.204%

24. Federal Direct PLUS Loan • Limit is the COA less any other Financial Aid • Payments begin 60 days after first date of disbursement (can request deferment) • No prepayment penalty • Dependent students whose parent is denied may qualify for additional Federal Direct Loan limits

25. Private Loan Options What to Consider: • Borrower Benefits • What’s in it for me? (W.I.F.M.) • Co-Borrower Options • FICO, Debt to Income ratio • Payment Options • Full deferment • Principal & Interest • Good Faith Payments • Rate • Index – Prime or LIBOR (difference of about 3%) • Margin - % added to index • Floor – Never go below • Fees • Origination Fee – 0% to 3% • Repayment Terms • 10 to 25 years

26. The Student Choice Solution Offered at NASA Federal Credit Union Can borrow up to $75,000 for an undergraduate degree Nearly 2,000 4-year, not-for-profit public and private colleges and universities who participate in the federal student aid programs – known as Title IV.

27. The Student Choice Solution • Low Interest Rates (Based on LIBOR Index + Spread) • Floor 6% • Ceiling 18% • NO origination or prepayment fees • 20 or 25 year repayment (>< $40K) with max of $75,000 • Full deferment available • Graduated Repayment • 0.25% rate discount for automatic repayment (ACH)

28. The Student Choice Solution • Flexible Repayment Options • Full deferment (maximum 5 years + 6 month grace) • Interest only • Principal & Interest • Graduated repayment available • Forbearance • Bankruptcy • Death • Economic hardship • Natural disaster • Late notification from school • Military mobilization

29. Your Education/Application Web Site To Apply Applicants Visit: www.nasafcu.studentchoice.org or call (866) 465-4841

30. Thank You for Attending Please contact us with any additional questions. Charlie Hudson Business Development Account Representative chudson@nasafcu.com (888) 627-2328 Ext. 267 www.nasafcu.com/NASAGoddard For more information or for any additional assistance in planning your college career visit: www.nasafcu.studentchoice.org You can also send questions to scholarhelp@studentchoice.org