The Urban School

1. The Urban School Financial Aid Information for Parents of the Class of 2009

2. About this presentation: “Good Financial Aid planning is not necessarily good tax planning.” I am not a financial planner nor am I offering financial advice. All of the information presented here is accurate as of today. The rules, regulations, and processes affecting financial aid on the state and federal level change each year (and this year are changing monthly.) Presentation Prepared November 2008

3. Sources of Financial Aid • Gift Aid • Grants & Scholarships • Self Help • Loans & Work

4. What’s Available? • Federal Grants (based on financial need) • Pell Grant • Academic Competitiveness Grant • SMART Grant • Supplemental Educational Opportunity Grant

5. What’s Available? cont. • Federal Work Study • Federal Perkins Loans • Federal Stafford Subsidized & Unsubsidized Loans (Unsubsidized loans are not need-based) • Direct Loans (are the same as Stafford)

6. Types of Applications • FAFSA (Free Application for Federal Student Assistance) apply beginning Jan 1st 2009 for Fall 2009 • CSS Profile apply when the admissions application goes in • Private and other scholarship applications

7. Differences between the FAFSA and CSS Profile • FAFSA: information on size of family, adjusted gross income, age of older parent, assets outside the home, etc. • CSS PROFILE: individual colleges ask for information including home equity, income and assets from non-custodial parents, etc.

8. CSS Profile • Not used for awarding federal financial aid . . . only aid from the colleges/universities • Not all schools require • Online Registration only . . . go to: www.profileonline.collegeboard.com

9. Basic Equation of “Need” Cost of Attendance (COA) • Expected Family Contribution (EFC) • Student’s Financial Need (eligibility)

10. Cost of Attendance • Tuition and fees • Room and board • Books and supplies • Transportation • Miscellaneous personal expenses • May cover cost of computers • May also include other extraordinary expenses

11. Expected Family Contribution • Need Analysis is the formula used in determining a family’s EFC • EFC is the measure of a family’s financial strength • The Coll/Univ Financial Aid Office uses the EFC to determine the student’s overall need for financial aid

12. Calculating Eligibility • Federal EFC will be same at all Coll/Univ • Federal financial aid eligibility varies based on institution’s COA • Some Coll/Univ may use institutional methodology to award their own institutional funds

13. EFC Calculators • www.finaid.org • Click on Calculators • Click on Expected Family Contribution and Financial Aid Calculator • www.FAFSA4caster.ed.gov • www.Collegeboard.com • Click on Pay for College • Click on Financial Aid Easy Planner

14. Eligibility Varies Based on Cost Private 4-year COA $42,979 - EFC 15,000 = Need $27,979 Public 4-year COA $22,953 - EFC 15,000 = Need $ 7,953 Public 2-year COA $16,068 - EFC 15,000 = Need $ 1,068

15. Grants • Federal Pell Grants . . . based on “need” • automatically awarded by the Federal Govt. • Supplemental Educational Oppty Grants . . . based on “need” • awarded by the college based on FAFSA info • Cal Grants . . . based on “need” and academic qualifications awarded by the State

16. Cal Grants • In order to qualify, the FAFSA must be submitted no later than March 2nd. And the GPA Verification Form sent by the school by March 2nd as well. • Student must meet • All federal eligibility criteria • Income & asset limits • GPA requirement

17. Stafford Loans • Annual and aggregate loan limits • Freshman - $3500 in Sub plus a possible $2,000 Unsub • Sophomore - $4500 in Sub plus a possible $2000 • Juniors/Seniors - $5500 • Aggregate - $23000 • Subsidized vs. Unsubsidized

18. Types of Stafford Loans Subsidized Staffords: student must have “financial need” . . . Federal government pays the interest while the student is in college/grad school Unsubsidized Staffords: student does not have financial need and pays or defers the interest while in college/grad school Note: all first year students (US citizens or permanent residents) will be eligible for one of these loans, regardless of income

19. Cost of Borrowing - Stafford • Interest rate • Will range from 6% to 6.8% depending upon the Federal Govt. Year ( 6 % in 2009-010) • Fees • Up to 3% origination fee paid to the U.S. Department of Education (ED) • Up to 1% insurance premium paid to the guarantor

20. PLUS Loan • Parent borrows for the dependent undergraduate • Approval subject to credit check • Loan limits: COA less other aid • Interest rate is 7.9 - 8.5% fixed • Repayment begins 60 days after the beginning of the final term of the freshman year

21. Private Loans • Not Title IV (federal) aid • Also known as “alternative” loans • Credit- and income-based loan • May require a co-signer • Loan fees and interest rate usually higher than Stafford or PLUS loan Lender assumes the risk of default

22. Private Loan Repayment Comparison

23. Special Circumstances If there is a special circumstance (loss of job, etc.): • First, call each Coll/Univ Financial Aid Office for guidance and required forms • A detailed explanation should include: • Student’s name and SSN • Give SPECIFIC financial details • Time period involved • Attach supporting documentation

24. Awarding & Packaging • Award letters may vary in composition • Listing of awards and amounts • COA, EFC, need and unmet need • Period of enrollment covered • Response may or may not be required

25. Packaging at Public Institutions • Subtract Expected Family Contribution (FAFSA EFC) from Cost of Attendance (COA) as resident or commuter • Package with state/federal grants, loans, work-study to funding limit or to meet need, whichever is first • MAY use foundation funds for “regents” scholarships • MAY use institutional/athletic funds for talent or athletic scholarships

26. Packaging at Highly Selective / Highly Endowed Private Institutions • At Yale, Stanford, Cal Tech, Pomona, etc. . . . individual policies for scholarships/grants applied to admitted students whose adjusted family income (not EFC, not “need”) is at or below a specified level • Grants may apply to tuition, and not total cost (loans might be considered for R & B )

27. Packaging at Most Private Institutions • Subtract EFC (from FAFSA or Profile) from COA • Use all state/federal funds possible to meet need • “Leverage” gift aid/self-help institutional funds based on desired characteristics • MAY “gap” or apply Parent PLUS Loan to meet need • MAY offer merit scholarships for academics, leadership, athletics, talent, etc.

28. Sample Leveraging Programat “Moderately Selective” Institution

29. Sample Leveraging Program at “Selective” Institution

30. Sample Leveraging Program“by academic interest”

31. Leveraging Example COA = $ 40,000 3 students who have $ 20,000 EFC Need = $ 20,000 • @ 90% gift aid . . . $18,000 in grants/scholarships • @ 70% gift aid . . . $14,000 in grants/scholarships • @ 50% gift aid . . . $10,000 in grants/scholarships

32. FAFSA • First year . . . Don’t wait for admission!!! • Always apply • Yearly process • After January 1 prior to the fall term (i.e. January 1, 2009 for Fall 2009) • Student needs a PIN (more on this later) • Parent needs a PIN (more on this later)

33. FAQs about completing the FAFSA # 1 – 3 Name • No nicknames • Name must be listed exactly as it appears on the Social Security card • Will be matched with Social Security Administration (SSA)

34. FAQs(cont.) #28 Grade Level . . . never attended college, 1st year undergrad # 30 Enrollment Status . . . Full time! # 31 Yes, interested in work-study and loans

35. FAQs(cont.) #48-60 Dependency Status . . . A student is a dependent student unless one of the answers to the questions is “yes” • 24 years of age or older? • Dependent other than a spouse for whom a student provides more than half of the support? • Veteran of the armed forces or currently serving on active duty? • Are, or were, in foster care or were a ward or dependent of the court at any time when you were 13 or older? • Are an emancipated minor or are in legal guardianship as determined by the court in your sate of legal residence? • Are a self-supporting unaccompanied youth who is homeless or at risk of homelessness? • Married (as of the day they complete the FAFSA)? (Note: Overrides are granted only based on situations of child abuse, etc.; the family cannot “decide” to make a student independent.)

36. Parent Information Who is a Parent? • Biological parent(s) • Adoptive parent(s) • Stepparent is considered a parent for financial aid purposes, and that person’s income and assets must be included in FAFSA information

37. Parent Information(cont.) • Who is not considered a parent for this section? • Foster parent(s) • The ward is automatically considered an independent student • Legal guardian(s) • Must attempt to get parental information • Coll/Univ FAO may use Professional Judgment to make student independent (happens rarely)

38. Parent Information(cont.) #61 - 62 Parents’ Marital Status • As of date application is signed • Custodial Parent • Parent the student lived with most in last 12 months • If unable to determine, who provided most of student’s support? claims on taxes?

39. Parent Information(cont.) #75 - 76 Number in Parents’ Household / College #75 . . . Include student and parents Parents’ other children : If parents provided more than 1/2 support from July 1, 2006 through June 30, 2007 Other children who are considered “dependent” for federal financial aid #76 . . . Count the student (parents do not apply, nor do grad students living in the home!)

40. Parent Information(cont.) • Other people if they now live with student’s parents and • Parents currently provide more than 1/2 support, and • Parents will continue to provide more than 1/2 of their support from July 1, 2009 through June 30, 2010

41. Parent Information(cont.) # 82 – 95 Parent Income/Taxes Information • Custodial parent filed with ex-spouse • Consider only income of custodial parent (which includes any child or spousal support received) • Custodial parent remarried • Stepparent information must be included

42. Parent Information(cont.) #91-93 General Asset Information • If net worth is one million or more, enter $999,999 • If negative, enter 0 • Net worth means current value minus debt

43. Parent Information(cont.) #91 Total of Cash, Savings and Checking Accounts • Total as of the day the FAFSA is signed! (pay your monthly bills before completing the form!)

44. Parent Information(cont.) #92 Net Worth of Investments • Do not include home you live in, prepaid tuition plans or value of life insurance, and retirement plans • Include other real estate, Education IRAs, CDs, money market funds, mutual funds & college savings plans • Trust funds must be reported even if access is restricted

45. Parent Information(cont.) #93 Net Worth of a Business or Farm • Value means market value of land, buildings, machinery, equipment, inventory, etc. • Debt means only debts for which business or investment farm was used as collateral • Business with more than 100 employees

46. Prioritizing College Choices • List a CA Coll/Univ in one of the top three boxes for Cal Grant consideration • List schools most likely to attend • Ways to add coll/univs to the list: • Wait for Student Aid Report (SAR) • Add schools by phone or on the Web • 8 colleges at a time . . . Final Choice needs electronic info

47. Step Seven Date and Sign • If filing electronically, don’t forget PIN or signature page • If filed by a dependent student, student and 1 parent must sign • If filed by an independent student, only student must sign

48. Online Filing Tips • Apply for PIN(s) NOW! go to: www.pin.ed.gov both one parent and the student need PINs! • Complete the FAFSA Worksheet • Allow ample time to complete for on-time submission

49. Student Aid Report (SAR) • Expect SAR after filing -- 1 to 2 weeks for Online FAFSA . . . Comes to student’s email address! • Carefully review for any errors • Contact Coll/Univ before submitting corrections

50. Outside Scholarships • Apply (investigate) early • Create a portfolio • No time to be modest • Personal statements . . . you’re only one person • Letters of recommendation • make sure they like you • www.fastweb.com and www.fastaid.com