Financial Aid 102

1. Financial Aid 102 Harvard Summer Institute on College Admissions

2. F. Duane QuinnFinancial Aid Specialist duane201@charter.net

3. Sally Donahue Director of Financial Aid Senior Admissions Officer Harvard University sdonahue@fas.harvard.edu

4. Agenda • Brief Review of 101 • Calculation of the Family Contribution • Institutional Vs. Federal

5. Theory • Parents and students are responsible for financing education costs......… • Up to their ability.

6. Theory • The student and her family will benefit the most from higher education and should pay for it...... • Borrowing • Saving • Working • Financial Aid should offer students Access and Choice to higher education

7. Eligibility Cost less Family contribution = Eligibility for aid

8. Determining the Family Contribution • The Eligibility Index (EFC) • Theoretical Approach • Contrast the Federal Methodology to the “Institutional Methodology”

9. 1. Determining the Eligibility Index (EFC) Total Parent Income Taxable and Non-taxable minus Taxes Paid (Fed. State and Local) minus Employment Allowance minus Income Protection Allowance minus Title IV Exclusion equals “Available Income”

10. 2. Total Parental Assets Cash, Savings and Checking plus Other Real Estate / Investments (home?) plus Business Value (100 or more employees / adjusted) plus Farm Value = “Total Net Worth” less “Education Savings / Asset Protection Allowance (Age 50 = $48,800) times 12% Asset Conversion Rate = “Income Supplement”

11. 3. Determining Parent Share of EFC “Available Income” plus “Income Supplement” = “Adjusted Available Income” times Conversion Percentage divided Number Attending College = Eligibility Index from Parent(s)

12. 4. Determining Student Share of Index Total Student Income less Taxes and FICA paid less $6000.00 Protection Allowance times 50% = Index Available From Income Total Student Assets X 20% = Index Available from Student Assets

13. 5. Final Step add “Eligibility Index from Parent’s Income and Assets” plus “Eligibility Index- Student Income” plus “Eligibility Index- Student Assets* equal “ELIGIBILITY INDEX” (EFC)

14. Parent income remains level, assets increase Asset Impact – Family Size: 4 This example is an estimate only. Based on 2013-14 Federal Methodology (one child in college) Slide from Mass. Educational Financing Authority (MEFA).

15. Parent assets remain level, income increases Income Impact – Family Size: 4 This example is an estimate only. Based on 2013-14 Federal Methodology (one child in college). Slide from Mass. Educational Financing Authority (MEFA)

16. Federal Vs. Institutional Methodology • Federal • Income = AGI from tax return • Medical, dental, tuition costs upon appeal • Institutional • Not recognize losses in taxable income • Expenses collected on PROFILE

17. FM Vs. Institutional Methodology • Federal • No credit for educational savings • Income and Assets combined to calculate EFC • Institutional • Credit (per child) for future higher ed. expenses • EFC from Income and EFC from Assets

18. FM Vs. Institutional Methodology • Federal • Exclude home equity • No incentive to save for higher education (Some in recent act) • Institutional • Include home equity • Incentive in (CESA) Cumulative Education Savings Allowance

19. FM Vs. Institutional Methodology • Federal • 20% of student assets • EFC divided by # in college • Based upon BLS • Institutional • 25% of student assets • 60% for 245% for 3 • Based upon CES

20. Eligibility Cost less Family contribution = Eligibility for aid

21. Example of “Packaging” • COLLEGE “A” cost $40,000 - F.C $ 8,000 = need $32,000

22. The Financial Aid Package

23. The Financial Aid Package cost $40,000 $ 8,000. F. C.

24. The Financial Aid Package cost $40,000 need = $32,000 $ 8,000. F. C.

25. The Financial Aid Package cost $40,000 grant = $25,000 meet full need $ 3,000 work $4,000 loan $ 8,000. F. C.

26. The Financial Aid Package cost $40,000 unmet need “GAP” $5,000 grant = $20,000 $3,000 work $4,000 loan $ 8,000. F. C.