Grants Are

1. Not Enough Grants Are

2. Presented By California Association of Student Financial Aid Administrators www.casfaa.org California Community Colleges Student Financial Aid Administrators Association www.cccsfaaa.org California Lenders for Education www.clfe.org

3. Agenda • Student Borrower Statistics • Types of Loans • Life Cycle of a Loan

4. 2006/2007 Cost of Attendance $229 Billion Parent/Student Contributions Federal Student Loans Other (Includes scholarships, grants, tax relief and other aid from states, colleges, employers and other sources) Private Education Loans Source: Based on estimates by Octameron Associates, “Don’t Miss Out”, 29th Edition; College Board, “Trends in Student Aid”; and Sallie Mae. Includes tuition, room, board, transportation and miscellaneous costs for two and four year college degree granting programs.

5. 2006/2007 Cost of Attendance $229 Billion In twenty years, the cost of tuition and fees has doubled at private and public institutions In one year, private and public tuition, fees, room and board has increased by +6% • Western region public institutions • Lowest national tuition and fees • Total COA greater than south and southwest regions Source: College Board

6. Borrowing for College Today • More than fifty percent (50%) of all college students borrow a student loan Source: College Board, Octameron Associates

7. Borrowing for College Today Total 2006-2007 federal loan dollars borrowed by students • 139% increase in number of student loans in 10 years • 20% increase in 2 years $74 BILLION DOLLARS Source: College Board, Octameron Associates

8. Borrowing for College Today Total 2006-2007 private loan dollars borrowed by students • 1200% increase in 10 years • 64% increase in 2 years $23 BILLION DOLLARS Source: College Board, Octameron Associates

9. How Prevalent Are Loans In Paying For College? • Students response to question: “List all types of loans that come to mind that people use to finance college education.” • 79% - Federal Student Loans • 13% - Bank Loans (Private) • 7% - Home Equity Loans • 4% - Grants • 5% - Personal Loans • 2% - Scholarships • 1% - Work Study Source: First Marblehead Study

10. Parties Involved in Loan Process Student/Parent: Student (or parent) enrolled in a Title IV Eligible School at least half time; US Citizen or Permanent Resident School: Title IV Eligible School certified to offer student loans by the US Department of Education Lender: Source of funds for student loan for the purpose of financing a post-secondary education Guarantor: State or private agency which repays the lender if the borrower fails to make payments resulting in default

11. Types of Loans • Federal Stafford Loans • Offered by private lenders who participate in the Federal Family Education Loan Program (FFELP) or by the Federal Government in the Direct Loan Program (DLP)

12. More… Federal Stafford Student Loans borrowing limits established by the US Department of Education

13. Parent PLUS Loan Option for parents of undergraduate dependent students Loan funds borrowed by the parent to make up the gap up to Cost of Attendance less any other financial aid Types of Loans

14. Graduate PLUS Loan Option for graduate students Used to finance the student’s education, not to exceed the student’s Cost of Attendance less any other financial aid Types of Loans

15. Federal Perkins Loan Campus-based student loan program, limited funds available Not all schools participate Annual student borrowing limits: $4,000 Undergraduate Students $6,000 Graduate Students Types of Loans

16. Private Loans “Credit-Based” loans with or without a cosigner Financing up to the Cost of Attendance Many must be certified by a school official Varying interest rates and fees based on credit rating Deferred repayment options available while the student attends school Types of Loans

17. Direct to Consumer (DTC) Loans Credit-based borrowing Student “self-certifies” their loan eligibility and need for the loan School is not typically involved in the process Types of Loans

18. Summary Types of Loans Federal Stafford Loans Federal Family Education Loan (FFEL) Direct Lending (DL) • Federal PLUS Loans • Parent • Graduate • Federal Perkins Loan • Private Loans • Direct to Consumer (DTC)

19. CSU & CCC Unmet Need Comparison

20. Life Cycle of a Loan Life Cycle of a Loan 20

21. Life Cycle of a Loan Application/Origination Process Student Submits FAFSA School Certifies Loan Eligibility Student Completes MPN 21

22. Life Cycle of a Loan Application/Origination Process Guarantor Issues Guarantee to Lender Lender Disburses Funds to School Lender Approves Loan 22

23. Life Cycle of a Loan Application/Origination Process School Credits/Pays Borrower 23

24. Life Cycle of a Loan Application/Origination Process Student Submits FAFSA School Certifies Loan Eligibility Student Completes MPN Guarantor Issues Guarantee to Lender Lender Disburses Funds to School Lender Approves Loan School Credits/Pays Borrower 24

25. In-School/Grace Life Cycle of a Loan • In-School Servicing • Entrance Counseling • Enrollment Status Updates • Demographic Updates • Loan Sales • Exit Counseling Grace Period 25

26. Repayment Life Cycle of a Loan • Repayment • Payments • Paid in Full • Deferment/Forbearance • Delinquency • Default 26

27. Grants Are Not Enough Education is the most important investment any student will ever make during their lifetime 27

28. EDUCATION is the bestINVESTMENT Today’s Children are California’s Future 28

29. QUESTIONS?