College Financing 101 An Educational Seminar – Powered by NASA FCU

1. College Financing 101An Educational Seminar – Powered by NASA FCU Presented by: Steve Wynne Account Executive – Client Relations and Education Presented by: Charles Hudson

2. Agenda • Introductions • Why the “Gap”? - Why the “Investment”? • How it all (should) begin! • Funding Options…FREE – CHEAP – GAP!! • Your NASA Federal Credit Union “Gap” Solution • Application Process Preview • Application…School Certification…Loan Cycle • Important Websites!! • Wrap-up and Q&A

3. Why the “GAP”?

4. So, why “Invest” in College?

5. How it all (should) begin! FAFSA (Free Application for Federal Student Aid) Types of Aid Available • Free Scholarships and Grants • Cheap Federal Direct Loans • Gap Federal Direct PLUS Loans • Gap Private Education Loans

6. Financial Aid Process PREPARE as early as possible • COMPLETE • as early • as January 1 • RECEIVE/ COMPARE • around May • Complete the FAFSA between January 1 and and June 30 • NOTE: States and schools have their own unique deadlines • Review award letters and compare options: • Free • Cheap • Gap • Pull together • Documents • Tax returns • W2’s etc.

7. 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!

8. College Enrollment and Costs Source: The College Board, Trends in College Pricing 2013, Figure 1

9. Where Does the Money Go? Cost of Attendance (COA) Tuition School Fees Housing/Rent Books Food Transportation Misc Expenses

10. Your Award Letter

11. The Award Letter • 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

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

15. 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

16. Award Letter Funding Options

17. Free, Cheap, and Gap Theme Options

18. Types of Financial Aid • Scholarships and Grants • Federal, State, Local • Federal Work Study • Federal Perkins Loan • Federal Direct Loans • Subsidized • Unsubsidized • Federal Direct PLUS Loans • Private/Alternative Student Loans

19. 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.

20. 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.

21. Scholarship Tips • Follow all instructions • Use Reference Letters • Highlight Any Community Involvement and Charity Work • Include Job History • Essays = TEE: Time Energy and Effort • Beware of scams!

22. Top 5 Scholarship Mistakes • Only applying for private scholarships • In every state, there are local scholarships that are awarded based on the residency of a student. • 41 of 50 states offer (CT, LA, ME, MI, MS, NE, NH, NM, WV) • Applying for too few scholarships • Not following instructions and other application mistakes • Not paying attention to deadlines • Looking for Scholarships for only a few weeks Source: StudentScholarshipSearch.com

23. 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

24. 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

25. 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

26. 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 4.66% plus 1.073% loan fee* • Awarded to eligible students based on financial need • Government pays interest while in school • Fixed interest rate of 4.66% plus 1.073% loan fee* *First Disbursed between July 1, 2014 and June 30, 2015

27. Federal Direct PLUS Loans • Often listed on Award Letter (but not “always”) • Interest rate is fixed at 7.21% • 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 4.292%

28. Federal Direct PLUS Loans • 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

29. Student Indebtedness Indebted Students, by Amount Owed • 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 Federal Reserve Bank of New York statistics, as cited in The Myth of the Student Loan Crisis, Atlantic Magazine, March 2013.

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

31. Fixed Costs Tuition $7,000 + School Fees $1,000 Total Fixed $8,000

32. 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 Total Flexible $8,750

33. Unmet Need Fixed $8,000 Flexible $8,750 Total Costs $16,750 Total Costs $16,750 Total Award ($10,000) Remaining Need $6,750

34. Remaining Need • Savings Account • Retirement Account • 401K Plans • Home Equity Loans • Credit Cards • Tuition Payment Plans • Private Loan Options

35. Your NASA FCU “Gap” Solution

36. Underwriting Criteria • Line-of-credit structure • Apply once for an entire undergraduate career; borrowers submit an online draw request for additional funds • No annual application – but we conduct and annual review • Minimum Draw: $1,000…Maximum: $75,000 • Rates and Fees for NASA Federal Credit Union

37. Your NASA FCU “Gap” Solution • Low Interest Rates (Based on LIBOR Index + Spread of 3.69% to 4.43%) • Floor: 6% • Ceiling: 18% • No origination or prepayment fees • 20-25 year repayment term • Deferment/forbearance options available • Graduated Repayment

38. Will I need a Co-signer?? • Co-borrower recommended but not required • To qualify: student with a co-borrower • Student • FICO = 0 or 620+ • Co-borrower • FICO = 660+ • $2,500 gross monthly income • No student loans in default for last 7 years • No bankruptcy for last 5 years • To qualify: student withouta co-borrower • All of the above + 2 years of continuous work history

39. Details…Discounts…Repayment Options • Available for nearly 2,000 4-year, not-for-profit institutions participating in Title IV federal student aid programs • No origination or prepayment fees • 0.25% rate discount for automatic repayment (ACH) • Flexible Repayment Options; 20 repayment term • Full deferment (maximum of 5 years + 6 month grace) • Interest only payments • Principal and Interest payments • Graduated repayment available

40. “Safety Nets”… • 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 • Military mobilization

41. Application Process “Preview”

42. NASA FCU Application Website To Apply Applicants Visit: www.nasafcu.studentchoice.org or call (800) 322.8816

43. What to Expect: Required Loan Documentation Documents needed for processing: • Proof of Income • Proof of NASA FCU Membership • Signed Agreement • Signed Application • Proof of Identity • All of the above required for student and co-borrower

44. Application…School Certification…Loan Cycle

45. From $$ Request…to…$$ Disbursement! Your Student Choice Solution Loan Certification Process: between student, lender and school Approved funds are disbursed on date requested by school divisible by number of disbursements.

46. School Certification/Loan Funds Disbursements Loan Certification Process: • Loan funds disbursed directly to school • Credit Union/borrower does not have control over: • When funds are disbursed to school • When funds are applied to account • When or how disbursement is made to student Always Check Your Financial Aid Office Deadlines!

47. The Loan Cycle…

48. Important Financial Aid Websites • Department of Education • https://studentaid.ed.gov/ • National Center for Education Statistics • http://nces.ed.gov/collegenavigator/ • FastWeb Scholarship Site • http://www.fastweb.com/ • College Board’s Net Price Calculator • http://netpricecalculator.collegeboard.org/ • National Association for College Admissions Counseling • http://www.nacacnet.org/Pages/default.aspx NASA FCU • https://www.nasafcu.com/ Credit Union Student Choice • http://www.studentchoice.org/students/

49. Thank you for Attending…! Please contact us with any additional questions. Charlie Hudson chudson@nasafcu.com P: (301) 249-1800 Ext. 267 Center Blog: www.nasafcu/nationalacademies