Presentation on theme: "Paying for College Jim Walsh & Dawn Simpson Fleet & Family Support Center 301-342-5442"— Presentation transcript:
Paying for College Jim Walsh & Dawn Simpson Fleet & Family Support Center 301-342-5442 firstname.lastname@example.org email@example.com
Agenda What is financial aid FAFSA Grants/Loans/Work Study Other funding EFC/COA Scholarships Post 9/11 G.I. bill 2
3 Financial Aid Federal Government States Private Sources Civic organizations & churches Employers Financial aid is funding intended to help students pay educational expenses including tuition and fees, room and board, books and supplies, etc. for education at a college, university, private or career school.
Financial Aid 4 The Federal Government is the largest source of financial aid. You must complete the Free Application for Federal Student Aid each year to be eligible.
Undergraduate Student Aid by Source (in Billions, 2011-12 Source: The College Board, Trends in Student Aid 2011-12 5
FAFSA Free Application for Federal Student Aid 6 This should be your #1 stop FAFSAs are required by virtually all colleges and universities FAFSAs that are submitted electronically are typically processed within three days Submit your FAFSA after January 1st until June 30 th each year Typically takes parents and students 1-2 hours to complete Individual state and school FAFSA submission deadlines vary widely (MD-March 1 st ) May be completed using estimated tax information
FAFSA Cont. 7 Complete even if you don’t qualify for need-based financial aid (need for fed loans) – Required for institutional aid – Harder to get aid if things change, i.e. job loss, furlough – Need it for PLUS filing File early – Some states for aid is a first come / first served Move $ out of student accounts – Student @ 20%, Parent 5.64% Spend down excessive cash – About $50K is sheltered (based off older parent age) Appeal aid package – Substantial financial change Retirement accounts OK
Grant Programs 8 Federal Supplemental Educational Opportunity Grant (FSEOG) Pell Grant Up to $5,645 annually Undergraduate Based on need No repayment Limited to 12 semesters Up to $5,645 annually Undergraduate Based on need No repayment Limited to 12 semesters From $100 - $4,000 annually Undergraduate Based on exceptional $$ need No repayment Not all college participate From $100 - $4,000 annually Undergraduate Based on exceptional $$ need No repayment Not all college participate
Grant Programs Cont. 9 TEACH Grant Iraq and Afghanistan Service Grant Up to $3,716 annually Coursework to become an elementary/second teacher No repayment unless student fails to carry out service obligation Up to $3,716 annually Coursework to become an elementary/second teacher No repayment unless student fails to carry out service obligation Up to $5,081 For students who are not Pell-eligible Parent or guardian died as a result of military service in Iraq or Afghanistan after 9/11 Up to $5,081 For students who are not Pell-eligible Parent or guardian died as a result of military service in Iraq or Afghanistan after 9/11
Federal Education Loan Interest Rates Based of the 10-year Treasury note the prior summer It’s normally a good choice for students to choose federal loans, however, parent may find better rates with good credit. Private loans are less flexible than federal Loan Interest Rates by Disbursement Dates July 1, 2013 and June 30, 2014 Loan Type Direct Subsidized Loans (Undergraduate Students) Fixed at 3.86% Direct Unsubsidized Loans (Undergraduate Students) Fixed at 3.86% Direct PLUS Loans (Parents and Graduate or Professional Students) Fixed at 6.41% Perkins Loans (Undergraduate and Graduate or Professional Students) Fixed at 5% 12 Capped Undergraduate 8.25%, graduate 9.5% and PLUS loans 10.5%
Using your 529 College Savings Plans 14 Request payments at least 5 days out (speak with your plan) College expenses match 529 withdrawal year Payments- Owner, Beneficiary, School – Student must be enrolled to send to school School may treat it the same as Scholarship How much to withdrawal – Qualified expenses- tuition, fees, books, supplies, equipment, limited room & board and expenses of a "special needs" beneficiary – Considerations of tax credit available
Using Coverdell ESA Tax-free for tuition and fees, required books, supplies and equipment and room & board K-12 funding ok Must be used before beneficiary is 30 – Roll over the balance to another ESA for another family member – Coverdell ESA to a 529 plan if same beneficiary 15
Using U.S. Savings Bonds Series EE and I bonds Must have been at least 24 years old when the bond was issued Tuition and fees qualify; room and board do not Tax-free within limits – joint return is between $112,050 and $142,050 – $74,700 and $89,700 for single filers 16
Using IRA Withdrawals Traditional and Roth IRAs is not counted as an asset when calculating financial aid BUT, withdrawals do count as parental income, potentially reducing financial aid eligibility. Qualified educational expenses include tuition, fees, books, supplies, equipment, and room & board for ½ time or above students. Your tax advisor is your best source for guidance 17
Tax Credits & Interest Deduction American Opportunity Credit – 100% of the first $2000 and 25% of the next $2000 – First 4 years of college – ½ time or above, pursing a degree – Each child – Tuition and related course materials – $90,000 single, head of household, or $180,000 if married filing jointly Lifetime Learning Credit – 20% on first $10,000 in expenses – No limit in years claiming it – Total household – tuition and any required fees only – $53,000 to $63,000 : Single, Head of Household, $107,000 to $127,000 : Married Filing Jointly Student Loan Interest Deduction – $2,500 in 2012 18
What is Financial Need 19 For an early estimate, use FAFSA4caster: www.fafsa4caster.ed.gov
What is the Expected Family Contribution(EFC) 20 Amount family can reasonably be expected to contribute Stays the same regardless of college Two components – Parent contribution – Student contribution Calculated using data from a federal application form and a federal formula Colleges use EFC to award financial aid
What is Cost of Attendance (COA) 21 Determined by the school and may include: Tuition and fees Books and supplies Transportation Personal expenses Room and board *Shown in yearly cost. *Shown in yearly cost.
Scholarships - Types Academic (National Merit) Field of Study Special Talents/Interests Family Heritage Military Weird Scholarships (Milk Mustache/Potato) No Essay (Doodle for Google)
Scholarship Search Start the search early – many scholarship applications have fall deadlines. – Scholarships are available to students in grades 9-11, k-8, as well as current college students. Talk to your target college financial aid office about opportunities Check with civic/church/community-based organizations High school guidance counselor bulletin board DON'T pay for advice
Scholarship – Search Engines Big Future (College Board) - scholarship database lists scholarships and other types of financial aid programs from 3,300 national, state, public and private sources. Fastweb - the largest, most accurate and most popular free scholarship search site Scholarships.com - good coverage of awards and a fairly precise match.
Scholarship Scams If you have to pay money to get money, it’s probably a scam Nobody can guarantee you’ll win a scholarship Request for Personal Info: Do not give out personal information like bank acct, credit card or social security numbers. Everyone is Eligible: all scholarships have some criteria or restrictions that apply Typing/Spelling Errors (scholorship)
Scholarships - How to Win Prioritize your applications by deadline and the expected value of the scholarship Create an accomplishments resume Tailor the application to the sponsor’s guide Read and follow the instructions Make the application stand out Ask to be nominated Practice on a copy of the application form
Scholarships –Essays Answer the essay question orally then translate Give examples and be specific Personalize your essay and be passionate Write about something that interests you Talk about your impact on other people Proofread a printed copy of the essay
Scholarships – other tips Use a professional email address (firstname.lastname@example.org)email@example.com Clean up your Facebook account Make a copy of your application before you submit it Send certified mail, request receipt or delivery confirmation If rejected, ask for reviewer comments.
Scholarships Most Common Mistakes Missing deadlines Failing to proofread the application Failing to follow directions (essay length, number of recommendations) Omitting required information Applying for an award when you don’t qualify
Scholarships – after you win Understand your college’s outside scholarship policy. Understand how the scholarship monies will be allocated (ie lump sum or divided equally over 4 years). Check renewal criteria.
Post-9/11 GI Bill (chapter 33) 36 Can only transfer benefits while on active duty 36 months of benefits (not consecutive, & one school year is equivalent to 9 months Transferability to children can be use up until their 26 th birthday What’s covered 100% of in-state tuition and fees and are paid directly to the school Private or Foreign: Up to $18.077.50 per academic year (2012) Receive monthly housing allowance going ½ or more (E-5 in zip of college) Distance learning will equal ½ of national average (about $600 2013) Up to $1000 for books/supplied per school year Yellow Ribbon Program School need to participant in Only if you are entitled to 100% funding 36 months, 30 days w/disability