Paying for College Jim Walsh & Dawn Simpson Fleet & Family Support Center

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, Source: The College Board, Trends in Student Aid

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 – 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

Loan Programs 10

Loan Programs Cont… 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%

13 Work-Study

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

What is Financial Need 19 For an early estimate, use FAFSA4caster:

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.

Need Varies Based on Cost

WRAP-UP  FAFSA  Grants/Loans/Work Study  Other funding  EFC/COA 23

Scholarships 24

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 address  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.

Summary 34

35 Post 9/11 GI Bill

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 $ 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 $ ) 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