Packaging Financial Aid Nick Prewett University of Missouri - Columbia Crystal Bruntz Avila University

Financial Aid Packaging? Strategy used to distribute limited financial aid resources Combines various types of aid from federal, state, institutional, and private entities to meet student’s financial need Varies from school to school, depending on types of scholarships and other aid available Different philosophies

Packaging Goals Find the best combination of aid to meet the financial need of the students you serve Distribute resources in an equitable manner that are in line with your institutional philosophy Provide assistance that will have an impact on access and affordability. Attract the type of students you want to your school

Types of Aid Pell Grant (first source of aid) Federal, State and Institutional Grants Federal Direct Subsidized and Perkins Loans Need-based employment Waivers of tuition and fees Fellowships or assistantships Long-term Institutional Loans Athletic Scholarships AmeriCorps Funding McNair Scholars TEACH Grant Federal Direct Unsubsidized Loans Parent Loan for Undergraduate Student

Packaging Policy Should Set award amount guidelines for each program Specify portion of need school will meet if policy is not to meet full need Set gap between need and financial aid package, as flat amount or fixed percentage

Packaging Award Amounts Packaging policy should: Specify whether minimum award amount set for Federal Perkins Loans and/or Federal Work-Study Award only if need allows for more than established minimum award amount Consider program maximums that increase each year (e.g., Title IV loan programs)

Summer Terms Important issues to consider when packaging aid for summer include: Structure of the summer term for term-based programs Enrollment status Selecting the award year for a crossover payment period Funds allocation for summer aid Use of a scheduled academic year (SAY) as opposed to a borrower-based award year (BBAY)

Step 1 – Determining the Student’s Cost of Attendance (COA) Tuition & Fees Room & Board Books & Supplies Transportation Miscellaneous/Personal Loan Fees

Step 2 – Calculating the Student’s Financial Need Cost of Attendance -EFC Financial Need

Step 3 – Determine Eligibility for Individual Resources Determine Pell Grant eligibility first FSEOG – Generally awarded to neediest students (Pell Grant recipients) State Grants – Criteria set by the state Institutional Grants & Scholarships - criteria set by the institution

Step 3 – Determine Eligibility for Individual Resources continued… Work-Study – Examples: FWS, – Awarded within need and according to institutional policy Perkins Loan – Generally awarded to neediest students and according to institutional policies Subsidized Stafford Loan – Awarded within need, maximums determined by federal regulations

Step 4 – Develop Package Develop package using funds for which the student qualifies Institution’s packaging policy can influence the resulting package Total of package cannot exceed COA

Step 5 – Non-Need Based Aid Unsubsidized Stafford PLUS Loan Private Loans

Six Basic Packaging Models 1.Individual student 2.First-come, first-served 3.Distinct student group 4.Gift aid first 5.Self-help 6.Equity

1. Individual Awards are typically calculated by hand for each student.

2. First-Come, First Served First-Come, First-Served – Based on the order in which completed applications are received by the aid office until funds are exhausted. – If you use a priority date, you are most likely FCFS

3. Targeted Groups Targeted Groups – Separate packaging criteria for specific groups of students in addition to specific criteria required by law or regulation. (Good for institutional scholarships) – Do you award extra to First Generation students? – Do you award extra to ……… ?

4. Gift Aid First Model Cost of attendance (COA) –EFC –Federal Pell Grant –Estimated financial assistance (EFA) =Remaining need for packaging Grants and scholarships awarded first Self-help awarded to meet remaining need

5. Self-Help Model COA –EFC –Federal Pell Grant –EFA =Remaining need for packaging Self-help awarded first Gift aid awarded only if need remains

6. Equity Model Assures certain level of gift aid assistance Cannot be used to award FSEOG Two types: – Absolute equity – Fixed percentage equity

Equity Model Continued Equity Concept – Absolute Equity Students funded up to an institutional maximum fixed dollar amount with gift aid before their remaining need is filled with self-help. – Fixed Percentage Equity An institutional maximum percentage of NEED or COST for all gift aid is used up to a fixed amount.

Packaging Model Variations May include: – Increased self-help after first year – Lower self-help for low-income or disadvantaged students – Lower work-study for marginal students – Increased school-year work expectation as students progress academically Must be in school’s policies and procedures, and consistently followed

Packaging Techniques Self-Help – Self-help assistance awarded after the family contribution and before any consideration for gift aid. – Do you believe that the EFC is a real number and families should pay it? See Hagan Scholarship

Packaging Techniques Packaging to Cost of Attendance – Student’s FA need is met as much as possible according one or a combination of the previous techniques – Unmet COA is filled using remaining unsubsidized Stafford loan eligibility, PLUS and/or Private Loans. – Do you award PLUS to every student?

Packaging Techniques Many institutions do not use a specific model by itself. Variations of the models can be used to best fit the institutional objectives. Do you know what your institutional objectives are?

Loan Fees Must add actual or average loan fees to COA for Federal Direct Student Loan borrowers May include required fees for nonfederal student loans Once loan fees are added to COA, gross amount of loan is included in EFA when calculating student’s remaining need for other sources of aid

Overawards Financial aid that exceeds student’s financial need May occur when student receives additional financial assistance, or has changes to EFC or COA Student’s responsibility to report additional financial assistance Do you automatically repackage aid?

Award Notification Institutions are required to inform the student of: – the amounts – terms and conditions of his/her award – manner and timing of payments Signature of acceptance by the student is no longer required. However, many institutions continue this practice.

Packaging Example - Mizzou Gamma Sumcash Incoming first-year student, First Generation, AY 14/15 COA = $20,000 EFC = $0 Qualifies for state residency Has King of the Mountain scholarship of $2000 Eligible for Pell Grant of $5730 Maximum awards: State Grant - $1500, Sub Loan - $3500, Unsub Loan - $2000 Work Study - $1200, Institutional grant to fill remaining gap in gift aid up to institutional criteria. Package this student with the “FIXED EQUITY OF NEED” equity model with a maximum of 50% gift aid.

Packaging Example - Mizzou Determine need COA – EFC = Financial Need $20,000 - $0 = $20,000 Financial Need Determine gift aid Financial Need * Gift % = Max gift aid $20,000 * 50% = $10,000

Packaging Example - Mizzou Need 20,000 Max Gift Aid 10,000 Pell Grant 5,730 King of the Mountain Scholarship2,000 State Grant 1,500 Institutional Grant 770 Gift Aid Awarded10,000 Remaining FA Need 10,000 Work Study1,200 Sub Stafford Loan 3,500 Unsub Loan2,000 Total Self-Help 5,700 Unmet FA Need 4700 Total Package15,700

Packaging Example - Avila Avila University, Kansas City, MO – Small private school 1000 full time traditional undergraduate students 500 graduate students (4 programs) 500 adult non-traditional students – Different tuition rates and packaging philosophies for each – Equity Packaging formula for Traditional students Need-based institutional aid is awarded to students based on EFC and Academic ranking (GPA and ACT/SAT) Receive a maximum percentage of aid against tuition. Different % for First Year, Transfer and Athletes. Any gift aid outside of institutional funds is not counted, therefore many students receive gift awards greater than % of tuition.

Packaging Example - Avila Incoming first-year student, AY 14/15 On campus COA = $37,208 EFC = 2443 Academic Scholarship = $13,500 Need Based Grant = $2,000 – Varies based on EFC and Academic Scholarship – Target Discount Rate Pell Grant = $3,280 Maximum awards: State Grant - $1500, Sub Loan - $3500, Unsub Loan - $2000, Work Study - $2000

Additional Guidelines Enrollment criteria Classification Annual and Aggregate Maximums Annual Minimums Need Based vs. Non-Need Based Academic Criteria Residency Criteria

Questions? Nick Prewett Director of Financial Aid Mizzou Columbia, MO Crystal Bruntz Director of Financial Aid Avila University Kansas City, MO