Financial Aid: An Overview A Presentation of

Introduction Tonight you will learn: l What Financial Aid is l Sources of Financial Aid l The formulas used in determining your eligibility l When and how to apply l Resources for more information

Who Are You? l Is this process new to you? l Where is your son or daughter thinking about attending college? l What is the cost of that institution? l How will you pay for it?

Agenda l Learn the language: Review some simple vocabulary l Financial Aid Primer: Forms, Formulas and Funds l How do I apply? l Financial Aid Calendar l Review of the Forms

l Grants, Scholarships  Free Gifts  Do not have to be repaid l Loans  Money that must be repaid  Borrowed by student, parent, or both l Work Study  Money student is given the opportunity to earn $$ IOU What is Financial Aid?

Grants & Scholarships Pell Grant MASSGrant SEOG Tuition Waiver Fee Grant Institutional Grant Private Scholarship Massachusetts Performance Bonus

Educational Loan Programs Massachusetts No Interest Loan Federal Perkins Loan Federal Direct or Stafford Loan (subsidized or unsubsidized) Institutional loans Other state loans

Over $68 Billion given out in Financial Aid in Source: The College Board

l STUDENTS have the primary responsibility for contributing to their education to the extent that they are able l PARENTS are responsible for contributing to their children’s education to the extent that they are able l FAMILIES with similar circumstances will be expected to contribute similar amounts to higher education; those with different circumstances will be expected to contribute different amounts Financial Aid Basic Premises

Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Aid Eligibility/Family Need Financial Aid BASIC FORMULA

Tuition and Fees Tuition and Fees Room and Board Room and Board + + Supplies Other Personal Expenses Books Transportation COST OF ATTENDANCE (COA)

l IS a measure of parent’s capacity over time to absorb educational costs l IS NOT a dollar amount expected from current income or assets. l IS NOT an estimate of “extra” cash available. The Expected Family Contribution

Taxes # in family The Financial Aid Funnel Expected Family Contribution (EFC) l Used to award all Federal Aid at public and private schools l Uses both parent and student information (for dependent students) l Uses standard income and asset protection allowances l Does not consider HOME EQUITY or Qualified Retirement Assets # in college Assets Income FAFSA Elements of Federal Methodology

l Student Income 50% after taxes and income protection allowance of $2500 l Student Assets 35% EXPECTED FAMILY CONTRIBUTION STUDENT Contribution (dependent) l Parent Income 22-44% after taxes and income protection allowance l Parent Assets* 3-6% after asset protection allowance * Retirement & Home Equity not included in federal formula l Divided by number in college PARENT Contribution + Current Federal Methodology

l Used by colleges to give out their own money l Formula could vary widely from school to school l Generally includes more assets than the Federal Methodology Home Equity often included l Often requires additional applications/forms Institutional Methodology for Institutional Funds

23 Family Profile Oldest Parent’s Age: 50 Family Members: 4 Number in College: 1 Federal tax: 10% of AGI The Parent Contribution A Case Study Federal Methodology

$0 $5,000 $10,000 $15,000 $20,000 $25,000 Private A Need EFC COA - EFC = NEED COA Private BState College/ University Community College $25,000$30,000$10,000$5,000COA $30,000 How Does the Formula Work?

The “Step” Approach to Awarding Financial Aid For Institutional Grants, Admissions Ranking can determine Financial Aid Awarded

Unmet Need = $1,900 Work = $1,500 Work Study Loan = $2,600 Stafford Loan Gift Aid = $6,000 Grant + $5,000 Scholarship EFC = $8,000 COA - EFC = Need $25,000 -8,000=17,000 The Financial Aid Barrel A Sample Financial Aid Award

Sources of Financial Aid Consider All Your Options ! l Federal Government l State Government l College / University l Private Agencies (Kiwanis, Elks, church or synagogue group) l Professional associations l Parent’s employer

‘Financially’ Manageable During and AFTER the College years PARENT STUDENT Will not jeopardize  Financial Security  Comfortable Retirement  Educating other children  other financial goals  Will not leave excessive debt  Will not jeopardize financial independence after graduation Estimate the ‘Total’ Cost of Education 4+ years of expenses Estimate the ‘Total’ Cost of Education 4+ years of expenses Look at your entire Financial Situation Make financial decisions that :

“Insider” Tips l Find out the deadlines and comply! l Keep copies of what you send. l “Guess-timate” on your applications l If you have questions, ask! l Look at all of your financing options l Don’t rule out a school just because of its cost l Apply to one or two financially ‘safe’ school l Think about how you (parent & student) will pay your share of total college costs (2/4+ years)

Financial Aid Application Materials l FAFSA - Free Application for Federal Student Aid –Required by all colleges –Free form l PROFILE –Some colleges need this –Paid form l Institutional Application –One per school –Usually part of admissions packet l Business/Farm Supplement l Non Custodial Parent Statement l Tax Return REMEMBER! Forms must be filed EVERY YEAR.

Financial Aid l Can be required by the federal government or by any institution l is carried out by the institutions l involves documentation of data provided on the application forms l an award based on non-verified information is subject to change after the information has been verified VERIFICATION PROCESS

The Financial Aid Calendar l January (or earlier for Profile): Complete forms (BEST GUESS IS OK FOR INCOME) l February (or earlier for Profile): Many school’s deadlines for forms l Late February - March: Schools may call you with questions l End of March - Early April: Admissions and Financial Aid notification mailed

The Financial Aid Calendar (continued) l April: Compare award letters from different schools l May 1: DECISION DEADLINE - Tell all schools yes or no l May: Pay deposits (tuition, room and board) - about $500 l June: Bill for the Fall semester, due by 8/1 or so l November - December: Bill for the Spring Semester

“I need more help!...” l Higher Education Information Center 1(800) l Federal Student Aid Center - FAFSA Processing: FEDAID l College Scholarship Service - Profile Processing: (800) l Each college’s financial aid office l Your high school guidance office l Your state legislator’s office

Still more help on the WEB Resources for: Financial Aid Scholarships College Information

HELPFUL HINTS IN COMPLETING THE FORMS READ all the instructions Complete the ENTIRE form, unless specifically instructed to leave something blank Use number 2 pencil or a pen with black ink Read “When You Fill Out This Form” on page 2 of FAFSA Be sure to answer all questions on the form using information about the individual about whom the question is directed (e.g. Do not provide parent's social security number when asked to provide the student's social security number. ) Use regular first-class mail. Sending the forms special delivery or by overnight mail or by any other special process to the P.O. Box indicated MAY DELAY RECEIPT of the forms by the processor Notify all of the financial aid offices of institutions to which student applies regarding any unusual or special family circumstances not already reflected on both of the forms

Let’s Fill Out the Forms l Free Application for Federal Student Aid (FAFSA) – l Profile Registration Form –

THANK YOU!