C OST OF A TTENDANCE Part II

B ASIC N EED E QUATION Cost of attendance (COA) –Expected family contribution (EFC) ___________________________________ = Unmet Need

A WARDING All ‘Gift Aid’ must be taken into account prior to awarding subsidized funding Examples of ‘Gift Aid’ Pell FSEOG CAP KTG KEES Scholarships Company Reimbursement

A WARDING Example $31,905 COA - 0 EFC What is the Unmet Need? - 5,730 Pell Grant FSEOG - 1,900 CAP - 2,970 KTG Scholarship - 1,883 Company Reimbursement What is the student’s remaining need?

P ERKINS The Federal Perkins Loan Program provides money for college or career school for students with financial need Perkins Loans are low-interest federal student loans for undergraduate and graduate students

P ERKINS Available to undergraduate, graduate, and professional students with financial need Interest rate for this loan is 5% Sullivan, Spencerian, and SCTD are the lender Students make their payments to the school or servicer Funds depend on the students financial need and the availability of funds at each campus

P ERKINS Determining Eligibility Must be an undergraduate, graduate, or professional student with exceptional financial need Must be enrolled at least part-time Must be enrolled in a program that leads to a degree or certificate awarded by the school

P ERKINS How much funding can a student borrow? Amount depends on the students financial need Amount of other aid a student receives Availability of funds at the campus Due to limited funds, not every student who qualifies for a Perkins Loan will receive funding

P ERKINS Maximum eligibility amount Undergraduate $5,500 per award year $27,500 aggregate loan limit Graduate/Professional $8,000 per award year $60,000 aggregate loan limit Note: Before awarding, check policy and availability of funds at your campus

D IRECT L OANS What is a Federal Direct student loan? A federal student loan, made through the William D. Ford Federal Direct Loan Program, for which eligible students and parents borrow directly from the U.S. Department of Education at participating schools. Types of Direct Loans Direct Subsidized Loans Direct Unsubsidized Loans Direct PLUS Loans

D IRECT S UBSIDIZED L OAN The school determines the amount a student can borrow, and the amount may not exceed their financial need. The Department of Education (DOE) pays the interest on a Direct Subsidized Loan If the student is enrolled at least half-time For the first six months after the student leave school (referred to as a grace period) During a period of deferment (a postponement of loan payments) Note: Borrowers of subsidized Stafford Loans first disbursed on or after July 1, 2014 are once again eligible for an interest subsidy during the 6-month grace period. The subsidy during the grace period had been temporarily removed by the fiscal year 2012 budget bill for loans first disbursed on or after July 1, 2012, and before July 1, 2014.

D IRECT S UBSIDIZED L OAN Determining Eligibility Must be enrolled at least half-time School must participate in the Direct Loan Program Must be enrolled in a program that leads to a degree or certificate awarded by the school Available ONLY to undergraduate students who have financial need

D IRECT S UBSIDIZED L OAN Is there a time limit to receive Subsidized loans? YES for first-time borrower on or after July 1, 2013 Limit on the maximum period of time, measured in academic years, a student can receive Direct Subsidized loans May not receive Direct Subsidized loans for more than 150 percent of the published length of the students program referred to as “maximum eligibility period” Maximum eligibility period can change if the student changes to a program that has a different length If the student receives Subsidized loans for one program and then changes to another program, the Subsidized loans received for the earlier program will count towards the new maximum eligibility period

D IRECT S UBSIDIZED L OAN Examples: If a student is enrolled in a four-year bachelor’s degree program, the maximum period for which they can receive Subsidized loans is six years (150 percent of 4 years = 6 years) If the student is enrolled in a two-year associate degree program, the maximum period for which they can receive Subsidized loans is three years (150 percent of 2 years = 3 years)

D IRECT U NSUBSIDIZED L OAN The school determines the amount a student can borrow based on their cost of attendance and other financial aid received The student is responsible for paying the interest that accrues on a Direct Unsubsidized Loan during all periods If a student opts not to pay the interest while in school and/or during grace periods and deferment or forbearance periods, the interest will accrue and capitalized

D IRECT U NSUBSIDIZED L OAN Determining Eligibility Must be enrolled at least half-time School must participate in the Direct Loan Program Must be enrolled in a program that leads to a degree or certificate awarded by the school Are available to undergraduate and graduate students No requirement to demonstrate financial need Note: Maximum eligibility period does not apply to Unsubsidized loans

D IRECT L OAN L IMITS Federal Student Aid - An Office of the U.S Department of Education. June 2013.

D IRECT PLUS L OAN PLUS loans are federal loans that graduate students and parents of dependent undergraduate students can use to help pay for college or career school PLUS loans can help pay for education expenses not covered by other financial aid

D IRECT PLUS L OAN The U.S. Department of Education is the lender The borrower must not have an adverse credit history Adverse Credit History - When determining whether a borrower is ineligible for a PLUS Loan based on an adverse credit history, the Department obtains a credit report on the borrower from at least one national credit bureau. Adverse credit is defined in the regulations as the applicant being 90 days or more delinquent on a debt or having been subject in the last five years to a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment or write-off of an FSA debt. The absence of any credit history is not considered adverse credit. (2013/2014 FSA Handbook) The maximum loan amount is the student’s cost of attendance (determined by the school) minus any other financial aid received

D IRECT PLUS L OAN Determining Eligibility Must be a graduate or professional degree student Enrolled at least half-time in a program leading to a degree or certificate Be the parent, biological, adoptive, or in some cases, stepparent, of a dependent undergraduate student enrolled at least half-time Meet the general eligibility requirement for federal student aid. If you are borrowing on behalf of your child, your child must also meet these requirements.

D IRECT PLUS L OAN How do students/parents apply? Complete FAFSA Complete Credit Authorization form If approved; Complete MPN Graduate or professional students will also be required to complete Entrance Counseling

D IRECT PLUS L OAN When does repayment begin? Direct PLUS Loan enters repayment once the loan is fully disbursed Graduate/professional student loans will be placed into deferment while the student is enrolled at least half-time and for an additional six months after they cease to be enrolled at least half-time Parent borrower may contact their loan servicer to request a deferment Eligible while child is enrolled at least half-time May be eligible for an additional six months after child ceases to be enrolled at least half-time During deferment interest will accrue. May choose to pay the accrued interest or allow the interest to capitalize.

D IRECT L OAN I NTEREST R ATES Direct Loan interest rates for % for Direct Subsidized Loans and Direct Unsubsidized Loans for undergraduate students 6.21% for Direct Unsubsidized Loans for graduate/professional students 7.21% for parent and graduate PLUS Loans Interest rates are effective for all Direct Loans with a first disbursement on or after July 1, 2014

P RIVATE L OANS What is a private loan? A private student loan is a nonfederal loan issued by a lender such as a bank, credit union or other financial institution. It is a loan that is made to a borrower expressly for postsecondary education expenses, regardless of whether the loan is provided through the educational institution that the student attends or directly to the borrower from the private educational lender. Also referred to as Alternative Loan

P RIVATE L OANS All Federal aid should be utilized first Help bridge the gap when Federal aid is not enough to cover cost of a student education Student must apply with lender and be approved

P RIVATE L OAN Generally… Require payments while the student is still in school Can have variable interest rates, some greater than 18% Interest may accrue while the student is in school May require an established credit record May need a co-signer to receive the best possible rate Interest may not be tax deductible Cannot be consolidated into the federal loan consolidation program May be prepayment penalty fees

P RIVATE L OANS Disclosure requirements Provide the prospective borrower with the information required by 15 U.S.C. 1638(e)(1) Federal [12 CFR (a) in the Federal Reserve System Truth in Lending regulations – provided by the lender Inform the prospective borrower that she may qualify for FSA loans or other assistance from the FSA programs, and that the terms and conditions of an FSA loan may be more favorable than the provisions of private education loans

P RIVATE L OANS Lenders that currently lend to Sullivan, Spencerian, and SCTD students Kentucky Advantage Education Loan Smart Option Student Loan Note: Student have the right to choose any lender

A WARDING Example: Grade Level 2 $12,500 COA - 2,500 EFC $10,000 Unmet Need - 3,280 Pell Grant - 1,400 Scholarship Perkins - 1,800 FWS $ 2,620 Remaining Need What amount can be awarded in subsidized funding?

S UBSTITUTING FOR THE EFC May substitute certain types of aid for student’s EFC Direct unsubsidized loans Teach Grant funds PLUS loans State loans Private education loans Any other non-need-based loans Annual loan limits still apply PLUS loans count toward neither annual nor aggregate limits

S UBSTITUTING FOR THE EFC Unsubsidized Stafford Loans can replace the EFC Example $ 27,905 COA - 6,582 EFC $ Unmet Need - 4,000 Internal Scholarship - 5,000 External Scholarship - 5,550 Company Reimbursement - 2,970 KTG $ Remaining Need What amount can be awarded in subsidized funding?

R EFERENCES Cost of Attendance – Module 5 – NASFAA Core KHEAA – Kentucky Higher Education Assistance Authority Federal Student Aid: An Office of the U.S. Department of Education. June