College Financing Workshop - Montgomery County Public Schools

Report
College Financing Workshop
Workshop Agenda
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Getting ready- the college calendar
How much does College Really Cost
Debunking college financing myths
Types of financial aid- grants, scholarships, work
& loans, academic common market.
What is the Net Price Calculator
The application process- (FAFSA, CSS Profile, and
other forms)
Evaluating Financial Aid Awards
Scholarship Opportunities
The College Calendar
• Make sure you check out the specific deadlines for schools of
interest.
• November-March
• If applying Early Decision, some schools require the CSS
Financial Aid Profile Form by a certain deadline as well as
the students application. (Only required by about 500
schools)
• Many schools have scholarship application deadlines. (Check
the schools web-site for details)
• Starting in November you can obtain the FAFSA-on-the-Web
Pre-Application Worksheet (www.fafsa.ed.gov)
• January-February:
Submit FAFSA- State of Maryland deadline is March 1.
College Calendar
• February-April:
Notifications from colleges will begin,
followed by financial aid award letters.
Watch for email notifications if the school has
requested additional documents.
Email notifications may be listed on the
student’s college account.
May 1: Send tuition & housing deposits (most
schools require this)
STAY ORGANIZED
• Financial Aid File
– FAFSA- File EVERY YEAR
– CSS Profile Form (if required)- Every Year
– Student Aid Report Information (SAR)
– Copies of Tax Returns & W-2s
– Copies of any corrections
– Copies of school financial forms
MEET ALL DEADLINE DATES
The Financial Aid Equation
How Much Does College Really Cost
• COA-EFC=NEED
– COA is Cost of Attendance (tuition, room, board,
fees)
– EFC is Expected Family Contribution ( estimated by
the federal government. What you can pay for
your child’s tuition per year based on your
income, assets, savings)
Financial Aid Myths
• Scholarships will pay our student’s college costs.
 Reality: Only 4% of total financial aid is in the form of merit or talent-based
scholarships.
• Our family makes too much money to qualify for financial aid
 Reality: Many factors beyond annual income are considered in determining a
family’s ability to pay for college expenses. These include family size, net value
of assets, age of parents, number of children in college, and special
circumstances.
• The equity in our home will make our child ineligible for financial aid
 Reality: Federal and state formulae do not consider home equity. Some
independent institutions do review home equity but often adjust it relative to
family income. Home equity is requested on the CSS Profile Form
• Our other assets will make our child ineligible
 Reality: Parental assets are protected for retirement. Parental assets have no
effect on eligibility for 95% of applications. Or the remaining five percent, no
more than 5.7% of parents’ net assets (savings investments, equity) are used in
determining eligibility for aid. Retirement funds (IRA, 401K, 403b, etc.)are not
considered assets (except for CSS Profile Form) but pre-tax amounts
contributed in the prior tax year are considered untaxed income.
Financial Aid Myths
• I am not an A student or an athlete, so I will not be eligible for
financial aid
 Reality: Most financial aid is awarded on the basis of the economic
situation of the parents and student. There are also funds available to
students with special talents.
• Financial aid is available only to minorities
 Reality: Although a few scholarships are based on race, gender, disability, or
other factors, the overwhelming amount of money is awarded on the basis of
financial need. Awards based on academic ability, athletic, and other special
talents, and community service also exceed awards based on minority status.
• Big, prestigious colleges will award more aid
 Reality: Every college makes its own decisions about how much aid to offer.
Big colleges have big expenses, and some small colleges have large
endowments or other financial aid resources.
• More non-education debt will get me more financial aid
 Reality: Need analysis formulas do not consider consumer or mortgage debt.
Financial Aid Myths
• I will have to go deeply into debt in order to go to college
 Reality: Most students graduate with less debt than the cost of a single year of
private school tuition. A good rule of thumb is not to borrow more during
college than your expected starting annual salary when you graduate.
• Student employment hurts grades
 Reality: On average, students who work up to 15 hours per week actually
get better grades than those who do not work.
• My neighbor did not get financial aid, so neither will I
 Reality: Your neighbor is not you. He or she may have significantly different
financial circumstances than you do, despite outward appearances. Your
neighbor’s child may have attended a lower cost school, or your neighbor
may want you to think he or she is not receiving support. The only way to
learn if you are eligible for financial aid is to apply for it. If you do not apply,
you definitely will not receive assistance. In addition eligibility rules for
financial aid change each year as do family circumstances.
Financial Aid Myths
• I should wait until I have filed tax returns before applying for financial aid.
 Reality: Meet the application DEADLINES!! Yes it is easier to complete the forms after tax
returns have been completed, but it is far worse to miss a deadline. If you have not
completed your tax returns by the application deadlines, estimate as closely as possible
the information you report on FAFSA and provide corrections later if needed.
• I should wait until I am admitted before applying for financial aid
 Reality: ONCE AGAIN MEET ALL DEADLINES!!! Many application deadlines for financial
aid are earlier than the dates the colleges announces admission decisions. If you do not
meet the financial aid deadline, you may not be awarded some aid because funds will be
exhausted by the time you apply. By meeting the deadline, you will be considered fully
for all financial aid funds.
• Applying for financial aid will hurt my chances for admission
 Reality: Most colleges practice “aid blind” admission, which means they make decisions
without regard to ability to pay. ASK the schools directly what their policy is. Are they
“need-blind”, “need-assistance”, “need-aware”.
• I will not qualify for financial aid because I have saved money for college.
 Reality: The federal government uses only 20% of the student assets as part of the family
contribution. For instance, if a student has $5,000 in savings, the change to the family
contribution would be $1,000. $5,000X20%=$1,000.
• If my parents do not claim me on their tax return, I will get more aid
 Reality: Not true- A student must meet the Independent Student Criteria*
Types of Financial Aid
GRANTS-SCHOLARSHIPS-WORK-LOANSACADEMIC COMMON MARKET
• Grants (Gift Aid based on NEED)
• Scholarships (Gift Aid based on merit/talent)
• Work-Study
• Educational Loans (student & parent loans)
• Academic Common Market (Only offered for
certain majors not offered by any Maryland
Public Schools, and with participating states)
SEE ACADEMIC COMMON MARKET WEB PAGE
Financial Aid Award Packaging
• Availability of funds and
institutional policy will influence
amount and type of aid offered.
(for example work study &
institutional grants)
• Remember many scholarships will
have requirements the student
must maintain to keep.
• Many schools are unable to meet
full federal financial aid eligibility
(need) due to limited resources.
• All schools use different need
analysis methodologies to
distribute aid.
Maximum amounts allowed:
Federal Pell Grant: $5,500
TEACH Grant*: $4,000
Federal Stafford Loan: $5,500
Federal Perkins Loan: $5,500
Federal Supplement Educational
Opportunity Grant: $4,000
Federal Work-Study: depends on
funds available at school
Federal PLUS Loan (for parents
only) COA minus other aid received.
Must contact school directly for
exact estimate.
Types of Educational Loans
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Federal Perkins Loan
Federal Stafford Loans
Federal PLUS (Parental) Loan
Private or Institutional Loans
Institutional Monthly Payment Plan
Some families use home equity loans
Interest paid on student loans is deductible on
federal tax returns for many middle income
students and parents
WHAT ARE
Subsidized & Unsubsidized Loans??
SUBSIDIZED
 Need Based
 No Payments or interest while in school
 Payments & interest begin 6 months after graduation
 Low interest rate from government
 Repayment options from 10-25 years
UNSUBSIDIZED
 Eligibility not based on income or need
 Interest begins when funds are disbursed
 Defer interest or pay interest while in school
What is the Net Price Calculator?
• Every College is required to have a Net Price
Calculator on their website.
• This tool will help you get an estimate based on
your personal situation.( Only as good as the
information submitted)
• Understand the finanical resources available for a
particular school.(Some schools use sophisticated
analysis, others use averages)
• REMEMBER to ask about Mandatory FEES that
may not be included in tuition.
• Contact the schools financial aid office or Bursar
HOW TO APPLY FOR
FINANCIAL AID
• #1. Both Student and Parent NEED TO GET A
PIN- WWW.PIN.ED.GOV
• FILE FAFSA- (FREE APPLICATION FEDERAL STUDENT AID)
ALL SCHOOLS
• WWW.FAFSA.ED.GOV (WATCH OUT FOR SCAMS IF YOU GOOGLE FAFSA)OPTIONAL USE THE FAFSA WORKSHEET TO GET READY
• FILE ONLINE AFTER JANUARY, 1 2014
• IF NEEDED COMPLETE THE CSS AID PROFILE
• www.student.collegeboard.org/css-financial-aid-profile
Financial Aid Application Materials
• 2013 Federal tax Returns
• All W-2 forms
• FAFSA- Taxed and untaxed income of custodial parent(s) and
student
• Number of family members/Number of dependent children in
college at least ½ time for at least 1 academic term
• Age of parent
• Net assets (checking, savings, investments, ‘other’ real estate
equity, business and farm equity)
• Maryland DEADLINE is MARCH 1, 2014 or the earliest college
deadline-whichever comes first
Comparing the Forms
FAFSA
• About 100 questions
• Free to file
• Income Driven
– Adjusted Gross Income (AGI)
of both the student and
parent(s)
• Asset Information
– Asset protection for parents
• Special Circumstances
– Can’t be reported on FAFSA,
must talk with each school
separately
CSS Profile
• About 300 questions
• Charged a fee to file
• Income Information (same as
FAFSA)
• Asset Driven
– Home Equity & Retirement
Savings
– Assets in sibling’s name
– Prior Year & Future Year Income
(est.)
• Special Circumstances
– Open narrative box to add
Common Mistakes on the
FAFSA
• Leaving a field Blank (If the answer is zero, write “0”)
• Not using legal name as it appears on the student’s Social Security Card. Or
Using the Incorrect SS #.
• The words “YOU” and “YOUR” on the FAFSA always refer to the STUDENT, not
the parents.
• Confusing “total income tax” with adjusted gross income, taxes withheld, or
taxes due.
• Listing retirement assets as investments.
• Not reporting Earned Income Credit, retirement contributions, combat pay,
and military food and housing allowances as “untaxed income”.
• Not counting the student as a member of the family and/or as a family
member who will be attending college.
• Not listing colleges you want to receive the report, or listing the wrong college
with the wrong Federal School Code.
• Not reporting the student’s housing plans for each college.
• Not signing the form with the required PIN number for
PARENT & STUDENT.
• Failing to submit all required application forms and
documents
• Missing application deadlines
• Submitting incomplete application forms or deadlines
• Not checking email or the college website for important
messages
Comparing Financial Aid Packages
PRIVATE ABC COLLEGE
COA =
Minus EFC-
$40,000
-$18,000
$22,000
AWARDS:
COA=
Minus EFC-
$25,000
- $18,000
$ 7,000
AWARDS:
Grant for Freshman Year
President Scholarship*
Work Study*
Federal Perkins Loan
TOTAL=
PUBLIC SCHOOL
$2,000
$8,000
$5,000
$3,500
$18,500
$3,500
TOTAL BILL (with EFC)
= $21,500
Federal Perkins Loan $2,000
TOTAL=
$5,000
TOTAL BILL (With EFC)
= $23,000
Evaluating Aid Packages
• Financial aid awards contain varying amounts of grant, workstudy and loans.
• What is the TRUE bottom line for EVERYTHING
• Consider your need, not calculated need, and compare the
offers.
• What are the CONDITIONS of the scholarships, grants, and
loans.
• If I study abroad, what will happen to my financial aid award?
• What if a parent or student loses a job?
SCHOLARSHIPS
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Available from colleges, companies, community-based groups, banks, credit
unions, employment, associations, and other organizations
Usually require separate applications
May require transcript, essay, interview, audition, recommendations
Ask the college, look on their website, and do not forget to apply for college
department scholarships every year.
Some have certain requirements, GPA, club member, income level, etc….
NEVER PAY A FEE FOR A SCHOLARSHIP
Watch for Scams, Do not automatically provide S.S. #- Some other Scams will
send emails asking for a credit card or bank account number-Some will say you
have been selected or you are a finalist in a contest that your child never
entered.
Use recommended scholarship search sites (See Wootton website)
Some local opportunities available in the College Center
Thank You for coming……

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