Guide to Paying for College

Editor's Notes

• #3: Introduce MEFA Introduce yourself, your school and your experience in helping families finance college Reference the main brands a family may see out there and emphasize that they are offered by MEFA
• #4: WELCOME Housekeeping – give timeframe for presentation, discuss how you wish to handle questions, tell where restrooms are Review seminar agenda
• #5: MESSAGE: There’s a lot of financial aid available, however loans make up a large portion of the total aid awarded. Because there are three major types of financial aid, it’s very important to be aware of what’s making up the award vs. the total bottom line Yes, loans are considered financial aid because of their special repayment terms for students. Loans must be repaid Loans may be offered to the student OR the parent. Work-study does not come off the student’s bill You don’t have to accept loans or work-study
• #6: Message: Most financial aid is awarded based on the families ability to pay for college, not grades, standardized test scores or talent Some colleges award merit aid Awarding practices can vary significantly from college to college Discuss some of the ways merit aid can be awarded
• #7: MESSAGE: Students may need to complete multiple applications and colleges will have varying deadlines. Where to get it? Online…Guidance Office…from the colleges, talk about the benefits of completing the FAFSA online Cannot file until 1/1/2010 Mention password resource page in booklet to keep track of deadlines Introduce MEFA counselor emails as a helpful tool to remind them of deadlines for applications. Stress the importance of deadlines and staying organized through process. Talk about estimating income to meet deadlines Can only do 1 form and send it to up to 10 schools at a time All schools require the FAFSA It’s FREE Must be completed each year Mention College Goal Sunday as resource for completing form CSS PROFILE: SOME colleges need this…why? Gives colleges more information to spend their internal funding, it’s faster than waiting for the FAFSA data for colleges that award based on early decision or want to award early There is a fee for the PROFILE, explain If student is applying early decision CSS/Profile may be required earlier than FAFSA College/University Financial Aid Application Institutions can ask anything Not all colleges require this, check your application view books and applications for details
• #8: MESSAGE: Students may need to complete multiple applications and colleges will have varying deadlines. Where to get it? Online…Guidance Office…from the colleges, talk about the benefits of completing the FAFSA online Cannot file until 1/1/2010 Mention password resource page in booklet to keep track of deadlines Introduce MEFA counselor emails as a helpful tool to remind them of deadlines for applications. Stress the importance of deadlines and staying organized through process. Talk about estimating income to meet deadlines Can only do 1 form and send it to up to 10 schools at a time All schools require the FAFSA It’s FREE Must be completed each year Mention College Goal Sunday as resource for completing form CSS PROFILE: SOME colleges need this…why? Gives colleges more information to spend their internal funding, it’s faster than waiting for the FAFSA data for colleges that award based on early decision or want to award early There is a fee for the PROFILE, explain If student is applying early decision CSS/Profile may be required earlier than FAFSA College/University Financial Aid Application Institutions can ask anything Not all colleges require this, check your application view books and applications for details
• #9: MESSAGE: Students may need to complete multiple applications and colleges will have varying deadlines. Where to get it? Online…Guidance Office…from the colleges, talk about the benefits of completing the FAFSA online Cannot file until 1/1/2010 Mention password resource page in booklet to keep track of deadlines Introduce MEFA counselor emails as a helpful tool to remind them of deadlines for applications. Stress the importance of deadlines and staying organized through process. Talk about estimating income to meet deadlines Can only do 1 form and send it to up to 10 schools at a time All schools require the FAFSA It’s FREE Must be completed each year Mention College Goal Sunday as resource for completing form CSS PROFILE: SOME colleges need this…why? Gives colleges more information to spend their internal funding, it’s faster than waiting for the FAFSA data for colleges that award based on early decision or want to award early There is a fee for the PROFILE, explain If student is applying early decision CSS/Profile may be required earlier than FAFSA College/University Financial Aid Application Institutions can ask anything Not all colleges require this, check your application view books and applications for details
• #10: Message: Explain what happens with the applications once they are submitted Your information is processed by a central processing center and data is sent to the colleges that you selected as well as the Massachusetts Office of Student Financial Assistance (be sure to answer questions about your state of residence) You will receive a SAR (Student Aid Report) and, if you also file PROFILE, a CSS PROFILE Acknowledgement Report Comes in different forms- e-mail if you provided a valid e-mail address or paper if you did not provide a valid email address Be sure to review all of your answers and make sure they are correct If you estimated your income, compare your FAFSA answers to your tax return or other financial records and correct any answers that are wrong For PROFILE corrections, contact your colleges directly Correct any information that was erroneously reported or update your estimates Make sure processing is completed Explain verification process. U.S. Department of Education requires 30%, some schools do 100%. Explain what documents might be required. It doesn’t mean that there is anything wrong with application but a method to verify that information matches with tax returns.
• #11: MESSAGE: The applications do not calculate how much the student will receive in financial aid, instead they calculate the EFC E.F.C: measures the family’s ability to contribute towards the student’s educational expenses for the upcoming academic year. an attempt to measure your family’s ability to absorb educational expenses, but makes no particular assumptions about how you will finance that contribution. In fact, you have choices about how to do that which we will discuss later. The family has the primary responsibility for contributing the student’s education. The amount the family can contribute is calculated before the financial aid award is determined. The EFC is calculated using a standard formula for all families.
• #12: MESSAGE: Factors that go into the formula. Depending on the audience, you may want to go into more detail about the methodology behind the formula (chart is located in the book) and explain the following details. It is important to note that the 22-47% of income that ends up being part of the EFC is 22-47% of the available income for the family AFTER  all taxes (federal, state, and FICA) and allowances (employment allowance and income protection allowance) have been subtracted.   As income increases, the percentage of income that is considered “available” increases based on the principle that as income increases, families are more able to absorb educational costs. Percentage of income may actually be as low as zero if the income is low. The income protection allowance is based on the number in the family and number in college. IPA designed to allow for basic living expenses (food, housing, transportation expenses, clothing and personal care, medical care and other family consumption) This treatment levels the playing field for families so that families with similar available income are treated similarly in the process regardless of how they spend their available income. In other words, personal lifestyle decisions are not factored into the formula. This slide also shows that a higher percentage of a student’s income and assets are expected to be contributed toward college as the student is the primary beneficiary of the education. Use this slide to talk about how multiple children in college affect the parent contribution. Dependent students must be at least 1/2 time and enrolled in a degree seeking program. Depending upon the audience, you may want to elaborate on the simple needs test where in certain circumstances – assets are not counted at all. Discuss the variables that go into the formula Use this opportunity to talk about asset on FAFSA vs. CSS Profile Home equity Retirement Life insurance Explain that there are other factors that go into the EFC including household size and number in college which impact the EFC.
• #13: MESSAGE: This slide illustrates the generous parent asset protections allowance. While assets (current value of savings, checking accounts, investments, reportable businesses and farms) are considered in the financial aid formula, assets have minimal impact to the EFC as it is primarily an income driven formula. For this reason, having saved for college or other assets that you can use to help pay for college is a good thing; it gives families options for paying the balance due. For example, An additional 75K in savings only increases the EFC by $810 An additional 150K in savings only increases the EFC by $4382 Remember this is parental assets (3-6%) while student assets would be assessed at a higher rate (20%)
• #14: MESSAGE: This slide shows that the EFC formula is heavily income driven Income (all income, from taxable and non-taxable earnings and other sources) is assessed at a higher rate in the financial aid formula, than assets. For example, An additional 40K in income increases the EFC by $10,139 An additional 90K in income increases the EFC by $26,240 Colleges don’t tell families how to meet their EFC. For example with family B, the college wouldn’t require the family to use any of their reported assets for education expenses. This is an option the family has. More about payment options later on. Reminder, the EFC is determining how much the family can absorb in educational expenses. This doesn’t mean that the family is expected to pay their full EFC from their current income from one year. They have options including meeting their EFC using a number of resources. We’ll discuss this further.
• #15: MESSAGE: all colleges use this preliminary calculation to determine eligibility for financial aid a their institution. EFC stays the same regardless of institution Explain that COA varies and list items commonly included in COA (tuition and fees, room and board, books and supplies, travel and misc. or personal expenses) Again, the amount the family can contribute is taken into consideration before determining a financial aid award. In a perfect world, you would get 100% of your financial need in financial aid and all you have to pay is your family contribution….but it doesn’t always work this way Based on funds availability, many families demonstrate high need so schools may only meet a percentage of this need with aid
• #16: MESSAGE: The bar graph illustrates the three line formula (COA – EFC = need) that we looked at earlier. Financial aid eligibility varies from school to school. Use this chart to show why a student should never rule out a college because of its cost. The student is eligible for a large financial aid package from college A. At the same time, you don’t know what that financial aid package will include until the student is accepted to the school and receives their financial aid award letter. For this reason, the student should consider applying to a balanced list of colleges financially. At College D, the student has 0 eligibility for financial aid, however it might be an affordable option for the family. In a perfect world (theoretically) , The college will be able to meet the student’s full need and the EFC will remain the same, however many colleges cannot meet full “need” due to available funding
• #17: MESSAGE: Colleges use the EFC to determine eligibility for financial aid, then try to meet their eligibility (or fill the barrel) with financial aid from all resources. Most colleges are not going to be able to fill the barrel. The EFC always goes into the barrel first Then the college will try to fill the barrel with financial aid from all resources In this situation the student had $25,000 in financial aid eligibility, yet there is unmet need. Unmet need is more common than not Explain what happens to EFC, when there is unmet need. In this example, if the student decides to attend this institution, the family will need to contribute the EFC plus unmet need ($5000 + $3000 = $8000) for the student to attend. Use this as an example to demonstrate how the EFC is a MINIMUM contribution for a family, not necessarily a MAXIMUM Explain the difference between direct and indirect costs in the COA and that even though the college wont bill the student for indirect costs, the family still needs to determine how they will be met. Explain ways that students can reduce indirect costs, such as books and travel.
• #18: MESSAGE: When comparing award letters, you can’t just look at the bottom line. You need to compare what’s making up each financial aid award. Here are three examples of awards from colleges with the same Cost of Attendance (COA) You can see that even though three hypothetical colleges cost the same, and the EFC is the same, the Award Letters from them can differ greatly from one another. Explain the differences and possible reasons for the variance. Talk about the different kinds of loans they might see on an award letter What do they do if they are offered a parent loan
• #21: Leave families with these action points to begin the financial aid process.