Financial Aid and Scholarships
What is Financial Aid? Financial aid is money available to help meet a family’s demonstrated financial need • Made up of grants, scholarships, federal loans, and other types of self-help aid • Colleges use the formula below to determine how much financial aid to provide each student: (The sticker price, which includes the t otal cost of tuition and fees, COST OF ATTENDANCE room and board, books and supplies, transportation, and other educational expenses.) (How much a family is expected to pay out of pocket ─ EXPECTED FAMILY CONTRIBUTION toward one year of educational expenses based on the student’s and parent(s) income and assets. This is __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ determined by the FAFSA and/or the CSS Profile.) - FINANCIAL NEED (How much money you need in financial aid in order to be able to attend the college.)
Example of Calculating Financial Need Cost of attendance at University X $40,000 Expected Family Contribution - $ 5,000 Financial Need = $35,000 This student would be expected to pay $5000 out of pocket and would need $35,000 in financial aid in order to be able to pay for his/her first year at University X.
The First Step Is Completing the FAFSA The FAFSA is the required financial aid form that is used to determine federal financial aid and most scholarships. • Calculates your Expected Family Contribution (EFC). *EVERYONE APPLYING TO COLLEGE SHOULD COMPLETE THE FAFSA* • There is no income cut-off to qualify for federal student aid. • Eligibility is determined using a mathematical formula that takes many factors other than income into account, such as the size of your family and the age of your older parent. • When you complete the FAFSA you’re also automatically applying for funds from your state and often your college. • In fact, many colleges won’t consider you for any of their scholarships (including academic scholarships) until you have submitted a FAFSA. • Don‘t make assumptions about what you’ll get - fill out the FAFSA and find out. IT’S FREE!
Completing the FAFSA • The FAFSA is free to file. • Seniors can begin filling out the FAFSA on October 1 st . • The FAFSA should be filed online to take advantage of the IRS interactive data retrieval tool. • There is a link to the FAFSA webpage https://fafsa.ed.gov/ on the left side of your Naviance homepage. • Prior to completing the FAFSA, you need to obtain an FSA ID. • There is a link to the FSA ID site at the top of the FAFSA webpage. • Every year you are in college, you will need to complete a new FAFSA, so it is important not to lose your ID. • Students should list their schools alphabetically. • Some students will be selected for FAFSA verification.
FAFSA Assistance • FREE Help Applying for Financial Aid for College • There is a link to the FAFSA Day website www.fafsaday.org on the right side of your Naviance homepage. Check for a location near you. • Financial aid experts will be available to help you and your parents complete the FAFSA. • If you plan to attend: • Please register on the FAFSA Day site. • Bring the following items: FSA ID, 2015 Federal Tax Return, Social Security #, Driver’s License, 2015 W-2 Forms or year-end pay stubs, 2015 untaxed income records, current bank statements, 2015 business and investment records, your alien registration card (if you are not a U.S. citizen) • Other financial aid questions can be answered by MEFA, the Massachusetts Educational Financing Authority via phone or email. • There is a link to the MEFA website www.mefa.org on the left side of your Naviance homepage.
CSS Profile • An additional financial aid form may be required • CSS Profile is used by about 400 colleges for nonfederal financial aid and scholarships ( The list of colleges can be found on College Board) • The CSS Profile can be found on College Board, you can use the same user name and password if you already have an account. • https://student.collegeboard.org/css-financial-aid-profile • Requires more detailed financial information, including additional assets • MEFA should also be able to help with any questions you have concerning the CSS Profile.
Financial Aid Packages Financial Aid Packages consist of: • Gift Aid: Money you never have to pay back • Grants • Scholarships • Self-Help Aid: Money you have to pay back or work off • Loans • Work Study You may be able to receive some additional financial aid through tax credits and/or tax deductions. • American Opportunity Credit ⦁ Student Loan Interest Deduction • Lifetime Learning Credit ⦁ Tuition and Fee Deduction
Net Cost Your Financial Aid Package should tell you your Net Cost for your first year of college. • Net Cost is how much you will be paying out of pocket and through self-help aid like loans and work-study. (The sticker price, which includes the t otal cost of tuition and fees, COST OF ATTENDANCE room and board, books and supplies, transportation, and other educational expenses.) (The total of your grants and scholarships ─ GIFT AID - aid where no repayment is required.) ___________________________________________________________________________________________________________________________________________________________________________ - NET COST (How much money you will need to pay out of pocket and through self-help aid, like loans and work-study.)
Federal Loans Your Financial Aid Package should tell you how much money you can take out in Federal Loans. • You can tell your school you do not want a loan that is being offered or that you want to take out a smaller loan amount, if it makes more sense for you to pay more out of pocket. • You can also contact the school’s financial aid office, if you think you should be eligible for more in federal loans to see if anything can be done. There are 3 types of federal loans that your schools might award you: • Federal Perkins Loans: low-interest loans for students with exceptional financial need; not available at all colleges • Federal Direct Subsidized Loans: for students with financial need; the government pays the interest as long as your in school at least half-time and during a period of deferment • Federal Direct Unsubsidized Loans: do not require financial need; you are responsible for paying the interest during all loan periods; your interest will accrue (accumulate) and be added to your principal loan amount, if you do not pay the interest while you are in school, during deferment, etc.
Other Options To Pay Net Cost Your Financial Aid Package should give you other options for paying your net cost. • Work Study • Family Contribution • Payment Plan Offered By the Institution • Parent/Graduate PLUS Loans • Military and/or National Service Benefits • Non-federal Private Education Loan
Financial Aid Shopping Sheet • Template designed by the U.S. Dept. of Education that is voluntarily being used by more than 2,000 colleges and universities • Standardizes the format of your financial aid package, which makes them easier for you to compare • There is an example of the Financial Aid Shopping Sheet on Naviance • Click on the document library link on your Naviance Homepage • Look in the Four Year College Folder
Be Mindful of Preferential Packaging Preferential packaging is a financial aid and enrollment strategy used by an institution to enroll the strongest class possible. For example, if 3 students are accepted to College X, the college would award scholarships vs. loans in the following manner: Difficulty Level Scholarship Loan Student A Safety School $35,000 $ 0 Student B Fit School $20,000 $ 7,500 Student C Reach School $ 0 $20,000 In other words, the better they think you’ll do at their school, the more money they are likely to give you in scholarships that you don’t have to pay back!
Borrowing Responsibly Responsible Borrowing Video Overview • The suggested strategy is to try to borrow based on your anticipated starting salary after college • Budget based on 50-30-20 formula using after-tax dollars • 50% of after-tax pay for fixed expenses like housing, utilities, transportation, etc./ needs • 30% of after-tax pay for discretionary expenses like entertainment, gym, pets, etc./ wants • 20% of after-tax pay for financial commitments like student loans, savings and retirement *The best practice is no more than 10% of your after tax monthly pay should go toward student loans*
Example of Budgeting Based on 50-30-20 Based on this formula, if your anticipated starting salary is $45,000 , you do not want to have a student loan payments greater than $280 a month!
Reasonable Total Borrowing *Note that the amounts listed are what is considered reasonable to borrow over the course of your entire college education and not just for one year!*
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