AMEDF Scholars Methodology: FINANCIAL AID FOR COLLEGE Scholars Methodology: A Review Complete Guide to College Funding with Session 2 One on One Conference FINANCIAL AID FOR COLLEGE Career & Majors and CB Big Future 2019 ‐ 20 College Choices and CB Big Future • College Financial Aid (Today) Providing Everything You Need to • College Financial Coordination (Today) Better Prepare for College – EFC, Cash ‐ Flow Worksheet and Budget • One ‐ on ‐ one advising available (future) DETERMINATION OF “ NEED ” FAFSA & CSS Profile • Expected Family Contribution (EFC) – Federal Methodology (FM) – Institutional Methodology (IM) • Free Application for Federal Aid (FAFSA) • CSS Profile • Net Cost of Attendance (COA) Net COA – EFC = Need = Eligibility for Need ‐ based Aid EFC (continued) EXPECTED FAMILY CONTRIBUTION (EFC) Federal Methodology (FM) FB Institutional Methodology (IM) FM Rules of Thumb: IM Rules of Thumb: FAFSA and Assessment Rates CSS Profile and Assessment Rates • Minimize student income • Minimize student income & • • Custodial Parent(s) available Custodial + Natural parents’ above $6,660 & assets assets available income: 20 ‐ 45% income : 22 ‐ 47% • • Shift assets from includable • Shift assets from includable Assets above allowance: 5% • Assets above allowance : 5.6% • Student income: 50% w. minimum • to favorable or excludable to excludable Students Income 50% (above contribution (~$2,200) $6,660) • Student Assets: 25% • Two ‐ year look back (Prior ‐ • Two ‐ year look back • Student Assets: 20% • Income includes taxable, pretax & • Filing starts Oct 1 st of year prior) • tax ‐ free Income includes taxable, • Filing starts Oct 1 st of year • pretax & tax ‐ free (gifts) Assets include home, sibling assets, before school year business • Assets exclude home, before school year • Considers parental retirement, retirement, life insurance, single ‐ pay life insurance & relative small business contributions 1
AMEDF Scholars Methodology: FINANCIAL AID FOR COLLEGE SAMPLE CASE: SAMPLE CASE EFC RESULTS 1. 2 parents (older is age 45) , 2 students (ages 17 & 13; • 2019 ‐ 2020 Federal Methodology: $14,470 students have no financial resources) – Parent Contribution = $14,470 2. Annual gross income from wages of $100k – Student Contribution = $0 3. Fed tax liability of $6,739, NY of $4,559 and FICA of $7,650 (2018 tax tables/ deductions/ rates) • 2019 ‐ 2020 Institutional Methodology: resulting in about $81,052 of net income after $13,668 taxes – Parent Contribution = $11,468 4. $11,100 in Accumulated Savings (non ‐ retirement investments) (last 2 ‐ years of redirected – Student Contribution = $2,200 retirement savings) 5. $100,000 in home equity value • What is the annual EFC ? Components of Aid In Action: 2 ‐ Steps *2018 ‐ 19 Pell Grants, SEOG & NY TAP Cost Reduction vs. Aid Maximization Pell : Need and Methodology COA (tuition, R& B, fees, etc) • EFC Range: 0 ‐ $5,486 -Less Merit Scholarships or tuition discount • Award Range: $6,095 ‐ $652 Approaches: -Less Private and Non-Need Aid/ Scholarships SEOG : I. Cost = Equals Net COA Reduction & • Neediest first w. priority for Pell recipients non-need aid - Less EFC (IM vs. FM) • $100 ‐ $4,000 II. Need-based NY Tuition Assistance Program ( TAP ) Need-Based Eligibility Hierarchy & Ratios aid & Quality – Schedule E: $500 ‐ $5,165/year maximization - Less Government Need- – Net Taxable Base (NTB) income determined Based Aid – $80,000 cap; below $7,000 max award = Equals School Need-Eligibility *Only 2018 ‐ 19 award details are available as of October 15, 2018 COLLEGE WORK ‐ STUDY (pg 2) UNDERGRADUATE STUDENT LOANS • Direct Subsidized, Direct Unsubsidized • Special jobs allocated to “needy” students – Annual & aggregate limits (pg 13) • Taxable wages but does not count against EFC – Interest rate, accrual, repayment (pg 11) in subsequent years • Perkins (subsidized only ‐ pg 3) • Estimate based on # hours worked per week – Annual & aggregate limits – i.e. 32 week school year – Interest rate, accrual, repayment • Increase for Independent students • $8/hours at 10 hours per week • Private ( hesc.ny.gov for private loan comparison = $8 x 10 x 32 = $2,560 tool) 2
AMEDF Scholars Methodology: FINANCIAL AID FOR COLLEGE EXTRAPOLATION: SCHOOL AID AID HISTORY AND POLICY • Grants & need ‐ based scholarships Yale SUNY Buffalo In ‐ state – Last in first out! COA $ 73,820 $ 28,329 – Based on school’s aid history and policy Avg. Aid Package $ 56,320 $ 10,937 • Merit scholarships Avg. Non ‐ Need 0 $ 6,030 Avg. need ‐ based gift aid $ 54,568 $ 4,026 – Based on student’s admission profile and/or skills (scholarship or grant) – Typically a cost reducer/discount Avg. need ‐ based loan $ 2,423 $ 3,922 Avg. % of need met 100% 49% – Renewal usually contingent upon academic Avg . indebtedness at $ 13,050 $ 19,500* progress (be mindful of GPA requirement above graduation 3.0) Source : BigFuture.collegeboard.org, Fall 2018, * previous data from 2017 since current year data not available Sample Case Results Sample Case Results PUBLIC: FM EFC $14,470 ELITE PRIVATE: IM EFC $13,668 • COA of $28,329 – EFC of $14,470 = Need or • COA of $73,820 – EFC of $13,668 = Need or eligibility of $13,859 eligibility of $60,152 – Fed subsidized student loan = $3,500 – Fed subsidized student loan = $3,500 – Fed work study = $2,560 – Fed work ‐ study = $2,560 • School aid eligibility • School aid eligibility – Need of $13,859 – student loan of $3,500 – work study of $2,560 = $7,799 – Need of $60,152 – student loan of $3,500 – work • Unsub. Loan of $2,000; Perkins loan?; merit study of $2,560 = $54,092 scholarship? EDUCATION TAX CREDITS DEFINITIONS: ( Funding Education Guide ) (Bipartisan Budget Act of 2018) • American Opportunity Credit ($90k/$180k ‐ 2017) • COA (pg 7) – Per student • Books & Supplies, Computer, Transportation, Personal – 40% refundable with no tax liability • School estimate vs individual – 4 years of undergrad only • EFC (pg 7) – 100% of 1 st $2k and 25% of next $2k qualified • Need (pg 7) expenses (max is $2,500/student/year) – See chart: COA ‐ EFC = Need • Lifetime Learning Credit ($64k/$128k ‐ 2017) • Aid Eligibility: Qualifiers for various sources of aid – Per tax return – 20% of up to $10k in qualified expenses – More narrow definitions (pgs 7 ‐ 8) • Phase outs apply based on income – Additional qualifiers for Pell, SEOG, NY TAP, Fed • Does not reduce need ‐ based eligibility! student loan, PLUS 3
AMEDF Scholars Methodology: FINANCIAL AID FOR COLLEGE Private Loan Comparison Tool Private Loan Example MANAGING AID ELIGIBLITY: PARENTAL LOANS FAFSA, CSS Profile, EFC Formula • PLUS (pg 3, 11) • Minimize incomes during college years ( start 2 years before college ) – Annual limit (COA not funded by aid) • Student Assets: – Interest accrual (upon disbursal) – Reallocate through smart spending – Repayment (60 days after full disbursement) – Reallocate to favorable (i.e. 529, Coverdell) – PLUS has no income ratio test – Exclude (i.e. Insuring a provider see ‐ NY EPTL) • Co ‐ sign for Private student loans • Parental Assets: – Save up to Asset Protection Allowance • Decision based on credit score – Reallocate above allowance – PLUS more credit friendly (credit score in the 600s) – Realize gains 2 years before college – Private needs credit score in the 700s • Outcome based on college selection – PLUS rejection blessing in disguise (pg 13) • Begin college with the highest eligibility FINANCIAL AID TOOLS WHAT WE’VE COVERED • EFC: College Board (CB) EFC calculator 1. Estimate COA & need ‐ based aid eligibility (COA ‐ – CB: (www.collegeboard.org) EFC) – FAFSA: (AMEDF Facebook) • Aid History & Details: 2. Evaluate strategies for increasing need – CB Big Future 3. Estimate Fed and NY aid to determine “remaining need” – IPEDS Data (http://nces.ed.gov/ipeds/) • www.HESC.ny.gov for NY TAP, award estimator & 4. Compare eligibility and admission profile to college’s aid history & policy Private Loan comparisons • Scholarship search: Fastweb, College Board, 5. Determine non ‐ need aid possibilities NASFAA Scholarship Inquiry letter 6. Next up: What is our actual budget ? 4
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