Financing Your Higher Education Justin Rummel, Director Office of Financial Aid & Scholarships
Financial Aid & College Access o The first mistake many families make is assuming they can't afford college. o Financial Aid can significantly reduce the cost of college. o Two factors are generally used to determine who gets aid: 1. "Merit-based" aid is given to students who do something exceptionally well (like music, athletics, or academics) or to students in a certain career path (like teaching, science, math, and engineering). 2. "Need-based" aid is given to students who demonstrate a lack of financial resources to pay for college. *Some schools are also moving to “location” based aid, i.e. what state are you from
Who Gives Financial Aid? o The U.S. Government Starts with the Free Application for Federal Student Aid or FAFSA • (https://fafsa.ed.gov/) o Maryland Also starts with the FAFSA….submit no later than March 1, 2019 • Check out http://www.mhec.state.md.us/preparing/Pages/FinancialAid/descriptions.aspx • o Your College, University or Vocational School Also starts with the FAFSA….keep in mind funds are limited, file the FAFSA early • o Private Sources May in some cases start with the FAFSA…but usually have a separate application • Check sites like www.fastweb.com, www.cappex.com, and www.unigo.com • Private financial institutions also offer loan products for higher education. •
Types of Financial Aid o Gift Aid – No repayment & renewable w/ academic success 1. Institutional Merit & Need-based grants and scholarships 2. Institutional academic department grants and scholarships 3. Federal Pell grants > Need-based 4. State grants & scholarships > Merit, Need-based & Competitive 5. External, 3 rd party benefits & scholarships o Self-Help Aid – Needs to be repaid in some fashion 1. Federal Work Study 2. Federal Student Loans – Direct Subsidized, Unsubsidized (no credit check) 3. Federal Parent Loans – Parent PLUS (credit check) 4. Private or Alternative Loans (credit check)
How do you apply for financial aid? o Complete the annual Free Application for Federal Student Aid (FAFSA) Visit https://fafsa.ed.gov/ and complete the 2019-2020 FAFSA • Available October 1, 2018 and generally takes 30 minutes to complete • Uses 2017 tax information (if eligible use the IRS Data Retrieval Tool) • Determines your Expected Family Contribution or EFC • o You’ll need the following items to complete the FAFSA online: Create a FSA ID the student(s) and the parent(s) • SSN for the student(s) and the parent(s) (If a non-citizen, your registration #) • A driver’s license number (if you have one) • Federal tax information or tax returns for the student(s) and the parent(s) • Records of untaxed income (child support received, interest income, veteran’s non - • education benefits, if applicable) Info regarding cash, savings, checking balances, stocks, bonds, non residential real estate, • business or farm assets, if applicable o Avoid common errors, visit https://blog.ed.gov/2017/09/12-common-fafsa-mistakes-2/
Will you be eligible for aid? With a little effort, you’ll discover that you have many options, you • can get financial aid because you… o Are financially qualified to receive aid. o Earn good grades, take hard courses or have a special talent. o May be the first in your family to attend college. o Are really great at sports (only division 1 & 2 offer scholarships). o Plan to major in specific academic subjects. o Serve or have served in the military. o Agree to work in certain high-need locations or professions post-grad. o Are a resident of your state and so many more reasons. Keep in mind that you cannot receive more aid than a school’s • published Cost of Attendance (COA) COA – Expected Family Contribution or EFC = Financial Need •
Cutting Costs The cost of higher education depends on where you choose to enroll • but there are many ways to lower the cost even more. o Learn about special college savings programs (Maryland 529) o Earn college credits in high school o See if you qualify for exam and application fee waivers o Complete tuition residency requirements o Apply for as much “gift aid” as possible o Apply for federal tax breaks like the… ❑ American Opportunity Tax Credit - $2,500 per student ❑ Lifetime Learning Tax Credit - $2,000 per tax return ❑ Student Loan Interest Deduction Keep in mind, the “Net Tuition Price” is the actual cost to attend • o Cost of attendance/sticker price – gift aid = Net Tuition Price o Provides a more accurate picture of your out-of-pocket expenses
Federal Loan Limits, Interest Rates & Fees Grade Level Dependent Student Independent Student (or dependent (credits) student w/ Parents ineligible for PLUS loan Freshman Annually - $5,500 Annually - $9,500 (0-29 credits) (no more than $3,500 subsidized) (no more than $3,500 subsidized) Sophomore Annually - $6,500 Annually - $10,500 (30-59 credits) (no more than $4,500, subsidized) (no more than $4,500 subsidized) Junior/Senior Annually - $7,500 Annually - $12,500 (60+ credits) (no more than $5,500, subsidized) (no more than $5,500 subsidized) Aggregate Loan Limits • Dependent students $31,000 (no more than $23,000 subsidized) o • Independent students (or dependent w/ no Parent PLUS eligibility) $57,500 (no more than $23,000 subsidized) o Interest Rates • Direct loan (sub/unsub) interest rates are 5.05% (fixed rate for life of the loan) • Direct Parent PLUS loan interest rates are 7.60% (fixed rate for life of the loan) Origination Fees • The loan fee is a percentage of the loan amount and is deducted from each loan disbursement. • 1.066% for Direct loans & 4.264% for PLUS loans; first disbursed before October 1, 2018
Federal Grants PELL GRANTS • The maximum Federal Pell Grant award is $6,095 for the 2018 – 19 award year. o Amounts change annually and are renewable with academic progress. The amount you get, though, will depend on: o – your Expected Family Contribution, – the cost of attendance (determined by your school for your specific program), – your status as a full-time or part-time student, and – your plans to attend school for a full academic year or less. SUPPLEMENTAL EDUCATIONAL OPPORTUNITY GRANTS (SEOG) • Each school determines award amounts (between $100 and $4,000 a year) o The amount you get, though, will depend on: o – your financial need and the amount of other aid you get, – when you apply and the availability of funds at your school. TEACH GRANTS, IRAQ & AFGHANISTAN SERVICE GRANTS & WORK STUDY • More information available on https://studentaid.ed.gov/sa/types o Check individual college / university websites, as well o
Maryland State Grants Howard P . Rawlings Program of Educational Excellence Awards • Guaranteed Access Grant – Amount of grant equals 100% of financial need but no more o than $18,600 annually to eligible graduating high school seniors Educational Assistance Grant – Amount of grant is determined by student need but no o more than $3,000 annually to eligible graduating high school seniors and full-time degree seeking undergraduates Delegate & Senatorial Scholarships • Available to current high school seniors and full-time or part-time, degree-seeking o undergraduate and graduate students. Award amounts vary and are limited; contact your state legislators office for more info. o Keep in mind, all Maryland grant programs have specific eligibility • requirements, for example: Financial Need; o Income; o Enroll at 2-year or 4-year Maryland college or University (public/private) o Attend full-time (12 credits); o HS GPA; o Degree-seeking; o Check out www.mhec.state.md.us for more information on other • Maryland state grants, eligibility criteria and annual award renewal requirements
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