Paying for Postsecondary Education
How much?
2016: • Please right click and duplicate slide. 4-year Public - $20k - $30k 4-year Private - $30k – over $60k 2030: 4-year Public - $40k - $60k 4-year Private - $92k - $130k cost projector at www.finaid.org
<50% % of students who graduate within 4 years. (look at collegeresults.org).
6-year grad rates Schools will advertise 6-year graduation rates to make them look better. Collegeresults.org
120 Number of credits usually required to complete a Bachelor’s Degree.
12 x 8 = 96; this means a student is already 24 credits short (an entire year!) for their 4-year credential.
15+ The number of credits a student should consider taking MINIMALLY every semester to graduate on-time.
Click to edit Master title style Plan Ahead
AFFORDABILITY
ROI
Does a cheaper option How much will I make sense if my have to borrow for family is struggling to school? pay? Will there be jobs available in my chosen field? What do I want the rest of my life to look like? What do I want to have? How do my decisions now Will I be able to affect my vision for my afford my future? monthly loan payments?
Resources • EducationPlanner.org • Collegecost.ed.gov » Net-price calculators • MySmartBorrowing.org
Click to edit Master title style Scholarships
It’s never too early to find free money! • Start early and keep looking • Check with school counselor about local opportunities • Google your interests • Activities, Athletics, Family, Hobbies, Participation, Attributes – Do your research! • Don’t miss deadlines!
0 Average number of scholarships that senior students apply for in high school.
Click to edit Master title style FAFSA
FAFSA.gov Apply after October 1 (of senior year in hs) It’s the student’s application • Parent sections 2017-18 will use 2015 tax information
FSAID.ed.gov • Allows you to sign the FAFSA (as well as loan documents) • The student and one parent (if the student is dependent) will need an FSA ID Username and Password • DO NOT lose it; DO write it down – You will need to file a FAFSA every year you are in postsecondary school • Need separate email addresses for student and parent; make sure information is accurate (and identical to the information you file on your FAFSA)
Whose information goes on the FAFSA? • Divorced or separated parents - the parent that provides more than 50% of students support (household) • Stepparents – yes • Adoptive parents - yes • Grandparents – no • Foster parents - no • Legal guardians - no • Anyone else the student is living with - no
Independent Students are: • 24 or older on Jan 1st of award year (this year before 1992) • Veteran (includes active duty personnel) • Working on graduate degree • Emancipated minor in legal guardianship • Orphan, in foster care, or ward of the court at anytime when student was age 13 or older • Have legal dependents other than spouse • Student deemed homeless by proper authority
Know your deadlines! Schools have priority filing deadlines. State Grant deadline is : May 1 - First Time and Renewal Applicants that plan to enroll in a degree program or a college transferable program at a junior college or other college or university August 1 - First Time applicants that plan to enroll in a community college; a business, trade, or technical school; a hospital school of nursing; or a 2-year program that is not transferable to another institution
Expected Family Contribution (EFC)
Expected Family Contribution (EFC) • Student and Parent Contribution • Bulk of EFC comes from income • Assets exclude: value of home you live in, personal property, retirement, and life insurance. • Assets include (but not limited to): value of cash, savings, and checking, investment accounts, 529 plans, rental property, etc. • Parent asset contribution = roughly 6% • Student income contribution = 50% of amount over $6,420; assets at 20%. • Parent contribution divided by number of children in college at the same time
State Grant Form First-time filers Can also access at pheaa.org through Account Access
Click to edit Master title style Award Letters
Financial Need Schools/colleges receive financial aid information and calculate financial need. School cost……………………. $30,000 EFC…………………………….. - $ 3,000 Financial need………………… $27,000 FAO “packages” student based on financial need and available funding (varies from school to school). Financial aid award letter sent to student.
Sorting it all out
How much is gift aid? – I don’t have to pay it back. How much is self-help aid? – I will have to pay it back or earn it. What are the total costs and how much will I owe the school?
Where does the money come from?
Gift aid (do not repay) • Pell Grant (max $5815) • PA State Grant (max $4300) » (OH, DE, MA, VT, WV, • SEOG and DC) • TEACH Grant • EAP • Iraq and Afghanistan • Chafee Grant Service Grant • Blind or Deaf Beneficiary • Americorps Grant • Postsecondary Educational • GI Bill Gratuity Program • PATH For more information: studentaid.ed.gov, • PA TIP pheaa.org, or gibill.va.gov • RTSS
Self-help aid (must work to earn or repay) • Work Study » Say “yes” to work study question on the FAFSA • Loans » Federal Direct Stafford Loans » PLUS Loans » Private/Alternative Education Loans
$37,000 Average student indebtedness for graduates of the class of 2016.
What does a $1 million look like?
What does $1 Trillion look like?
Repayment Examples It is estimated that you would need an annual salary of $44,928 to be able to afford this loan payment. Source: finaid.org
Repayment Examples It is estimated that you would need an annual salary of $22,264 to be able to afford this loan payment. Source: finaid.org
Studentloans.gov Log in with your FSA ID and complete your Master Promissory Note (MPN) and Entrance Counseling.
Direct Stafford Loans » Subsidized – no interest while in school ◦ Interest will be charged after an interest-free, 6- month-grace period ◦ 3.76% fixed rate for loans between 7/1/16 and 6/30/17 ◦ *1.069% origination fee deducted at disbursement » Unsubsidized – interest accrues in school and grace ◦ 3.76% fixed rate for loans between 7/1/16 and 6/30/17 ◦ *1.069% origination fee deducted at disbursement » *Gross loan amount of $5500 will be $5441.20 » Interest rate adjusted annually and capped at 8.25%
Calculating Accrued Interest To calculate your daily interest accrual, use the following formula: • Interest rate x current principal balance ÷ number of days in the year = daily interest Example: Sara Student has a $2,000 current principal balance and 3.76% interest rate this year. Using the formula: • .0376 x $2,000 ÷ 365 = $0.21 (~$18.90 quarterly interest) What if she borrowed $10,000? • .0376 x $10,000 ÷ 365 = $1.03 daily (~$93 quarterly interest)
Loan Servicer navient.com myfedloan.org mygreatlakes.org nelnet.com
Stafford Loan Limits
Stafford Loan Limits
Parent Loan for Undergraduate Students (PLUS) • Parent borrows a loan for the student » 6.31% interest rate for 2016-17; interest capped at 10.50% » Up-front fee of 4.276% deducted at disbursement » May borrow full cost of education minus any aid » Credit Check is required » Can defer repayment while the student is enrolled, but as with Unsubsidized loans, the interest does accrue. Interest payments are encouraged. • Apply @ StudentLoans.gov
Private/ Alternative Loans • Nonfederal loans, made by a lender such as a bank or credit union. • Student is the borrower. Co-signers usually required. Some loans have a co-signer release. • Based on credit scoring and debt-to-income ratio. • Fees, interest rates, loan amounts, and repayment provisions vary by lender. • Compare loans before choosing and read the fine print. • Loan of Last Resort.
Click to edit Master title style Decide
Deciding
Review and consider all of your options. Sometimes the best fit is not your first choice.
Determining Affordability • Approach this process as you are buying an EDUCATION . • Apply everywhere you want, but be open minded and give yourself options. • Think in terms of yesterday’s money, today’s money, and tomorrow’s money. • Have discussions as a family .
Ways to Pay • Out-of-pocket? • Parent loans? (*home- equity line of credit) • Expendable income/sign up for a • Double check with the payment plan? school (additional institutional money, scholarship opportunities, • Scholarships? institutional loans).
Ways to Save
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