Presented By: Michael Lopata CPA, CCPS
Paying for college is the most complex financial transaction a family will make. More complex than buying a house. More complex than getting a car loan. The reason is the escalating costs accompanied with the variety of systems that must interact to get to the difference between price and cost. Dr. Joseph Moore, President of Lesley University
Student Aid 2011-2012 Dollars Federal Loans (Billions) Federal Pell Grants 80.0 70.8 70.0 Institutiional Grants 60.0 Education Tax Credits 50.0 40.0 Federal Grants 34.5 32.8 30.0 State Grants 20.0 16.4 13.4 9.8 Private/Employer Grants 10.0 6.6 1.1 0.0 Work Study Funding Source The federal government provided 67% of all student aid in 2000-01 and 2006-07 and 73% in 2011-12.
Bas ased ed on a " a "needs eds an anal alys ysis" is" fo formul rmula COA – EFC = Need – Resources = Adj. Need Example: COA (Cost of Attendance) $20,000 EFC (Expected Family Cont.) -12,000 Need: = $ 8,000 Resources (Scholarship) - 2,000 Adjusted Need = $ 6,000
FEDERAL METHODOLOGY INSTITUTIONAL METHODOLOGY • Used to determine eligibility • Used to determine eligibility for for Title IV federal aid selective institutional aid • FAFSA • CSS Profile • Principally used by state, • Includes resources of younger community, trade and siblings and relatives regional private colleges • Several options for NC parent • Includes resources of one contribution (noncustodial) parent group and the student • One uniform application • Customized application without special • Offsets standard for unusually high circumstances medical expenses and private school • No offsets for medical tuition expenses or private school • Limits assessment on earnings of tuition students from low income • Often integrated with state households programs*
Annuities Life insurance Retirement accounts Unexpended financial aid Personal items Restricted bank accounts Personal residence (IM will assess) ◦ Second or vacation residences are assessed Family farm (IM will assess) ◦ Family farm corporations, partnerships, etc., are not assessed ◦ Investment farms are assessed Siblings ’ assets (IM will assess) Businesses with less than 100 full-time employees (IM will assess)
Employer education assistance plan (resource) Loan proceeds Rollovers Food stamps Gifts and support, other than money Gifts paid to college for tuition (resources) Contributions to or payments from flexible spending accounts, including MSAs (IM will assess) Federal and state disaster funds Insurance used for reimbursement of loss Financial aid proceeds QTP withdrawal Nonqualified deferred compensation contribution
School ol “B” School “A” Cost: $20,000 Cost: $40,000 - EFC: $5,000 - EFC: $5,000 Need $15,000 Need $35,000 60% of need met 100% of need met ($9000) - $6000 short! Gift Aid – 80% Gift Aid – 50% Self Aid – 20% Self Aid – 50% EFC: $5,000 EFC: $5,000 +Unmet Need: $0 +Unmet Need: $6,000 Total Cost: $5,000 Total Cost: $11,000 Total Gift: $28,000 Total Gift: $4,500 Total Self: $7,000 Total Self: $4,500
The FAFSA (Free Application for Federal Student Aid) www.fafsa.ed.gov FAP (Financial Aid Profile) http://student.collegeboard.org/css-financial-aid- profile The 568 Presidents’ Group - Consensus Methodology www.568group.org College’s own institutional forms Other Forms: Business/Farm supplements Divorce/Separated Agreements
Appea eal l A formal request to have a financial aid administrator review your aid eligibility and possibly use Professional Judgment to adjust the figures. Asset et Protecti tection n Allo lowan ance ce A portion of your parents' assets (or Independent Student) that are not included in the calculation of the parent contribution. Expec ected ted Famil amily y Contr ontribu ibuti tion (EFC FC) ) The amount of money that the family is expected to be able to contribute to the student's education. Feder deral al Metho thodo dolo logy gy The need analysis formula used to determine the EFC.
Ga Gapping ing The practice of failing to meet a student's full demonstrated need. Instit itutiona utional l Methodolo odology gy (IM) M) If a college or university uses its own formula to determine financial need for allocation of the school's own financial aid funds, the formula is referred to as the Institutional Methodology. Leveraging eraging The controversial practice of figuring out how much it will take to attract such students and customizing aid offers to optimize the quality of the incoming class. Need Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need
Deter termi mini ning ng Majors and Degree rees ◦ Target outcome > Income potential, market demand, geographic opportunities ◦ Desired majors > Joint, major and minor, compatible, transferable ◦ Years to completion >Certificate, Technical, Associates, Bachelors, Masters, MBA, JD, PhD, MD ACT study found that more students are expressing a desire to enter certain fields than there are positions while other high need occupations have more positions than students desiring to enter. Pay scale le College ge ROI Report rt PayScale has ranked more than 850 U.S. colleges (for both in and out- of-state tuition when applicable) by their college tuition ROI - what you pay to attend versus what you get back in lifetime earnings. http://www.payscale.com/college-education-value/
Colleges in the blue are colleges a student may want to consider applying to their honors program. There are many perks for the honors group plus funding will be very good. A good but not necessarily complete list of colleges with honors programs can be found on the following link. Honors Programs HONORS PROGRAMS. Parents Note: Call the college admissions department or double check the colleges website to see if a honors program exist as not all colleges have honors programs. Colleges identified by red type with a red asterisk are approximately one of the 60 colleges that offer 100% funding of the need formula. Remember the formula is: Cost of Attendance Minus the expected family contribution equals the need. Some of these need based only colleges do offer merit aid but only to a very, very small percentage of the incoming freshman class. Colleges below the blue section represent colleges that could be too easy and a waste of your time. The money the colleges would invest in you would be good but the time spent here would not be challenging and therefore be a potential waste of your time.
Swarthmore College 91.3% Vanderbilt University 86.5% Emory University 82.5% Rhodes College 71.1% Spelman College 70.4% University of Delaware 64.0% University of Georgia 54.4% University of Tennessee 33.8% Georgia Southern 19.9% University of Memphis 11.1% Savannah State 9.1%
Merit Based Career Specific Athletic Nursing Academic Education Student Specific Music Other Talents Minority Need Based Religious College Specific Family History Medical History Local Scholarships Other Student Specific Guidance Counselors Factors Charitable Trusts Non Profits Chamber of Commerce Volunteer Organizations Trade Unions Places of Worship
College Loans Federal Subsidized and Unsubsidized Stafford Loan Federal Perkins Loan Federal Plus Loan College’s own loan program Personal Residence Loans Margin Account Loans Retirement Account Loans Life Insurance Loans Private Loans Intrafamily Loans
ABILITY (IQ): MOTIVATION (EQ): Academic Record (AR) Academic History (AH) Absences and details Cumulative GPA Curriculum (AP, honors, NHS & merit science/math, foreign Recommendations lang.) Class rank (rankings) Extracurricular Activities (EA) Employment Standardized Tests (ST- Volunteerism rankings) PSAT (NMSQT), SAT Yield Enhancement (YE- Reasoning rankings) ACT, SAT Subjects Visits and relativity Special Skills (SS) Special Circumstances (SC) Athletic Adversity Music Diversity Others
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