1 of 57

What You Need to Know �about College Financial Aid

November 14, 2024

Classical Academy High School

National Association of Student �Financial Aid Administrators Presents …

2 of 57

Roadmap of Presentation

Categories, types, and sources of financial aid
Application process overview
How much will I get? – Your SAI (EFC) & Calculating Financial Need
How do I pay for this? Should I borrow?
Free Application for Federal Student Aid (FAFSA)

3 of 57

Why This Matters to Me

My background
Empower parents so that:

Plan ahead – can’t just “hope it works out”
Armed with tools – know eligibility
Understand concepts and strategies – before applying for admission
Expose myths and misinformation, guard against scammers

4 of 57

Every situation is unique and dynamic:

your brother’s,

co-worker’s,

neighbor’s,

or the family at school that looks just like you

This is confusing and feels unfair.

Your college financial aid situation

5 of 57

Many factors affect $.

College

Public vs. private
Meets need or gaps
Enrollment priorities

Family

Financial situation
Resources
Type of college desired

Student

career goals
maturity
Interests
Test scores and GPA
Desirability by college

Financial Aid

Need-based
Merit-based
Loans

College

Costs

6 of 57

Mistakes.

Assume Merit

Don’t assume a merit scholarship for your smart kid

Many highly selective schools have no merit aid, so…you’ll pay full price
But many colleges discount up to 50% with merit aid

Assume No Need

Don’t assume you won’t qualify for need-based aid

Make sure by first running an SAI/EFC estimator

Remove too early

Don’t automatically take a college off the list because cost is too high

First, research their merit and need-based aid policies
Many private colleges can cost less than state colleges
Most families at most colleges do not pay the “sticker price”

7 of 57

Do: Think in Categories and Layers for understanding

Type of aid

Source of Aid

Government

College

Outside Sources

Eligibility

Eligibility for need-based aid = calculate your SAI/EFC

Merit chances = research colleges

Need

Merit

Athletic

8 of 57

Categories of Financial Aid

Need-based aid

Merit-based aid

Need assessed by submitting parent and student income & asset information

--apply via the FAFSA

--Sometimes the CSS Profile

--Sometimes the college’s form

Awarded more robustly by colleges that can live on endowment income

Can be based on academics, leadership, drama, music, etc.

--apply via Admissions application

--Tuition discounts

--Automatic scholarships (GPA/test scores)

--Stackable scholarships (multiple categories)

Awarded more robustly by colleges who depend on tuition income

9 of 57

Sources of Financial Aid

Federal & State Government

*College and Universities*

Private Sources

10 of 57

A Typical Need-Based Financial Aid Package Can Include:

Scholarships

Grants

Work-Study Employment

Loans

Gift Aid

Self-Help Aid

11 of 57

Bad news: the cost (it goes up each year)

Regional, private colleges cost includes tuition and room&board

University of San Diego: $75,690
Azusa Pacific: $58,514
Point Loma Nazarene: $60,184

State schools

Cal States: $~7,000 + $17,000 R&B = ~$24,000+
UCs: $14,436 + $19,200 R&B+= ~$33,636+
Univ of AZ $42,300 + $15,000 R&B = $57,300+

Nationally known, selective schools

Stanford: $ 92,892
USC: $ 95,225 per year!

12 of 57

Good news: College is a buyer’s market (except at highly selective and flagship state schools)

90% of college admissions deans worry about not meeting enrollment goals
Last year, 61% of them did not meet enrollment goals
The average tuition discount is 53% of the published sticker price and rising
But not at highly rejective colleges who often have zero merit scholarships

Strategy: To avoid paying full price, apply to colleges where your child will be an attractive candidate for merit scholarships.

These are often the colleges you haven’t heard of and who are less rejective. Smaller, private colleges with admit rates above 50%.

What’s my AFFORDABLE school?, not, What’s my DREAM school?

13 of 57

What is available from the Federal Government?

Federal Pell Grant

$7,395 max for 2023-24

Iraq Afghanistan Service Grant

Federal Supplemental Educational Opportunity Grant (FSEOG)

Teacher Education Assistance for College and Higher Education (TEACH) Grant

Federal Work-Study (FWS)

Federal Direct Student Loans (Direct Loans)

Federal PLUS Loans

(parent borrower)

Veterans Benefits

14 of 57

What is available from California?

Cal Grants –

generally, incomes below $135K qualify,
covers tuition at a Cal State or UC
up to $9,358 at private school

UC Gold and Blue program –

tuition is covered at a UC for incomes of $80K or less

CA Middle Class Scholarship –

10-40% off tuition, sliding, incomes between $80K and $226K

15 of 57

What is available from Colleges and Universities? ��Six Types - Type of school affects resources��

1. In-State Public Schools

(UCs, CSUs)

Government money: Pell Grant, Work Study, student loans, Cal Grant.

Very little else to offer.

2. Elite Private Colleges

(Harvard, Stanford, Williams, MIT

~70 in the country)

Colleges with admit rates under 25%

Meet 100% of financial need for everyone

Usually have zero merit scholarships, and if they do, they’re few and super-competitive

$90K per year+

16 of 57

What is available from Colleges and Universities? �Six Types - Type of school affects resources

3. Out-of-State Public Flagship Schools

popular flagships like MI, VA, WA = zero aid or discounts = pay full price

$65K+ per year

4. Public Schools Offering Out-of-State Student Scholarships

Can cost less than a UC or Cal State

WUE Discounts (western states) - http://www.wiche.edu/wue

Other States like MO, AL – in-state rates for GPAs above 3.0

17 of 57

What is available from Colleges and Universities? �Six Types - Type of school affects resources

5. Private Schools That Will Accept Your Student

Merit scholarships are used to meet college diversity priorities

Colleges with admit rates between 30% and 50%

Will often have tiered scholarships based on GPA and/or test scores

Will still (usually) cost between $50K and full price

Examples include LMU, Chapman, American Univ, Texas Christian

6. Private Schools that Will Pursue Your Student

Merit scholarships are an enrollment tool

Colleges with admit rates above 50%

Will have automatic “tuition discount scholarships” based on GPA and/or test scores

Also can have competitive scholarships, Honors programs that come w/money

Examples include PLNU, Univ of Portland, Univ of Tulsa, Samford

18 of 57

Non-resident scholarships – New Mexico�example

19 of 57

Tiered Merit Scholarships – PLNU, example

20 of 57

Stanford need table�example

21 of 57

Private Sources – Be Choosy

Local scholarships and natural connections have better odds
Think through all your natural connections: friends, relatives, professional & religious organizations, neighbors, EMPLOYER
Look for good fits and narrow restrictions
Time is best spent applying to scholarships that match you
Weigh the cost of time & stress spent applying against odds of winning one-time, small amounts of money
Often, need-based college awards will be reduced if a student brings an outside scholarship

22 of 57

Private Sources - Myth

Myth: “There’s millions in unclaimed money. Just search hard.”

Reality:

Scholarship programs work hard to generate publicity for their scholarship and give away all their money.
If money goes unclaimed it is usually because of narrow eligibility restrictions.

Time is best spent applying to scholarships that best match you.

23 of 57

Legitimate Scholarship Searches

Goingmerry.com

College Board Scholarship Search

but these ^ are usually not worth the trouble, lots of spam, no results

San Diego Foundation – www.sdfoundation.org

High School Guidance Office postings

24 of 57

Scholarship Scams

Guaranteed scholarships/aid

never give out SSN

Promises to find “hidden” and “unclaimed” money
Fees involved

never pay money for a scholarship

Time pressure for participation

25 of 57

�Understanding Need-Based Eligibility�

Definitions (COA, EFC > SAI, Need)
Parent & Student Contribution
Examples
Forms

26 of 57

What is Cost of Attendance (COA)?

Direct Costs (fixed, billable)

Indirect Costs (variable)

Estimation of expected costs

published on each college’s website

Tuition and fees

Room and board

Books and supplies

Transportation

Miscellaneous

personal expenses

27 of 57

An index of student’s and family’s ability to pay postsecondary educational expenses

Harvard quote:

“afford to absorb over time”

Student contribution

Parent contribution

(for dependent students)

Heavily income-weighted

What is Student Aid Index (SAI)?

Calculated from FAFSA data (income and assets)

Formerly called the EFC = Expected Family Contribution

28 of 57

Factors That Determine a � Parent’s Contribution

Total Income

Both parents’ taxable and non-taxable (AGI + untaxed)

Including custodial stepparent’s income
Including amount being contributed to retirement plans

Allowances

Taxes paid
Employment allowance if both parents are working
Living allowance based on family size
Retirement, age of parents
Number in college

Net Assets – 5.64%/20%

Cash/Bank accounts
Real estate
Other investments (not retirement accounts)
Business net worth
Non-family farm net worth
529 accounts, Coverdells, reported under parent assets
Possibly home equity – only if college requires the Profile, not asked on the FAFSA

29 of 57

What Income Year Is Assessed?

Use income from “prior prior year” (2023 for class of 2025) on the forms

Cannot use another year’s income
If income has changed, must fill out forms with 2023 information and then write to each Financial Aid Office to explain current year

Use asset values on the day of filling out

Assets not considered in the formula: retirement funds, life insurance, annuities

30 of 57

Special Circumstances

Secondary or Home school tuition

Unusual uncovered medical/dental expenses

Parent or spouse death

Extraordinary dependent or elder care

Loss of employment

Divorce

Student cannot obtain parental information

31 of 57

Cost of attendance (COA) – Student Aid Index (SAI) (calculated for you) = Financial Need Your Need is then used to construct your financial aid award.

What is Financial Need?

32 of 57

Eligibility Examples

USC / Stanford

90,000 COA

-10,000 SAI (you)

80,000 Elig. for Aid

CSUSM / SDSU

25,000 COA

-10,000 SAI (you)

15,000 Elig. for Aid

Community College

5,000 COA

-10,000 SAI (you)

-0- Elig. for Aid

PLNU / APU

55,000 COA

-10,000 SAI (you)

45,000 Elig. for Aid

33 of 57

Package Examples

College that Meets Need

(COA $90K - SAI $10K = $80,000 need)

$2,000 work study job

$3,500 student loan

$74,500 grant/scholarship

__________________

$80,000 total award

College that Gaps

(COA $55K - SAI $10K = $45,000 need)

$2,000 work study job

$5,500 student loan

$15,000 stackable merit scholarships, discounts

$22,500 PLUS loan

This is in addition to the SAI of $10,000.

_________________________________

$45,000 total award

34 of 57

What you can do NOW�(parent homework)

Know Your Eligibility (SAI / EFC)

Use college Net Price Calculators or
www.collegeboard.org search for EFC Calculator

Knowing your EFC may affect to which types of colleges you apply
Have honest discussions about affordability and valuing of college BEFORE giving your child a blank slate to apply
Decide tolerance for borrowing – who and from where
Apply for aid in senior year

35 of 57

List-Building Strategy

If family qualifies for need-based aid and top student, then apply to state schools or selective schools that meet 100% need
If family does NOT qualify for enough need-based aid then the strategy is a college where they’ll get merit aid (or be prepared to pay full price)

Merit aid awarded more when student’s GPA and test scores are above the college’s mid-50^th percentile
Or when student has particular desired niche talent
Or when student meets diversity criteria desired by college

Even winning the college’s top scholarship can still be unaffordable

Takes time to research – recommend an hour/week during 11^th grade www.collegedata.com

List must have a financial safety school or two on it

This is where the honest family discussions come in:

rational, non-manipulative, unemotional

36 of 57

How do I pay for college? �Think in 3 buckets:

Amount to pay to College

Past

savings

Present

Current earnings

Future

Borrowing

Student
Parent

37 of 57

Options If It Looks Unaffordable

Student lives at home
Community College with plan to transfer to a 4-year college (California Transfer Admission Guarantee)
ROTC/Military academies
Foreign Institutions
Go slower to save/earn, work/intern; gap year
Go faster = Cost less by finishing in 3 years, taking more classes, summer college classes
Choose a trade/apprenticeship program

38 of 57

Should I Borrow?

Nearly all Financial Aid Offices assume students will borrow

All colleges calculate a contribution from the student before any aid is given (from loans and summer earnings)
UCs assume a student contribution of $10,500 before any aid is given

$5,500 student loan and $5,000 from earnings

About two-thirds of college graduates borrow
Average student loan debt at graduation is $29,000
Student loans are not dischargeable in bankruptcy
Estimate monthly payments to be about 1% of your total borrowing

39 of 57

Counsel in Favor of Student Borrowing i.e. ‘skin in the game’

Student loans are usually the only way students can contribute to their own college education and yield better degree completion
The student is the prime beneficiary of the education; loans are an investment in their own future
Student loans create opportunities to attend college
One-third of graduates have zero debt; one-fourth graduate with less than $20K debt
Having a loan payment helps a young adult establish credit
The vast majority of college graduates are responsibly making their loan payments
There are several income-based repayment options

40 of 57

Loans – Who Borrows and From Where?�Main options

Stafford Federal Direct Loans – student borrower

Subsidized – 6.53% interest, need-based

govt pays interest while in school
yearly limits: $3500 freshman, $4500 soph, $5500 junior & senior

Unsubsidized – 6.53% interest, non need-based

student pays interest while in school
$2000 additional above Subsidized limits
Can borrow all as unsub if don’t qualify for need-based aid

Private Loans, your bank – student borrower, higher interest rate, cosigner required – red flag
PLUS Loans – parent borrower

may borrow up to cost of attendance, per year
9.08% interest plus 4% origination fee

Home Equity loans

41 of 57

How Much Debt is Too Much?��Is the dream school worth the debt?

Total debt

upon graduation should

not exceed

the average

first-year salary

in career field.

Monthly

student loan payments

should

not exceed

10-15% of monthly

starting salary.

42 of 57

Considerations in Borrowing

Do my talents align with my intended major?
What career will allow me to be the best steward of my talents?
Does my planned borrowing fit within that?

Social worker versus Chemical Engineer

Am I allowing for future financial margin?

To be able to give to causes important to me

43 of 57

Which form(s)?

Government $ = FAFSA www.fafsa.gov
College $

FAFSA – fill out once, send data to all colleges
maybe the CSS Profile www.cssprofile.collegeboard.org
maybe college’s form – read each college’s financial aid website

Private Sources – forms vary, apply through the source

Applying for merit scholarships from colleges:

Can be automatic via college admission application OR
Can be competitive – separate application – read websites

44 of 57

When/How to File FAFSA�Seniors ONLY

After *October 1* of student’s senior year – December??
But before earliest aid deadline from among colleges applied to
Pay attention to financial aid filing deadlines at each college! Different at each college.

Check each college website to find aid application deadlines

Class of 2025 uses 2023 tax info, completed in April 2024
Use the 2025-2026 form not the 2024-2025 form. There are always two forms open.

45 of 57

Process Schedule Summary

Family completes financial aid applications after October 1 December?? of senior year and before aid deadlines
Financial Aid Office will make a financial aid award for an admitted student (by April 1)
Admissions Office will notify for merit scholarships
Student and Parent should evaluate the award, compare with other offers
Student returns any required information to accept award and enroll (usu by May 1)

46 of 57

FAFSA (Free Application for Federal Student Aid)

A standard form that collects demographic and financial information about the student and family
Filed electronically (available in English and Spanish)
Do not be intimidated – instructions are straightforward; live chat and phone help
Takes about 30 minutes
Can start, save, and come back later
Fill out once and data is sent to colleges you list

Up to 10 at a time. Can add more colleges after it’s processed.

47 of 57

California Dream Act Application

Instead of the FAFSA, a standard form that collects demographic and financial information about the undocumented student and family
File electronically by March 2 - www.caldreamact.org
California does not share the info with the Federal Gov
Under AB 540, undocumented students in CA have access to financial aid options and in-state tuition rates
Student must meet all of the AB 540 criteria

48 of 57

Gather This Data:

Social Security Number / Alien Registration Number
Federal tax information or tax returns
Records of untaxed income
Cash, savings and checking account balances
Investments other than the home in which you live

49 of 57

Who Fills It Out? – divorced parents

Custodial Parent(s) fill out the FAFSA

“Better FAFSA” new rule – the parent who contributed the most financial support.

Does not matter who claims the student on taxes

Income information is submitted for custodial parent’s household

Meaning, custodial stepparent information cannot be excluded

50 of 57

Dependent or Independent?:

Student’s dependency status:

Financial Aid and IRS definitions of Dependency are different
Not related to how you claim the student on your taxes

Meaning, you can’t get more aid by making your student “independent” by not claiming him on your taxes
Most students going from high school to college are Dependent status

51 of 57

Independent Criteria:

A student is considered “independent” for financial aid purposes if one more criteria are met:

24 years or older
Have a Bachelor’s degree
Married
Have a child for whom you provide more than half the support
Orphan, foster care, ward of the court at any time since age 13
Emancipated minor
Homeless
Veteran

If none of these apply, then parent information must be submitted on the FAFSA.

52 of 57

FSA ID (step one, apply for this before completing the FAFSA)

Allows you to electronically sign/complete the FAFSA
May be used by students and parents throughout aid process, including subsequent school years
One parent and the student each need to get an FSA ID
Apply at https://fsaid.ed.gov/npas/index.htm

53 of 57

FAFSA on the Web (FOTW)

54 of 57

FAFSA Processing Results

Processor

College

Student

55 of 57

Email Notification of SAR Processing

SAR = Student Aid Report, is the output after filing the FAFSA
Comes to student’s email address
Electronic access at www.student aid.gov

56 of 57

Solid Resources

www.studentaid.ed.gov Department of Education
www.collegeboard.com College Board
www.goingmerry.com Going Merry

57 of 57

Thank you for coming!

Becky Priest

Independent Financial Aid Counselor

College Counselor at The Cambridge School

NASFAA member