Financing Your

College Education

Claudia A. Wenzel

Assistant VP Enrollment & Financial Services

John Carroll University

Topics We Will Discuss• The Basics of Understanding the process

including:

• Expected Family Contribution (EFC)

• Formula for financial need

• The application process and timeline

• Free Application for Federal Student Aid(FAFSA)

• Special circumstances

• Common misconceptions of Aid

• Tips for Success

Funding a College Education

• To the extent they are able, parents

have the primary responsibility to pay

for their dependent children’s education

• Students also have a responsibility to

contribute to their educational costs

Past

FuturePresent

COST OF ATTENDANCE

Direct Expenses (Fixed)

• TUITION & FEES

• ROOM

• BOARD

Indirect Expenses (Variable)

• BOOKS & SUPPLIES

• TRANSPORTATION

• PERSONAL

EXPENSES

The Expected Family Contribution

(EFC)

• Amount family can reasonably be expected to contribute as determined by the Federal Government

• Stays the same regardless of college

• Two components

• Parent contribution

• Student contribution

• Calculated using data from a federal application form and a federal formula

• EFC at most institutions is used as indication of federal and state eligibility rather then the amount to be paid by the family

Calculating the EFC for a

Dependent Student

• Student & Parent Income

• Taxes Paid/Income Protection Allowance

• Family Asset Equity (excludes home)

• Family Size

• Number of family members in college

• Age of older parent

Definition of Need

Cost of Attendance (COA)

– Expected Family Contribution(EFC)

= Need (Eligibility)

Need Varies Based on Cost

X

Y

Z

Cost of Expected Family NeedAttendance Contribution (Variable)

(Variable) (Constant)

1

2

3

EFC EFC

What is Financial Aid?

Financial aid consists of funds provided to

students and families to help pay for

postsecondary educational expenses

Types of Financial Aid

Need/Non-Need

• Scholarships

• Grants

• Loans

• Employment

Gift Aid

Self-Help Aid

Self-Help Aid: Loans

• Money students and parents borrow to help pay college

expenses

• Repayment usually begins after education is finished

• Only borrow what is really needed

• Look at loans as an investment in the future but ask yourself:

• How much debt is too much?

• What is the return on your investment?

• Will you be able to repay your loans?

Subsidized Unsubsidized

Need based Not based on financial need

Interest is fixed at 4.53% for new

undergraduate loans disbursed during

2019-20*. Interest is subsidized while

the student is in school and during

deferment.

Interest is fixed at 4.53% for all new

loans disbursed during 2019-20*.

Interest accrues from time of

disbursement of the funds.

Direct Subsidized and Unsubsidized Loans are two separate,

unique types of loans that are awarded separately.

Direct Loans

Interest rates recalculated annually and are effective July 1st based on

the 10-year

Treasury note index plus 2.05%, capped at 8.25%

Class Year Base Amount

Additional

Unsubsidized

Amount

Total Available

to Borrow

Freshman $3,500 $2,000 $5,500

Sophomore $4,500 $2,000 $6,500

Junior $5,500 $2,000 $7,500

Senior $5,500 $2,000 $7,500

Direct Loans

Independent Students and Dependent Students whose parents

have been denied the PLUS Loan are eligible for additional Direct

Unsubsidized Loans ($4,000 as Freshmen and Sophomores and

$5,000 as Juniors and Seniors)

PLUS/ Private Loans

• PLUS

• Federal Loan borrowed in Parent’s name

• 7.08% Interest Rate/ Can be deferred while student is in school

• Credit check required

• Denial allows for additional unsubsidized loan in student’s name

• Private Loans

• Require credit check as well as debt to income calculation

• Student borrower will require a cosigner

Student Employment

• Allows student to earn money to help pay

educational costs

• A paycheck; or

• Nonmonetary compensation, such as room and

board

• Student may opt whether or not to work or

number of hours to work

Sources of Financial Aid

• Federal government

• States

• Colleges and universities

• Private sources

• Civic organizations and churches

Federal Aid Programshttps://studentaid.ed.gov

TEACH

Pell Grant

Campus Based Programs

Direct Loans

Ohio Aid Programshttps://www.ohiohighered.org/sgs

Ohio College Opportunity Grant (OCOG)

War Orphans Scholarship

National Guard Scholarship

Safety Officers Memorial

Nurse Education Assistance Loan Program (NEALP)

Choose Ohio First

Colleges and Universities

• Award aid on the basis of both merit and need

• Aid may be gift aid or self-help aid

• Use information from the FAFSA and/or institutional applications

• Deadlines and application requirements vary by institution

• Check with each college or university

Private Sources

• Foundations, businesses, charitable

organizations

• Deadlines and application procedures vary

widely

• Begin researching private aid sources early

SEPTEMBER

Admission Application

OCTOBER

Complete FAFSA

DEC-FEB

Financial Aid Awards released

JANUARY-MAY

Apply for outside scholarships

Complete special circumstance forms

MAY 1

Deposit to confirm enrollment

SPRING-SUMMER

Process aid, secure loans/payment plans

Application Process

• Institutional Applications

• Admission application/scholarship applications

• Free Application for Federal Student Aid (FAFSA)

• Used by ALL schools to determine federal/state and in most cases institutional aid

Available October 1

• College Scholarship Service (CSS)

This link will take you to college board website -student.collegeboard.org/css-financial-aid-profile

• Used by selective schools to collect greater detailed information to inform awarding of institutional aid

FSA ID• This link will take you the

FAFSA website -https://fsaid.ed.gov/npas/index.htm

• Sign FAFSA electronically

• May be used by students and parents throughout aid process, including subsequent school year

• Only the owner should create a FSA ID

• Separate FSA ID required for student and at least one parent

Free Application For Student Aid

• Website: www.fafsa.gov

• 2020-21 FAFSA on the Web available on October 1, 2019 FAFSA.GOV

• May be filed at any time during an academic year, but no earlier than the October 1. Confirm with individual colleges for preferred deadline

• A standard form that collects demographic and financial

information about the student and family

• Information used to calculate the expected family contribution

(EFC)

Special Circumstances

• Cannot report on FAFSA

• Send explanation to financial aid office at each college

• College will review special circumstances

• Request additional documentation

• Decisions are final and cannot be appealed to U.S. Department of Education

• Verify that FAFSA is accurate

• Change in employment status

• Medical expenses not covered by insurance

• Change in parent marital status

• Unusual dependent care expenses

• Student cannot obtain parent information

IRS Data Retrieval Tool

• While completing FOTW, applicant may submit real-

time request to IRS for tax data from 2018 tax year

• IRS will authenticate taxpayer’s identity

• If match found, applicant will not have ability to view

the information

• Reduces documents requested by financial aid office

IRS Data Retrieval Tool

• Some will be unable to use IRS DRT

• Examples include:

• Filed an amended tax return

• No Social Security Number (SSN) was entered

• Student or parent married but filed separately

Frequent FAFSA Errors

• Social Security Numbers

• Divorced/remarried parental information

• Income earned by parents/stepparents

• Untaxed income

• U.S. income taxes paid

• Household size

• Number of household members in college

• Real estate and investment net worth

General Student

Information

• Social Security Number

• Citizenship status

• Marital status

• Drug convictions

• Selective Service registration

• Level of parents’ school completion

Student Dependency

Status

FAFSA asks questions to determine dependency

status for federal student aid (not IRS) purposes:

• If all “No” responses, student is dependent

• If “Yes” to any question, student is

independent

Information About Parents of

Dependent Students

• Marital status and household size as of time of completion

• Tax, income, and other financial information from the 2018 tax year

• Dislocated worker status

• Receipt of federal means-tested benefits

• Assets as of time of completion

• Untaxed income

Information About Student

(and Spouse)

• Tax, income, and other financial information from the 2018 tax year

• Dislocated worker status

• Receipt of federal means-tested benefits

• Assets as of day of completion

• Untaxed income

Additional Information

• College and housing information

• FAFSA preparer information

• Certification of Statement of Educational

Purpose

Signatures

• Required

• Student

• One parent (dependent students)

• Format for submitting signatures

• Electronic using FSA ID

• Signature page

35

Confirmation PageRedesigned for clarity. Includes:

Confirmation Number

Data Release Number (DRN)

EFC estimate

Pell Grant and Direct Loan

estimates

Option for parents to transfer

info to an application for a

sibling

Graduation, Transfer, and

Retention rates for each

college on the FAFSA

Average Net Price at each

institution

FAFSA Processing Results

• CPS notifies student of FAFSA processing results by:

• Email notification containing a direct link to student’s online SAR if student’s email was provided on paper or electronic FAFSA

• Student with FSA PIN may view SAR online at fafsa.gov

• Institutional Student Information Record (ISIR) sent to colleges listed on FAFSA approximately 10 to 14 days after FAFSA is submitted

• College reviews ISIR and may request additional documentation if necessary to resolve any conflicting information

Making Corrections

If necessary, corrections to FAFSA data may be made by:

• Using FAFSA on the Web fafsa.gov if student has a FSA ID;

• Updating paper SAR (SAR Information Acknowledgement cannot be used to make corrections); or

• Submitting documentation to college’s financial aid office

CSS PROFILE

• Not required by every institution

• Collects more in-depth information

• Fee charged per institution

Next Steps:

• Obtain and review admissions and financial aid Web sites and materials for each school to which you are applying

• Meet all application deadlines

● Complete FAFSA and other application materials, such as College Scholarship Service’s PROFILE application, if required by school or state agency

● Submit all requested follow-up documents

• Investigate other sources of aid

Common Errors and Myths

• Families need to hire a financial aid consultant to navigate the process

• You will be responsible for whatever is calculated as your family contribution

• Reporting assets

• Parental data in situations of divorce and remarriage

• You can “negotiate” a financial aid award

by pitting colleges against each other

TIPS FOR SUCCESS

• Start early and ask questions

• Net Price Calculator (NPC)

• Know the importance of deadlines

• Read everything

• Don’t assume you don’t qualify

• Compare apples to apples-understand the make-up of

an award

• Involve the student

Good Luck!