Presented By: Michael Lopata CPA, CCPS

Transcription

1 Presented By: Michael Lopata CPA, CCPS

2 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

3

4 Dollars (Billions) Student Aid Federal Loans Funding Source Federal Pell Grants Institutiional Grants Education Tax Credits Federal Grants State Grants Private/Employer Grants Work Study The federal government provided 67% of all student aid in and and 73% in

5 Based on a "needs analysis" formula 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

6 FEDERAL METHODOLOGY Used to determine eligibility for Title IV federal aid FAFSA Principally used by state, community, trade and regional private colleges Includes resources of one parent group and the student One uniform application without special circumstances No offsets for medical expenses or private school tuition Often integrated with state programs* INSTITUTIONAL METHODOLOGY Used to determine eligibility for selective institutional aid CSS Profile Includes resources of younger siblings and relatives Several options for NC parent contribution (noncustodial) Customized application Offsets standard for unusually high medical expenses and private school tuition Limits assessment on earnings of students from low income households

7 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)

8 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

9 School A Cost: $40,000 - EFC: $5,000 Need $35, % of need met Gift Aid 80% Self Aid 20% EFC: $5,000 +Unmet Need: $0 Total Cost: $5,000 Total Gift: $28,000 Total Self: $7,000 School B Cost: $20,000 - EFC: $5,000 Need $15,000 60% of need met ($9000) - $6000 short! Gift Aid 50% Self Aid 50% EFC: $5,000 +Unmet Need: $6,000 Total Cost: $11,000 Total Gift: $4,500 Total Self: $4,500

10 The FAFSA (Free Application for Federal Student Aid) FAP (Financial Aid Profile) The 568 Presidents Group - Consensus Methodology College s own institutional forms Other Forms: Business/Farm supplements Divorce/Separated Agreements

11 Appeal A formal request to have a financial aid administrator review your aid eligibility and possibly use Professional Judgment to adjust the figures. Asset Protection Allowance A portion of your parents' assets (or Independent Student) that are not included in the calculation of the parent contribution. Expected Family Contribution (EFC) The amount of money that the family is expected to be able to contribute to the student's education. Federal Methodology The need analysis formula used to determine the EFC.

12 Gapping The practice of failing to meet a student's full demonstrated need. Institutional Methodology (IM) 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 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

13 Determining Majors and Degrees 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 College ROI Report PayScale has ranked more than 850 U.S. colleges (for both in and outof-state tuition when applicable) by their college tuition ROI - what you pay to attend versus what you get back in lifetime earnings.

14 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.

15 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%

16 Merit Based Athletic Academic Music Other Talents Need Based College Specific Local Scholarships Guidance Counselors Charitable Trusts Non Profits Chamber of Commerce Volunteer Organizations Trade Unions Places of Worship Career Specific Nursing Education Student Specific Minority Religious Family History Medical History Other Student Specific Factors

17 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

18 ABILITY (IQ): Academic Record (AR) Cumulative GPA Curriculum (AP, honors, science/math, foreign lang.) Class rank (rankings) Standardized Tests (STrankings) PSAT (NMSQT), SAT Reasoning ACT, SAT Subjects Special Skills (SS) Athletic Music Others MOTIVATION (EQ): Academic History (AH) Absences and details NHS & merit Recommendations Extracurricular Activities (EA) Employment Volunteerism Yield Enhancement (YErankings) Visits and relativity Special Circumstances (SC) Adversity Diversity

19 Colleges in the orange are the most competitive colleges from your college search based on the comparison of the colleges standardized scores as compared to your standardized scores. Admissions to these colleges can be accomplished but funding by the college will not be there for the family. These colleges could also represent institutions were the student becomes overwhelmed and slip into serious stress. Adding to the last two points plus the lack of investment in the student by the college can make the overall selection of the college as less than desirable. Colleges in the yellow are colleges a student should readily get admitted to. The good funding starts here in the yellow colleges. The combination of the admissions and some good funding will make this list of colleges more desirable than the Orange set. Colleges in the green are colleges a student should also readily get admitted to. This group also represents colleges that you should academically and socially excel at. This group of colleges will also represent colleges who should offer the best funding in the form of merit aid and better than average need based aid. We would like you to have at least three colleges in the green in the six to ten colleges that you apply to in the fall. Remember three in the green for the best overall results academically and financially.

20 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.

21 Rank College Name State Student SAT(1600 Point System) College SAT 25% Bottom Fourth College SAT Mean Average College SAT 75% Top Fourth 1 Georgia State University GA Mercer University GA Rollins College FL University of Georgia GA Elon University NC St. Louis University MO Rhodes College TN Wake Forest University NC Georgia Institute of Technology GA Emory University GA Washington University in St. Louis MO Duke University* NC

22 Financial Aid Diagnostic Test Financial Aid Part II Applying the lessons from Financial Aid Part 1. A strategy that can increase financial aid awards by 15%. Ways to create competition amongst colleges. A deeper look into financial aid award letters. FAFSA and CSS/Profile tips