Finding Money for College" presented by:"

Transcription

1 The Money Maze! Finding Money for College presented by: COLLEGE PLANNING NETWORK a local nonprofit organization, assisting individuals seeking higher education opportunities sponsored by: Randall S. Linde & Associates College Planning Network

2 Workshop Program Welcome and Introductions Can you afford to pay college costs?! Who gets help and who pays. How do you identify all the pieces of the financial aid puzzle? The Student and Family Contribution -! How do you prepare? Quick Break College Planning Network

3 Workshop Program The Needs Analysis Formula - How do the colleges decide who gets financial aid? Preparing Applications - How should you complete the Free Application for Federal Student Aid (FAFSA) and CSS Profile? Negotiating Aid Offers - How do you get! the financial aid that YOU know you need? Individual Questions College Planning Network

4 Income vs. Tuition from College Planning Network

5 Aid Received by Income Level! Source: U.S. Department of Education,! National Center for Educational Statistics Income Level for Financially! Dependent Students Any Grants Loans Work PLUS Aid Study Loan All 46.4% 27.6% 33.7% 5.6% 3.3% Less than $20, % 73.3% 44.7% 17.0% 3.9% $20,000 - $39, % 63.0% 52.0% 18.1% 6.1% $40,000 - $59, % 21.5% 47.7% 14.3% 8.4% $60,000 - $79, % 3.7% 45.7% 10.6% 11.1% $80,000 - $99, % 1.1% 45.9% 8.3% 12.2% $100,000 or more 39.1% 1.0% 36.3% 4.8% 10.3% College Planning Network

6 Student Aid By Sources! (source; The College Board - Trends in Student Aid 2011) While federal loans provide the largest portion of financial aid, institutional and private scholarships offer significant support. State grants provide more than 5% in Washington. Student Aid by Sources, Educational tax Credits 6% State Grants and Workstudy 5% Federal Pell Grant 10% Institutional and Private Scholarships 19% Other Federal Programs 6% Private Student Loans 7% Federal Loans 47% College Planning Network

7 Pieces of the Financial Aid Puzzle! Where do you find the money to pay college costs? College financial aid is either: need-based (financial circumstances) merit-based (awarded for achievements) Programs are divided into: Gift Aid - grants and scholarships Tax Credits - credit on U.S. income taxes Self Help - work study and education loans College Planning Network

8 Gift Aid - Grants! & Scholarships Federal Grants The Pell Grant ($5,550 for Fall 2011) Supplement Grants - SEOG ($4,000 max.) State Grants Wash. State Need Grant ($9,280 max.) Institutional Grants and Scholarships Private Scholarships! thewashboard.org College Planning Network

9 College Planning Online! Using CPN s Web Site: Other A calendar of all CPN workshops with location maps is available on our Website For daily updates on CPN programs and scholarships College-Planning-Network/ Other good Websites: College Planning Network

10 Tax Credits American Opportunity Tax Credit for undergraduate students at least half time $2,500 credit on annual tuition/fees & books paid per student 100% of first $2,000, 25% of next $2,000, even if borrowed up to $1,000 paid if no credit possible Lifetime Learning Tax Credit $2,000 credit on annual tuition/fees paid for less than half-time and graduate students College Planning Network

11 Grants vs. Loans In 1981, grants were 55% of all financial aid. In 2011 they were just 35%. In 1981, loans were 42% of all financial aid In 2011 they had increased to 58% College Planning Network Grants Loans

12 Self Help - Work Study & Loans Federal and State College Work Study 19.5 max. hours per week, flexible schedule Job relates to studies, employer reimbursed Education Loans Perkins Loan (3.4% interest, no fees) Subsidized Ford Loan (3.4% interest, 0.5 fee) Un-Subsidized Ford Loan (non need, 6.8% int.) PLUS (non need-based, parent/grad. 7.9% int.) College Planning Network

13 Student Loans! in Washington Source: College InSight 2012 College Name Avg. Loans of Grads. % Grads. w/loans vs. Pell Grants Cost of Educ. WA St. Univ. $22,686 59% 29% $23,611 Univ. of WA $20,608 48% NR $22,042 Eastern WA U. $20,395 52% 32% $18,824 Western WA U. $18,969 51% 22% $19,604 Central WA U. $18,539 60% 30% $20,199 Evergreen St. Coll. $17,545 46% 38% $19,453 Walla Walla U. $34,818 79% 34% $32,718 Northwest Univ. $33,453 85% 34% $32,778 Pacific Lutheran U. $29,774 72% 27% $41,580 Seattle Pacific U. $28,829 72% 29% $41,567 U. of Puget Sound $28,524 60% 22% $50,175 St. Martin s U. $28,439 74% 34% $39,337 Seattle Univ. $27,741 74% 23% $45,462 Whitworth Univ. $23,983 70% 28% $41,150 Gonzaga Univ. $23,522 70% 19% $43,275 Whitman Coll. $17,711 45% 14% $50, College Planning Network

14 The Total Cost of Education Financial aid is not based on tuition/fees Financial aid is based on the! total cost of education The total cost of Education includes: Tuition and Fees Books and Supplies Room and Board Transportation Other Costs (necessities for student) College Planning Network

15 How Need! is Calculated Cost of Education - Expected Family Contribution (EFC) = Financial Need College Planning Network

16 What Goes Into! The Calculation? Age of oldest parent Number in household Number of household in college Parent s income and assets Student s income and assets College Planning Network

17 Assessable Assets Stocks and bonds Protected and! Non-Protected Assets Non-assessable Assets Annuities CDs Life insurance Savings/checking EE savings bonds Small business Trusts Mutual funds Retirement plans Home/farm equity College Planning Network Source: U.S. Department of Education

18 EFC Calculations for ! (source; U.S. News and World Report) For the academic year, the government will give an EFC of $0 and the maximum Pell Grant of $5,550 to students from families earning less than about $30,000. For every $100 in after-tax income above that $30,000, the government will raise the student's EFC by at least $22. For every $100 of after-tax income above about $60,000, the student's federal EFC will rise by as much as $47. That means a middle class family of four with an adjusted gross income of about $75,000 could get an EFC of anywhere from $4,000 to $9,000 a year, depending upon other factors such the parents' ages, savings, and expenses. 2012! College! Planning! Network

19 Comparing Student and! Parent Saving Strategies $10,000 grows to $20,000 (estimated EFC contribution) Child $20,000 - $ 0 = $20,000 $7,000 $10,000 - $6,130 = $ 3,870 $1,935 $10,000 - $1,400 = $ 8,600 $1,300 $10,235 Parent $20,000 - $42,500 = $ 0 $ 0 $10,000 - $18,850 = $10,000 $3,100 $10,000 - $ 0 = $10,000 $2,800 $5, ! College! Planning! Network

20 Primary Factors to Consider Regarding College Costs Income Taxes Control Financial Aid

21 Account Types Roth IRA! 401(k)! 529! UTMA! Taxable Investments! Life Insurance! Annuities! Taxes! Positive Positive Positive Slightly Positive Negative Positive Positive Control! Parents Parents Parents Child Parents Parents Parents Impact on Financial Aid! Positive Positive Neutral to Negative Strongly Negative Neutral to Negative Positive Positive

22 New GET Contracts 100 units = 1 year of tuition and fees Current cost of 100 units = $17,200 Current value of 100 units = $11,782 You will pay a 46% premium in exchange for the guarantee from the state of Washington

23 What do you mean our child is going to college this fall?! Scenario 1 (two kids, husband over 50, wife in 40 s, both working) $200k adjusted gross income No 401(k) contributions being made $60k in non-qualified assets $35k deductions/exemptions $34k federal taxes paid (estimated) = $58,123 expected family contribution (EFC)

24 A Plan for the Future Scenario 2 (two kids, husband over 50, wife in 40 s, both working) Fully funding 401(k) s Fully funding Roth IRAs for $6k and $5k respectively $49k in non-qualified assets $160,500 adjusted gross income $35k deductions/exemptions American Opportunity Tax CREDIT up to $2,500 $21k federal taxes paid (estimated) = $44,430 expected family contribution (EFC)

25 Planning Beats Panicking Scenario 1! Scenario 2! EFC! $58,123 $44,430 Income Taxes! +$34,000 +$21,000 Total! $92,123 $65,430 Difference Between the Two $92,123 -$65,430 $26,693

26 Quick 5 Minute Break presented by: COLLEGE PLANNING NETWORK a local nonprofit organization, assisting individuals seeking higher education opportunities College Planning Network

27 The Needs Analysis Formula! How the colleges decide who gets the money Sample Needs Analysis Formula!!Community &!State Colleges &!Private!!!!!Technical Colleges!Universities!!Universities Sample Cost of Education!!$8,000!! $15,000!!$35,000 Student Contribution (income/assets) $ 500 $ 500 $ 500 Parent Contribution (income/assets) $2,500 $ 2,500 $ 2,500 Expected Family Contribution!!$3,000!!$ 3,000!!$ 3,000! Indicated Financial Need!!$5,000!!$12,000!!$32,000 Federal Grants $2,000 $ 2,500 $ 3,500 State Grants $2,000 $ 2,000 $ 2,500 Institutional Grants/Scholarships $ 2,000 $ 5,000 Private Scholarships (need or merit) $ 5,000 Total Gift Aid!!!$4,000!!$ 6,500! $16,000 College Work Study $1,000 $ 3,000 $ 3,500 Subsidized Student Loans $ 2,500 $ 2,600 *Un-Subsidized Student Loans $ 9,900 Total Self Help!!!$1,000!!$ 5,500! $16,000! Total Financial Aid!!!$5,000!!$12,000!!$32,000! College Planning Network

28 Completing Applications! Free Application for Federal Student Aid (FAFSA)! and the CSS Profile The FAFSA is not a tax form When is the best time to file? New applications: fafsa.ed.gov, pin.ed.gov The new FAFSA4caster (federalstudentaid.ed.gov) What is the CSS Profile Required by some private colleges Used to distribute their institutional aid Asks questions not on the FAFSA College Planning Network

29 Critical Areas! of the FAFSA Section 1 - student information demographic/personal/ data Section 2 - student status Sections 3 - parent information - tax return (will file, box #2) - cash, savings and checking - asset values Section 4 - student information Colleges to receive information College Planning Network

30 Submitting The FAFSA! Working with the! Student Aid Report Sending the FAFSA (to Dept. of Education) Make a copy before sending the FAFSA The Student Aid Report (SAR) What is the electronic SAR? What do I do with it? College Planning Network

31 Special Circumstances Letters What is a Special Circumstances Letter? Replaces the federal formula with reality Providing extra-ordinary and regular expenses Setting a negotiating point Who do I send it to and when should it be sent? Identifying hungry colleges Does it really make a difference? Negotiating with individual financial aid offices Negotiating between different colleges College Planning Network

32 Critical Steps to Success Do what you are doing tonight Get to know the people who can help most high school counselors reference librarians college financial aid officers Exhaust all the gift aid Submit the FAFSA at the earliest allowable date Write a Special Circumstances letter and negotiate Prepare for the Expected Family Contribution College Planning Network

33 Thank You! for Attending Please be sure to complete your workshop evaluation and leave it at the registration table as you go. The presenter will stay as long as necessary to answer your individual questions. presented by: COLLEGE PLANNING NETWORK College Planning Network