Navigating College Financial Aid

Program Analysis

Dr. Herm Davis

301-548-9423

hdcfaces@comcast.net www.drhermdavis.com

Higher Education in MarylandHigher Education in MarylandInstitution Year FoundedWashington College 1782St. Johns of Annapolis 1784University of Maryland at Baltimore

1807

Mount St. Mary’s 1808MICA 1826U.S.N.A 1840U.M.C.P 1845John’s Hopkins University 1857Bowie State University 1865Towson University 1866McDaniel College 1867College of Notre Dame 1873Goucher College 1885UMES 1886Hood College 1893Frostburg University 1898

COLLEGE SELECTION COLLEGE SELECTION PROCESSPROCESS

1)1) Quality of EducationQuality of Education2)2) HappinessHappiness3)3) Security and HealthSecurity and Health4)4) AffordabilityAffordability

““Top 10 Best Colleges: Public Schools National Universities” VS. “Top 10 Top 10 Best Colleges: Public Schools National Universities” VS. “Top 10 Party Schools”Party Schools”

Top 10 Public Schools National UniversitiesTop 10 Public Schools National Universities(U.S. News & World Report)(U.S. News & World Report)

Top 10 Party SchoolsTop 10 Party Schools (Princeton Review rankings)(Princeton Review rankings)

11 University of California – BerkleyUniversity of California – Berkley University of Georgia – AthensUniversity of Georgia – Athens

22 University of California – Los AngelesUniversity of California – Los AngelesUniversity of VirginiaUniversity of Virginia

Ohio State University Ohio State University

33 University of Michigan – Ann ArborUniversity of Michigan – Ann Arbor Penn State University – University ParkPenn State University – University Park

44 University of North Carolina – Chapel HillUniversity of North Carolina – Chapel Hill West Virginia UniversityWest Virginia University

55 College of William and Mary College of William and Mary Georgia Institute of TechnologyGeorgia Institute of Technology

University of MississippiUniversity of Mississippi

66 University of California – San DiegoUniversity of California – San DiegoUniversity of California - DavisUniversity of California - Davis

University of Texas – AustinUniversity of Texas – Austin

77 University of California – Santa BarbaraUniversity of California – Santa Barbara University of Texas - Gainesville University of Texas - Gainesville 88 University of California – IrvineUniversity of California – Irvine

University of WashingtonUniversity of WashingtonUniversity of California – Santa BarbaraUniversity of California – Santa Barbara

99 University of Texas – Austin University of Texas – Austin University of Wisconsin - MadisonUniversity of Wisconsin - Madison

University of IowaUniversity of Iowa

1010 Penn State University – University ParkPenn State University – University ParkUniversity of IllinoisUniversity of IllinoisUniversity of FloridaUniversity of FloridaOhio State UniversityOhio State UniversityPurdue UniversityPurdue University University of Georgia - AthensUniversity of Georgia - AthensUniversity of Maryland – College ParkUniversity of Maryland – College Park

Depauw UniversityDepauw University

Components for DiscussionComponents for Discussion

1 – 1 – Overview Overview 2 – 2 – Forms AnalysisForms Analysis3 – 3 – Process AnalysisProcess Analysis4 – 4 – FAFSA / CSS Profile Preparation & AnalysisFAFSA / CSS Profile Preparation & Analysis5 – 5 – Resource AnalysisResource Analysis6 – 6 – Award AnalysisAward Analysis

Overview of the Financial Aid Overview of the Financial Aid ProcessProcess

How to start the Financial Aid Process – How to start the Financial Aid Process – KNOW your 4 worst enemies!KNOW your 4 worst enemies!

Enemy #1Enemy #1 – – Cost of AttendanceCost of Attendance

Enemy #2Enemy #2 – – Missed deadlinesMissed deadlinesTwo main reasons:Two main reasons:

“ “Student must be admitted before filing for aid” Student must be admitted before filing for aid” – – WRONG!WRONG! “ “Parents must have their Federal income taxes submitted” – WRONG!Parents must have their Federal income taxes submitted” – WRONG!Enemy #3Enemy #3 – – Self discriminationSelf discrimination Two main reasons:Two main reasons: “ “We make too much to file for aid” – WRONG!We make too much to file for aid” – WRONG! “ “We can’t afford a private college” – WRONG!We can’t afford a private college” – WRONG!Enemy #4Enemy #4 – Your College– Your College Student Student • Student needs to check college’s financial aid websiteStudent needs to check college’s financial aid website• Parents need to obtain their student’s ID and passwordParents need to obtain their student’s ID and password

4-year College Graduation Comparison 4-year College Graduation Comparison Chart Chart

www.collegeresults.org (1 of 2) (1 of 2)

College or University2011

4-Year Grad Rate

% Pell Recipients

Among Freshman

Estimated median

SAT/ACT State

Size (Undergrad

FTE)

Duke University 88.5% 13% 1440 NC 6,697

Wake Forest University 82.4% 14% 1325 NC 4,657

University of Richmond 76.5% 14% 1280 VA 3,457

Loyola University Maryland 79.2% 14% 1198 MD 3,807

Johns Hopkins University 84.4% 12% 1395 MD 5,820

University of North Carolina at Chapel Hill 75.2% 20% 1310 NC 18,579

Elon University 77.5% 10% 1215 NC 5,032

Carnegie Mellon University 71% 13% 1400 PA 5,830

4-year College Graduation 4-year College Graduation Comparison Chart (2 of 2)Comparison Chart (2 of 2)

College or University 4-Year Grad Rate

% Pell Recipients Among

Freshman

Estimated median

SAT/ACT State

Size (Undergrad

FTE)

University of Maryland-College Park 66.1% 15% 1290 MD 25,535

Pennsylvania State University-Main Campus 63% 16% 1195 PA 37,763

Indiana University-Bloomington 49.8% 21% 1170 IN 31,427

Salisbury University 46.4% 21% 1130 MD 7,304

North Carolina State University at Raleigh 40.8% 25% 1180 NC 23,172

Towson University 39.3% 21% 1075 MD 16,216

Hood College 60.2% 28% 1065 MD 1,393

East Carolina University 32.5% 34% 1040 NC 19,710

FAFSA Forms AnalysisFAFSA Forms Analysis► Free Application for Federal Student Aid Free Application for Federal Student Aid

(FAFSA)(FAFSA)

► CSS ProfileCSS Profile

► Institutional Aid Application (IAA)Institutional Aid Application (IAA)

► Verification Work Sheet (VWS)Verification Work Sheet (VWS)

Free Application for Federal Free Application for Federal Student Aid (FAFSA)Student Aid (FAFSA)

► www.fafsa.govwww.fafsa.gov► Cost: FreeCost: Free► Submit for each student per year Submit for each student per year

immediately after Jan. 1immediately after Jan. 1stst..► PIN Required to sign electronicallyPIN Required to sign electronically► www.pin.ed.govwww.pin.ed.gov

► fafsa4caster.ed.govfafsa4caster.ed.gov

CSS ProfileCSS Profile►https://profileonline.collegeboard.comhttps://profileonline.collegeboard.com►Cost is $25 for the initial application and Cost is $25 for the initial application and

$16 to add additional schools$16 to add additional schools►CSS Non-Custodial Parent Profile cost is CSS Non-Custodial Parent Profile cost is

$25$25►CSS IDOC (Institutional Documentation CSS IDOC (Institutional Documentation

Service)Service)

Institutional Supplemental Institutional Supplemental FormsForms

► Institutional Aid Application (IAA)Institutional Aid Application (IAA) “ “Institutional Funding Form”Institutional Funding Form” Financial Aid Form found on college Financial Aid Form found on college

financial aid websitefinancial aid website►Verification Work Sheet (VWS)Verification Work Sheet (VWS)-IRS Data Retrieval Tool (DRT) FAFSA -IRS Data Retrieval Tool (DRT) FAFSA

Update Update -VWS Form + w-2’s +IRS Tax Transcript-VWS Form + w-2’s +IRS Tax TranscriptIRS ph: 1-800-908-9946IRS ph: 1-800-908-9946

Process AnalysisProcess Analysis

►Online processingOnline processing►How colleges receive dataHow colleges receive data►How to correct dataHow to correct data►EFC FormulaEFC Formula►Awarding of Aid FormulaAwarding of Aid Formula

ONLINE FAFSA FlowONLINE FAFSA Flow

Student Student Aid Report

S A R

FAFSA entered by Student/Parent

Central Processor

StudentCorrections

SchoolAward “Package”

Process

School ISIRIndividual Student Information Report1. 4. 7.__ 2. 5. 8.__3. __ 6. 9.__10.__

SchoolAward Letter Sent

to Student

Maryland State Scholarship

Include a Maryland College on the FAFSA

FAFSA PreparationFAFSA Preparation--Who fills out the FAFSA?Who fills out the FAFSA?Parent(s) of the student, where the Parent(s) of the student, where the student has resided more than 50% of student has resided more than 50% of time of the calendar year.time of the calendar year.- - Who’s information do you use?Who’s information do you use?Parent(s) who are married or remarried Parent(s) who are married or remarried OR Single, Divorced, Separated or OR Single, Divorced, Separated or Widowed?Widowed?

FAFSA Preparation FAFSA Preparation ►Student Financial InformationStudent Financial Information “ “As of today, what is your (student’s) As of today, what is your (student’s)

total current balance of cash, savings total current balance of cash, savings and checking account(s)?”and checking account(s)?”

““As of today, what is the net worth of As of today, what is the net worth of your (student’s) investments, including your (student’s) investments, including real estate…”real estate…”

FAFSA PreparationFAFSA Preparation► Parent(s) Financial InformationParent(s) Financial Information““As of today, what is the parent’s total current balance As of today, what is the parent’s total current balance

of cash, savings and checking account(s)?”of cash, savings and checking account(s)?”

““As of today, what is the net worth of the parent’s As of today, what is the net worth of the parent’s investments, including real estate? (Don’t include investments, including real estate? (Don’t include the home in which your parents live. Net worth the home in which your parents live. Net worth means current value minus debt.)”means current value minus debt.)”

““As of today what is the net worth of your parent’s As of today what is the net worth of your parent’s current business and/or Investment farms? (Don’t current business and/or Investment farms? (Don’t include a family farm o family business with <100 include a family farm o family business with <100 FT employees)”FT employees)”

EFC FORMULAEFC FORMULAEFC = Expected Family EFC = Expected Family

ContributionContribution (ESC-I) Expected (ESC-I) Expected StudentStudent Contribution from Contribution from IncomeIncome

+ (ESC-A) Expected + (ESC-A) Expected Student Student Contribution from Contribution from AssetsAssets

+ (EPC-I) Expected + (EPC-I) Expected ParentParent Contribution from Contribution from IncomeIncome

+ (EPC-A) Expected + (EPC-A) Expected Parent Parent Contribution from Contribution from AssetsAssets

= (EFC) [= (EFC) [Expected Family Contribution]Expected Family Contribution]

FAFSA PreparationFAFSA PreparationQuestion? Student Parent

What is the value of your cash, checking, savings account?

$ 10,000 $ 20,000

What is the Value of investment accounts excluding all retirement accounts?

$ 6,000 $ 50,000

What is the value of your business account (excluding a family farm or family business with <100 FT employees)?

$ $

20% Age APA

Award CalculationAward CalculationLCLC MC 1MC 1 MC 2MC 2 HCHC

COACOA $16,000$16,000 $20,000$20,000 $40,000$40,000 $60,000$60,000

-EFC EFC

$12,000$12,000 $12,000$12,000 $12,000$12,000 $12,000$12,000

= NEED= NEED $4,000$4,000 $8,000$8,000 $28,000$28,000 $48,000$48,000

FAFSA / CSS ProfileFAFSA / CSS ProfilePreparation and AnalysisPreparation and Analysis

FAFSAFAFSA Step-by-step PreparationStep-by-step Preparation

CSS ProfileCSS Profile Step-by-step Step-by-step PreparationPreparation

Item AnalysisItem Analysis Item AnalysisItem Analysis

Student’s IncomeStudent’s Income Student’s IncomeStudent’s Income

Student’s AssetsStudent’s Assets Student’s AssetsStudent’s Assets

Parent’s IncomeParent’s Income --NONO Untaxed Social Security Untaxed Social Security

Parent’s Income Parent’s Income Business/Farm IncomeBusiness/Farm IncomeUntaxed Social Security Untaxed Social Security IncomeIncome

Parent’s AssetsParent’s Assets-NO-NO Home Equity, Retirement Plans Home Equity, Retirement Plans or Business and Farm Assetsor Business and Farm Assets

Parent’s AssetsParent’s Assets Including:Including: - Home Equity- Home Equity -Retirement Plans-Retirement Plans -Business and Farm -Business and Farm AssetsAssets

Number in CollegeNumber in College Number in CollegeNumber in College

Special CircumstancesSpecial Circumstances Non-Custodial ProfileNon-Custodial Profile

Asset Protection AllowanceAsset Protection Allowance

Example: If the age of the older parent is 50 and 2 parents are in the household: The asset protection allowance is $34,600

Age of older Age of older parent as of parent as of

12/31/1312/31/13

Allowance if Allowance if there are 2 there are 2

parentsparents

Allowance if Allowance if there is only one there is only one

parentparent4040 $27,300$27,300 $6,300$6,3004444 $30,000$30,000 $6,900$6,9004848 $33,000$33,000 $7600$76005050 $34,600$34,600 $8000$80005252 $36,500$36,500 $8300$83005454 $38,500$38,500 $8700$87005656 $40,600$40,600 $9200$92006060 $45,500$45,500 $10,200$10,2006464 $50,900$50,900 $11,300$11,300

65 and over65 and over $52,000$52,000 $11,600$11,600

RESOURCE ANALYSISRESOURCE ANALYSISSelf Help Programs (Awarded before gift aid)Self Help Programs (Awarded before gift aid)

Work-study or student employment programsWork-study or student employment programs: federal and college.: federal and college.

LoansLoans: Direct Loans, PLUS Loans and Private Loans – : Direct Loans, PLUS Loans and Private Loans – borrowed money that you must pay back, usually with interest.borrowed money that you must pay back, usually with interest.

Gift Aid ProgramsGift Aid Programs – “Free Money” – “Free Money”

Grants Grants – Need Based– Need BasedMoney you don’t have to repay, typically based on financial need.Money you don’t have to repay, typically based on financial need.

Scholarships Scholarships – Merit and May be Need Based– Merit and May be Need BasedInstitutional, State and PrivateInstitutional, State and PrivateFree money awarded usually based on your area of study or merit. Free money awarded usually based on your area of study or merit.

Federal Loans: The smart way to Federal Loans: The smart way to borrowborrow

►Federal Direct LoansFederal Direct Loans Subsidized Direct LoansSubsidized Direct Loans

►Based solely on financial needBased solely on financial need►Federal government pays the interest while Federal government pays the interest while

you are in schoolyou are in school

Unsubsidized Direct LoansUnsubsidized Direct Loans►All eligible students can receive them, All eligible students can receive them,

regardless of income or assetsregardless of income or assets►You’re responsible for paying the interest You’re responsible for paying the interest

while in school.while in school.

Federal Direct Loan LimitsFederal Direct Loan LimitsYearYear Dependent Dependent

UndergraduatesUndergraduatesIndependent Independent UndergraduateUndergraduatess

Graduate and Graduate and Professional Professional StudentsStudents

First YearFirst Year $3,500 + $2,000 = $3,500 + $2,000 = $5,500$5,500

$9,500$9,500 $20,500 – $20,500 – (effective 7/1/12- (effective 7/1/12- Grad Student Grad Student Loans are only Loans are only Unsubsidized)Unsubsidized)

_________________ _________________ Interest Rates Interest Rates – – SEE Next SlideSEE Next Slide

Second YearSecond Year $4,500 + $2,000 = $4,500 + $2,000 = $6,500$6,500

$10,500$10,500

Third YearThird Year $5,500 + $2,000 = $5,500 + $2,000 = $7,500$7,500

$12,500$12,500

Fourth YearFourth Year $5,500 + $2,000 = $5,500 + $2,000 = $7,500$7,500

$12,500$12,500

Total Total amount you amount you can borrowcan borrow

$27,000$27,000 $45,000$45,000

Federal Direct Loan Interest Federal Direct Loan Interest RatesRates

Loan Type Current Interest Rates ( NOT Fixed rates)

Undergraduate Direct Loan From 3.9 % Not to exceed 8.25%

Graduate Direct Loan From 5.4% Not to exceed 10.5%

Direct PLUS Loan(Parent Loan for Undergraduate Students)

From 6.4% Not To exceed 10.5%

Federal Pell Grant = $5,635

Federal Direct PLUS LoansFederal Direct PLUS Loans►Enable parents or stepparents (whose Enable parents or stepparents (whose

information is reported on the FAFSA) information is reported on the FAFSA) to borrow up to the cost of attendance.to borrow up to the cost of attendance.

Minus any other aid the student may Minus any other aid the student may receivereceive

Legal guardians cannot borrow PLUS loans Legal guardians cannot borrow PLUS loans ..

(Resource Analysis Continued)(Resource Analysis Continued)

► Academic Common MarketAcademic Common Market “ “College 411” Guide College 411” Guide

http://www.mhec.state.md.ushttp://www.mhec.state.md.us► Innovative OpportunitiesInnovative Opportunities ““Best College Deals” -www.petersons.comBest College Deals” -www.petersons.com► College Graduation Rates by years of studyCollege Graduation Rates by years of study www.collegeresults.org www.collegeresults.org    ► Net Price CalculatorNet Price Calculator http://netpricecalculator.collegeboard.org/http://netpricecalculator.collegeboard.org/

The Award ProcessThe Award Process► Colleges assign each student a password Colleges assign each student a password

and user name after the admissions and user name after the admissions applications are received. The user name applications are received. The user name and password is assigned to allow students and password is assigned to allow students to monitor their admissions application, to monitor their admissions application, financial aid status, academic record and financial aid status, academic record and billing statements. billing statements.

► The financial aid offices uses this process to The financial aid offices uses this process to communicate with the students regarding communicate with the students regarding their financial application status.their financial application status.

(The Award Process Continued)(The Award Process Continued)

► After each college receives the aid After each college receives the aid application/documents it will post receipt of application/documents it will post receipt of the document on the student’s financial aid the document on the student’s financial aid page.page.

1. The posting will tell the student the 1. The posting will tell the student the status of the document received regarding status of the document received regarding its fulfillment.its fulfillment.

2. If the college requires additional 2. If the college requires additional information, it will post the listing on the information, it will post the listing on the student’s aid page.student’s aid page.

((PROBLEMPROBLEM: Student fails to monitor his/her : Student fails to monitor his/her financial aid page in order to take further financial aid page in order to take further action and thus complete the aid application action and thus complete the aid application process.)process.)

(The Award Process Continued)(The Award Process Continued)

► After the student meets all requirements for After the student meets all requirements for awarding, the aid office will post the award on the awarding, the aid office will post the award on the student’s account.student’s account.

1. The awards will be posted for the student to 1. The awards will be posted for the student to accept or decline.accept or decline.

2. If accepted, the student will be instructed 2. If accepted, the student will be instructed regarding any additional action to be taken. regarding any additional action to be taken.

(Note: A student should check his/her college email (Note: A student should check his/her college email account as well as their personal email account and account as well as their personal email account and regular U.S.P.S) regular U.S.P.S)

((ProblemProblem: Student fails to monitor his/her financial : Student fails to monitor his/her financial aid page to either accept or decline awards. In aid page to either accept or decline awards. In addition, even after accepting, many times the addition, even after accepting, many times the student fails to complete the award process by not student fails to complete the award process by not fulfilling the loan application process.)fulfilling the loan application process.)

Navigating College Financial Aid

Program Analysis

Dr. Herm Davis

301-548-9423

hdcfaces@comcast.net ww.drhermdavis.com