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Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

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Page 1: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Your Financial Aid Journey

Investing in Your Future5 Steps to Prepare for CollegeCollege Financing OptionsFinancial Aid Terms

Page 2: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Investing in your future

Higher earningsCollege graduates earn more money and have better job security. People with a bachelor’s degree earn $415 more per week than those with a high school diploma.

Job SecurityThe unemployment rate also drops to 4.9% if you have a bachelor’s degree versus a rate of 9.4% for those with a high school diploma.

Page 3: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Be a sensible borrowerWhile college is still a good investment, you wantto be smart about it. If you’re taking out student loans, plan to keep your borrowing in proportion to your future earning potential. Get started by visiting the Bureau of Labor Statistics at bls.gov/bls/blswage.htm to find the estimated starting salary for various careers after graduation.

Page 4: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Understanding College Costs

Tuition is the cost for taking classes. The amount varies

depending upon your academic program, number of credit hours, and whether you are in-state or out-of-state.

Room and board includes the cost of campus

housing and possibly your meal plan. If you decide to live off-campus, you’ll want to look into average rental costs near campus and estimate a weekly grocery bill.

Page 5: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Understanding College Costs

Books and supplies are materials needed for your

courses that you’ll need to budget for each semester. The average annual cost for these materials at a four-year public college is about $1,168. Look for ways to lower these costs by buying used books, or renting them.

Personal expenses include things you normally

spend money on like laundry or cell phone bills.

Page 6: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Understanding College Costs

Compare Costs between public and private schools

Average annual cost for an in-state residentPublic Institution Private Institution

Tuition $8,240 $28,500

Room and board $8,887 $10,089

Books and supplies $1,168 $1,213

Personal expenses $2,066 $1,496

TOTAL COST $20,381 $41,298

Source: trends.colleboard/org/college_pricing/report_findings/indicator/883

Page 7: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

5 Steps to Prepare for College

1. The FAFSA is for everyoneRegardless of your income, all families should complete the FAFSA (Free Application for Federal Student Aid) annually.

2. Use your college’s Net Price CalculatorEstimate your college’s costs by visiting their website and using their Net Price Calculator. Play with the variables and see how your total cost might change. For example, investigate how living on-campus, off-campus, or living at home might affect costs.

3. Do you have additional expenses?Do grants, scholarships, institutional awards, Federal Work-Study, Federal Perkins Loans, and/or Federal Direct Stafford Loans cover all your college related expenses?

Page 8: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

5 Steps to Prepare for College 4. Explore your additional financing options

If the financing options provided by the Net Price Calculator fail to cover all your costs, you may consider: Tuition payment plan, Federal Direct PLUS loan for parents, Private (or alternative) student loans.

Tip: Student loan payments should be 10% or less of a student’s net monthly income after graduation.

Important Note: Be aware that all types of student loans will need to be repaid in the future. As you make your plans, you should give serious consideration to the loan amounts needed throughout your entire education. You should make sure you can comfortably manage your student loan indebtedness.

Page 9: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

5 Steps to Prepare for College

5. Know your deadlines and compare your optionsThe charts on the following slides provide an overview of the different types of resources families often use to cover education costs. Pay special attention to the application deadlines to make sure that you can take full advantage of these opportunities.

Page 10: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

College Financing Options

Funding Options

Description How to Apply

Free Aid Scholarship Scholarships are awarded on various criteria, which usually reflect the values and purposes of the donor or founder of the award. Scholarship money is not required to be repaid.

Research online

Free Aid Pell Grant The Federal Pell Grant Program provides need-based grants to low-income students to promote access to college. Grant money is not required to be repaid.

FAFSA

Page 11: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

College Financing OptionsFunding Options

Description How to Apply

Free Aid State Aid Most of the state programs are available only to students who attend a college within their state of residence. To be considered for state-based aid, you should consider attending an in-state college.

FAFSA

Free Aid Institutional Aid

Many college and universities, both public and private, provide grants or scholarships to students to help them pay for all or part of the tuition and fees charges by the institution. This is granted by the specific college the student is attending.

FAFSA

Page 12: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

College Financing OptionsFunding Options

Description How to Apply

Self-help Federal Work-Study Program

Students can earn money towards their college education by working part-time

FAFSA

Self-help Tuition payment plan

Tuition installment plans can be a reasonable alternative to education loans if you can afford to pay tuition, just not in a lump sum at the start of the semester.

Check with college

Page 13: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

College Financing OptionsFunding Options

Description How to Apply

First choice student loans

Federal Perkins Loan

A need-based federal student loan for undergraduate and graduate students with an exceptional financial need.

FAFSA

First choice student loans

Federal Direct Stafford Loan

Federal student loans available to students who are attending college at least half-time. There are two types of this loan: Subsidized and Unsubsidized.

FAFSA

Page 14: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

College Financing OptionsFunding Options

Description How to Apply

Student loans to cover remaining college costs

Federal Direct PLUS Loan for parents

A credit-based federal loan for parents of dependent students. The PLUS loan allows the parent to borrow money on the student’s behalf.

FAFSA

Student loans to cover remaining college costs

Federal Direct PLUS Loan for students

A credit-based federal loan option for students seeking a degree.

FAFSA

Student loans to cover remaining college costs

Private or alternative loans

Private student loan programs are a credit-based college financing option.

Banks or other lenders.

Page 15: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Financial Aid TERMS you should know

DisbursementA process of issuing (transferring) funds from a lender to a borrower, often through your school.

Disclosure statementA lender’s legal statement sent to you immediately after a loan is approved or disbursed, identifying the amount borrowed, interest rate, finance charges, other terms, and your repayment rights and responsibilities.

Grace periodA period of time when you are not required to make payments on your loan, typically between the time you leave school (e.g. graduate) or drop below half-time enrollment and when you enter repayment.

Page 16: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Financial Aid TERMS you should know

Annual Percentage Rate (APR)The yearly cost of a loan, calculated on a percentage basis, that reflects all finance charges including loan interest and fees.

Cosigner / Co-borrowerMost private student loan applicants are required to have a cosigner, especially undergraduate students who don’t have a steady income or credit history. The cosigner is required to sign the loan document, but the student is the primary borrower.

Credit ScoreA number that represents your credit-worthiness, the likelihood of you repaying a debt and the degree of risk for the lender. The score may impact your eligibility and interest rate you receive.

Page 17: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Financial Aid TERMS you should know

Interest RateThe specific fixed or variable rate that a lender charges, expressed as a percentage per year of the amount borrowed. A fixed interest rate is locked in and will not change during the life of your loan, whereas a variable interest rate can change over time with the market (i.e. monthly, quarterly, semi-annually, or annually) over the life of the loan.

Origination feeA processing fee based on a percentage of the principal borrowed and deducted from the loan at each disbursement. Considered part of the annual percentage rate.

Page 18: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Financial Aid TERMS you should know

Repayment termThe period of time over which you will repay your loan; terms usually range from 10-20 years.

School certificationThe process where your school confirms and authorizes to the lender that you are enrolled and have met other eligibility requirements.

Page 19: Your Financial Aid Journey Investing in Your Future 5 Steps to Prepare for College College Financing Options Financial Aid Terms

Resources provided by Wells Fargo

Planning for College guide walks students through the college planning process and provides a place where students can keep track of important information.

CollegeSTEPS magazine provides students and parents with articles, tips, and resources for planning and paying for college.

Your Financial Aid Journey in 5 Steps is an easy to follow guide that navigates parents and students through the financial aid process in five simple steps – starting with completing the FAFSA.