Financing the Endicott Experience Maria Morelli Director of Financial Aid
Agenda • Calculating the bottom line • Types of financing available • Plus Loan vs Private Loans • Selecting a lender • Important questions to ask • Things to remember
Understanding costs Description Tuition: General Fees:
Amount $43,264.00 $950.00
Housing:
$12,896.00
Meals:
$5,814.00
Total Direct Costs:
$62,924.00
Transportation Allowance:
$1,000.00
Personal Expenses:
$1,000.00
Books:
$1364.00
Average Loan Fees: Total Cost of Attendance:
Resident Student Budget
$40.00 $66,328.00
Use this to figure out the net cost
Maximum amount of aid the student can receive including scholarships, grants, and loans
Understanding costs Description
Amount
Tuition:
$43,264.00
Fees:
$950.00
Total Direct Costs:
$44,214.00
Housing Allowance:
$1,000.00
Meal Allowance:
$5,170.00
Transportation Allowance:
$1,000.00
Personal Expenses:
$1,000.00
Books:
$1,364.00
Average Loan Fees: Total Cost of Attendance:
$40.00 $53,792.00
Student Living with Parents Use this to figure out the net cost
Maximum amount of aid the student can receive including scholarships, grants, and loans
Figuring out net cost Total Direct Costs - Grants & Scholarships = Total Net Cost
Example (Resident Student): Total Direct Costs:
$62,924.00
Presidential Scholarship:
- $20,000.00
Endicott Grant:
-$3,000.00
Outside Scholarship:
-$1,000.00
Total Net Cost:
$38,924.00
This is the amount that has to be paid out of pocket or covered by loans
Will your student borrow direct loans? •
Cost After Direct Student Loans
Maximum amount is $5,500 with up to $3,500 from Subsidized loan for first year students
Total Net Cost:
$38,924.00
•
Subsidized vs. Unsubsidized
Subsidized Loan:
- $3464.00
•
Interest rate currently 6.39% calculated daily
Unsubsidized Loan:
- $1,979.00
Remaining Cost:
$33,481.00
•
Interest rate set each July 1st by adding 2.05% to 10-year U.S. Treasury note rate
•
Origination fee is currently 1.057%
•
Payment deferred until 6 months after the student graduates or leaves school.
Daily Interest Rate Formula Interest Amount = (Outstanding Principal Balance x Interest Rate Factor) x Number of Days Since Last Payment
Types of Financing Available • Payment Plan • Federal Parent PLUS loan • Private Student Loans
Payment Plan • Provided through NelNet • No interest, flat $40 fee per semester • Can set up a payment plan for any amount • Max 5 payments per semester • Fall payments start in July, Spring payments start in December, if opting for max number of payments
Example: Payment Plan for Full Net Cost of $33,841.00 after student’s loans Fall Total Net Cost: $16,920.00* Date Due July 1
Spring Total Net Cost: $16,920.00*
Payment
Date Due
Payment
$3,384.00 + $40.00 Fee
December 1
$3,384.00 + $40.00 Fee
August 1
$3,384.00
January 1
$3,384.00
September 1
$3,384.00
February 1
$3,384.00
October 1
$3,384.00
March 1
$3,384.00
November 1
$3,384.00
April 1
$3,384.00
Total Paid
$16,960.00
*amount rounded down to simplify example
Total Paid
$16,960.00
Federal Direct Parent PLUS Loan • • • • • • • •
Federal loan for Parents of undergraduate students Credit check Apply online, instant approval Currently 8.94% (10 Year T-Bill Rate + 4.60%), Origination fee 4.228% Can borrow up to $20,000 per year, maximum of $65,000 lifetime per child Payment can be deferred while student is in school 3 repayment options: standard, graduated, and extended If parent is denied due to credit, can appeal, apply with endorser, or student can borrow additional $4000 Federal Unsubsidized Direct Loan
Example PLUS Loan for $33,941 Direct Costs (Standard repayment) Borrowed Amount:
$16,000.00
Origination Fee:
$676.00
Amount sent to school: Estimated monthly payment:
$15,324.00 $202.00
Total repayment amount:
$24,259.00
Remaining Balance to Endicott:
$18,617.00
Payment plan per month:
$1,862.00
Keep in mind that the figures above are only for one year.
Private Student Loans •
Offered by Banks, Credit Unions, or State Agencies
•
Can be taken out by the student or the parent to cover total costs less other aid
•
Credit check required
•
Students will generally need a cosigner – Does not need to be the parent
•
Interest rates vary and can be fixed or variable
•
Lenders may offer various repayment options
•
Payment may be able to be deferred while in school
Which one is right for you? It depends. . . Parent Plus Loan
Private Student Loan
Primary Borrower
Parent
Parent or Student
Cosigner Required
Only if parent has adverse credit history
Cosigner may be required, likely for student borrowers
FAFSA Required
Yes
No
Lender
Federal Government
Private lenders & financial institutions
Interest rate type
Fixed
Varies by lender
Tax Deductible Interest
Yes
Yes
Subsidized Interest
N/A
N/A
Source: Edvisors.com
Which one is right for you? It depends. . . Parent Plus Loan
Private Student Loan
Loan Fees
4.288%
Varies by lender, many have no fees
Loan Limits
$20,000 maximum per year
Cost of Attendance minus other aid
Cumulative Loan Limits $65,000 per child
Varies by lender – May vary by degree/major and credit
Repayment Period
Varies by plan option and loan balance – 10 to 25 years
Varies by lender, typically 5-25 years
Repayment Options
Standard, Extended, Graduated
Varies by lender
Death Discharge
Student or Parent
Varies by lender
Disability Discharge
Parent Only
Varies by lender
Source: Edvisors.com
How do I find a private lender? • Endicott preferred lender list • Lender does not need to be on Endicott’s list • Elm Select
Questions to ask about private loans • What is the interest rate and what are the conditions to receive that interest rate? • How many payments will I have to make? • Can payment be deferred while in school? What payment options do I have while in school? • Can I pay off the loan early?
Questions to ask about private loans • What are the deferment and forbearance options? • What are the responsibilities of the cosigner and is there a cosigner release option? • If I defer payment, how is the interest capitalized? • Can I be pre-approved for multiple years? • Do you offer any incentives for automatic payments?
Things to remember • You can combine the payment plan and loan options to lower the amount borrowed • Borrow only what you really need • Involve your student in the conversation about what and how much to borrow and make sure they understand what they are borrowing
Things to remember • When borrowing PLUS or a private loan borrow for the whole academic year • Know what your credit rating is, most private lenders require a credit score in mid-600s • Use PLUS loan as a fall back • Don’t be afraid to ask questions