Financial Aid Night 2021

Financial Aid 101 Meg Ryan Executive Director of Admissions & Financial Aid

Agenda • • • • •

What is Financial Aid? & why care about it now?

How to apply for financial aid Need-based aid vs. merit-based aid Alternative financing options Q &A

What is Financial Aid? Financial assistance to help families cover the cost of attendance.

• Need-Based and/or Merit-Based • Gift (Grants & Scholarships) • Self-help (Loans & Work-Study) It can come from • State and Federal Governments • Institution • Outside/Private sources (other than the family)

The role of Financial Aid in College Agenda Choice • What is Financial Aid? & why careto about • About 40% of students who decided not go it now?

• How to applycited for financial aid related to their first-choice college reasons • Need-based aid vs. merit-based aid to cost (Inside Higher Ed) • Alternative financing options • College is a long-term • Q &A investment for the student and family

What to know now • Your financial aid expectations, needs & limitations throughout the entire admission process • Parents & students should discuss the role of cost in your college search • Admission deadlines impact on financial aid eligibility • Net Price Calculator/FAFSA4caster – any institution that receives federal funds must post a Net Price Calculator on their website

Planning for college during uncertain Agenda economic times • The current economic facing • What ischallenges Financial Aid? are & why care about it now?

• How to apply for financial aid both students and colleges • Need-based aid vs. merit-based aid • If you experience a dramatic change to your • Alternative financing options financial situation • Qat &Aany point during college, you should connect with the financial aid office • Saving for college will always benefit you • Honest conversations now, prevent difficult ones later

Applying for financial aid

Applying for financial aid: how • Free Application for Federal Student Aid (FAFSA) • CSS PROFILE (CollegeBoard’s form, used by more than 600 colleges) • Institutional Forms • Primary Documentation – Tax Returns, W-2 Statements, IRS Transcripts

Applying for Agenda financial aid: when • FAFSA & CSS PROFILE are available • What is Financial Aid? & why in care about it now?

How to apply October of your• senior yearfor financial aid • Need-based aid vs. merit-based aid • Use income information from two years prior • Alternative financing options to your enrollment • Q &A – Start college in Fall 2022 – Use taxes from 2020, filed in spring/summer 2021

Applying for financial aid: who • When parents do not share the same household, the parent that files the FAFSA is: – the parent with whom the student lives most of the year – OR the parent who provided more financial support during the previous 12 months Note: who claims the student on the taxes does not determine who is the “custodial parent”

Applying forAgenda financial aid: who • If the custodial parent remarried, that • What is is Financial Aid? & whystepcare about it now? parent’s information on theaidFAFSA • Howistorequired apply for financial • Need-based aid vs. merit-based • Non-custodial parent information may be aid requested Alternative financing options by the institution• in different ways (CSS PROFILE, • Q &A institutional form) • Non-custodial parent information is not included in federal or state eligibility requirements • Waivers are available when non-custodial parent is not able or willing to provide information

Need-based vs. Merit-Based Aid

Need-based financial aid • Uses a formula to determine if you have demonstrated financial need.

• Can be used in conjunction with merit.

• Need-based only institutions attempt to even the playing field with aid to allow all students an equal opportunity to enroll.

• Your strength as an applicant may not be a factor.

Cost of Attendance - Expected Family Contribution = Financial Need

Cost of Attendance Agenda • Comprehensive• fees attend Aid? that&college Whatto is Financial why care about it now?

How to apply for financial aid • Includes direct •and indirect costs • Need-based aid vs. merit-based aid Direct (billed to you) Indirect (expenses you may see • Alternative financing options but are not billed by the college) • Q &A Tuition

Books

Room

Transportation to/from campus

Board

Personal expenses

Required fees

Misc. expenses

Expected Family Contribution (EFC) The EFC is the amount used by colleges to evaluate a family’s ability to pay for college through: • Direct contribution from income • Drawing down on assets • Borrowing

This amount can be calculated using variations of the: • Federal Methodology (FM) • Institutional Methodology (IM) *Your calculated EFC does not mean that your bill will match that number exactly, it is a number used in a formula

EFC formulas: Agenda Do: Do NOT: • What is Financial Aid? & why care about it now?

• How to apply for financial aid • Assess ability to pay for • Evaluate a willingness to pay college forvs. college • Need-based aid merit-based aid • Alternative• financing options retirement • Account for cost of living Use traditional accounts (401k, 403b) • Q &A • Protect income and assets based on input in the • Use a cash-flow analysis formula – Outgoing expenses cannot be – How close you are to retirement, where you live

fairly applied across all applicants for financial aid and are therefore not part of the formula

Colleges can calculate your need differently Federal Methodology

Institutional Methodology

• Number in household

• Number in household – with details on family composition • May consider parent not living in the household • Income & taxes with details on how they were earned • Assets

• Custodial Parent & Spouse • Income & taxes • Assets – Home equity not included

• Applied the same way across all institutions

– Home, farm & business equity

• Allows for customizing based on institutional priorities

A note aboutAgenda the changing FAFSA • Starting with the 2023-2024 theit now?

• What is Financialacademic Aid? & why year, care about How to applyand for financial aid FAFSA will look• different the formulas will be different • Need-based aid vs. merit-based aid • Alternative financing options • Expected Family• Contribution Student Aid Q &A Index – Emphasizes that this number is used in a formula, it is not prescriptive

Merit-based financial aid • Scholarship funds to attract top students to enroll in their institution • Awards can be based on academic, athletic or artistic talent, contributions outside of the classroom or any combination of your application information

Preferential packaging Agenda • Colleges use financial as a Aid? recruitment toolit now?

• What isaid Financial & why care about • How to apply for financial aid to attract the strongest students to enroll at their institution• Need-based aid vs. merit-based aid • Alternative financing options • Institutions use• their Q &Aown grant funding to improve the strength of a financial aid award

Preferential packaging • Where you sit in the applicant pool will determine your financial aid award • Example: academics Your GPA: 3.8

Average Admitted GPA: 3.5

Average Admitted GPA: 3.8

Your GPA: 3.5

Financial aid example Agenda

College A – College B – College C – College D – College E – Community Merit aid Fed/State Meet full Not College Aid only meeting need • What is Financial Aid? & why care about it now? need $60,000 •

How to apply for financial $25,000 aid $50,000 $65,000 • Need-based aid vs. merit-based aid $20,000 $19,000 $25,000 $20,000 • Alternative financing options • Q &A

$20,000

Demonstrated Need

$40,000

$31,000

$40,000

$5,000

-$15,500

Total Financial Aid Awarded

$30,000

$31,000

$50,000

$5,500

$4,500

Net Price to Family

$30,000

$19,000

$15,000

$19,500

$0

Cost of Attendance Expected Family Contribution

$4,500

Types of Financial Aid

Grants & scholarship programs Agenda Funds that you receive and are not required to pay • What is Financial Aid? & why care about it now? back or earn • How to apply for financial aid • Institutional grants or scholarships • Need-based aid vs. merit-based aid – Can be need or•merit-based Alternative financing options

• Q &A • Federal Pell Grant • Federal Supplemental Educational Opportunity Grant (SEOG) • State Grant (PHEAA)

– PA has reciprocity with: DE, D.C., MA, OH, VT, WV

Student loans • Federal Direct Loan is often included in a financial aid award – Subsidized • Interest is subsidized until 6 months after you are no longer enrolled

– Unsubsidized • Interest begins to accrue the day the loan is added to your student account.

Work-study Agenda • Funds that need• to beisearned by the student What Financial Aid? & why care about it now?

• How tovary applyacross for financial aid • Employment policies institutions aid vs.job? merit-based (how do you get• aNeed-based work-study Whataid • Alternative financing options happens if you •earn more than your work-study Q &A award?)

• These funds are often listed in a financial aid award but are not directly credited to the student account

Alternative Financing Options Closing the gap after financial aid

Alternative Loans • Student loans or alternative loans in the parent’s or student’s name • Can come from the federal government (Parent Plus Loan) or a variety of lenders • Ask about interest rates, deferment options and payment plans

Outside scholarships Agenda • Look locally • • •

• What is Financial Aid? & why care about it now?

• How to apply for financial aid Talk to your counselors • Need-based aid vs. merit-based aid Apply for smaller scholarships • Alternative financing options Apply often, early and throughout your enrollment • Q &A

• Online resources: • • •

FastWeb.com Collegeboard.com Niche.com/colleges/scholarships

Other options • Payment plans – Check with your institution – Allow for installment plans

How will you measure Return on Investment? Agenda • • • • •

What is Financial Aid? & why care about it now?

How to apply for financial aid Need-based aid vs. merit-based aid Alternative financing options Q &A

Question & Answer Meg Ryan Executive Director of Admissions & Financial Aid mryan@allegheny.edu