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Please silence your cell phones! Thank you for being considerate to the people around you.
Paying for Postsecondary Education
HIGHER EDUCATION IS
CONSTANTLY CHANGING…
…Particularly Costs
Then v. Now • Please right click and duplicate slide. State School Tuition/Fees in 1993 -
$4000 State School Tuition/Fees in 2015 -
$9500 One summer of scooping ice cream could pay
for a year of college; today students would have to work about 991 hours (~25 40-hour weeks)
https://collegetuitioncosts.wordpress.com/graphs/
http://www.theatlantic.com/education/archive/2014/04/the-myth-of-working-your-way-through-college/359735/
• Please right click and duplicate slide. 2015:
4-year Public - $20k - $30k
4-year Private - $30k – over $60k
2030:
4-year Public - $40k - $60k
4-year Private - $92k - $130k
cost projector at www.finaid.org
Your education is a
good investment.
If I said, “Give me
$30,000 now, and in
40 years, I will give
you a $1M ROI -
guaranteed!,” do you
think that is a good
deal?
The higher your level of
education, the more
money you’ll earn over
your lifetime.
SO WHY IS EVERYONE
CONCERNED ABOUT
BORROWING AND
AFFORDABILITY IF STUDENTS
CAN PAY IT BACK?
Question:
Attainment • Please right click and duplicate slide. 59% of students who began
seeking a bachelor’s degree at a 4-year institution completed that
degree within 6 years
(Rate was 62% female; 56% Male)
NCES report, May 2015 (Class of 2002 and when they reached educational attainment).
Attrition • Please right click and duplicate slide. That means 41% of students
didn’t graduate in 6 years.
Those who don’t graduate still have to
pay back loans!
Those who take longer to graduate and
borrow more must repay loans!
Source: Postsecondary Analytics, How Full-Time are “Full-Time” Students? Prepared for Complete College America, October 2013.
Most students
are NOT taking
the credits
needed to
graduate
on time
RETURN ON INVESTMENT
Affordability
Affordability/ROI for Students
• Are there going to be jobs in your field upon
graduation?
• What do those jobs pay to start?
• How much will you have to borrow for your
education?
• Do you have an open mind about your
education?
• Have you researched costs, what your
financial aid might look like, and had
discussions with your parents?
MySmartBorrowing.org
An interactive, online tool
created by PHEAA that helps
students and families:
• Estimate career salaries &
college tuition
• View the impact of savings
on overall cost
• Calculate loan repayment
• Avoid overborrowing
MySmartBorrowing.org
The Financial Aid Process
www.fafsa.gov Create your
FSA ID prior to
completing your
FAFSA. *You and your parents
need an FSA ID
Start a New
FAFSA or Log in
as a returning
user.
**File your
FAFSA every
year you will
attend
postsecondary
education.
Whose information
goes on the FAFSA? • Divorced or separated parents - the parent
that provides more than 50% of students
support (household)
• Stepparents – yes
• Adoptive parents - yes
• Grandparents – no
• Foster parents - no
• Legal guardians - no
• Anyone else the student is living with - no
Independent Students are: • 24 or older on Jan 1st of award year
(this year before 1993) • Veteran (includes active duty
personnel) • Working on graduate degree • Emancipated minor in legal
guardianship • Orphan, in foster care, or ward of
the court at anytime when student was age 13 or older
• Have legal dependents other than spouse
• Student deemed homeless by proper authority
State Grant Form
Click on Start
Your State
Application
from your
FAFSA
Confirmation
Page.
Links to
pheaa.org.
Know your deadlines! Know all of your state and school/college
deadlines and file the FAFSA by the
earliest date!
• School Priority Filing Dates – vary by school
• PA State Grant Deadlines –
◦ May 1, 2016 - First Time and Renewal Applicants that plan to enroll in a degree program or a college transferable program at a junior college or other college or university
◦ August 1, 2016 - First Time applicants that plan to enroll in a community college; a business, trade, or technical school; a hospital school of nursing; or a 2-year program that is not transferable to another institution
Expected Family Contribution
(EFC)
How is the EFC Calculated?
• Parent contribution + student contribution = EFC
• Bulk of EFC comes from income
• Home, personal property, qualified retirement funds, and value of life insurance excluded from assets
• Asset protection allowance (based on age of older parent, or the parent if single parent household)
• Parent asset contribution = roughly 6%
• Student income contribution = 50% of amount over $6,400
• Student asset contribution = 20% of assets
• Parent contribution divided by number of children in college at the same time
Financial Aid Award Letter –
Calculating Need Schools/colleges receive financial aid information and calculate financial need.
School cost……………………. $30,000
EFC…………………………….. - $ 3,000
Financial need………………… $27,000
FAO “packages” student based on financial need and available funding (varies from school to school).
Financial aid award letter sent to student.
Sorting it all out….
How much is
gift aid? – I
don’t have to
pay it back.
How much is
self-help aid? –
I will have to
pay it back or
earn it.
What are the
total costs and
how much will I
owe the
school?
Review and consider all of your
options! Sometimes it’s not
always your first choice!
What is Available?
Federal Programs
• Pell Grant (2015-16 max award $5775)
» *….must have high need
• Campus-based aid (amounts determined by FAO)
» FSEOG………………… up to $4000
» Federal work-study…… FAO determines
• For most programs, student must be enrolled at least half-time.
Federal Programs
• TEACH (must meet teaching commitment)
• Iraq and Afghanistan Service Grant
• Americorps (for details, go to www.americorps.gov)
PA State Grant Program
• PA State Grant*
» Full-time, in PA…...….up to $4,348
» Part time, in PA………up to $2,174
• Out of state….. Up to $600 in DE, MA, OH, VT, WV, and
DC
*Amount determined in part by the cost of the school and the student must
be attending school at least half-time to be eligible
Other State Programs • State Work-Study - job related to major
• Educational Assistance Grant (EAP) – National Guard
• Chafee Education and Training Grant – administered by the Department of Public Welfare
• Blind or Deaf Beneficiary Grant
• Postsecondary Educational Gratuity Program (PEGP)
• Partnerships for Access to Higher Education (PATH)
• PA Targeted Industry Program (PA TIP Program)
• Ready to Succeed Scholarship (RTSS)
**For details, see the PA Guide to Student Aid or visit www.pheaa.org
www.studentloans.gov Log in with
your FSA ID
and complete
your Master
Promissory
Note (MPN)
and Entrance
Counseling.
Average student
loan borrowing in PA
is $32,528 as of
2013. Source: The Institute for
College Access and
Success; Project on
Student Debt Numbers.
Federal Direct Loan Program
• Stafford Student Loans » Subsidized – no interest while in school
◦ Interest will be charged after an interest-free, 6-month-grace period
◦ 4.29% fixed rate for loans between 7/1/15 and 6/30/16
◦ 1.068% origination fee deducted at disbursement
» Unsubsidized – interest accrues in school and grace
◦ 4.29% fixed rate for loans between 7/1/15 and 6/30/16
◦ 1.068% origination fee deducted at disbursement
» Gross loan amount of $5500 will be $5441.26
Calculating Accrued Interest To calculate your daily interest accrual, use the following formula:
• Interest rate x current principal balance ÷ number of days in the year = daily interest
Example:
Sara Student has a $2,000 current principal balance and 4.29% interest rate this year. Using the formula:
• .0429 x $2,000 ÷ 365 = $0.24 (~$21.60 quarterly interest)
What if she borrowed $10,000?
• .0429 x $10,000 ÷ 365 = $1.18 daily (~$106 quarterly interest)
Loan Servicer (just some of the companies you might be repaying)
myfedloan.org
navient.com
mygreatlakes.org
nelnet.com
Loan Borrowing Limits
Additional Eligibility
Repayment Examples
It is estimated
that you would
need an annual
salary of $37,345
to be able to
afford this loan
payment.
Repayment Examples
It is estimated
that you would
need an annual
salary of $19,917
to be able to
afford this loan
payment.
Parent Loan for
Undergraduate Students (PLUS)
• Parent borrows a loan for the student
» 6.84% interest rate for 2015-16
» Interest is capped at 10.50%
» Up-front fee of 4.292% deducted at disbursement
» May borrow full cost of education minus any aid
» Credit Check is required on this loan
» Can defer repayment while the student is enrolled,
but as with Unsubsidized loans, the interest does
accrue. Interest payments are encouraged.
Alternative/
Private Education Loans
• Nonfederal loans, made by a lender such
as a bank, credit union, state agency, or a
school.
• Student borrows in his or her own name.
• Based on credit scoring and debt-to-income ratio.
• Fees, interest rates, loan amounts, and repayment
provisions vary by lender and are generally higher than
federal student loans.
• Co-signers usually required. Some loan products
have a co-signer release option.
• Compare loans before making choice and read the fine
print!
Borrowing for Higher Education
Direct Stafford Loans
PLUS Loans
Alternative/Private Loans
What’s Next?
THE BIG PICTURE
Thinking about…
How much will I have to borrow for school?
What do I want the rest of my life to look like? What do I want to have? How do my decisions now affect my vision for my future?
Will there be jobs
available in my
chosen field?
Will I be able to afford my monthly loan payments?
Does a cheaper option make sense if my family is struggling to pay?
Determining Affordability • Approach this as though you are not buying a
school, you are buying an EDUCATION.
• Apply everywhere, but look at sticker price!!
Tuition costs in PA range from $3000 to more
than $40,000…PLUS room and board!
• Be open minded and diverse in college
searches.
• Think in terms of yesterday’s money, today’s
money, and tomorrow’s money.
• Have discussions as a family!
HOPE IS NOT A STRATEGY
Ben offers these suggestions for paying your bill:
• Can you pay anything out-of-pocket? • Does family have expendable income
each month to sign up for a payment plan?
• Has the student applied for as many scholarships as you could? (Check with guidance office, the school you’ll be attending, or do an online search).
• Can parents borrow (are they willing to borrow) or cosign a loan? (*parents can also look at a home-equity line of credit)
• Double check with the school to see if there is anything else they can offer you (additional institutional money, scholarship opportunities, institutional loans).
Scholarship search:
• Start early – and KEEP LOOKING
• Don’t forget to continue studies!
• GOOGLE your interests
• Don’t PAY for information
• Criteria varies by school
» If you’re asked to pay, it’s not free money - (SCAM)
• Don’t disqualify yourself until IT disqualifies YOU
• Don’t fear ESSAYS
• Provide what is asked
• Small scholarships ADD UP
• Activities, Athletics, Family, Hobbies, Participation,
Attributes – DO YOUR RESEARCH
• Don’t miss DEADLINES
• Write it down!
FastWeb.com
EducationPlanner.org
Chegg.com
FinAid.org
Scholarships.com
Scholarship-Page.com
DoSomething.org/Scholarships
Colleges.Niche.com
StudentScholarships.org
BigFuture.Collegeboard.org
MeritAid.com
Pittsburghfoundation.org
Google “unusual scholarships”
Don’t miss out on FREE Money!
WAYS TO SAVE Now make this AFFORDABLE!
Commute!
Plan ahead to graduate on-time!
Buy used text books, rent them or go online to find them cheaper!
RAs
ROTC
Ask about a cheaper meal plan.
Beware of the
5 or 6 year plans! • 5th year will cost 20-25% more than
your first year!
• Loss of institutional funds after 4 years.
• Loss of State Grant eligibility after 4
years.
• You will run out of federal loan
eligibility (capped at $31,000 for
undergraduate students)
What should you do now?
Complete a practice FAFSA on the
FAFSA4Caster on FAFSA.gov to see if
you might qualify for grants.
Apply for scholarships!
Visit mysmartborrowing.org to start
budget planning for each school choice.
Retake SATs or ACTs.
Apply for FSA IDs.
Special Circumstances
Recent death or disability
Reduced income
Recent separation or divorce
Contact the school and
ask for a special
consideration AND
contact State Grant
Division at PHEAA
Resources • PHEAA toll free: 1-800-692-7392
• Federal Student Aid Info Center – 1-800-433-3243
• www.pheaa.org – Account Access
• www.EducationPlanner.org
• www.MySmartBorrowing.org
• www.youcandealwithit.com
• www.fafsa.gov
• www.studentaid.ed.gov – general financial aid info » Check out their Facebook page
• www.studentloans.gov – information on federal loans
• www.nslds.ed.gov - information on your specific loans
Presenter Contact Info
Kim McCurdy Higher Education Access Partner
PHEAA
724.734.8550
QUESTIONS?
