Paying for College:Do You Have a Strategy?

What Are the Options?The Hidden Costs Colleges. The Need for Transparency.Resources That Can Help.

http://projectonstudentdebt.org/fact_sheets.vp.html

Three Pillars of College Preparation

Academics FinancesAdmissions

When you understand how each area works and know what action to take that might save you money or help minimize your out of pocket cost, that’s when you have a strong college strategy

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Typical Costs Tuition and Fees Books and Supplies Room and Board Transportation Miscellaneous Expenses (cell phone, deposits, labs) Loan Fees Insurances (Auto, Rental, Computer) Special Equipment (PC, Frig., internet) Personal Expenses (laundry, food, Spending money (parties, visiting college buddies, etc.) Parent’s weekend Moving in and moving out costs Off campus living deposits and payments for utilities. Fifth year!

Grants Grants provide money that does not need to be

repaid. Awards are based on need. Federal Grants:

Pell: $5,500 annually. Federal Supplemental Educational Opportunity

Grants (FSEOG): For students with exceptional need $400 - $4,000 annually.

Might be cut in federal budget. New York State Tuition Assistance Program (TAP)

For NY schools and NY residents. Based on need. Scholarship money does not have to be repaid.

Student Loans 2 out of 3 college students qualify for some type of financial aid. Usually low interest, but compound with interest, if unsubsidized. To qualify for Federal Stafford and Pell loans you must apply. Free Application for Federal Student Aid (FAFSA) form.

Free and online. Everyone should fill out the application. Suppose you have a financial emergency and need aid. If FAFSA hasn’t been filed, you may not qualify for a loan.

These loans might be first step in establishing your credit rating. These loans are to be paid by the student, the parent is not

responsible. If you fail to pay on time, you are delinquent. If you’re delinquent over time, you’re in default and the entire loan is

due. Loans have to be repaid. Bankruptcy does not wipe out federal students loans.

Shopping for Loans Not all loans are the same. Understand options and responsibilities.

Compare lenders, amount to be borrowed and terms of the loan.

Make payments on time.

Notify lender if circumstances change which can affect payment.

Apply for deferment or forbearance, if you are unable to pay.

If you have problems, talk to lender about alternative pay options.

Consider consolidating your loans after graduating.

Keep careful records regarding your loans.

Federal loans are different from private loans which are more expensive with higher fees and higher default rate.

Federal Perkins Loan

Given at schools’ discretion. Interest rate is 5%. Need based. Awards:

Undergraduates up to $5,500 Graduate and professional students up to $8,000

No interest until student leaves school. Student pays it back.

Federal Stafford Loans $5,500 - $7,500 for dependent students per year. $9,500 - $12,500 for independent students per year. Lifetime limits:

$31,000 for undergraduate dependent students. $57,500 for undergraduate independent students. $138,500 for graduate or professionsl students.

Subsidized loans – Federal government pays the interest during periods when repayment is not required.

While the student is still in school at least half-time. During the grace period before the loan enters repayment. During periods when the loan is in a deferment status.

Unsubsidized loans – Student is responsible for interest that accrues from the date of the first disbursement throughtout the life of the loan. Added to the loan’s principal.

1-2% Origination Fees usually added to the loan. Student pays it back

Steps to Repayment Exit Interview: Prior to graduation or becoming a part time student clarify

the amount borrowed, the lender and status of your loans. To be done either -

In person with college official Over the internet Phone Video

Create your own spending plan for repayment Create your own personal budget Include income, fixed expenses, variable and occasional expenses Estimate your monthly loan payment and which payment plan fits

During grace period, contact lender to set up payment plan Start payment plan ASAP as loan is already accumulating interest. Stay in touch with lender should there be any changes (address, phone)

Payment Plans Options on $30,000 in Federal Loans at 6.8%

Standard Months in Repayment 120 Monthly Payments $345.25 Interest Payment $11.429.00 Total Loan Payment $41,430.00

Extended Months in Repayment 300 Monthly Payments $208.23 Interest Payment $32,468.00 Total Loan Payment $62,469.00

Graduated Months in a Period

Period (years) Monthly Payment 1-2 $237.06 3-4 $288.20 5-6 350.38 7-8 $425.98 9-10 $517.88

Monthly Payments 120 Interest Payment $13,667.13 Total Loan Payment $43,668.13

Income Based, Income Contingent and Income Sensitive Repayments Plans are available

for graduates with economic sensitive issues at www.studentaid.ed.gov/

Consequences of DefaultingCollection agencies take over loanCollection charges addedCan be suedWages could be garnishedTax refunds interceptedCredit report and credit score impactedIneligible for defermentsCut off from future federal aidMay not be able to renew a professional

license.

Resources www.nslp.org - Assist students and families with loan related services. www.fastweb.com - Free search service for locating scholarship opportunities www.studentaid.ed.gov - Federal financial assistance - grants, loans and work-study. www.collegescholarships.com - Database of lesser known private scholarships. www.financialaidnews.com - Newsletters and blogs from around the Internet,

dedicated to bringing you the best, most up to date financial aid information. www.scholarshipmonkey.com - Free service for students and parents wishing to obtain scholarship information for academic pursuits.

www.fastaid.com - Free data base of private-sector, graduate, worldwide scholarships, fellowships, grants and free undergraduate college scholarships.

www.scholarshipexperts.com - Free database of college and grad school scholarships.

www.schoolsoup.com - Claim to have the world's largest free scholarship database. www.scholarships.com - Scholarship search service and financial aid information

resource. www.hesc.com – N.Y. S. Higher Education Servicres Corp. http://www.ombudsman.ed.gov/ - Help resolve Federal student loan problems.