Paying for Postsecondary Education

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Things to think about

• Have you talked to your student about their goals and how they can get there?

• Have you talked about options and back-up plans?

• Have you talked about what’s affordable for your family?

• How can you get money to pay for school? How can you get other people to pay for it?

• Are there things you or your student should be doing to navigate this process (i.e. curriculum choices, dual enrollment, school visits, applications, tests, etc.)?

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Cash Work Payment Plan Grandma Win big at The River’s Casino Win the Power Ball Jackpot Eat only Ramen Noodles Sell your childhood coin collection Sell ad space on your car Athletic Scholarship Academic (Merit) Scholarship Outside Scholarships Federal Grants State Grants Stafford Loans Alternative/Private Loans

How to Pay

Where does the money come from?

• Private Scholarship Sources

» HS Counselors

» Clubs and organizations

» Church

» Bank/Credit Union

» Employers

» Utility Companies

» Department Stores

» Check the Newspaper!

• Internet Scholarship Searches

» www.pittsburghfoundation.com

» www.fastweb.com

» www.finaid.org

» www.scholarshipexperts.com

» www.collegeboard.com

» Do a Google search for “unusual scholarships”

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• You can estimate your tax information using final paystubs from 2014 or using a prior year tax return if the information will be similar.

• Use the IRS Data Retrieval Tool after you have filed your taxes.

www.fafsa.ed.gov

**Sign using a 4-digit PIN number. Student and 1 parent will need a PIN. **PIN will be changing to username and password in Feb/Mar timeframe.

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 1992)

• Veteran (includes active duty personnel)

• Working on graduate level 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

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State Grant Form

Apply for your State Grant From the FAFSA Completion/Confirmation Page

Start your state application to apply for Pennsylvania state based financial aid

Know Your Deadlines Know all of your state and school/college deadlines and file the FAFSA by the earliest deadline.

• School Deadlines – vary by school

• PA State Grant deadlines – ◦ May 1, 2015 - 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, 2015 - 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

$6,310 • Student asset contribution = 20% of assets • Parent contribution divided by number of children in

college at the same time

Need Schools/colleges receive financial aid information and calculate financial need.

School cost……………………. $26,000

EFC…………………………….. - $ 3,000

Financial need……………… $23,000

FAO “packages” student based on financial need and available funding (varies from school to school).

Financial aid award letter sent to student.

Types of Financial Aid

Federal Programs

• Pell Grant (2014-15 max award $5730) *….must have high need

• Campus-based aid – amounts determined by FAO

» FSEOG………………… up to $4000

» Perkins loan….……….. up to $5500

» Federal work-study…… FAO determines

• For most programs, student must be enrolled at least half-time.

Other Federal Programs

• TEACH (must meet teaching commitment)

» For more information, visit studentaid.ed.gov

• Iraq and Afghanistan Service Grant

» For more information, visit studentaid.ed.gov

• Americorps

» For details, go to www.americorps.gov

Pennsylvania State Grant

• PA State Grant* » Full-time in PA = up to $4011

» Part-time in PA = up to ½ of the full-time award

• Out of State = up to $600 in DE, MA, OH, RI, VT, WV and DC

• Amount is determined, in part, by the cost of the school

*must be at least half time to be eligible

Pennsylvania State Grant

• A Pennsylvania State Grant is based on financial need and other requirements

• The maximum amount of the grant is determined, in part, by the cost of attendance at the school:

Community College $2,134

State University $3,414

State Related $3,670

Private Institution $4,011

Ready to Succeed Scholarship

• NEW for 2014-15

• Provides scholarships to high achieving students whose annual family income does not exceed $110,000.

• Recipients must attend a participating school in Pennsylvania, have at least a 3.25 QPA, and have earned the equivalent of 24 credits.

• Maximum award is $2,000 and limited funds are available.

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)

• Pennsylvania Targeted Industry Program (PA –TIP)

*For details, see the PA Student Aid Guide page 20, or visit www.pheaa.org

Studentloans.gov

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

◦ 4.66% fixed rate for loans between 7/1/14 and 6/30/15

◦ 1.073% origination fee deducted at disbursement

» Unsubsidized – interest accrues in school and grace

◦ 4.66% fixed rate for loans between 7/1/14 and 6/30/15

◦ 1.073% origination fee deducted at disbursement

» Gross loan amount of $5500 will be $5440.99

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 $2000 current principal balance and 3.86% interest rate this year. Using the formula:

• .0466 x $2000 ÷ 365 = $0.26 (~$23.40 quarterly interest payment)

• What if she borrowed $10000 over 4 years?

• .0466 x $10000 ÷ 365 = $1.28 daily (~$115 quarterly interest payment)

Servicers

• Fed Loan Servicing (PHEAA)

• Nelnet

• Great Lakes

• Navient (Sallie Mae) » You may look up your servicer and their

contact information at any time on www.nslds.ed.gov

Loan Limits

Additional Eligibility

Repayment Examples

Repayment Examples

Parent Loan for

Undergraduate Students (PLUS)

• Parent borrows a loan for the student

» 7.211% interest rate for 2014-15

» Interest is capped at 10.50%

» Up-front fee of 4.204% 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!

Affordability • Approach this process that you are buying an

education, not a school.

• Be open minded and diverse in college searches.

• Apply to at least 5 schools – do not exclude one school based on cost alone.

• Think of your money in terms of yesterday’s money, today’s money and tomorrow’s money.

• Determine how much you can afford to borrow.

• Set some parameters up front.

Special Circumstances

• Reduced Income

• Recent death or disability

• Contact the school AND contact PHEAA State Grant Division. There may be additional aid available.

What can I do now?

• Visit www.fafsa4caster.ed.gov to see what you may qualify for in the future.

• Explore as many scholarship opportunities as possible.

• Visit www.mysmartborrowing.org to start budget planning for each school choice.

• Retake SATs or ACTs.

Reduce your costs

• Graduate on Time!

• 2+2 strategy (2 years at a community college and then transfer to a 4-year program)

• Commute.

• Rent text books or buy used.

• See if you can evaluate your meal plan choices.

Beware of the 5-year Plan!

• 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.

• Only $4000 left in federal student loan borrowing.

3 Key Reminders

•File the FAFSA

•On time

•Follow up

Resources • PHEAA toll free: 1-800-692-7392

• Federal Student Aid Info Center – 1-800-433-3243

• www.pheaa.org

• www.EducationPlanner.org

• www.Mysmartborrowing.org

• www.Youcandealwithit.com

• www.Myfedloan.org

• www.fafsa.ed.gov

• www.federalstudentaid.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