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Financial Preparation for College The Myth of ‘Financial Aid’

Presented by: F³E Foundation for Financial Education www.f3eonline.org. Financial Preparation for College The Myth of ‘Financial Aid’. In the Beginning…. (But hopefully, not ‘As it now and ever shall be’). Financial Aid. Scholarships Loans Campus Employment. Sources. Scholarships

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Financial Preparation for College The Myth of ‘Financial Aid’

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  1. Presented by: F³EFoundation for Financial Education www.f3eonline.org Financial Preparation for CollegeThe Myth of ‘Financial Aid’

  2. In the Beginning… (But hopefully, not ‘As it now and ever shall be’)

  3. Financial Aid Scholarships Loans Campus Employment

  4. Sources • Scholarships • Loans • Campus Employment • College Catalog • Financial Aid Office • At Cafeteria, Library, etc.

  5. Now?? Sources • Scholarships • Loans • Campus Employment • www.finaid.org • www.finaid.org • Computer Programmer • River Rafting Guide, etc.

  6. Financial Aid’s Purpose -Help pay for college Now -At many private colleges, attract more ‘Better’ students Then

  7. ‘Better’ Students?? -Higher Grades, SATs, etc. -Diverse (Geographic, Ethnic, Interests, Skills) -Ability to Pay (non-need based)

  8. How is Financial Aid Calculated?

  9. Non-Need Financial Aid -Provided from college’s own sources -Fills seats and/or attracts ‘Better’ students

  10. Need-Based Financial Aid • EFC (Expected Family Contribution) • Based upon FAFSA formula (Free Application for Federal Student Aid) • -Measures Your Income/Assets (But Not Your Debt)

  11. Result: a Dollar Figure The EFC

  12. EFC Example Married, 45-year-old couple Two kids (14 and 17) Total income (2 salaries): $100,000 Non-retirement savings: $20,000 Annual EFC each college year? $19,000

  13. Who Pays? How much? Where does the money come from?

  14. Sources of Money -Your Hard Earned Money (YHEM) -Other People’s Money (OPM)

  15. OPM X X X YesNo • Scholarships • Loans • Work

  16. YHEM Three Sources: • Past (Assets) • Present (Salaries, Dividends, Interest) • Future (Loans)

  17. What’s the Myth of Financial Aid? But it’s not…. Families believe Financial Aid is about how they pay for college

  18. Financial Aid is about how… • Colleges Pay for their part of Cost Of Attendance (COA) • Often with YHEM - Loans - Work

  19. Annual Total College CostExample: $40,000

  20. YHEM/OPM Summary($40,000 annual cost)

  21. Financial Aid is NOT About • How families pay for ‘Their Costs’ (EFC) • It is about how colleges cover their share…if any. (Sometimes, EFC exceeds total cost.)

  22. Want Proof? Ask Financial Aid Officers these three Questions: 1. What’s the Income Limit for Student Loan Interest Deduction? 2. Explain Hope Scholarship/Lifetime Learning Credits? 3. Difference between Mutual Funds and Annuities on FAFSA? (federal methodology)

  23. To Repeat… But it’s not…. Families Believe Financial Aid is about: How They Can Pay for College

  24. Families Need Advice • Financing Their EFC • Average Years to Graduate: -’Publics’: 28% four-year graduation rate -’Privates’: 67% four-year graduation rate • Non-Need Scholarships (ex: SAGE TuitionRewards)

  25. Families Need College Funding Advice ‘College Funding’: How to Pay for What YOU Have to Pay For

  26. College Funding vs. Financial Aid

  27. ‘SAGE’ Advice • Save / Invest Now! • Review Current / Projected Family Finances • Create a College Funding Plan

  28. If necessary: Seek help…

  29. The Reward?

  30. Good Luck! The Foundation for Financial Education info@f3eonline.org www.f3eonline.org 1-240-499-0390

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