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Demystifying Financial Aid: A Comprehensive Guide for Students and Parents

Understand the essential forms, terms, and processes of financial aid, including FAFSA, EFC, and types of aid available. Learn how to navigate the system effectively and maximize your funding options.

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Demystifying Financial Aid: A Comprehensive Guide for Students and Parents

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  1. Financial Aid 101:An Overview Susan Gudin Director of Financial Aid Yale University

  2. The Forms You Need to Know • FAFSA - Free Application for Federal Student Aid • Required by all colleges • Free form • www.fafsa.ed.gov • PROFILE • Some colleges need this • There is a cost • Profileonline.collegeboard.com • Institutional Application • One per school • May be part of admissions packet

  3. “Insider” Tips • Find out the deadlines and comply! • Use a matrix • Keep copies of what you send • Have your most recent tax return when completing forms • If you have questions, ask! • Don’t rule out a school just because of its cost • Review all financing options

  4. Institutional Methodology • Some schools will use the Profile and/or their own application form • Used by colleges to give out their own money • Formula will vary school by school • Often includes home equity

  5. www.collegeboard.com Financial Aid calculator (All schools are required to have a net price calculator by the end of October, 2011) Helps family determine their estimated family contribution Compare Your Financial Aid Awards service Families offered credit check option Dependent students First-time applicants U.S. citizens or permanent residents

  6. What is Cost of Attendance (COA) • Direct costs- Tuition, Room , Board, Fees • Indirect costs- Travel allowance, personal expenses, books & supplies • Direct & Indirect costs combined into costs of attendance

  7. What is the Expected Family Contribution (EFC) • Measure of what a family is expected to contribute over a year • Two components: • Parent Contribution • Student Contribution • Student Income • Student Assets

  8. What is Financial Need Cost of Attendance - Expected Family Contribution ___________________________________ = Financial Need

  9. Important terms: • Merit-based aid • Need-based aid • Meeting Full need • “Gapping” • Need-aware Admissions policy • Need-blind Admissions policy • “Shopping Sheet”

  10. Types of Financial Aid • Grants, Scholarships, Gifts, Fellowships, etc. • Money that doesn’t need to be repaid • Loans • Money which must be repaid; may be borrowed by student, parent, or both • Work • Money which the student is given the potential to earn

  11. Assets • Cash, Savings, Checking • Home Equity- Not collected on FAFSA, used by some schools for institutional aid only • Other real estate • 529 Plans • Excludes retirement savings

  12. How do I Pay My EFC? • Past Income • Savings • Present Income • Salary • Payment Plans • Future Income • Loan Programs

  13. Benefits of Saving • All educational options left open, regardless of cost • Reduces or eliminates the need to borrow • Spreading the cost of college over time, minimizes the impact on your lifestyle during the years you pay for college

  14. Benefits of Saving(Continued) • Minimum impact to financial aid needs analysis • Family contribution from parents’ assets = 3-5.64% • Family contribution from student’s assets=20%

  15. Direct Loan(Subsidized and Unsubsidized) • Subsidized: Must demonstrate “need” • Interest rate: 6.8% (2012-2013) • Politics! • Unsubsidized : Need is not a consideration • Interest rate: 6.8% (2012-2013) • All graduate and professional school direct loans are unsubsidized

  16. Direct Loan Subsidized • No interest or principal payments while student is in school and for 6 months after graduation. • Federal government pays interest while student is in school and for 6 month grace period. • Delayed repayment and deferment provisions.

  17. Direct Loan Unsubsidized • Only principal is deferred, interest accrues • Federal Government does not pay interest while student is in school • Interest rate is 6.8%

  18. Federal PLUS Loan • Borrowers are parents of dependent undergraduate students. • Loan limits • Annual limit: cost of attendance less other aid • Aggregate limit: none • Fixed interest rate • 7.9% Direct Loan • 3 % Origination fee, 1% Default fee

  19. Federal PLUS Loan(continued) • Interest is charged on Direct PLUS Loans during all periods, beginning on the date of your loan's first disbursement • Choice of making payments while the student is in school or deferring payments until after graduation • If you choice not to pay the interest monthly, it is capitalized no more than 4 times per year

  20. “I need more help!...” • Federal Student Aid Center - FAFSA Processing: 1-800-4-FEDAID • College Scholarship Service - Profile Processing: (305) 829-9793

  21. “I need more help!…” • Each college’s financial aid office • Online net price calculators • Your high school guidance office

  22. Computer Resources • www.fafsa.ed.gov - FAFSA on-line • www.ed.gov/finaid.html - U. S. Dept. of Education • Profileonline.collegeboard.com - Profile on-line • www.finaid.org - great all around information page; includes links to free scholarship searches. • www.fastweb.com – free scholarship searches

  23. And your last (but not least!) source... • CONTACT ME! • E-Mail:susan.gudin@yale.edu • Phone:(203) 785-2645

  24. I’ll be here for a while for any questions... Thanks for your Attention!!

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