Download Investing in Value - Hinsdale South High

Investing in Value
Financing a College Education
Cost and Value
• What are you hoping to get for the money you
invest?
▫ All college degrees and experiences are not equal
• How do you measure educational value?
▫ What’s important to you and your student?
• What can you afford to invest and what do you
want to invest?
▫ Ability to invest is different than willingness to
invest
A Monthly Commitment
• What type of payment would you be able to
make on a monthly basis from available
resources?
▫ What’s comfortable and how far could you stretch
it if you wanted to?
• How long are you prepared to make those
payments?
▫ Larger investments might be possible by
elongating the payment schedule
Different EFCs
• The EFC calculated by the FAFSA may not be
what colleges expect you to pay.
▫ Merit programs may take you below your EFC
▫ Gapping – a college may not be able to meet your
demonstrated financial need
▫ Some private colleges may establish a different
EFC based on Institutional Methodology
 CSS PROFILE provided by College Board
 Other institutional form
 Net Price Calculators
College A
(FAFSA)
College B
College C
(FAFSA)
(Institutional)
Family EFC
$20,000
$20,000
$25,000
Direct Cost
of Attendance
$25,000
$45,000
$55,000
Aid Offered
$6,000
$23,000
$30,000
(Merit)
(Merit/Grant)
(Grant)
Remaining Cost $19,000
$22,000 $25,000
Scholarship versus Grant
• Scholarships are typically based on some criteria
OTHER than financial need
▫ Academic, artistic, athletic, etc.
▫ Thought of as a reward, but it is actually an incentive
▫ Because it is an incentive, what you are offered in
scholarship will differ from college to college
• Grants are based on financial need
▫ Federal, State and Institutional
▫ May differ from college to college since your need level
will differ according to cost
▫ May change as your need level changes from year to year
Student Loans
• Most common loan is the Federal Stafford loan,
and the typical student can borrow $27,000 over
a four-year period
▫ The average college student spends 250 days in
college per year, or 1,000 days over four years.
▫ That comes out to $27 per day for a student to
have a place to live, eat three meals a day, enjoy a
place to workout, use library and lab resources,
participate in social activities AND receive a
college education.
Loan Tips
• As a general rule of thumb, students should not
borrow more for their undergraduate degree than
what they expect to earn in a starting salary
▫ May differ from major to major
• Pay attention to loan default rates for different
colleges
▫ It may make sense to borrow more for a college
where job placement is high and the loan default rate
is very low versus borrowing less for a college where
job placement is lower and loan default rate is high
Campus Jobs
• Students, even the most involved students, can
still easily fit in time to work a part-time job
▫ Most campus jobs are about 10 hours per week
▫ In high school, students are in school eight hours a
day, activities are on top of that, and a job would
be on top of that
▫ In college, students are in class an average of
about three hours per day, leaving lots of “time
pockets” to fit in a couple of work-study hours
Sample FA Proposal ($8,000 EFC)
Academic Scholarship
Institutional Grant
Explore Grant
Residential Grant
State MAP Grant
Stafford Loan (subsidized)
Stafford Loan (unsubsidized)
Institutional Loan
Total Aid Applied to Charges
Employment Opportunity
$12,000
$10,083
$1,000
$2,500
$4,720
$3,500
$2,000
$2,000
$37,803
$2,400
Tuition, Room, Board & Fees
$48,482
Remaining Cost w/out job
$10,679
Sample FA Proposal ($40,000 EFC)
Academic Scholarship
Explore Grant
Stafford Loan (unsubsidized)
$12,000
$1,000
$5,500
Total Aid Applied to Charges
$18,500
Tuition, Room, Board & Fees
$48,482
Remaining Cost
$29,982
Assessing the FA Proposal
• You can accept or decline any part of a financial aid
proposal
• Make sure you understand what each item is (e.g.
gift aid versus loan), and whether or not it is
renewable each year
• If it is renewable, make sure you understand the
renewal process (e.g. GPA, filing status, etc.)
• Be aware of any packaged PLUS loan (Federal
Parent Loan for Undergraduate students)
▫ PLUS can be a helpful resource, but you don’t have to
take out the maximum
Sample FA Proposal (with PLUS)
Academic Scholarship
Institutional Grant
Explore Grant
Residential Grant
State MAP Grant
Stafford Loan (subsidized)
Stafford Loan (unsubsidized)
Institutional Loan
Federal PLUS Loan
Total Aid Applied to Charges
Employment Opportunity
Tuition, Room, Board & Fees
Remaining Cost w/out job
$12,000
$10,083
$1,000
$2,500
$4,720
$3,500
$2,000
$2,000
$10,679
$48,482
$2,400
$48,482
$0
Comparing FA Proposals
• Make sure you are comparing “apples to apples”
▫ Total gift aid to gift aid
 Renewable versus non-renewable
▫ Total loan to total loan
 Student versus parent
▫ Remaining Out-of-Pocket
 May need to factor in graduation rates
 May need to factor in difference for travel or cost of living
▫ Packages may be different from college to college, but
should be some similarities
 Should be getting PELL grant at any college
 Stafford loan total for first year should be $5,500
Appealing the FA Proposal
• A financial aid officer will typically not change a
proposal simply because another college is
offering more or asking for a lesser contribution
▫ Nothing wrong with asking, but should do so
tactfully
• Every college can use institutional judgment
based on extenuating circumstances or
upcoming changes to the family financial picture
▫ Make a phone call or send an email
▫ Don’t assume the extenuating circumstances you
listed on the FA forms was already factored in
Paying the Balance
• Find out what the payment options are and if there are
any additional fees for different plans
• You may be able to benefit from using a credit card
with a rewards program, but ask about additional fees
and pay your credit card balance every month!
• If there is a gap between what you feel you can pay on
a monthly basis and what you actually owe, investigate
ways to bridge that gap that make sense
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Outside scholarships
PLUS loan
Home Equity Loan
Additional Student Loan
Final Word
• Students who attend their “best fit” school are more
likely to graduate on-time, have a higher GPA, and
experience greater post-graduate success
• Nothing wrong with setting performance expectations
for the student if he or she is attending a college that
requires a “stretch” investment
• Students who play an active role in helping finance
their own education are more likely to put forth
greater effort in making the most of the opportunity