It’s no secret that postsecondary education is an investment, but do you find yourself asking how much it will really cost and wondering how you will pay for it? We’ll help you determine the true cost of education after high school and go over all your options for payment – from scholarships and grants to financial aid and student loans. We’ll also cover the topic of timing – when you should begin looking into your options and what to expect from the application process.

1. May 27th, 2014

2. Presented By:
Shonna Prickette –
Training & Development Manager

3. INTRO
Handouts are yours
Sources are sited
Resources used are
cataloged on several
slides at the end
Ask questions!
Goal of today is to
prevent this feeling…

4. Source: Bureau of Labor Statistics; Current Population
Survey, unpublished tables, 2012

5. Source: Carnevale, Anthony P., Jayasundera, Tamara, and Cheah, Ban. (2012). The College Advantage: Weathering the
Economic Storm. Georgetown University: The Center on Education and the Workforce.

6. $$ SAVED MONEY $$
$$ FREE MONEY $$
Scholarships & Grants
$$ BORROWED MONEY $$
Federal or Private Loans

7. Source: Sallie Mae; Go to: http://news.salliemae.com/research-tools/america-pays-2013
for this study & more information on how America pays for college.

9.  Start early, save whatever you can
 It’s not too late to start now
 Keep saving as long as you can
 Change your spending habits
 GET ADVICE ON HOW TO SAVE*
No Need!
It’s already yours!
No need!

10. $100 = Initial Deposit
+ $50 = Monthly Deposit
X .15% = Interest Rate
X 18 = Years of contribution
Balance ($150 gain)

11. $100 = Initial Deposit
+ $50 = Monthly Deposit
X 3% = Interest Rate
X 18 = Years of contribution
Balance ($3800 gain)

12. PRIVATE
INSTITUTIONALSTATE FUNDED

13.  Do your best in school
 SAT/ACT scores are important
 Begin research early – spring junior year
 Look everywhere & keep looking
 Local businesses
 State college funding programs
 On-line Databases

14. Utilize your resources
 Guidance Counselor
 On-line Databases contain info on millions of
scholarships worth BILLIONS of dollars
 Salliemae.com/scholarships
 Studentaid.ed.gov/scholarship
 Careerinfonet.org/scholarshipsearch
 College Financial Aid Office

15.  Fill out as many as you can
 Don’t miss the deadlines
Based on terms of the scholarship
No need! (the best part)

16. Federal Pell Grant
Undergrad, up to $5,730 (2014-2015 award year)
Fed Supplemental Ed Opportunity Grant (FSEOG)
Undergrads with exceptional financial need, up to $4,000
TEACH Grant
 Elementary or secondary school teacher
 Must teach full-time in a designated teacher shortage area
 4 year commitment, up to $16,000
Iraq & Afghanistan Service Grant
 Parent passed away as a result of military service after 9/11

17. Guaranteed employment while you’re in school
On campus – usually work for your school
Off-Campus – usually private non-profit or public agency
You will earn at least minimum wage
Employer must pay you at least once a month, directly
Important considerations:
 Will work interfere with studies or sports commitments?
 Do I want to work while in school?
 Could I get a higher paying part-time job elsewhere?

18. What is a federal student loan?
 Money from the government that’s repaid WITH INTEREST
 Helps you pay for educations expenses at an eligible college,
tech school, vocational school, or grad school
Who gets aid?
 Every student, regardless of age or family income
 Must meet some basic eligibility requirements
 14 MILLION students currently receive aid
How much aid is available?
 More than $150 BILLION is available every year

19. WHY FEDERAL STUDENT LOANS?
 Lower interest rates
 Flexible repayment options
 Longer repayment terms
 Tax-deduction of interest paid
When considering your options to borrow for a
college education, it’s recommended that you
exhaust federal funds before private loans!

20.  KNOW YOUR COLLEGE
 KNOW YOUR EMPLOYMENT OUTLOOK
 UNDERSTAND THE FINANCIAL AID OPTIONS
 KNOW YOUR FINANCIAL AID OUTLOOK

21. COLLEGE AFFORDABILITY & TRANSPARENCY CNTR
 US Department of Education
 www.collegecost.ed.gov
1. College Scorecard
2. College Navigator
3. Net Price Calculator

22.  COLLEGE SCORECARD
 Basic, quick comparison
 Enter the name of the college to see:
 Typical Cost
 Graduation Rate
 Loan Default Rate
 Median Borrowing

23.  COLLEGE NAVIGATOR
 In-depth analysis
 Enter the name of the college to see:
 Tuition, fees, net price, & financial aid
 Faculty & enrollment numbers
 Ethnicity & gender
 Programs, majors, varsity athletic teams
 Crime stats

24.  NET PRICE CALCULATOR CENTER
 Links to Net Price Calculator on college site
 Enter the following info for personalized analysis of
your cost & an estimated financial aid package:
 ACT/SAT scores, GPA, & high school rank
 Student Tax info
 Parents Tax info
 Family Assets

25.  OCCUPATIONAL OUTLOOK HANDBOOK
 Bureau of Labor Statistics
 Guide to career info on hundreds of occupations
 At Bls.gov/oco, search by:
 Highest median pay for 2012
 Projected # of new jobs
 Projected growth rate
 Job Category

26. HOW DOES A LOAN WORK?
 A loan is a borrowing agreement made between
two parties, where one party lends money to another
party who agrees to repay the borrowed money on
specific terms, with interest.
 A loan is made up of 2 components:
 PRINCIPAL = Original amount borrowed
 INTEREST /FEES = Expenses paid by the borrower
Interest is calculated (compounded) monthly. With
student loans, the interest can be paid right away, or
CAPITALIZED (added to the unpaid principal).

27. WHAT IS A “SUBSIDIZED” STUDENT LOAN?
 Subsidized =
 US Dept of Ed. pays the interest while:
o You’re in school ½ time
o During your grace period
o During periods of deferment
 Unsubsidized =
 You pay the interest during ALL periods:
o Interest accrues as soon as the loan is disbursed
o You can choose to pay the interest while in school
o You can choose to capitalize the interest

28. WHAT IS A “LOAN ORIGINATION FEE”?
 Basically, a processing fee
 Some federal loans have origination fees
 Fee is subtracted from the loan amount before
disbursement
o Your loan is $1,000 with a 1% origination fee
o $1000 (amount borrowed) - $10 (1%
origination fee) = $990
o $1000 is the amount you pay back

29. $5000 Principal
- $0 Origination Fee
$5000 Value of Loan
X $0 Interest rate of 5% (Subsidized)
Need to repay, starting Jan, 2019
Loan = No Origination Fee, 5% Interest Rate, Subsidized

30. $5000 Principal
- $50 1% Origination Fee (you get $4950)
$5000 Value of loan
$21.21 Monthly Interest @ 5% (Unsubsidized)
X 54 Number of mths in school & grace period
What you’ve paid by Jan, 2019
Need to repay, starting Jan, 2019
Loan = 1% Origination Fee, Unsubsidized, Interest only payments @ 5%

31. $5000 Principal
- $50 1% Origination Fee (you get $4950)
$5000 Value of loan
$1258 Total of 5% Interest compounded monthly;
capitalized to the principal for 54 months
What you’ve paid by Jan, 2019
Need to repay, starting Jan, 2019
Loan = 1% Origination Fee, Unsubsidized, Capitalized interest @ 5%

32.  HOW MUCH CAN A STUDENT BORROW?
 How much you get depends on:
 Financial Need
 Cost of Attendance
 Enrollment Status (F/T vs. P/T)
 There are limits:
 Annual (per year)
 Aggregate (total)
 The limits depend on:
 Year in school
 Dependant Status

33. FEDERAL PERKINS LOAN:
 Awarded for exceptional financial need
5% Fixed Annual Interest Rate
No Origination Fee
$5,500 per year limit ($27,500 maximum)
 Unsubsidized
 You pay all the interest
 Student is the borrower
Loan is in student’s name
 College is the lender

34. FEDERAL STAFFORD LOAN (DIRECT):
 Largest Student Loan Program
3.86% Fixed Annual Interest Rate
1.072% Origination Fee
 Student is the borrower
Loan is in student’s name –
School determines how much
you can borrow
 US Dept of Education
is the lender

35. SUBSIDIZED STAFFORD LOAN:
 Slightly better terms:
Available to undergrad students
 Must demonstrate financial need
 US DOE pays the interest while in school
UNSUBSIDIZED STAFFORD LOAN:
 Available to undergrad & grad students
 No need to demonstrate financial need
You pay the interest during all periods

36. SUBSIDIZED & UNSUBSIDIZED STAFFORD LOANS:
 BORROWING LIMITS:
 YEAR 1 = $5,500 ($3,500 Subsidized)
 YEAR 2 = $6,500 ($4,500 Subsidized)
 YEAR 3 = $7,500 ($5,500 Subsidized)
 BEYOND = $7,500 ($5,500 Subsidized)
 TOTAL LIMITS = $31,000 ($23,000 Subsidized)

37. WHAT ABOUT THE REST?
$12,000 = Annual Net Cost of Attendance
- $2,000 = Perkins Loan
- $4,500 = Stafford Loan
- $1,000 = Private Scholarships
- $1,000 = Work-Study
= $3,500 = REMAINING BALANCE

38. FEDERAL DIRECT PLUS LOAN:
 Used to borrow the remainder of cost
 Parent is the borrower
Approval based on credit history
 No need to demonstrate financial need
6.41% Fixed Annual Interest Rate
4.288% Origination Fee
Borrow up to 100% of cost of attendance
 No aggregate limits
 Unsubsidized
 US Dept of Education is the lender
 Loan cannot be transferred to student

39. SALLIE MAE SMART OPTION STUDENT LOAN:
 Used to borrow the remainder of cost
 Student/Co-Signor is borrower
Approval based on credit history
 No need to demonstrate financial need
5.75-12.88% Fixed Annual Interest Rate
2.25-9.88% Variable Annual Interest Rate
NO Origination Fee
Borrow up to 100% of cost of attendance – No limits
 Unsubsidized
 Sallie Mae is the lender
 Co-Signor release = Loan can be transferred to student

40.  How much federal aid will we receive?
 Must complete Free Application for Federal
Student Aid (FAFSA) for official eligibility
 Fafsa4caster.ed.gov
 Early eligibility indicator
 For anyone not ready to file an official FAFSA
 Provides an estimate

41.  The FAFSA determines your eligibility for federal
loans, grants, work-study, & some state &
institutional aid.
 It’s the ONLY way to apply for federal student aid
 It’s REQUIRED if you want federal financial aid
 Completed online at fafsa.gov
 Complete ASAP after Jan. 1 of the year you’ll start school
b/c aid might be awarded as first-come, first-served

42.  The Student Aid Report (SAR) summarizes the info
you provided on the FAFSA & will contain your
Expected Family Contribution (EFC).
 SAR is returned 3-10 days after FAFSA is submitted
 Review the SAR carefully to make sure it’s correct
 Colleges listed on your FAFSA will also receive your SAR
 From this point, stay in contact with your college’s aid
office as they will put together your aid package

43. Expected Family Contribution (EFC) is calculated
based on the info you reported on the FAFSA,
according to a legal formula.
 EFC will appear on your SAR
 Income, assets, family size, & # attending college are
considered in the formula
 EFC is used to determine need for federal student aid
• Cost of attendance – EFC = Financial Need

44.  EVALUATE YOUR AWARD
 After admissions letter arrives (April), college will put
together an award package & send an award letter.
 Award letter shows COMPLETE aid package
 Grants, scholarships, work-study from all souces
 Not obligated to accept all aid offered
 Evaluate the award, your need, & compare it to other
colleges. Then decide which to accept.

45.  WHAT CAN YOU USE STUDENT LOAN MONEY FOR?
 To pay for education expenses at the school that awarded
your loan. Contact the financial aid office with questions.
 Tuition
 Room & Board
 Supplies & Equipment
 Child care expenses
 Transportation
 Personal PC

46.  ACCEPT YOUR AID PACKAGE
 Sign the award letter and return it to the school for
processing.
 The financial aid office at your college will guide you thru the
paperwork which includes signing a promissory note, (you
PROMISE to repay your loans according to the terms)
 College is required to provide entrance counseling

47.  DISBURSEMENT
 Most student loan funds will go directly to the college or
come directly from the college
 You will be paid thru the college in at least 2 installments
(semesters)
 College will use aid money first to pay for tuition, fees,
room, board, and other expenses on your student
account. If any aid money remains, you will receive the
funds by check

48.  CANCELLATION
 Before loan money is disbursed, you may cancel all or part
of your loan by notifying the school.
 After the loan is disbursed, you may cancel all or part of
the loan within certain time frames
 Promissory note will explain procedures for cancelling
loans

49.  MOST STUDENT LOANS HAVE GRACE PERIODS
 Not REQUIRED to make payments while enrolled in school
 Grace periods allow you to get financially settled:
• Perkins = 9 months
• Stafford = 6 months
• PLUS = No grace period
REMEMBER: Unsubsidized loans start to accrue interest as soon as
the loan is disbursed which will be capitalized onto the principal,
unless you choose to pay the interest charges while in school!

50. Student loans are LEGAL obligations!
Student loans are borrowed money (in your name)
that MUST be repaid just like car loans & home
mortgages. You MUST repay a student loan ever if
your circumstances become difficult.
Non-payment of student loans has serious
consequences (legal default on a loan) and will
negatively affect your credit rating.

51.  Standard
Fixed monthly payment, $50 minimum, 10-year term
 Graduated
Monthly payment starts low & increases, 10-year term
 Extended
Fixed or graduated payments
Must have more than $30,000 in Direct Loans
25-year term
 Income Sensitive or Contingent
Income-based repayment options

52.  Loan servicer will give you a repayment schedule:
When first payment is due
Number & Frequency of payments
Amount of each payment
 You will be notified if your servicer changes
 The loan is YOUR responsibility!
Make payments regardless of receiving billing notices
You must pay even if you aren’t getting reminders
Notify your loan servicer when you change your address

53.  National Student Loan Data System:
www.nslds.ed.gov
Dept of Ed’s central database for student aid
Access & retrieve your student loan data
 Repayment Estimator
www.studentloans.gov

55.  FINANCIAL AID PROCESS INFOGRAPHIC
studentaid.ed.gov/prepare-for-college/checklists/#checklists
 “FUNDING YOUR EDUCATION – Guide to Federal
Student Aid” Document
Studentaid.ed.gov/resources
 Checklists to begin preparing from Elementary school
to 12th grade
Studentaid.gov/prepare-for-college/checklists

56.  Scholarship Opportunities:
– Careerinfonet.org/scholarshipsearch
– Salliemae.com/scholarships
– Studentaid.ed.gov/scholarship
 College Scorecard, College Navigator, and Net
Price Calculator
– Collegecost.ed.gov
 Labor Statistics Occupational Outlook Hndbk
– Bls.gov/oco

57.  Free Application for Federal Student Aid
– Fafsa4caster.gov
– FAFSA.gov
 Sallie Mae Smart Option Student Loan
– Contact your financial institution
 National Student Loan Data System
– nslds.ed.gov
 Repayment Estimator
– studentloans.gov