College Financing 101:
Understanding Your Award Letter
Presented by: Steve Wynne
Presented By: Tracie McGetrick
Account Executive – Client Relations and Education
Strategic Partnerships
Award letter questions?
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Definitions
• Award Letter
–
Also referred to as a financial aid package and contains the cost of
attendance and any financial aid offered to the student by the school
• Cost of Attendance (COA)
–
The cost set by the school to cover student expenses, which includes
tuition, fees, books, rent, food, misc. expenses, etc.
• Financial Aid
–
The offering of scholarships, grants, federal work study and loans to assist
a student in meeting the cost of attendance
Award letter questions?
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Scholarships
Scholarships – amounts vary – begin as early as 11th grade
• Awarded based on need or merit
• Awarded for a variety of reasons: academics; sports; extracurricular activities; community service; hobbies; writing skills
Resources include
• High School Guidance Counselor
• On-line Search Engines
– Fastweb.com
– Finaid.org
– College board.org
• iPhone and Android app (New – as seen on Shark Tank)
– Scholly
Award letter questions?
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Scholarship Tips
• Follow all instructions
• Use Reference Letters
• Highlight Any Community
Involvement and Charity
Work
• Include Job History
• Essays = TEE: Time Energy
and Effort
• Beware of scams!
Award letter questions?
Visit www.studentchoice.org/scholarhelp
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Top 5 Scholarship Mistakes
1. Only applying for private scholarships
 In every state, there are local scholarships that are awarded based on
the residency of a student.
 41 of 50 states offer (CT, LA, ME, MI, MS, NE, NH, NM, WV)
2. Applying for too few scholarships
3. Not following instructions and other application mistakes
4. Not paying attention to deadlines
5. Looking for scholarships for only a few weeks
Source: StudentScholarshipSearch.com
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Financial Aid Overview
We’ve applied…
We’ve been accepted…
Now what?
Award letter questions?
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How Does it All Begin?
The only way to access most financial aid
is by completing
the FAFSA
(Free Application for Federal Student Aid)
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FAFSA Process
FAFSA - Free Application for Federal Student Aid
• Begin as early as January 1st of upcoming current school term
through June 30th of ending school term. Check with your State
and college for additional deadlines
• Submit application on-line (99%) at www.fafsa.ed.gov
– or through the mail (not recommended)
• Must apply annually
Beware of scams!
Award letter questions?
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FAFSA Process
• Submit the FAFSA
–
–
Online 2-3 weeks to process
Paper 4-6 weeks to process
• Student receives SAR (Student Aid Report)
–
–
Summarizes info on FAFSA
Provides EFC (Expected Family Contribution)
• School receives ISIR (Institutional Student Information Record)
10 to 14 days after FAFSA submitted
–
–
Summarizes information on student’s FAFSA
All schools listed on FAFSA receive ISIR School uses information coupled
with application to determine student’s financial need and creates an
award letter
Award letter questions?
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FAFSA Process
• School sends Award Letter to student
–
–
–
Financial aid award package
Sent directly to student
Review and decide which awards to accept
• Unmet need
–
–
–
–
–
–
–
Savings Account
College Savings Plan
Home Equity Line
Credit Cards
401K
PLUS Loans
Private Loans
Award letter questions?
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YOUR AWARD LETTER
Award letter questions?
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Award Letter Types
By System
By Mail
By Email
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Types of Financial Aid
• Scholarships and Grants
• Federal Work Study
• Federal Perkins Loan
• Federal Direct Loans
– Subsidized
– Unsubsidized – not an award
• Federal Direct PLUS Loans – not an award
Award letter questions?
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Scholarships and Grants
• Free money from the government, state, and/or institution
• Does not have to be repaid
• Grants may have an obligation associated with acceptance; failure
to meet obligation may require grant to be repaid
• Awarded based on need or merit
– Federal Grants based primarily on financial need
• Awarded for a variety of reasons:
– Academics, sports, extra-curricular activities, etc.
Check with the Financial Aid Office for
additional scholarships that may be available.
Award letter questions?
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Scholarships and Grants
Verify
• Are you willing to meet the requirements attached to
receiving this aid?
• Is the scholarship/grant renewable; not just made available
for one year, but aid that will be carried over year after year?
• Compare award letters- different schools will award varying
amounts of aid, compare the dollars award to make the right
choice for student and family.
Award letter questions?
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Federal Work Study
• Free money – kind of!
• First come – First serve – Financial Need
• Provides jobs to student with financial need
• Paid at least minimum wage
• Jobs are part time, usually on-campus
Didn’t receive Work Study?
Check with the Financial Aid or Admissions Offices
Award letter questions?
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Federal Perkins Loan
• Loan is in the student’s name,
made through the school’s
financial aid office
• Fixed interest rate of 5%
• Awarded to students with
exceptional financial need
• Once in repayment, pay
school directly
• Maximum annual amount is
$5,500
• Standard repayment term
is 10 years
• Government pays interest while
in school
• Grace period is 9 months
Award letter questions?
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• No origination fee
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Federal Direct Loans
• William D. Ford Federal Direct Loan Program
• Loans are in the students name and funds come directly from the
U.S. Department of Education
• Standard repayment term is 10 years with a 6 month grace period
Award letter questions?
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Federal Direct Loan
Subsidized
Unsubsidized
• Awarded to eligible students
based on financial need
• Awarded to all eligible
students, not based on need
• Government pays interest
while in school
• Students are responsible for
interest, may defer
• Fixed interest rate of 4.66%
plus 1.051% loan fee*
• Fixed interest rate of 4.66%
plus 1.051% loan fee*
*First Disbursement between July 1, 2014 and June 30, 2015
Award letter questions?
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Federal Direct Loan Limits
Subsidized
Freshman
Sophomore
Juniors & Seniors
Award letter questions?
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Unsubsidized
$3,500
$4,500
$5,500
Dependent Student
Freshman
Sophomore
Juniors & Seniors
$5,500
$6,500
$7,500
Independent Student
Freshman
Sophomore
Juniors & Seniors
$9,500
$10,500
$12,500
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Award Letter Example
University of Success
Federal Loan – Subsidized
Federal Loan – Unsubsidized
School Grant
State Scholarship
Federal Work-Study
$3,500
$2,000
$1,500
$1,000
$2,000
Total Award
Cost of Attendance
Remaining Need
$10,000
$20,000
$10,000
Award letter questions?
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How Much Do You Really Need?
Consider:
• Fixed Costs
• Flexible Costs
• Appeals
• Other Income
• Tuition Payment Plans
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Fixed Costs vs. Flexible Costs
Tuition
+
School Fees
$8,000
Total Fixed
$9,000
Total Flexible
$11,000
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$1,000
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Flexible Costs
Total Flexible Costs
$11,000
Total Flexible Costs
$8,750
Rent – ($500 X 10)
Rent – ($400 X 10)
$5,000
Food – ($300 X 10 months)
$3,000
Books - ($200 X 10 books)
$2,000
Personal Expenses - ($75 10 months)
$750
Transportation - (ex: Bus pass @ $25/mo
x 10mos.)
$250.00
$4,000
Food – ($300 X 10 months)
$3,000
Books - ($100 X 10 books)
$1,000
Personal Expenses - ($50 X 10 months)
$500
Transportation - (ex: Bus pass @ $25/mo
x 10mos.)
$250.00
Award letter questions?
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(New) Unmet Need
Fixed
Flexible
Total Costs
$9,000
$8,750
$17,750
Total Costs
Total Award
Remaining Need
$17,750
($10,000)
$7,750
Need reduced by $2,250 (or $225 a month)
Award letter questions?
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Appealing your Award Letter
Reasons to appeal:
• Change in employment/income
• Medical bills
• Divorce
• Disability/death
• High consumer debt
Award letter questions?
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Appealing your Award Letter
Each school will have their own process and procedures. Visit the
school’s website for specific instructions on how to appeal.
– Submit a letter
– Appointment with Financial Aid Office (FAO)
– Telephone interview
Award letter questions?
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Remaining Need
• $7,750 needed over a 10 month period
– $775 month
• Consider other income before borrowing
– Part time job
– Assistance from family members/friends
• Consider school payment plans
– School may offer a monthly payment plan for a small fee
Award letter questions?
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Tuition Payment Plans
A tuition payment plan is a short-term interest-free solution that
takes your school bill and splits it into smaller amounts, payable over
a number of months.
• Plans are offered by most schools
• Sometimes managed through an outside company
• Administered through the campus billing office
• Small semester or annual fees will apply
• Look on your school’s website or contact the financial aid office for your
school-specific details
Award letter questions?
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Tuition Payment Plans
Why use a tuition payment plan?
• Budget first, borrow wisely - before considering any student loan,
families should utilize current income or savings with a payment plan,
or use a payment plan in combination with a student loan
• More time to pay - spreading your tuition payments over several
months, you “pay as you go”
• No interest charges – why take out a loan and pay interest if you can
use a payment plan!
Award letter questions?
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Federal Direct PLUS Loan
• Often listed on Award Letter
• Interest rate is fixed at 7.21%*
• Bridges the gap between education costs and financial aid
• Credit based loan made to the biological, adoptive, or in some
cases a step-parent of a dependent student for the purpose of
meeting the cost of attendance.
• Origination fee of 4.204%
*First Disbursed between July 1, 2014 and June 30, 2015
Award letter questions?
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Federal Direct PLUS Loan
• Limit is the COA less any other Financial Aid
• Payments begin 60 days after first date of disbursement (can
request deferment)
• No prepayment penalty
• Dependent students whose parent is denied may qualify for
additional Federal Direct Loan limits
Award letter questions?
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Private Loan Options
What to Consider:
• Borrower Benefits
• Rate
• Index – Prime or LIBOR
(difference of about 3%)
• Margin - % added to index
• Floor – Never go below
• Fees
• Origination Fee – 0% to 3%
• What’s in it for me? (W.I.F.M.)
• Co-Borrower Options
• FICO, Debt to Income ratio
• Payment Options
• Full deferment
• Principal & interest
• Good faith payments
• Repayment Terms
• 10 to 25 years
Award letter questions?
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NASA Federal Credit Union Student
Choice Solution
• Line of Credit Structure
• Borrower Benefits
– $75,000 maximum
– 0.25% interest rate reduction
for ACH
• Rates – LIBOR + 3.69% - 4.43%;
• Repayment Terms
Floor 6.00%
– 20 or 25 years depending on
balance at graduation
– Graduated Repayment
Option
• No upfront or backend fees
• Flexible in-school payment
options
– Full deferment (5 years plus 6
mos. Grace)
– Interest Only
– Principle and Interest
Award letter questions?
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Student Indebtedness
• Total student debt has more
than doubled from 2005 to
2012 ($463B to $963B)
• 2013 average borrower debt:
• 4 year Public = $25,000
• 4 year Private = $29,900
(includes federal and private loans from borrowers attending
not-for-profit institutions only)
• 88% of borrowers have less
than $50,000 in total
education debt
Source: The College Board, Trends in Student Aid 2013
Award letter questions?
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Where to Find Information
Start at : NASA FCU Home Page URL
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Where to Find Information
Click over to: CU Student Choice URL
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Thank you for Attending
For more information or for any additional assistance in planning
your college career visit:
http://nasafcu.studentchoice.org/
800-322-8816
Award letter questions?
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Thank you for Attending
Tracie McGetrick
Strategic Partnerships, CU Student Choice
Please contact us with any additional questions.
Submit questions to:
[email protected]
or visit:
www.studentchoice.org/scholarhelp
Presentation Slides:
www.nasafcu.com/NASACenters
www.nasafcu.com/PartnerCompanies
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