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Presented By: Michael Lopata CPA, CCPS

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Presented By:

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Paying for college is the most complex

financial transaction a family will make. More

complex than buying a house. More complex

than getting a car loan. The reason is the

escalating costs accompanied with the variety

of systems that must interact to get to the

difference between price and cost.

Dr. Joseph Moore, President of Lesley

University

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The federal government provided 67% of all student aid in 2000-01 and 2006-07 and 73% in 2011-12. 70.8 34.5 32.8 16.4 13.4 9.8 6.6 1.1

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Funding Source

Dollars

(Billions)

Student Aid 2011-2012

Federal Loans Federal Pell Grants Institutiional Grants Education Tax Credits Federal Grants

State Grants

Private/Employer Grants Work Study

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Based on a "needs analysis" formula

COA – EFC = Need – Resources = Adj. Need

Example:

COA (Cost of Attendance)

$20,000

EFC (Expected Family Cont.)

-12,000

Need:

=

$ 8,000

Resources (Scholarship)

- 2,000

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FEDERAL METHODOLOGY

• Used to determine eligibility

for Title IV federal aid

FAFSA

• Principally used by state,

community, trade and

regional private colleges

• Includes resources of one

parent group and the student

• One uniform application

without special

circumstances

• No offsets for medical

expenses or private school

tuition

• Often integrated with state

programs*

INSTITUTIONAL METHODOLOGY

• Used to determine eligibility for

selective institutional aid

CSS Profile

• Includes resources of younger

siblings and relatives

• Several options for NC parent

contribution (noncustodial)

• Customized application

• Offsets standard for unusually high

medical expenses and private school

tuition

• Limits assessment on earnings of

students from low income

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Annuities

Life insurance

Retirement accounts

Unexpended financial aid

Personal items

Restricted bank accounts

Personal residence (IM will assess)

◦ Second or vacation residences are assessed

Family farm (IM will assess)

◦ Family farm corporations, partnerships, etc., are not assessed

◦ Investment farms are assessed

Siblings’ assets (IM will assess)

Businesses with less than 100 full-time employees

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Employer education assistance plan (resource)

Loan proceeds

Rollovers

Food stamps

Gifts and support, other than money

Gifts paid to college for tuition (resources)

Contributions to or payments from flexible spending

accounts, including MSAs (IM will assess)

Federal and state disaster funds

Insurance used for reimbursement of loss

Financial aid proceeds

QTP withdrawal

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School “B”

Cost: $20,000

- EFC: $5,000

Need $15,000

100% of need met

Gift Aid – 80%

Self Aid – 20%

60% of need met

($9000) - $6000 short!

Gift Aid – 50%

Self Aid – 50%

EFC: $5,000

+Unmet Need: $0

Total Cost:

$5,000

Total Gift: $28,000

Total Self: $7,000

School “A”

Cost: $40,000

- EFC: $5,000

Need $35,000

EFC: $5,000

+Unmet Need: $6,000

Total Cost:

$11,000

Total Gift: $4,500

Total Self: $4,500

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The FAFSA (Free Application for Federal Student

Aid)

www.fafsa.ed.gov

FAP (Financial Aid Profile)

http://student.collegeboard.org/css-financial-aid-profile

The 568 Presidents’ Group - Consensus

Methodology

www.568group.org

College’s own institutional forms

Other Forms:

Business/Farm supplements

Divorce/Separated Agreements

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Appeal A formal request to have a financial aid administrator

review your aid eligibility and possibly use Professional

Judgment to adjust the figures.

Asset Protection Allowance A portion of your parents' assets

(or Independent Student) that are not included in the

calculation of the parent contribution.

Expected Family Contribution (EFC) The amount of money

that the family is expected to be able to contribute to the

student's education.

Federal Methodology The need analysis formula used to

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Gapping The practice of failing to meet a student's full

demonstrated need.

Institutional Methodology (IM) If a college or university

uses its own formula to determine financial need for

allocation of the school's own financial aid funds, the

formula is referred to as the Institutional Methodology.

Leveraging The controversial practice of figuring out

how much it will take to attract such students and

customizing aid offers to optimize the quality of the

incoming class.

Need Cost of Attendance (COA) - Expected Family

Contribution (EFC) = Financial Need

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Determining Majors and Degrees

Target outcome

> Income potential, market demand, geographic opportunities

Desired majors

> Joint, major and minor, compatible, transferable

Years to completion

>Certificate, Technical, Associates, Bachelors, Masters, MBA,

JD, PhD, MD

ACT study found that more students are expressing a desire to enter

certain fields than there are positions while other high need occupations

have more positions than students desiring to enter.

Pay scale College ROI Report

PayScale has ranked more than 850 U.S. colleges (for both in and

out-of-state tuition when applicable) by their college tuition ROI - what you

pay to attend versus what you get back in lifetime earnings.

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Colleges in the blue are colleges a student may want to consider applying to their honors program. There are many perks for the honors group plus

funding will be very good. A good but not necessarily complete list of colleges with honors programs can be found on the following link. Honors

Programs HONORS PROGRAMS. Parents Note: Call the college

admissions department or double check the colleges website to see if a honors program exist as not all colleges have honors programs. Colleges identified by red type with a red asterisk are approximately one of the 60 colleges that offer 100% funding of the need formula. Remember the formula is: Cost of Attendance Minus the expected family contribution equals the need. Some of these need based only colleges do offer merit aid but only to a very, very small percentage of the incoming freshman class.

Colleges below the blue section represent colleges that could be too easy and a waste of your time. The money the colleges would invest in you would be good but the time spent here would not be challenging and therefore be a potential waste of your time.

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Swarthmore College

91.3%

Vanderbilt University

86.5%

Emory University

82.5%

Rhodes College

71.1%

Spelman College

70.4%

University of Delaware

64.0%

University of Georgia

54.4%

University of Tennessee

33.8%

Georgia Southern

19.9%

University of Memphis

11.1%

Savannah State

9.1%

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Merit Based

Athletic

Academic

Music

Other Talents

Need Based

College Specific

Local Scholarships

Guidance Counselors

Charitable Trusts

Non Profits

Chamber of Commerce

Volunteer Organizations

Trade Unions

Places of Worship

Career Specific

Nursing

Education

Student Specific

Minority

Religious

Family History

Medical History

Other Student Specific

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College Loans

Federal Subsidized and Unsubsidized Stafford Loan

Federal Perkins Loan

Federal Plus Loan

College’s own loan program

Personal Residence Loans

Margin Account Loans

Retirement Account Loans

Life Insurance Loans

Private Loans

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ABILITY (IQ):

Academic Record (AR)

Cumulative GPA

Curriculum (AP, honors,

science/math, foreign

lang.)

Class rank (rankings)

Standardized Tests (ST-

rankings)

PSAT (NMSQT), SAT

Reasoning

ACT, SAT Subjects

Special Skills (SS)

Athletic

Music

Others

MOTIVATION (EQ):

Academic History (AH)

Absences and details

NHS & merit

Recommendations

Extracurricular Activities (EA)

Employment

Volunteerism

Yield Enhancement (YE-

rankings)

Visits and relativity

Special Circumstances (SC)

Adversity

Diversity

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Colleges in the orange are the most competitive colleges from your college search based on the comparison of the colleges standardized scores as compared to your standardized scores. Admissions to these colleges can be accomplished but funding by the college will not be there for the family. These colleges could also represent institutions were the student becomes overwhelmed and slip into serious stress. Adding to the last two points plus the lack of investment in the student by the college can make the overall selection of the college as less than desirable.

Colleges in the yellow are colleges a student should readily get admitted to. The good funding starts here in the yellow colleges. The combination of the admissions and some good funding will make this list of colleges more

desirable than the Orange set.

Colleges in the green are colleges a student should also readily get admitted to. This group also represents colleges that you should academically and socially excel at. This group of colleges will also represent colleges who

should offer the best funding in the form of merit aid and better than average need based aid. We would like you to have at least three colleges in the

green in the six to ten colleges that you apply to in the fall. Remember “three in the green” for the best overall results academically and financially.

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Colleges in the blue are colleges a student may want to consider applying to their honors program. There are many perks for the honors group plus

funding will be very good. A good but not necessarily complete list of colleges with honors programs can be found on the following link. Honors

Programs HONORS PROGRAMS. Parents Note: Call the college

admissions department or double check the colleges website to see if a honors program exist as not all colleges have honors programs. Colleges identified by red type with a red asterisk are approximately one of the 60 colleges that offer 100% funding of the need formula. Remember the formula is: Cost of Attendance Minus the expected family contribution equals the need. Some of these need based only colleges do offer merit aid but only to a very, very small percentage of the incoming freshman class.

Colleges below the blue section represent colleges that could be too easy and a waste of your time. The money the colleges would invest in you would be good but the time spent here would not be challenging and therefore be a potential waste of your time.

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Rank College Name State Student SAT(1600 Point System) College SAT 25% Bottom Fourth College SAT Mean Average College SAT 75% Top Fourth

1 Georgia State University GA 1360 1000 1095 1190

2 Mercer University GA 1360 1060 1160 1260 3 Rollins College FL 1360 1095 1187 1280 4 University of Georgia GA 1360 1120 1215 1310 5 Elon University NC 1360 1130 1225 1320 6 St. Louis University MO 1360 1080 1205 1330 7 Rhodes College TN 1360 1190 1285 1380

8 Wake Forest University NC 1360 1250 1330 1410

9 Georgia Institute of Technology GA 1360 1260 1355 1450

10 Emory University GA 1360 1280 1375 1470

11 Washington University in St. Louis MO 1360 1400 1470 1540

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Financial Aid Diagnostic Test

Financial Aid Part II

Applying the lessons from Financial Aid Part 1.

A strategy that can increase financial aid awards by

15%.

Ways to create competition amongst colleges.

A deeper look into financial aid award letters.

FAFSA and CSS/Profile tips

) www.fafsa.ed.gov http://student.collegeboard.org/css-financial-aid-profile www.568group.org http://www.payscale.com/college-education-value/

References

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