Understanding Financial Aid Awards and Communicating with Financial Aid Offices

Welcome to
Understanding Financial Aid
Awards and Communicating
with Financial Aid Offices
Presented by the
National Association for
College Admission Counseling
Wednesday, April 15, 2009

1 • www.nacacnet.org

Today’s Agenda
•  Financial aid award letters
•  Comparing financial aid award letters among
schools
•  Prospects for standardization of award letters
•  Communicating with financial aid offices
•  Counseling considerations in the current
economic climate


Today’s Presenters
•  Cedrick Andrews, Policy Associate,
The Institute for College Access and
Success (TICAS)
•  Youlonda Copeland-Morgan,
Associate Vice President for Enrollment
Management and Director of
Scholarships and Student Aid, Syracuse
University

Today’s Presenters, cont.
•  Barbara Hall, Senior Consultant, Murray &
Associates and the National Center for
College Costs, and former Guidance
Director and College Counselor at Bishop
Dwenger High School, Fort Wayne, IN
•  Tim Christensen, Specialist on College
Access and Success (moderator)


Components of Financial Aid
Award Letters
•  Award letters are not standardized, so
not all will contain each of these
components
•  Cost of attendance (COA)
–  Tuition and fees
–  Room and board
–  Books and supplies

Award Letters, cont.
•  Cost of attendance (COA), cont.
–  Health insurance/fees
–  Transportation
–  Personal


•  Cost of attendance (COA), cont.
–  May also include:
•  Dependent care
•  Study abroad expenses
•  Disability expenses
•  Employment expenses for co-op study
•  Loan fees


•  Take-away: Chapter on “Cost of
Attendance (Budget) in the 2008-2009
Federal Student Aid Handbook at
http://ifap.ed.gov/sfahandbooks/
attachments/
0809FSAHbkVol3Ch2Oct14.pdf


•  Possible issues with cost of attendance
–  Definitions of components not standardized
–  Cost categories not standardized
–  May not include all costs
–  May not be based on actual costs or may
not be most recent data


•  Expected family contribution (EFC)
–  Derived from information reported on Free
Application for Federal Student Aid
–  Generally consistent from school to school


•  Expected family contribution (EFC),
cont.
–  May be increased by CSS Profile at some
schools
–  EFC may not be the total family
contribution
•  Loans and work-study earnings are also a
contribution from the family

•  Financial aid
–  Gift aid
–  Self help aid
•  Need-based and non-need based federal loans
•  Work-study employment
•  Private (non-need-based) loans


•  Gift aid
–  Grants and scholarships
–  May come from federal, state, or
institutional sources
–  May be need-based or merit-based


•  Gift aid, cont.
–  Does not have to be repaid as long as
recipient meets requirements
–  May or may not be renewable


•  Federal need-based loans
–  Perkins
–  Subsidized Stafford
•  Features of need-based loans
–  Low interest rates
–  Delayed repayment
–  In-school interest subsidy


•  Federal non-need based loans
–  Unsubsidized Stafford
–  Parent PLUS
–  Grad PLUS


•  Federal non-need based loans, cont.
–  Higher interest rates
•  6.8 percent fixed rate for unsubsidized
Stafford
–  Interest accrues during school and deferments
–  Payments on PLUS loans are due while the
student is in school


•  New repayment options are becoming
available for most federal student loans
–  Income-based repayment
–  Public service loan forgiveness


•  Take-away: Income-based repayment
and public service loan forgiveness site
at www.IBRinfo.org


•  Work-study employment
–  Must be willing to work during
academic year
–  Provides work experience
–  Research shows 10-15 hours/week
may have academic benefit
–  May reduce loan burden

•  Take-away: The financial aid chapter in
NACAC’s Guide to the College Admission
Process at
http://www.nacacnet.org
/PublicationsResources/Marketplace/Pages
/AdmissionGuide.aspx


•  Take-away: The National Association of
Student Financial Aid Administrators’
“Student Aid Program Summary,” accessible
from
http://www.nasfaa.org/redesign/fanight.asp


•  Private Loans
–  Not really financial aid but a financing tool
like a home equity loan or credit card
–  Less available due to credit crunch


•  Private Loans, cont.
–  Only used as a last resort after other
financial aid options
–  Should have co-signer and be school
certified for best interest rates and terms


•  Take-away: The Institute for College
Access and Success, Project on
Student Debt’s “Questions to ask about
private loans” at
http://projectonstudentdebt.org/
private_loan_questions.vp.html


•  Unmet need or “gapping”
–  May need to find alternative financing, such
as a private or home-equity loan
•  Always give federal loans priority over private
loans and credit card debt
–  May be able to reduce expenses instead of
taking on private debt


Comparing Financial Aid Award
Letters Among Schools
•  Why aid packages differ from institution
to institution
–  Cost of attendance
•  Both categories and amounts may vary
–  EFC
•  May differ if institution is a CSS Profile user


Letters Among Schools, cont.
•  Why aid packages differ from institution
to institution, cont.
–  Fund availability
–  Institutional awarding policies


•  May be useful to subtract gift aid
from cost of attendance
–  Difference may be met by a
combination of self-help aid (loans and
work) and EFC
•  May be useful to aggregate grants
vs. work-study vs. loans

•  Loan terms
–  May not be stated on award letter
•  Amount of unmet need or “gap”


•  Future aid packages
–  Renewability
–  Changes in proportion of grant vs. loan in
subsequent years
–  Probably not stated on award letter


•  Ideal (for student) treatment of outside
scholarships
–  First—meeting unmet need
–  Then—reducing self help
–  As a last resort—reducing grant (but never
Pell Grant)


•  Take-away: NACAC’s “Student
Bulletin: Understanding Your
Financial Aid Award Letter” at
http://www.nacacnet.org/
PublicationsResources/Marketplace/
Documents/LateHS.pdf


•  Non-financial considerations to bear
in mind
–  School’s academic programs
–  School type and size
–  School’s culture and demographics
–  The best aid package may not be the
best school choice overall

Prospects for Standardization of
Financial Aid Award Letters
•  Steps Congress and the U.S.
Department of Education are pursuing
•  Steps institutions could take now
–  Prominently display most important and
useful information
–  Include straightforward instructions and
helpful resources

Financial Aid Award Letters, cont.
•  Steps institutions could take now, cont.
–  Include complete estimate of COA
–  Clearly distinguish gift aid from self help
and provide bottom line cost
–  Avoid jargon, acronyms and unexplained
terms


•  Steps institutions could take now, cont.
–  Encourage wise borrowing by disclosing
loan terms and conditions
–  Distinguish between costs the school will
bill the student for and those the student
will have to pay on his/her own


•  Take-away: Mark Kantrowitz’s editorial
on standardization of award letters in
Inside Higher Ed at
http://www.insidehighered.com/views/
2007/06/22/kantrowitz


Communicating with Financial
Aid Offices
•  Responsibilities of the aid office
–  Counseling
–  Need analysis
–  Awarding
–  Monitoring
–  May also have job placement and veterans
affairs responsibilities

Aid Offices, cont.
•  What financial aid administrators do
–  Helping professionals and experts on
student financing
–  Multiple constituencies to serve
–  Stewardship of taxpayer and institutional
dollars
–  Compliance with multiple agencies’ rules

Aid Offices, cont.
•  Electronic communication
–  Email is good for routine correspondence
–  Do not encourage sending confidential
information via email, but it’s done
•  Telephone
–  Better for confidential conversation and
persuasion, but write instead if it’s hard to
get through

Aid Offices, cont.
•  Written communication
–  On-the-record (as is email)
–  When documentation is desired or required
•  When a visit is desirable or necessary
–  May wish to cultivate a relationship if
circumstances are complex
–  May be required if other communications vehicles
are not effective


Aid Offices, cont.
•  Proactive strategies
–  Inform the aid office of outside awards
as soon as they are known
–  Inform the aid office of any changes in
the family’s circumstances as soon as
they occur


Aid Offices, cont.
•  The appeals process
–  Appealing vs. negotiating awards
•  Most institutions will not negotiate, but
some will—so ask away
•  Preparing for an appeal and presenting
the case
–  Documentation
–  Be sincere and polite, not angry


Aid Offices, cont.
•  Appeals and professional judgment
–  Professional judgment is authority to adjust
EFC due to exceptional circumstances
•  Unemployment or reduced employment
•  Student’s decision to leave workforce or reduce
hours to return to school (adult student)
•  Costly medical situations
•  Home foreclosure
•  Other

Aid Offices, cont.
•  Professional judgment, cont.
–  Often requires third-party documentation
–  Professional judgment is subject to certain
statutory limitations
•  Special circumstances that distinguish one
student from a class of students
•  No automatic categories of professional
judgment

Aid Offices, cont.
•  A final word on appeals
–  Aid office workloads have increased;
staffing has not
–  Expect longer turnaround times on appeals


Aid Offices, cont.
•  Take-away: Recent guidance on
professional judgment from the U.S.
Department of Education at
http://www.ifap.ed.gov/dpcletters/
GEN0904.html


Counseling Considerations in the
Current Economic Climate
•  Practically speaking, there is nothing
going on that can’t be dealt with
–  Eligibility may increase, particularly for
Pell Grants
–  Students may become eligible for
subsidized federal loans


Current Economic Climate, cont.
•  Counselors can help families manage
expectations
–  Institutional funds may be exhausted
–  All awards have a ceiling, either by rule
or policy
–  There isn’t enough money in the world to
provide a safety net for all

•  On an emotional level, counseling is
much more challenging
–  Family circumstances may be dire
–  Be prepared to refer families to appropriate
financial and social services agencies and
help them access services


•  On an emotional level, counseling is
much more challenging
–  Be sympathetic, but also maintain appropriate
emotional detachment
–  Review and adhere to NACAC’s “Statement of
Principles of Good Practice”


•  Take-away: NACAC’s “Statement of
Principles of Good Practice” at
http://www.nacacnet.org/AboutNACAC/
Policies/Documents/SPGP.pdf


Q&A
•  Continue to submit questions via e-mail
•  We will select those questions with the
broadest applicability
•  An archive of today’s Webinar will be posted
on the NACAC Web site approximately one
week from today
•  Thank you for participating in “Understanding
Financial Aid Awards and Communicating
with Financial Aid Offices”!

Understanding Financial Aid Awards and Communicating with Financial Aid Offices

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