Cost of Education to you
During the 2003-04 academic year, college tuition and fees increased an average to you
$579 at four-year public institutions, or 14.1%
$1,114 at four-year private institutions or 6.0%
$231 at two-year public institutions or 13.8%
Total charges, including room and board, increased 9.8% for public institutions and 5.7% at private institutions (both due to a lower rate of increase in room and board).
The average cost for tuition, fees, room and board at a four year public institution averaged $10,636 in 2002-2003. The average cost for tuition, fees, room and board at a four year private institution averaged $26,854 in 2002-2003. Although rates have increased, they do not represent a trend of accelerated rate increases.
Financial Aid
Financial aid to students is growing. In 2002-03, $105 billion was distributed in student financial aid, $13 billion more than distributed the previous year.
Total aid per full-time equivalent student averages about $9,100, with $3,600 of that amount in the form of grants.
Grant aid per full-time equivalent (FTE) student grew $300 or 9 percent this year, compared to a $551 or 13 percent increase in loans per FTE.
GovernmentAid
Pell Grant funding rose by 15 percent in inflation-adjusted dollars. However, the average Pell Grant increased only 3 percent, providing an additional $123 per recipient. The $2,421 average Pell Grant covers less than 30 percent of average total charges (tuition and fees, room and board) at public four-year colleges and universities, while the maximum Pell Grant covers 41 percent of these charges.
While most federal grant aid is need-based, a decreasing portion of federal 'from all sources' aid is distributed according to need. Combined, unsubsidized Stafford loans, federal loans to parents and tax credits now make up 43 percent of total federal aid.
Institutional Aid
Institutional grants account for nearly 20 percent of student aid. These funds have more than doubled over the past decade and make up about 62 percent of the grant aid that undergraduates at private colleges receive, and over a quarter of the grant aid used by those attending four-year public institutions.
Identifying Financial Need and Awarding Financial Aid
If you will need financial aid to attend college, be attentive to the financial aid policies of schools you are interested in attending. In some cases, there are schools that will not consider your request for financial aid unless you apply for financial aid at the same time that you apply for admission. Be sure that your financial aid application arrives on time.
Calculating Need
The financial aid office will open a case file for you and perform the following analysis. First, they will calculate the cost of your college education for the upcoming year. That dollar amount is your 'cost of education'. Second, your 'family contribution' will be calculated based upon the FASFA (free application for federal student aid) and, if a private college, usually the CSS Profile (College Scholarship Service) and tax returns. The gap between the cost of education and family contribution is your 'demonstrated need'.
Once the financial aid department identified the 'demonstrated need', they begin to develop a financial package to offer you. Some schools notify you of your financial aid award at the same time that your receive your admission decision. Others send the financial aid award letter after your admission decision letter. Some schools are able to offer incoming students with financial need a complete financing package that covers the total cost of education. Other schools cannot cover the whole cost and leave a 'gap' that must be filled through other sources such as outside loans, etc. According to the National Association of College Admissions Counselors, 23% of all colleges close the "gap" based on the academic desirability of a student.
Closing the 'Gap'
The financial aid office fills in the gap in the following order:
Self-help funds in the form of work-study and loans. The area of loans for school is beyond the scope of this book. However, you should be aware of how these loans work. Go to www.ed.gov/DirectLoan/students.html for complete information or check with the financial aid office of your college.
Federal Pell Grant or state grants may be available for students with very significant financial need.
Institutional funds
If there continues to be an unmet gap, (73% of the cases), the family will typically turn to Parent Plus loans, alternative student loans and/or scholarships to make up the difference.
Impact of Scholarships on Financial Aid
Scholarships are an excellent way top fill the gap between your need and the college financing package. However, financial aid from all sources may not exceed the calculated cost of education. Consequently, if you have $2,000 in scholarships and your college offers you a full package without a gap or the gap is only $1,000, you have an extra $1,000 that will have to be reconciled.
Many colleges allow students to use scholarship funds in excess of calculated need to reduce the amount of loans taken. Other schools reduce their institutional grants on a 1:1 basis with scholarship awards, thereby destroying the incentive to seek awards. Other schools use a phased approach where, for example, the first $500 in scholarships reduces loans and any amount over $500 is equally split between reducing loans and reducing institutional grants.
You must check with your school to see what their policies are regarding outside funding. In most cases, scholarships will decrease the overall cost of going to college.
There is also a certain amount of flexibility in financial aid packages. So, if you think that your family's financial need isn't completely represented by the usual financial analysis, make an appointment with a financial aid counselor to review your specific situation. There may be an opportunity to substitute more institutional grants for loans or find other creative ways to improve your package.
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