Modesto Junior College
Creative College Financing 2/21/13Note: All information, facts, and figures are “ballpark” and subject to change. Financial Aid Terms and KeywordsFAFSA - Form which must be completed for most financial aid – deadline varies by school, typically around March 1 for UC, CSU, and JC, but may be earlierEFC (Expected Family Contribution) – Amount FAFSA reports that your family “ought to be able” to pay. Colleges use this number to compare financial need of various students.Demonstrated Need - the difference between a school's tuition, room, board costs and your EFCKey phrase: "ABC University guarantees that it will meet the demonstrated need of all accepted students." Question: How much of the aid is loan?Note: Some colleges count room & board as a cost, but do not count car expenses as a costNet Price Calculator – An online calculator which every college/university is required to post on its website. It takes student data (such as income, grades, and scores) and gives an estimate of how much aid the student will receive, based on the previous year.How are Colleges funded?Public Colleges – funded by the state, student fees, and endowmentsPrivate (not-for-profit) colleges – funded by student fees and endowmentsPrivate (for-profit colleges) - funded by student fees and shareholder investments, which must be repaidAccreditation & transferability of units are concerns. Search for "college accreditation" or Aid TypesGrant - generally need-based, does not need to be repaidBOG (Board of Governor's) Fee Waivers (junior/community colleges) – or search for "Board of Governor's Fee Waiver" Based on income only, requirements vary, typically under $40,000Cal Grants (state) - $1500-$11,000 (based on family income and GPA) - GPA & income requirements change from year to yearA (high GPA, income under ~ $42,000 for family of 4)B (mid GPA, income under ~ $42,000 for family of 4)C (technical/vocational schools only, max award ~ $3000)Pell Grants (federal) – $0 - $5500 per year based on cost of attendance, family income, and status (what percentage of full-time)Income requirements vary, typically under $60,000Need-based grants from individual colleges –In 2010, at Stan State, the median family income of a need-based recipient was $29,000, while at Harvard, the median family income of a need-based recipient was $120,000.Scholarships – do not need to be repaidMerit-based for academic, athletic, or other ability, including those offered by individual colleges, and private organizations like the National Merit Scholarship foundationFeature/affiliation based, including scholarships for future farmers, children of teachers, employees of Wal-Mart, tall women, and the descendents of a certain remote village in Finland, etc….Work-Study – wages paid for work done on campusTends to be less competition than for off-campus work, and designed to work around the students’ scheduleEligibility varies from school to school (are you “needier” than your classmates?)Loans - Must be paid backAffordable College ParadigmsIn-State Public Colleges (UC, CSU, JC) Generally, lowest sticker price for residents because CA contributes 50 – 90% of tuitionCommuting MAY save money, if the cost of maintaining a car is less than room and boardOut-of-State Public Colleges with Low Tuition, Room and BoardSome out-of-state universities have relatively low fees for out-of-state residents, and low cost of living makes the total cheaper than UCSome states have lenient residency requirementsExamples: Utah State, Missouri State, Iowa State. Most states have a “University of ABC” and a “ABC State U”, and the State U is cheaper (e.g. CSU is cheaper than UC).Private Colleges with High Sticker Price ($50K+), Generous Need-based AidThese colleges generally have large endowments and “needy” students may have incomes up to $180,000They are often “elite” and highly competitiveMost elite examples: Harvard, Yale, Princeton, Stanford, MIT, Caltech, Duke, Dartmouth, ColumbiaLesser known examples: Washington & Lee, William & Mary, Bowdoin, Swarthmore, Pomona, LehighPrivate Colleges with High Sticker Price, Generous Merit-based Aid (more than half the total cost given to large percentage of students)Tend to be “almost elite” schools with big endowmentsCan be earned by children of millionairesExamples: Rice, Vanderbilt, Rhodes, Denison, Case Western ReserveWarning: Often come with GPA requirements (e.g. 3.0) to keep scholarshipPrivate Colleges with Relatively Low Sticker PriceSticker price for tuition, room, and board in the $20,000 – 30,000 rangeTypically less competitive than the “elite” collegesOften save on costs by focusing on a few quality programs, but have limited programs and extracurriculars (e.g., no medical school or football team)Often subsidized by a church or denominationSometimes have generous need or merit-based financial aid as wellExamples: Grove City College, Cedarville, Brigham Young, Christendom, Spring ArborMaximizing Value at MJC/CSU/UC: Time is Money College sessions at the local high schools are usually informative.Q: Why can't they just add more classes and hire more teachers if the demand is so high?Q: Costs at MJC/CSU/UC keep going up. When/where is it going to stop?Q: Why do some students earn an AA degree/transfer in 2 years and others take 8+ years?MJC Insider tips:Placement test optimization – learn well in HS, do your best on the testsPriority registrationSequential order of classes needed for your programThe Math MillClass Wait ListsCreative options – other schools, online courses for fill-inPrivate Colleges – Out-of-pocket costsQ: How does anyone pay $50 – 60K a year for college?My family’s costs at CSU Stanislaus (2010)My family’s costs at CWRU (2010)Some College Statistics:4-year graduation rate: 19.4% (in 2010)6-year graduation rate: 51.8%Median income of financial aid recipient: $29,000Some College Statistics:4-year graduation rate: 63% (in 2010)6-year graduation rate: 82%Median income of financial aid recipient: $85,000Median aid amount: $27,000Annual ExpensesAnnual ExpensesTuition & Fees$5,000Tuition & Fees$35,000Room & Board1,000Room & Board11,000Transportation6,000Transportation1,000Total$12,000Total$47,000Annual Financial AidAnnual Financial AidNone0University Grants$28,000Work-Study$3,000Loans (by student)$5,000Total0Total$36,000Annual Family Cost:$12,000Annual Family Cost:$11,000X 6 yearsX 4 years$78,000$44,000Debt0Debt20,000Total Cost of Degree (not including misc):$72,000Total Cost of Degree (not including misc):$64,000Not mentioned: Potential wages earned in 2 years by a college graduate.Q: Where are all these schools with money to give away?Strategies for high-sticker cost schoolsLook for value (America's Best Value Colleges, U.S. News & World Report).Look for schools with generous endowments (search for "top college endowments"), but be aware that generous schools tend to be highly competitive.Look for significant merit-based scholarships, and significant numbers of students receiving (aid based on a performance level, rather than a “horse race”). Check out the net price calculators of your target schools.Scholarship matching (use only for your #1 choice school)In-state tuition match for out-of-state public collegesOutstanding students might target a "full ride" at a less competitive collegeBe "as needy or needier" than your fellow classmatesGive a second look to mail/e-mail from colleges for “diamonds in the rough”Bottom line: The better your academic record, the greater likelihood of acceptance to and/or financial offers from a well-endowed schoolNote: Less competitive schools sometimes give merit-based aid to “solid, not stellar” students.My projected costs at Spring Arbor (2012)Some College Statistics:4-year graduation rate: 37% (in 2012)5-year graduation rate: 53%Median aid amount: $20,000Annual ExpensesTuition & Fees$21,000Room & Board8,000Transportation1,000Total$30,000Annual Financial AidMerit-based Scholarship$7,000Need-based Grant$6,000Loans (by student)$6,000Total$19,000Annual Family Cost:$11,000X 5 years$55,000Debt24,000Total Cost of Degree $79,000 Cost-Reducing PrinciplesDo your best with the classes and opportunities you have now.If enrolled in college, "clear away" obstacles to get the best grades possible. If they can't be cleared away, consider postponing classes until a better time.If enrolled in high school, succeed in classes now so you don't have to pay to retake them. Study for college placement tests to reduce the number of remedial classes needed.Take a look at some colleges BEFORE 9th grade (before transcripts "count"). Ask, "What kind of grades and classes will I need to be accepted/receive scholarships here?"If possible, take AP classes and AP tests.Decide whether college is really the right option for youHow do you figure this out?School classes/favorite subjects - what do you like, and what are you good at?Enrichment classes and extracurricular activitiesVolunteer activities – generic and targeted.Be realistic about available opportunities vs. your ability. Consider not only what you like to do, but also what an employer might be willing to pay you for.Know what you want to study before you enter college, even if you end up changing majors.Some Draconian Strategies - proceed at your own riskDeclare financial independence – you must not receive financial assistance from a parent or relative.Become an in-state resident in another state - must live and work there for a year.Savings StrategiesBe honest about what priority college has in your lifeConsider ditching the carEliminate debt ASAPHigh interest debtStrategic timing of large debt retirement (e.g. car or house)Savings Accounts - A Few Options529 account - an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs.AdvantagesInterest is tax-deferred, and withdrawals are tax-free if used for education.Donor (parent) maintains control of the fundDisadvantagesAssets must be used for education or be taxed and take a 10% penaltyPrior to 2009, these were considered student (rather than parent) assets when calculating the EFC (expected family contribution) for financial aid. If the rule changes back, the student could receive less financial aidUTMA/UGMA (United Trust/Gift for Minors Act)AdvantagesAssets are taxed at the minor's income bracket, rather than the parents'Can be used for any purpose, not only educationDisadvantagesChild legally can assume control of the assets at age 18, even if irresponsiblePrior to 2009, student assets had a greater negative impact on financial aid than family assets. It could potentially reduce financial aid if the rule changes back.Generic Account in Parents' Name (Savings, Money Market, Brokerage, etc.)AdvantagesCan be used for any purpose, not only educationParent maintains complete control of the assetsAs parent assets, will have the least likelihood of reducing financial aid if the rules changeDisadvantagesNo tax benefitRequires self-control. It might be too easy to siphon off these funds for a house payment or family vacation.Additional Resources can be found at my website:: peterseny@mjc.edu ................
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