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Chapter 15 - Meeting College Costs

Financial aid has become increasingly complex as it has become more widely used. Today half of all undergraduate students receive some form of financial assistance. Despite the growing costs of higher education, though, the majority of students attend state institutions where the tuition is less expensive.

Families should apply for financial aid, even if they think they won't qualify. Many upper middle income families have become eligible for federal assistance, particularly federal government low interest loan programs which cannot be accessed until application has been made. In addition, being denied federal student aid often opens the door to other financial assistance.

Financial aid is designed to help those students without adequate financial resources to meet college costs. Broadly defined, costs include not only tuition, fees, and books, but also personal living expenses and travel to and from school. Financial aid is available at 2- and 4-year institutions and also at many vocational and trade schools.

In applying for financial aid, it is best if students and parents work closely with a high school counselor who is familiar with the various types of financial aid, has the reference books on hand, and can offer good advice. Sometimes, however, Foreign Service families are abroad in posts where knowledgeable assistance is not available. In that case, the family should obtain appropriate books from the resource lists in this chapter and consider contacting an educational consultant knowledgeable on financial aid. College financial aid offices will also provide financial advice and full information about their private and public sources of assistance, their packages that combine sources, and their required application forms.

It is important to note that information on financial aid changes from year to year, so resources need to be recently published or revised. Parents and students must ensure that they have up-to-date information on types of aid available and requirements. Low-interest loans are available to most students. The most recent annual copy of Don't Miss Out and The Federal Guide to Student Aid will have up-to-date information.

There are special circumstances that may affect eligibility for financial aid. One is if you have more than one family member in college. This will adjust the Expected Family Contribution to college costs downward. The other is when parents are divorced or separated. In that situation, students use income and assets of the parent with whom they lived for the greater part of the 12 months preceding application, including, if that parent has remarried, the stepparent's income/assets.

For financial aid purposes, the difference between dependent and independent students is important. Dependent students are those who are partially dependent upon parents for support. The income and assets of both are considered when determining financial aid. To qualify for federal funds, an independent student must fulfill one of the following conditions:

• Be 24 years old by December 31 of the award year or be declared independent at the discretion of the school's financial aid officer;
• Be an orphan, ward of the court, or a veteran of the Armed Services;
• Have a legal dependent other than a spouse;
• Be married, a professional, or a graduate student not claimed as a tax exemption by anyone else;
• Or be so judged by a school's Financial Aid Officer on the basis of documentation of unusual circumstances.

Private colleges may also ask for documentation of parents' resources before awarding their funding.

TYPES OF FINANCIAL AID

Colleges provide eligible students with a financial aid package made up of a combination of scholarships, grants, loans, and employment. Scholarships and grants are funds which do not have to be repaid. Grants are given on the basis of need, scholarships for need or merit. Educational loans carry lower interest rates than commercial loans and generally do not have to be repaid until the student leaves school. Part-time or full-time work aid is usually arranged for the student by the college. It should be noted that all male student financial aid applicants must be registered for the draft.

DETERMINING FINANCIAL NEED

Whether a student is eligible for financial aid can be determined by taking the total college costs and subtracting what the student and his/her family can pay. The following costs should be estimated for a 9-month period for each school the student is interested in:

• Tuition and fees
• Books and supplies
• Student's room and board/meals, even if student lives at home
• Clothing, laundry, recreation, and medical expenses
• Transportation
• Special costs such as child care, ongoing medical expenses, or expenses related to a handicap

A process called need analysis determines how much the student and his/her parents can pay. Families provide financial information about themselves on a need analysis document obtained from high school guidance counselors or from college financial aid offices (some colleges have their own forms). These forms may also be available at the Community Liaison Office at post. Families complete the Free Application for Federal Student Aid (FAFSA) or whatever financial aid document a school requires as soon as possible after January 1 of the year in which their student will be attending college that fall. The schools designated on the form by the prospective student receive the Expected Family Contribution (EFC) number which is processed centrally. It is based primarily on parental income, the family's assets (savings, home ownership), student income, and student assets. In general, it is expected that a greater percentage of the prospective student's assets (currently 35%) than the parents' assets (currently 5.6%) should be contributed. However, a family's expenses are also considered, and large debts, unusual expenses, and the age of the older parent can make a significant difference. Students are expected to contribute toward their own college expenses whenever possible. The EFC will only include student earnings above $1,750 (after taxes), but individual colleges usually project their own assessments based on geographic area and family finances.

When the colleges receive the student's EFC number, they then work up a financial aid package of grants, loans, and work that will meet the student's financial needs at their school. If the family has no financial need, but the school wants the student, they usually recommend one of the federal non-need based programs to help manage its cash flow, or they may offer college-based funding.

EARLY FINANCIAL AID PLANNING

Families should apply for financial aid for the following academic year as soon as possible after January 1. All applicants must file the FAFSA; some colleges may require other applications as well. Reapplication must be made each year.

It is important to file early and accurately. Individual school money, in particular, often goes quickly, and anything that holds up an application can jeopardize that source. A file of all sources to back-up the application should be kept in a quickly-retrievable place. This is especially crucial if a move is being made during the financial aid application process.

Resources

Managing the Price of College, published by the National Institute on Post Secondary Education, U.S. Department of Education, can be found at http://www.ed.gov/pubs/collegecosts/

FINANCIAL AID CHECKLIST

In addition to filling out the financial aid applications, students should use the following checklist to investigate other sources of assistance. Note that colleges often reduce the college aid package by the amount of a scholarship a student wins from an outside source, but the student may be able to negotiate not to have the aid package reduced.

• Investigate all possible sources of financial aid.
• Request financial aid information and appropriate forms when requesting college admission material, particularly information about each college's financial aid sources and their requirements for aid.
• Fill out financial aid applications completely as soon as possible.
• Keep careful track of all applications and deadlines.
• Respond promptly to any requests for additional information.
• Consider attending an in-state college or university or attending a community college for 1 or 2 years.
• Investigate loans that are forgivable upon completion of nursing or teaching experience.
• Investigate cooperative education - although it may take 5 years to finish, students can earn as much as $8,000 a year working in their field of interest.
• Check on alternatives to financial aid, just in case.

Resources

The College Board
45 Columbus Avenue
New York, NY 10023
Tel: 212-713-8000
Web site: http://www.collegeboard.com

Octameron Press
P.O. Box 2748
Alexandria, VA 22301
Tel: 703-836-5480
Fax: 703-836-5650
Web site: http://www.octameron.com

FEDERAL, STATE, AND INSTITUTIONAL FINANCIAL AID

Federal Programs

It is important to note that programs and award amounts from the federal government are subject to congressional appropriations and may change. The information given here is meant as a guideline and families should carefully research current programs and amounts.

Pell Grants, formerly called the Basic Educational Opportunity Grants, are Federal government grant programs open to any U.S. citizen who has not attained a bachelor's degree and has demonstrated financial need. Colleges expect that any student requesting financial aid will apply for a Pell Grant. State Grants require that students attend an in-state college to qualify. Usually the FAFSA will link students with their home state's program.

Need-Based Federal Stafford Loans range from $2,625 for a freshman to $5,550 for a senior with a maximum total of $23,000 for undergraduate education. These loans are also available for graduate school. The government pays the interest while the student is in school and for a grace period thereafter with repayment in 5-10 years. Stafford Loans are made by banks and credit unions, and students must file their own applications with the lender of their choice. These loans must be repaid in full. Eligibility for this program varies by family income level.

Campus-Based Aid and Scholarships supplement other programs. If the student still has need, the financial aid officer at the school will look at money to be awarded by the college. Included are:

• Federal Supplemental Educational Opportunity Grants (FSEOG) are from $1,000 - $4,000 and awarded to students with significant need.
• Federal Work-Study (part-time jobs) is awarded as a dollar amount up to which the student may work.
• Perkins Loans are low interest loans that allow students to borrow up to $3,000 per year to a maximum of $15,000 for undergraduate studies. They are also available for graduate students. The federal government pays the interest while the student is in school. A 5 percent interest rate is charged after completion of studies. In some cases, loan payments can be deferred, postponed, or cancelled.

Scholarships are also awarded by the college using its own funds for academics, band, talent, and athletic awards.

UNSUBSIDIZED FEDERAL LOANS

All families are eligible for at least one of the following loans, despite family income or assets. They can be used to help with cash flow.

Supplemental Loan to Students (SLS) may be used by independent students to borrow up to $4,000 - $5,000 per year to a maximum of $23,000. They are also available for graduate students, and students may defer repayment until after graduation but repayment begins shortly after the loan is processed. The FAFSA must be filed for eligibility for an SLS loan.

Parents Loans for Undergraduate Students (PLUS) is a non-need based loan program for credit-worthy parents of dependent undergraduate students. They can borrow from local lending institutions at an interest rate the same as the SLS loans with repayment beginning 60 days after loan processing.

MILITARY AND OTHER AGENCY SCHOLARSHIPS

Although more limited than previously, many colleges and universities have Reserve Officers' Training Corps (ROTC) units of the Army, Navy, Marines, and Air Force. These units offer opportunities for financial assistance in addition to officer commissions on graduation. Admissions requirements and programs vary from one service to another.

Some Foreign Service students may be eligible for programs sponsored by their parents' agencies. The Central Intelligence Agency has an undergraduate scholar program in engineering/science, partly need-based and with a work commitment. The National Security Agency has a merit-based program which includes summer work. The Defense Intelligence Agency has an Undergraduate Training Assistance Program (UTAP), a merit-based program. Contact the Family Liaison Office Education and Youth Officer for further information.

Resources

Army ROTC: The Program, the Requirements, the Obligations, the Benefits
Available from:
ROTC Scholarships (AD)
Fort Monroe, VA 23651-5000
Tel: 800-USA-ROTC

Four-Year Scholarship: Applicant Instruction Bulletin
Available from:
AFROTC/RRO
551 East Maxwell Road
Maxwell Air Force Base, AL 36112-6106
Tel: 334-953-7783

The Navy-Marine NROTC Scholarship Program Bulletin
Available from:
Navy-Marine NROTC Scholarship Program
The Commander
Navy Recruiting Command (Code 314)
801 North Randolph Street
Arlington, VA 22203-9705
Tel: 800-USA-NAVY

STATE FINANCIAL AID

In addition to Federal government money, all states have scholarships or grant programs for residents, and some offer other programs based on need, merit, or a combination of the two. Some states also have reciprocity agreements with other states.

In Virginia and Maryland, the offices to contact for information and application forms are listed below. Enclose a self-addressed business-sized envelope with two letter-rate stamps attached.

Virginia

Council of Higher Education Loans and Grants
101 North 14th Street
Richmond, VA 23219
ATTN: Coordinator of Financial Aid
Tel: 804-371-7941

Maryland

State Scholarship Board
16 Francis Street
Annapolis, MD 21401
Tel: 410-974-5370

INSTITUTIONAL AND PRIVATE PROGRAMS

Financial Aid for Foreign Service Children

AAFSW and AFSA Merit and Financial Aid Scholarships - The American Foreign Service Association (AFSA) and the Associates of the American Foreign Service Worldwide (AAFSW) offer both need-based financial aid grants of $500 to $2,500 with an aggregate family limit of $5,000, and merit scholarships to qualified dependent children of Foreign Service personnel of the Foreign Affairs agencies. The financial aid grants are for full-time undergraduates studying in the United States and are based solely on need. Merit Awards of up to $1,000 for high school seniors are based on academic achievements and leadership qualities. Complete information and application forms are available in October from the following address:

AFSA Scholarship Administrator
2101 E Street NW
Washington, DC 20037
Tel: 202-944-5504
Fax: 202-338-6820
Web site: http://www.afsa.org

Associates of the American Foreign Service Worldwide (AAFSW)
5125 MacArthur Boulevard N.W., Suite 36
Washington, D.C., 20016
Tel: 202-362-6514
Fax: 202-362-6589
Web site: http://www.aafsw.org

Overseas the application forms may be available in the Community Liaison Office.

In addition, AFSA administers the Heyward G. Hill Memorial Scholarship of the DACOR Bacon House Foundation. These grants up to $2,500 are for full-time rising junior or senior college students with a major in the field of foreign affairs who are academically worthy and deserving of support.

Both programs are limited to the dependent children of American Foreign Service personnel who have served or are currently serving abroad with the Foreign Affairs agencies (State, AID, USIA, Agriculture, Commerce, and APHIS). Membership in AFSA, AAFSW, or DACOR is not a requirement.

Three colleges offer scholarships to students who are children of Foreign Service personnel. They are:

Dartmouth College - S. Pinkney Tuck Scholarship, need-based award for students who are children or grandchildren of Foreign Service personnel. Contact:

Director of Financial Aid
Dartmouth College
Hanover, NH 03755
Tel: 603-646-1110

Vassar College - Polly Richardson Luken Memorial Scholarship and the Gilan Scholarship Fund, need-based for daughters with preference given to freshmen. Contact:

Director of Donor Relations
Vassar College, Box 14
Poughkeepsie, NY 12601
Tel: 914-437-5515

Yale University - For scholarship given by Mr. and Mrs. Gilbert H. Kinney, recipients must demonstrate financial need. In addition, the Louis Goethe Dreyfuss scholarships and fellowships are offered by DACOR Bacon House Foundation to children of Foreign Service officers for study at Yale. Undergraduate awards are based on need; graduate students, regardless of need, are eligible to apply for a fellowship. Preference is given to those planning a career related to foreign affairs. Contact:

Director of Financial Aid
Box 208288
New Haven, CT 06520-8288
Tel: 203-432-0360
Fax: 203-432-0359

State Department Federal Credit Union (SDFCU) Scholarships - The SDFCU Scholarship Fund distributes $6,000 worth of scholarships to members who have completed their freshman year at an accredited institution of higher learning, achieved academic proficiency, and are in need of financial assistance to continue their education. Applications for this scholarship are available in February. Additional information can be obtained from the following address:

SDFCU Annual Scholarship
State Department Federal Credit Union
1630 King Street
Alexandria, VA 22314
Tel: 703-706-5024
Fax: 703-684-1613

Federal Employee Education and Assistance Fund (FEEA) - The FEEA awards scholarships to high school graduates and college students ranging from $300 - $1,750. Selection criteria include academic achievement, community service, a recommendation, and an essay. FEEA also offers low interest students loans. To obtain an application send a self-addressed stamped envelope to:

FEEA Scholarship Program
Suite 200
8441 West Bowls Avenue
Littleton, Colorado 80123-3245
Tel: 303-933-7580

Prepaid Tuition and Other Costs

Many states offer tuition savings plans to their residents in the form of baccalaureate bonds. Income from these bonds is exempt if used to pay for college. The College Savings Bank in Princeton sells CDs based on the average room, board, and fees of 500 independent colleges.

For-profit programs designed to help families save for college expenses appear on the market regularly. Some states offer prepaid tuition plans to help families meet college expenses. Either of these types of programs should be assessed carefully. Information about them is available from many sources, including certified financial planners, accountants, or college financial aid officers.

Other Private Financial Aid

Private organizations such as corporations, labor unions, professional associations, and community and service organizations also offer aid. Scholarship programs based on a religious, ethnic, or racial heritage are available for those who qualify. When searching for such programs, consider not only the student's affiliations, but also those of the parents.

Financial Aid Search Services

A growing number of companies have assembled computer banks containing a variety of funding sources for colleges and universities. For a fee, these search services will conduct a computer search to match a student's interests, abilities, and family income with specific colleges or organizations that offer assistance programs appropriate to the student's background and needs.

The student fills out a standardized questionnaire listing personal goals, qualifications, and background. The company returns a printout of college and organization names, addresses, and specific program information. None of the companies guarantees success in obtaining assistance.

The College Board's College Scholarship Service cautions students to check out a company's claims carefully before sending money. Ask specifically if they refund the fee if no sources are located. Further information and questionnaire forms may be obtained by contacting the following services:

Peterson's Guides
Financial Aid Service
P.O. Box 2123
Princeton, NJ 08543-2123
Tel: 609-243-9111

Student College Aid
7950 North Stadium, Suite 229
Houston, TX 77030
Tel: 713-796-2209

National Scholarship Research Services
2280 Airport Boulevard
Santa Rosa, CA 95403
Tel: 707-546-6781