College Funding and Financing

Norman L. Glaus
Certified Public Accountant
Certified College Planning Specialist

Federal Stafford Loans

Federal Stafford Loans are the most common source of education loan funds and are available to both graduate and undergraduate students.

There are two types:

1. Subsidized, and
2. Unsubsidized

SUBSIDIZED

Subsidized Student loans are need-based. The federal government pays the interest on these loans while you are in school, during the grace period before repayment begins and during any periods of deferment.

Eligibility

ü        You must be a U.S. citizen or permanent resident; full- or half-time undergraduate or graduate student.
ü      A credit check is not required.
ü        School determines eligibility.

Loan limits (these amounts change for the 2007-2008 academic year)

Annual limits:

ü        Year 1 $2,625
ü        Year 2 $3,500
ü        Years 3 and 4 $5,500 per year
ü        Graduate student $8,500 per year

Interest rate

The interest rate on Stafford loans first disbursed beginning July 1, 2006 is fixed at 6.80%.

The interest rate on Stafford loans first disbursed July 1, 2005 through June 30, 2006 is variable and may change on July 1 of each year but will never exceed 8.25%. The rate is based on:

ü The 91-day T-bill rate + 1.70% during in-school, grace or deferment periods
ü The 91-day T-bill + 2.30% during repayment periods

Fees

For loans first disbursed beginning July 1, 2006, up to a 2% origination fee may be charged and must be paid to the federal government. Several lenders will pay all, or a portion of this fee on a borrower's behalf on loans for academic year 2006-2007 guaranteed beginning May 1, 2006. For loans guaranteed July 1, 2006 through June 30, 2007, a federal default fee up to 1% may be charged to cover administrative costs. Some guarantors may waive all or a portion of this fee (previously called "guarantee fee").

For loans first disbursed through June 30, 2006 up to a 3% origination fee may be charged and must be paid to the federal government. Some lenders will pay all, or a portion of this fee on a borrower's behalf. For loans guaranteed through June 30, 2006, a guarantee fee of up to 1% may be charged to cover administrative costs.

Repayment period

Up to 10 years.

Minimum payment

Six hundred dollars per year. If you take out Stafford loans from more than one lender you may be required to make more than one minimum payment.

Interest

The federal government pays the interest that accrues on the loan while you are in school, grace, or deferment periods.

Repayment

Six months after student graduates or falls below half-time status.

UNSUBSIDIZED

Unsubsidized Stafford loans are not need-based. You, the borrower, are responsible for the interest on the loan as soon as it is taken out. Most of the terms and conditions of subsidized and unsubsidized Stafford loans are the same.

Eligibility

ü        U.S. citizen or permanent resident
ü        Full- or half-time undergraduate or graduate student
ü        Not need-based
ü        School determines eligibility
ü        No credit check required

Loan limits

Independent students can borrow more than dependent undergraduate students.

Annual limits: (these amounts change for the 2007-2008 academic year)

ü        Year 1 $2,625 (dependent); $6,625 (independent)
ü        Year 2 $3,500 (dependent); $7,500 (independent)
ü        Years 3 and 4 $5,500 per year (dependent); $10,500 per year (independent)
ü        Graduate student $18,500 per year

Cumulative loan limits differ for undergraduate and graduate/professional students.

For undergraduate students: (these amounts change for the 2007-2008 academic year)

ü Dependent—$23,000 between subsidized and unsubsidized Stafford loans
ü Independent—$46,000 (up to $23,000 may be in subsidized Stafford loans)

For graduate and professional students: (these amounts will change for the 2007-2008 academic year)

ü $138,500 (up to $65,500 may be in subsidized Stafford loans)

Interest rate

The interest rate on Stafford loans first disbursed beginning July 1, 2006 is fixed at 6.80%.

Interest

Unpaid interest will be capitalized at the start of repayment and at the end of any deferment. If borrowers have forbearances, interest may be capitalized no more frequently than quarterly and again at the end of forbearance.

Fees

For loans first disbursed beginning July 1, 2006, up to a 2% origination fee may be charged and must be paid to the federal government. Several lenders will pay all, or a portion of this fee on a borrower's behalf on loans for academic year 2006-2007 guaranteed beginning May 1, 2006. For loans guaranteed July 1, 2006 through June 30, 2007, a federal default fee up to 1% may be charged to cover administrative costs. Most guarantors will waive all or a portion of this fee (previously called "guarantee fee").

For loans first disbursed through June 30, 2006, up to a 3% origination fee may be charged and must be paid to the federal government. Several lenders will pay all, or a portion of this fee on a borrower's behalf. For loans guaranteed through June 30, 2006, a guarantee fee of up to 1% may be charged to cover administrative costs. Most guarantors will waive all or a portion of this fee.

Repayment period

Up to 10 years.

Minimum payment

Six hundred dollars per year. Borrowers who take out Stafford loans from more than one lender may be required to make more than one minimum payment.

Repayment

Six months after student graduates or falls below half-time status.

Both the Subsidized and Unsubsidized Stafford Loans are eligible for consolidation.

Norman L. Glaus
Certified Public Accountant
Certified College Planning Specialist

The College Admission Review: A To-Do List For Each High School Year

Financial Aid Tip: High School Freshman - get involved in several activities in your high school year. Don't wait! Colleges like commitment, so doing something all four years of high school is very good.

Concerned about the current and future costs of college tuition? Wondering how best to meet today's expenses, help with your children's education and provide for your own retirement?

A Certified College Planning Specialist (CCPS) can help. A CCPS knows the best ways of obtaining the kinds of college funding that will best fit your income, your goals, and your lifestyle. A CCPS has met the National Institute of Certified College Planners' (NICCP) rigorous requirements for the CCPS certification.

freshman year action plan:
As a freshman, the first year of high school can be very exciting, as well as a bit intimidating. This is a year of transitioning - figuring out your schedule, learning how to get from one class to another, and getting to know your new classmates and teachers. Why even think about college – that is at least 4 years away! The answer is very simple, but enormously significant: Success in high school leads directly to admission to college.

NOW is the time to make sure that that you are enrolled in challenging classes that will help prepare you for college. Most colleges want students to have taken certain courses such as: English, mathematics, science, history, geography, the arts, and a foreign language. Other factors that will influence your admission to college are: grades, grade point average, rank in class, and activities outside the classroom. Use the College Board's College Handbook to see what specific colleges are looking for.

Get involved in any extracurricular activities: a part-time job, sports (including intramural teams), student council, band, choir, become a volunteer for community service activities, etc. There really is something out there for every student. Stay on top of your school assignments, extra-curricular activities, and other responsibilities.

If you are having trouble with any of your classes you can enroll the help of a tutor, ask an upperclassman to help you, or talk to your teachers or counselor about getting some extra help.

If you expect to get into the college of your choice - expect to study now!

Start saving for college!

sophomore year action plan:
Review your courses and class schedule with your guidance counselor to make sure that you are signed up for the right courses. Now is the time to consider taking more academically challenging and intellectually stimulating courses. Remember -- every single class that you take in high school--and the grades that you earn in those classes--can be found on your transcript. The colleges that you apply to will see the classes you took during your sophomore year and the grades you made in those classes. Try as hard as you can to do better in each of the classes that you have signed up for. It is important to try to keep your GPA at 3.0 or above. Your cumulative GPA will have a big impact on the colleges you are admitted to and even some of the scholarships that you will qualify for.

Become involved in school- or community-based extracurricular (before or after school) activities that interest you and enable you to explore career interests. You may want to reevaluate which and how many extracurricular activities you are going to pursue this year. Then focus on those extracurricular activities that allow you to mature, give you responsibility, and offer leadership potential.

Another unavoidable fact of college preparation is standardized testing. Colleges take your standardized test scores seriously and you should too! Take the Preliminary Scholastic Assessment Test/National Merit Scholarship Qualifying Test (PSAT/NMSQT). You must register early. If you have difficulty paying the registration fee, see your guidance counselor about getting a fee waiver. You can get free online PSAT practice by visiting www.collegeboard.com.

Although your PSAT/NMSQT score doesn't mean much this year, you will still want to do your best. Think of this test as a practice run.

Spend some time researching the colleges that you are interested in. The following issues should be taken into consideration when determining if a specific college is right for you:

ü WHAT ARE THEIR REQUIREMENTS

ü MAJORS/DEGREES (what does this college offer?)

ü CAREER OPTIONS

ü LOCATION (you may be spending four or more years here)

ü PUBLIC OR PRIVATE

ü 2-YEAR COMMUNITY COLLEGE OR 4-YEAR COLLEGE

ü AVERAGE CLASS SIZE (what is the student to faculty ratio?)

ü TRUE COST (what is included in your award letter: grants, work-study, scholarships, loans?)

Start investigating the college admissions process so you're prepared come junior and senior years. Talk to your parents about financing college – they might want to consider the professional expertise of a certified college planning specialist.

Continue saving for college.

junior year action plan:
Your college admission’s process is now set in motion. You are probably getting lots of letters and brochures in the mail from various colleges. Online resources (including each college’s website) can help you learn more about each college - including what majors and minors they offer, their academic quality and ranking, their accreditation, their job and graduate-school placement rates, their costs (tuition, room & board, books, etc.), and their financial aid.

Decide which colleges most interest you. Write these schools to request information and an application for admission. Be sure to ask about special admissions requirements, financial aid, and deadlines.

Continue to take pride in your grades and continue to attempt your best.

You will need to register for and take the Scholastic Assessment Test (SAT), the ACT, SAT Subject Tests, or any other exams required for admission to colleges you might want to attend. You don’t need to take these tests during your junior year. However, if you wait until your senior year, you will have the added stress of starting your college application process at the same time - and without knowing your test scores. If you take the tests in the spring of your junior year and are not happy with the results, you can retake them in the fall.

Mark the following crucial dates on your calendar.

ü 1/4/06 Late Registration Deadline for 1/28/06 SAT & Subject Tests

ü 1/6/06 Regular Registration Deadline for 2/11/06 ACT

ü 1/20/06 Late Registration Deadline for 2/11/06 ACT

ü 1/28/06 SAT & SAT Subject Tests

Keep in mind that it takes approximately three weeks for scores to be reported.

Arrange some college visits, if you have not already done so, and talk to students. Talk to college representatives at your high school college fair. Start talking with your teachers, counselors, and/or employers, etc., about writing a recommendation.

Investigate the availability of financial aid from federal, state, local, and private sources. You will also want to investigate the availability of scholarships provided by organizations such as professional associations, religious organizations, corporations, labor unions, and credit unions. Your family’s Certified College Planning Specialist can help you in this area.

Continue saving for college.

senior year action plan:
Your senior year - Wow!! Your senior year in high school is a wonderful time filled with a wide range of emotions, expectations, and decisions. It is also about making plans and choices. It is a time to reflect on your future career and life goals. Strengthen your admission chances.

While your senior year might seem the best time to sign up on those elective classes that you have been wanting to take instead of advanced or honors classes, you might want to hold off on taking too many easy electives. Some selective colleges may actually downgrade your application if you cut back on the challenging courses.

Following is a list of what you need to do in the fall of your senior year:

ü review the college materials, guidebooks, and other resources in order to finalize the list of colleges and universities that seem best suited for your needs

ü schedule visits, overnight stays, and interviews at your top college choices (You can also go online and virtually visit any colleges you have not already seen.)

ü request (or download from the college's website) any applications that you do not have

ü request key financial aid and scholarship information from your list of colleges

ü finalize your college essay drafts (but only after several edits, rewrites, and reviews by people you trust such as family members, friends, teachers)

Be sure to review each college's application requirements and deadlines carefully!

In February you should file the appropriate financial aid applications. The two basic types of financial applications are the FAFSA and PROFILE forms.

1. The Free Application for Federal Student Aid (FAFSA) form is used to calculate the Federal Methodology EFC and is used by all accredited colleges. The filing deadline for this form is June 30, 2006, for the 2005-2006 college year for Federal financial aid funds. Be aware that colleges may have their own deadline for filing this form for their financial aid funds.

2. The Financial Aid Profile (PROFILE) form is used by some private colleges to calculate the Institutional Methodology EFC. The filing deadline for this form is December 9, 2005, and may be filed at any time before this date, for the 2005-2006 college year.

A family should file the FAFSA and PROFILE forms even though they do not initially qualify for financial aid. An appeal cannot be made to the Financial Aid Officer (FAO) for increased financial aid unless these forms have been filed. Also, unless the application forms have been filed in prior college years, some colleges (usually, high-priced private colleges) will not consider the student for future financial aid.

In four to six weeks (one to two weeks if electronically filed) after filing the FAFSA form you should receive the SAR form. This SAR form will indicate your Estimated Family Contribution (EFC) on the upper right corner of the first page. Errors or estimated tax information must be immediately corrected or updated on this form and the form re-filed.

Check out what colleges look for and how to make your applications stand out. Then complete your college applications and get them in the mail. To calculate your college admissions chances, provide your GPA, test scores, class rank and the number of honors courses you will complete; and provide information about your extracurricular activities and achievements.

Keep track of your college applications. Be sure all schools have received all your materials. Make sure that all of your recommendations have been sent. Pay attention to Financial Aid deadlines: Get your FAFSA completed by 2/28.

In March you will be receiving your college decision letters. There are 4 kinds of letters: (1) acceptance, (2) rejection, (3) wait list, and (4) provisional.

The first two are self-explanatory. An applicant who is "wait-listed" is one who may be admitted if enough students decide to go somewhere else. A provisional letter states that a student can attend the college if he or she accomplishes whatever is outlined in the provisional acceptance letter. For example, the college may be unsure that you are ready for college-level work so they may require you to submit your final high school transcript before they enroll you.

If you have been “wait listed” you may want to write the college and appeal their decision.

Once you have compared financial aid packages and the comparative qualities of the colleges that have accepted you, it may make sense to go back to one or more of them to try to improve your package. If you are facing the real prospect of not being able to attend the college you really want to attend because of money, or if two similarly ranked colleges have offered drastically different financial aid awards and you really want to go to the college with the lesser financial aid award, then you should sit down and map out your strategy. Most colleges have an appeal process that will allow you to request a review of your financial aid eligibility and corresponding financial aid award offer. Each college determines its own regulations for this process, and you should be aware of each particular college’s procedures. If you feel that the college has not understood your financial circumstances, be ready to explain clearly what those special circumstances are. Any documentation you can supply will reinforce your claim. If your circumstances have changed since you filed your SAR, you should be honest and let the Financial Aid Officer know. The FAO will almost certainly make changes in your aid package.

After you have made your final decision on which college to attend, make sure you complete all the necessary paperwork on time and accurately.

Congratulations! You have graduated from high school. Over the summer, it is a good idea to double-check that everything has been taken care of and that you are ready to roll when college starts in the fall.

Pay for college!

Glaus & Associates, C.P.A., L.L.C.
2855 Independence
Cape Girardeau, MO 63703
(573) 334-8474 (573) 334-8713 FAX
normanglaus@glauscpa.com