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Lab bill format for Higher Education

and I'm going to record that right now all right all right well let's get started so first you know I hope um many of you know mea but if not mea is a state Authority we've been created by the state of Massachusetts and we've been around since 1982 and our mission is to help families plan save and pay for college and we were created for that reason and we continue to do that all that good work today um we have uh we have loans for students which you'll you'll hear about in this webinar we also have the state's College savings plans um and then we offer free guidance to All Families uh no matter what stage that they are in the college process so before we get into the nitty-gritty and some of the the details of what you're probably here for I just want to say congratulations uh to students if there are any students uh joining us or um if if they're with parents uh this is an exciting time of life uh it's a real Milestone and so I want to say congratulations to all of you for um being accepted um and the fact that you're going to be going on to uh next really exciting step So today we're going to talk about about understanding your financial aid offer um sometimes those are a little bit confusing to understand fully and then we're really going to talk about the methods you can use to pay your college bill which of course um probably needs to happen in the next number of weeks and then we'll talk about sort of the timeline of what's next when things are going to happen and any resources that you can continue to use to help you all right so your financial aid offer um I'll also add that this year was a very strange year to be going through the college application and financial aid application process uh as you know the FAFSA was delayed which delayed everything in the whole process so at some point hopefully you received a financial aid offer I have heard some students who are still waiting for um full complete offers so if that's you you are in uh company with a lot of people but hopefully many of you have received your Aid offer and one of the things about financial aid offers is that um they look different from college to college so um here are the things that should be on an aid offer and hopefully you have this um so we'll we'll kind of talk through and I I can answer any questions around this but basically you should uh be able to see the costs you know the full College cost for tuition and fees and room and board if you're going to live on campus and maybe some planning for additional costs that you need to plan for that should be listed on your Aid offer if it isn't you just want to make sure you work with the college to have a good understanding of your full costs and then you should see the aid that's been offered and that can be in the form of Grants and scholarships the best kind that you don't repay um work study off offers and loans and these are uh well these can come from a variety of sources as well from the federal government from your state and uh from the colleges and universities themselves so the financial aid office at a college is really the um you know they gather all of the aid up from all of the sources that you're eligible for and put it on this Aid offer for you so if we look at the example of the aid offer on the screen you'll see there's an ABC University Grant so that comes from the college itself and that's a grant that doesn't need to be repaid um then there are a couple of federal Awards Federal seog which is a Federal grant program and a Federal pel grant also a Federal grant program and you can see those amounts this award also has a mass Grant which is from the state of Massachusetts so again all of those those are grants that don't need to be repaid then we move down into the other type of Aid such as the federal work study program so there's an offer there for $1,500 uh that you don't receive upfront what that is is the student can find a job either on campus mostly um when they start their program and work and then they get paid just as they would in any job either weekly or every other week or or something like that monthly sometimes and usually then the student uses the money they receive from working to pay miscellaneous expenses maybe bus Fair maybe pizza late at night when they're studying things like that um they could also use it for some books or other expenses they have um but that's how they will that's how the work study comes in it's not anything that's upfront and again a student needs to find the the job um but work study jobs are usually read readily available on a campus uh but just uh for the best choice of jobs maybe look right away maybe even before you start um and then there are the loans the Federal Direct student loans which are part of the aid package because we'll talk about they have a lot of benefits and here at lists a subsidized part and an unsubsidized part so they're both the same loan with the same terms um but the difference between subsidized and unsubsidized is that with the subsidized portion the federal government pays the interest while the student is attending college with the unsubsidized portion um the federal government doesn't pay the interest but what happens is when the student graduates and is going into payment then any interest that has ured during the time they were a student would then get capitalized before the student starts repaying six months after graduation so that's the difference between those two and when you have you know grants and scholarships on an award offer just know that some of them can be merit-based and some are need-based and what that means is merit-based means they were awarded to the student based on achievement usually academic achievement but it could have also been for something athletic or artistic as well and it's really good to understand the criteria for the merit-based award U because sometimes there is a criteria a common one might be the student needs to keep a 3.0 grade point average something like that 3.2 very important to know so the student understands that if they miss that they may not receive that merit-based award in future semesters um need-based is based on the the information the financial information that you submitted on the FAFSA in any other financial aid form like a CSS profile or an Institutional application and that's based on the Family's financial situation uh parents and students income parents and students assets all of that so hopefully you can count on the same amounts of aid from year year but that is based on if there are big swings in your financial situation that could change so um you just want to know that that's how either of those could change but schools colleges do try to help to have students receive the same award from year to year so you can count on that so let me say a few words about those federal student loans okay so what's special about those is the student is the Bo borrower there's no co-signer no credit check and this year the fixed interest rate on those federal student loans is 6.53 and um yeah that's higher than it's been interest rates are a little bit higher all all around um that changes each year on July 1 so but when you borrow a loan at this rate for this year that's the rate that it stays um and then next year if it's a different rate that's that's the rate that will it will stay and again I meant I talked about what subsidized and unsubsidized um means and um there is a fee and the way that the student will receive this loan is the college will tell the student to go to a website called student a.gov if you accept these loans on the award offer and you go to student a.gov and the student will go through what's called an entrance counseling and it really is just an informational uh quiz so to speak so that the student understands that they're taking a loan and what are the terms of the loan um but no payments need to be made on either of these two loans while the student is in school it um begins six months after the student leaves college and the maximum amounts that a student can borrow through these this program is 5,500 as a freshman 6,500 as a sophomore more and 7500 each for junior year and Senior year I'm going to look I do have a question so I'm going to look quickly oh there's a good question just if a student is awarded a good amount of a merit-based scholarship um will the school offer less of need-based Aid thinking the student is already covered by uh the Merit that's that's a good question um if the if the college has a need-based and a merit based program the student would still be eligible for both however having that Merit does res reduce the students need a little bit um right so because part of what's factored in there is the costs minus what you can afford as a family ing to the formula and then the need so there may be a little bit um of a reduced amount of financial need need so it could could mean um that the financial need based Aid could be slightly reduced but they they can definitely if a college has both then they're eligible for what they're eligible for in the two programs all right and this is what I was starting to show that it's it's the college we're going to talk about how are you going to calculate the balance due that you're going to owe as a family so the college charges minus the financial aid and your enrollment deposit that you've already put down equals the balance due and those College charges are tuition fees housing food and health insurance so the college needs to by law um put a health insurance cost on there they need to offer health insurance to all students however if your student is on your family health insurance which is a common scenario that's very common that students are on their parents health insurance or family health insurance then you can wave that health insurance so that's an important step that you need to take you want to wave that health insurance if your student is already covered by another plan and that's a that's a good little charge there so um look and get the form from the college and wave that uh quickly I'll say that I know many times um a family will appeal for more financial aid and um so we had a webinar with all of these experts from colleges and if you have an interest in putting in an appeal and hearing people talk about what appeals might work and what might not and and um you know what forms to use all of that you can join um you can use this QR code and you can listen to this webinar that we had because it was very um High openening all the details of um you know how you should appeal what I would say to you UPF front is if you have a uh change in your financial circumstances from the time that you applied for financial aid you should definitely um appeal to the finan final aid office just to let them know so they know what your situation is I know sometimes if you have a crisis you may not be thinking of contact in the financial aid office but it's a good place to to call I'm going to try to answer this next question here too okay great good question if after we accepted the subsidized and unsubsidized loans we find that we don't need both loans this year can we drop the unsubsidized loan within a certain time period um and the answer is yes yes so um you know one easy way to do that is you accepted them they get dispersed half in the fall half in the spring so you could just let the financial aid office know that you don't need the spring dispersement that's a way that some families will do it um if you want want to reduce it further than that and your bill is paid um you can also just let the financial aid office know all right so now let's talk about paying your bill so you know usually we say that it's sort of that parents can look to past income current income and future income as a way to think about paying uh paying the college bill um the the other piece is also um that that we don't necessar I really talk about here is another way to pay is if you have any any relatives who um are willing to help out a little bit that's that's a nice thing too I guess that would fall in the current bucket but anyway um this savings would be past income so if you've saved anything for college anything you're going to be happy it's just it's just nice at this time to be able to have a little bit to rely on so that's terrific that could have been a 529 College savings plan a prepaid tuition plans savings bonds stocks CDs all of it um and so using any of that you'll you'll pat yourself on the back that that you had that so couple that we're going to talk about here are mea's um prepaid tuition plan the U plan or the U fund and if you have either of those um listed below are the ways that you can withdraw the money so with the you plan you would love log into your account online and request a distribution um or and you can also call um with questions and then your your monies will be sent to either the college or to you and you set that all up um with the U fund which is the Massachusetts 529 plan um and I would say most 529 plans across the country work in a similar way you would contact your um fund program manager um in the case of the U fund that's Fidelity Investments um and you would also request a distribution and you can let them know if you'd like the fund sent to the college or You' like them sent to you and you can set that up to also have that paid on a regular basis if you want to do that and uh Fidelity also has an 800 number um I they also have a lot you can do online I remember when I was using my U fund the first time I liked to call and just make sure I understood exactly how I was setting it up and then in future times I could go online and and and just request the distribution myself so um that's how you will withdraw money for those and again most 529 plans work very much the same way and then for present income um most colleges have something called a monthly payment plan and maybe they've sent you information about that already but if not you can ask and they usually have a plan that will allow you to spread out the cost of your tuition in fee payments um more than the the typical um Cadence which is usually fall and spring but if you want to spread it out further and pay anywhere from over 5 to 12 12 months you can join the monthly payment plan there's no interest charged but usually there is a fee could be anywhere maybe $75 sometimes um and then you set that up and you can pay on a monthly basis many times colleges will have another entity that that runs that program but um ask the financial aid office or the billing office and they will set that up for you and then the third piece is borrowing so let's be clear we already mentioned the fact that students have sometimes the direct subsidized and unsubsidized loans as part of an eight award so that is the the best way to borrow and what I didn't mention about that is that um students have a variety of repayment options when they go to repay their loans um and the most current one the save plan allows students to tie their monthly payment when they graduate to their income a very small percentage currently 10% um so that that allows students to get on their feed um and be able to manage their payments even though of course the faster you pay it off the less you pay over time but um there are just lots of repayment options to choose from so that's another benefit of that um but sometimes you saw those maximum amounts that students could borrow sometimes students need more and the family needs more to pay that college bill so that's when other loans come into play and any other loans outside of those federal student loans federal direct student loans um will need um a co-signer or co-borrower um because as we saw on those Federal Direct student loans there was no credit check you know student can borrow on their own just based on the fact that they're going to be a student graduate from college hopefully get a job um but any other loans other than those Federal Direct Loans the students will um need to have a co-borrower and there will be a credit check done so that's important to know so here are some things to think about obviously you want to borrow just as little as you have to um because you really want to keep in mind that probably as we mentioned this a offer that you received this year is probably going to look similar in the next three to four years so you may need to be borrowing in future years as well so you want to make sure you keep that in mind some other things to keep in mind um from on the parents side you might want to think about your other children that you have do you need to be thinking about other children coming up attending college in the future think through that students you might want to think about um do you know what your plans are in the future maybe maybe not but if you have a sense of what you might like to do and starting salaries that can be helpful when thinking about how to borrow and I mentioned both what parents are thinking and what students are thinking um about all this because really at this point it becomes comes between the parent and student to think about who is going to take on these additional loans um and you know as a parent can I take that on um for a student it's it's it's challenging to take on more in addition to those Federal Direct Loans but may be necessary so I see that as a family conversation so really important to know about any other loans is you want to understand is there a fixed or variable interest rate what is the interest rate what is the repayment timeline um you know who's on the note so who's going to be responsible you in most situations any co-borrower is equally responsible to paying that loan um and when you're shopping for your best financing option your best loan option one good thing is if you make inquiries into a couple of different loans apply for a couple of different loans all within a one to two week period um that counts as one hard credit pull one inquiry on your credit because they understand that you're shopping that's how you know it works if you're shopping for cars mortgages things like that as well all right so how much can you borrow well you can borrow up to the amount of the school's the college's cost of attendance minus any other Aid received but really probably you you can borrow more than you should almost so really Whittle that down and try to borrow only what you need um you apply for loans for the full year usually um but only one year at a time and what you want to do upfront is try to estimate what your monthly payment might be in the future too just so you have a sense of what it means to borrow $110,000 or what it means to borrow $20,000 so think think through that um loans are usually dispersed half in the fall half in the spring and they first they go directly to the college when they're dispersed if you're going to use some of that money for housing or food and you're not living on campus or something like that then um the college can can cut a check and and once their the bill is paid to the college they can send a refund so that you can use it for other expenses so this is me mea's student loan payment calculator and before I even say that let me say so mea has private loans probably your bank that you do business with may have a an educational loan um there are a number of educational loan providers out there your college may give you a list and say our students have used these these lenders um and the federal government has a program and I'll tell you about that in a moment so no matter what when you're SHO for a loan you want to find out all of the details about all of the loans upfront so you have an understanding of of which loan is going to work best for you so I love this is mea's student loan payment calculator and you just go on the mea website and when you go to apply for a loan on the page if you scroll down you can use the calculator first and I highly advise that and it will just ask you how much do you need to borrow and how many years before graduation and is your credit good very good or exceptional and then you calculate and in this case this family put in $20,000 uh student's going to be a freshman so we have four years to go and our credit is very good and then you receive this page which shows mea's loan options so mea has an immediate repayment 10year loan immediate repayment 15year and then some other options interest only defer payment and student deferred with co-borrower release and they all have slightly different interest rates as you can see going from lowest on the left so the immediate repayment that you repay over 10 years will have the lowest interest rate in APR and then as you move out um the interest rates go up a little bit but then you can look at the details about what is that payment going to be when in school what about when the student graduates what will the payment be what is the total cost of the loan if you pay it out the entire amount of time so I just find these figures so important in trying to think about what's what's going to be the best uh term for our family um so think about that look at these details really closely and do this with any lender that you're considering so you have all of that information and then I mentioned that the federal government has um an additional loan it's called the direct plus loan and that is a parent loan for undergraduate students um and that can be a good option for some families so I put it here um because the you know the school will give it to you and you go to that website again that I mentioned for the Federal Direct Loans student A.G and a parent would go in and apply for the loan there but especially this year in um this High interest rate environment the plus loan has a 9.08 fixed interest rate plus an origination fee so I just thought it was good for families to understand that during this year so here are some of the differences uh mea has rates that range from 5.75 to 8.95 and has no fee and the um direct plus loan is that nine% rate and the fee so good to know um but there are some other differences so on the mealone the student and the parent for example would both be on the Note um and equally responsible whereas on the direct plus loan it's just the parent on on the note so and just the parents responsibility to pay so that's that's important to know um you can also see that mea's repayment terms go from 10 to 15 years the direct plus loan goes from 10 to 25 years which could allow um someone to pay a a lower amount further out um and you can see all of the repayment options um enrollment status eligibility requir requirements and um the safeguards um you also do need to file have a fafs on file for the direct plus loan but wanted to point that out keep that in the mix and any other lenders that you're looking at and choose a loan that's going to be best for your family so I'd say let me see there is a question I'll take that question before I move on to this next one so are mea loans provided back by the state of Massachusetts or uh or they pass it to private Banks um mea we are our own you know they'll stay they will stay as a mea loan so um we have a servicer that Services mea loans but they will stay as meal loans um as a state-based lender um there is no def offer in mea loans other than the ones that you saw about deferring while the student is in is in school um so students with you know a really long program or a really long graduate program um you know wouldn't be able to defer undergraduate loans during that however we do have some hardship deferments so um families who are having problems you know can can call us and um there are options when um a family is in a hardship situation to defer for short you know forbearance for short periods of time so there's flexibility but there is no deferment so someone who's going to be in a in a um a long graduate program um wouldn't have that deferment option good question um so I think when I am sitting with a group of uh families well I guess I'm sitting with you now but I can't I can't hear everything that you're thinking and talking about but um most what I find is that every family will do this a little bit differently every family will pay the bill differently um so I'm just going to go through and give an example of how one family may decide to pay a $20,000 balance um for um for a college so maybe this family um has maybe the student has been working Summers and during the school year it has some savings and so they take a little bit of the student savings $1,000 and they're going to use that toward the bill this year and the parents have some savings maybe they are saving in a 529 plan um but they can decide to take all of their savings or they might just decide to take a portion right now and so they're taking a portion $4,000 and then again just an example um let's say the parents just paid off a car loan okay so the parents have $500 extra sort of in their monthly budget at the moment so they're going to join the monthly payment plan at the college and pay $500 a month for 10 months and that's that parent contribution to payment plan and then the family is going to take loan an educational loan so they're going to decide to borrow $10,000 and that's how this one family might come up to pay that $220,000 balance and hopefully they'd be able to do the same thing year overy year um if their financial situation stays the same and the student does well and is able to keep all the Merit money so let's talk about timing oh and I see another question thank you for your questions okay so this is a great question we have enough for one year's tuition in our son's 529 once that's paid down will they recalculate eight and then I guess I'll read the whole question I assume but I'm unsure my understanding is parents are expected to spend 50% of any assets they have outside of retirement towards the tuition so let me take the first part uh first um congratulations first of all that you have one year's tuition 529 that's not easy to do um so that's terrific and then yes when you apply for financial aid next year you will um have a different financial situation and you won't have that money so your financial aid will be calculated on your Aid applications next year so yes however ever um the way that assets all assets are factored into um the financial aid eligibility is that the expectation is actually that families are really only expected to pay at at most 5.6% of their assets toward their their college bill each year now what ends up happening in reality is families end up paying a lot more than that because but the expectation before financial aid is awarded is that um 5.6% of your assets are factored into your students financial aid eligibility um so that's the way that works um so that's great so for example let's say you have $100,000 in assets um then your expected family contribution which is now called your student aid index would go up by 5,600 when they're calculating your Aid so that's how $100,000 in assets would factor into your Aid eligibility there and that from the FAFSA that can be all of um your assets minus retirement and minus um your home is not considered on the FAFSA application but if you're applying for financial aid and your college requires the CSS profile or another application they may ask about the equity in your home and that could also be uh counted at that five six 5.6% rate all right so that was a lot immy question um so a few other things uh bills for the fall semester tend to be due in July or August I'm seeing that that most of the bills are um do in early August the last look that I took and that would be for you know your tuition fees housing meal plans and any other direct cost if there's lab fee or something like that um again I'll just say it again it's where it's saying it may include a health insurance charge so if you if your student already has health insurance you can wave that and then things that will be subtracted from your bill or your enrollment deposit that you made back when if there are any private scholarships coming in those can be deducted from your bill as well and then any financial aid that you have accepted will be deducted um also once you sign up for the payment plan um or let's say you apply for a loan once the college sees that you have a loan in process um they can deduct those amounts as well and they just sort of put them on there as tentative credits until the money actually comes in for the loan and it becomes a permanent credit as I mentioned work study does not get deducted from the bill that's up to the student to find a job and earn money and then use that for some miscellaneous expenses I'll give my little work study talk as well that I think sometimes parents think oh I don't know if I want my student working the first year because I don't want to disrupt their studies but I have a friend in a financial aid office who always said don't assume if they're not working that they're studying so um work study is a great program and if your student has it um I'd encourage them to get a job and they could get a job that might end up being you know something toward their career or they could get a job sitting at the desk in the library or the gym and just checking how many people are coming in easy job that then they could sit there and do their homework as well so um I'd talk up the work study um you want to apply for um any of the the other loans on top of those Federal Direct student loans hopefully about two weeks before the bill is due now sometimes the process is a little quicker than that but you want to try to get those in process give yourself a couple of weeks in case there's any back and forth with paperwork or signing signatures of both parties all of that um tends to take a few days and if you don't apply for a loan now you could still apply for one later in the year if if you know your plan sort of goes AR and you think you might need some funds later you can do that at at any time and again if you're interested in that payment plan make sure you're in touch with the college all right a few more resources and then I'll get to your last questions um in all of this ask questions of your lenders you're looking for transparency you want to understand your interest rate the repayment terms all of that um please feel free to be in touch with mea at any point you can call us I'll I'll put up the contact information you can call us any time um you can email us we're happy to help you through this really for the whole time that your student is in college um and and another great resource is the financial aid office at the college where your student is attending um so um you know it's been a crazy Year I'll reference again because of the FAFSA delays so financial aid offices have been busier than usual but um they are still a great resource for um students at at their college all right so all of the the details here um you probably are signed up for me for emails now that you um are here at this webinar so we'll send you emails a couple of times a month on anything relative to your student and their age and Stage um keep in touch come back for any any further um webinars view any videos uh check out our blog we WE Post you know relevant information um in a timely way and listen to the me podcast currently it's called the mea podcast and we're nearing our 100th episode so um wherever you get your podcast check that out and um yeah that's we we we have fun and then here are all the ways that you can contact mea and stay in touch so you can make a virtual appointment request you can email us at College Planning mea.org or you can call us at 1 800 449 MEA and these are just you can see um these are our webinars our podcast John Hughes here is our podcast host um and he's he's a great conversationalist I'll say and these are our blog posts specialized appointments and social media Facebook Twitter Instagram LinkedIn wherever you get your um information and here we are so um I see a couple of questions let me try to answer those oh you're so welcome oh great okay this is a great question so this person wants to borrow a mea loan um when you begin to apply for the loan it asks for some personal information whose information you are you putting in so um when you go in in and it says borrower that you can put in your parent borrower information because then it will say student borrower so wherever it says student borrower you can put the students information in but when you start out you can put your information in and you'll see as you go along that the two get linked and um you'll both need to do a section but once once you as the parent do most of it the students the student will have very little to complete and sign off on that's a great question are there any other questions well you heard me you don't need to have them all today um please know that you have h a good number of us our team loves to help students families all of that so please be in touch stay in touch and anything that we can help you with um about this process right now or into the future I hope you will you will reach out so thank you and have a great day