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[00:00:00] Okay. Good afternoon, everyone. My name is Stephanie Wells here from MEFA. We have a great program this afternoon to talk about all of your financial aid offers and get you started on thinking about options to pay the college bill. So I have a couple colleagues with me today who are going to help with the Q& A, Meredith Clement and Jennifer Bento Pinion.
So they are going to be behind the scenes answering your questions. So feel free to type your questions in the chat. And they will are in the Q and a I’m sorry, the chat is shut down and they will review those questions and answers as we go. And they may also stop me if there’s common questions that we want to, you know, share with everybody.
We can do that as well. But everybody is on mute. So if you try to speak or raise your hand, we won’t be able to hear you. So please communicate with us through the Q and a. All right, let’s get started.
So I just went over a [00:01:00] couple of these items, but feel free to the live transcript is on there as well. Type your questions in the Q& A, and we will get everybody a link to the recording.
So a little bit about MEFA and who we are. If you’re not familiar, MEFA is a quasi state authority here in Massachusetts, and we are dedicated to helping families plan, save, and pay for college, so we’re a self financing authority. Been around since 1982, so we’ve been offering low cost loan programs since then, but we also manage the state’s college savings plans, the U plan and the U fund.
So we’ll talk a little bit about using those plans as well to pay for school. Uh, but one of the biggest things we do at MEFA is offer guidance and education for families and students and school counselors and college administrators. And that’s a part of our programming today. So before we even get started, congratulations to any students on the line for your [00:02:00] college acceptances, and I always like to congratulate the parents for their students getting accepted because you’re going through this process with them as well, and it can be stressful, emotional, there’s a lot going on, a lot of moving parts, so congratulations on getting to this point.
Hopefully everybody has a couple of acceptances in hand that we can talk about today. So the main thing we’re going to focus on is really breaking down those financial aid offers line by line, giving you tools to understand them and compare financial aid offers. I think that’s really important to compare them and really understand that bottom line number of what you actually owe at each school.
What each school is providing in loans or scholarships, grants, things like that. It’s very important to break that all down. We’ll talk about how to pay the college bill, some options there, and also talk about the timeline. So what’s next? So it’s, you know, early March right now. We’re in fall, spring, as I like to call it.
A little bit warm today, but [00:03:00] it’s going to be colder soon. Um, and you know, there’s a lot going on between now and May 1st, when the student has to deposit. And then you have June and July where. You have accepted student programs and enrolled student programs, bills that are going to be coming in. So there’s a lot going on the next few months for high school seniors.
And of course, throughout, I’ll talk about free resources that you can access to help you through this process. Everything MEFA does is free of charge, all of our guidance and education. We really feel like it’s important to utilize free resources through this process. You shouldn’t have to pay anybody to get through it.
All right, so let’s start talking about the financial aid offer. As you can see on the screen, you have a sample of a financial aid offer. This is just an example of line items that you may see in a financial aid offer. Um, yours may look a little bit different You may have five offers from five schools and they all look a little bit different, but in each [00:04:00] financial aid offer.
Here we go. Oops. Sorry, my Wi Fi was a little unstable for a second there. Hopefully we can, uh, you guys can hear me. Okay, but my Q and A is Jennifer and Meredith behind the scene. Let me know if, uh, my you’re good. You can hear me. Okay, good. I had the connection unstable. All right. So your financial aid offers should already be arriving.
If you haven’t gotten those already. Okay. You should be getting them, you know, soon, as long as you’ve already applied for financial aid and been accepted to the school. Sometimes colleges send the financial aid offers with the acceptance letters. If the student applied early action or early decision, that may have happened, you know, you may already have financial aid offers from those early, uh, early schools.
But at the end of the day, There’s a bunch of things that will be on a financial aid offer from each school, depending on what you’re eligible for. So any [00:05:00] grants and scholarships that you’re eligible for from the school should be, they’re usually listed first. So the colleges, they like to put the money that they’re providing up front.
Those are usually the top line items there. So you can see the university grant on our example. And then you also see if you’re eligible, any federal and state grants that your family might be Qualifying for. And when we talk about grants and scholarships, that’s all free money that the student does not have to pay back.
So that’s the good stuff. So you’ll see the good stuff listed first. Then if the student is eligible for work study, you may see that on the financial aid offer. So in this example, we have 1, 500 work study award for the year. And what that means is that this student is eligible to. Get a job on campus, a designated work study job, and earn up to 1, 500 for the academic year in that job.
And they’ll get a bi weekly paycheck, usually something like that, and they can use [00:06:00] that money to pay for some of the unbilled expenses like books, supplies, pizza money, stuff like that. Um, so not every student is going to be eligible for all of the grants and work study. Some of it is based on financial need, which we’ll talk about.
And then we have loans. So there’s lots of different types of loans to pay for college with this type of loan that we’re talking about. We’re really talking about the federal student loan. So the loan that is in the student’s name. It’s not a parent loan. And that is a different type of loan than a loan through MEFA or Federal Plus Loan, because a student is taking that out on their own without a co signer.
And I’ll talk more about that loan in a second. And that is why it’s considered financial aid. So we’ll go over the rates and fees. But there’s not really a lot of places where a student can just take out, you know, significant portion for college, not pay it back for four years, defer it and not need a co signer.
So it is a, it is a special type of program [00:07:00] for students. Now, aid can come from different resources. The college and university, of course, the federal government as well as the state government. So here we’re in Massachusetts. I’ll probably refer to some mass programs, um, but the financial aid offers could look different.
It could come in an email. It could come on paper. You might need to log into the school’s portal to download your financial aid offer. So just know that it could be coming in a variety of different ways. And you will need to accept all or part of the financial aid offer usually by the school’s deadline of May 1st.
So that’s the National Decision Day. We have to deposit and accept your financial aid offer. Now, why would you not accept the entire financial aid offer? Most families are going to accept everything that’s on there. However, there could be programs that maybe the student doesn’t need to borrow the first year.
You have enough savings where they don’t need to borrow. So maybe you [00:08:00] decline that. Um, but usually we do say, you know, if your family does need to borrow, use these federal direct student loans first. They’re the best programs out there to get started. It’s a good way for students to have a little skin in the game and borrow a little bit on their own.
Um, maybe the student is working, you know, a significant amount of part time hours already, and they don’t have time to add on a work study job. So they might not accept that. So there are reasons why you might not accept the entire map. Thing, but for the most part, most families will accept all of the aid that they’re offered.
So the aid that you’re receiving could come in two different varieties. So the 1st could be merit based aid. And typically you’ll hear about that from the admissions office in the acceptance letter. If the student was awarded any merit based aid, so usually it could be the president’s scholarship at the college or some sort of grant or scholarship from the school.
And it’s typically awarded in recognition of the student’s achievements or skills. Most [00:09:00] merit scholarships from a college are going to be based on the overall admissions application. So not just their GPA, not just their athletic talent, but their overall application and the criteria to be awarded.
Awarded a merit based scholarship can be different from school to school, even within a same college, you could have different levels of scholarships available. So maybe the top 1 needs a 3. 8 to be accepted for that scholarship. And then the 2nd level down, which might be a little bit lower amount might be.
3. 5 GPA that the student needs to get that scholarship. I’m making these numbers up, but you get the point that it can be different from school to school. And often there are requirements for renewal of this scholarship. So it could be a minimum GPA that the student needs to maintain. Maybe they need to be enrolled in a specific major.
If they got a specific engineering scholarship and they decide to be a social worker, make sure that you’ll still be able to keep that scholarship or [00:10:00] know what will happen if they lose it. And even if the student just, you know, Has too much fun the first semester and their GPA isn’t quite what it needs to be to maintain that scholarship.
You do need to understand what will happen in that search circumstance and the college will tell you that usually in your acceptance letter and let you know if they need a 3. 0 and they get a 2. 8 will they lose their scholarship altogether or might they you know lose a portion of it or maybe they’ll get a semester to You know, get their grades back up, maybe just be on probation for a semester, give them a second chance.
So these are examples of what could happen just if the student doesn’t maintain what they need to, to keep that scholarship. Of course, there’s always special circumstances that you can talk to the school about and in terms of, um, you know, Any leave of absence for health or mental health, things like that.
You know, you could talk to the school if if that’s an [00:11:00] issue, but I’m talking about just regular. The student had too much fun and didn’t get their GPA that they needed for no real reason. That’s a good example of why a student might lose a scholarship. Then most of the financial aid that’s given out nationwide is going to be based on need.
So a family’s financial needs. So need based aid, most of the aid that’s given out by federal and state governments is based on financial need because they want. You know, the neediest of families to get this limited resource. So there’s a lot of aid out there, but a lot of it is based on financial needs.
So filling out that FAFSA form, maybe even the CSS profile form, and it’s standardized formulas that the governments and the states and the colleges use. Now, it is important to understand that Most colleges nationwide aren’t going to be able to give you 100 percent of what you might need. So you may need 50, 000, but they might be able to just give you 30.
I’m making the numbers up here. So just [00:12:00] know that most families, even though your need might be higher, you might not see 100 percent of that met in a financial aid offer. And that’s what we call maybe a gap in the award. Um, that you’ll also have to come up with as well. So we’ll talk about that. Um, but that’s basically how most financial aid is given out based on financial need, but you also have your merit based aid.
Now, when you get your financial aid offers, even if you did get a merit scholarship from the admissions office, That still should be on the financial aid offer as well. So let’s talk a little bit more about the federal direct student loans that I mentioned and go into the details about that. So there are limits on what students can borrow.
So you can see those in the box on the side, 5, 500 is the maximum that a freshman in college can take out. And you can see the higher amounts as they progress in their undergraduate career. As a graduate student, those numbers go up to like 20, 500 a year. And medical and dental students, theirs is even [00:13:00] higher, and I think 40, 500 a year.
So the numbers do go up as the student progresses. Um, but it’s just good to know that even if you get this loan, if you have more that you owe the school, then there might be additional borrowing that the family needs to take on. And it’s just always good to remember that the student does have this loan as part of their loan borrowing.
Uh, you know, in a monthly payment that they’re going to have to pay back when they graduate at approximately maybe 300 or so. So it is good to know, and there is no credit check on this loan. So the student can take out this loan. They don’t need a cosigner. It really is a nice way for a student to help the family take on a little bit of the borrowing on their own and, you know, contribute towards the bill.
The rates right now are The rates are higher than we’ve seen them in many years. Right now, the rate for this current academic year is 6. 53 percent fixed. Every July 1st, that rate will change. So the students who are high school [00:14:00] seniors right now looking at your financial aid offers, your rate next year is going to be different, most likely.
And we’ll find out from the feds what that rate will be in May. So usually they announce it in May, and then the rate goes into effect on July 1st every year. So hopefully it’ll go down this year. And then the student will have that rate for the life of that loan, and then they might take on loans for years two, three, and four that will have different rates since they reset each year.
But once the rate is locked in, it’s locked in for the life of that particular loan. Now this loan could be divvied up into two different types. So you have subsidized Federal Direct Student Loans and unsubsidized Federal Direct Student Loans. The subsidized portion of the loan is not going to accrue interest while the students in school.
So interest free while they’re in school. That subsidy is based on the family’s financial needs. So filling out that FAFSA form. So it is good to know, you know, if you have a subsidized loan, you’re not paying interest on [00:15:00] that while the students in school. So it is a good low cost way to take on a little bit of borrowing while the students in school.
Now the rest of that loan, or for some families that don’t qualify for the subsidy, it could be the entire 5, 500. The rest of it is going to be unsubsidized, meaning interest will accrue as soon as it’s dispersed while the students in school, you don’t have to make payments on the principal or interest while the student is in school.
You can make voluntary payments, which we definitely recommend on the unsubsidized portion so that when the student graduates, they just have to pay back what they borrowed, not any of the. interest that has accrued. So if you break down these amounts, subsidy, subsidized and unsubsidized, that 5, 500 freshman loan, the maximum amount that could be subsidized is 3, 500.
And then the rest, the 2, 000 or even up to the full 5, 500 would be unsubsidized. So you could see your loan breaking out into two, two different varieties. Now there is a small fee that’s [00:16:00] deducted from the loan amount. So just keep in mind, federal loans, whether it’s the parent or the student, there are fees associated and they are deducted from the loan amount.
Once the student deposit it, deposits at a school by May 1st and the school knows, okay, they’re coming to this school, then that will get the ball rolling with the financial aid office to email the student usually or through the school’s portal. everything they need to do to secure this loan. So they’ve been awarded the amount, but they still have to go through what’s called entrance counseling, which is kind of like an online quiz so that the student understands their rights and responsibilities as a federal student loan borrower.
When they graduate, they’ll have to go through exit counseling. So they understand the repayment options that are available. That is a requirement. They also have to sign their promissory note online. So those are things that the The college will send you, uh, send the student once you deposit and get the ball rolling.[00:17:00]
Now, as I mentioned, there’s no payments due while the student is in school, and, um, there’s several repayment options to choose from when they graduate. So calculating the balance due, I have a great Calculator on the next page. That’s going to show us how this works. Uh, but basically what you’re going to want to know is what is the school actually charging direct costs.
You also want to count for under indirect costs and then deduct your financial aid in your enrollment deposit and whatever is left over. That’s what you owe the college. So let’s look at MEFA’s college cost calculator. I’m going to demo this for you. When you get the spreadsheet, when you get the PowerPoint, the slides, you’ll get a PDF.
You can scan all of these QR codes, but this is going to help break it down for us. So this is right on MEFA. org. Scroll down here to this page here. So our college cost calculator, if you go to [00:18:00] ways to pay, or even just look in the search bar, you’ll find it. But that QR code will take you right here to this page.
So I am only going to put in one college for our demo, but you can add up to five and then you can print your results. So if we look at college A, I’m going to pretend it’s a private four year school up here in the northeast. So it’s, you know, fairly pricey. In this calculator, you’ll see little question marks next to a, all, many of the bullets.
And that will give you little tips of what this means. So food and housing, I’ll put in 15, 000. For books and supplies, for example, it shows the school will provide you an estimate. So these aren’t Direct build costs, but you do need to take account for that cost. So I’m going to put in, I’ll put in 3000 for books and supplies.
Now for health insurance, that’s something that you’ll want to be aware of in Massachusetts. Every student needs to have [00:19:00] health insurance if they go to school here. So I’m going to put in zero for my amount because my parents in this example have health insurance for me. So I don’t need to buy the schools.
insurance plan. So that could be up to 2, 000. So if the student doesn’t need their plan, the school’s plan, you should definitely waive that cost. And you’ll be able to do that. Once you get your bill, the birth bursar’s office or student accounts office will tell you how to put in your insurance information to get that insurance wave that insurance fee waived.
And you definitely want to do that as soon as possible. Don’t wait till next fall. Uh, cause. The student needs to have insurance once the semester starts. So you might not be able to get that money back if you wait too long. And then there could be other costs that you want to account for. So transportation, a laptop, whatever that might be, I’ll just put in.
I’ll just put in 3000, for example, just so we have some numbers here to work with. So before [00:20:00] we add in our financial aid, I just want to scroll down to the bottom of the calculator so you can see that it’s adding up all of our total costs. Now, what I’m going to do right now is add in our gift aid, which is our free grants and scholarships, our loans, and any other resources, and that will start deducting from that total cost.
So let’s put in, I’m just making these numbers up here. Let’s say we have a scholarship from the state. And then maybe the college, since they’re a private school, maybe they have a bigger endowment and maybe they have, you know, some good, um, merit and need based scholarship monies to give to the student.
So we have 20, 000 there. Then we have outside private scholarships. So those are scholarships the student can apply for. Hopefully they’ve already done that through their local high school for the local scholarships. That’s a good place to start. But you can see we also have MEFA pathway. org, which is MEFA’s college and career web portal that has a [00:21:00] free scholarship search on their fast web college board.
There are online search tools where the student puts in their demographic data. It sends them emails of scholarships they might be eligible to apply for. Now keep in mind when you’re looking at national search engines, those are a national competition. So lots more students applying, lots more competition.
Start locally, there’s less students applying, less competition for those. And then if the student has more energy and more time to put into it, then, you know, send them onto these websites to keep searching. Uh, go on the college’s website to keep searching. But all of these outside private scholarships, you will need to report to the college that you’ve received them because they are financial aid.
Okay, then we have our subsidized loan. Let’s pretend we’re eligible for the full subsidy. So we have 3, 500 subsidized, 2, 000 unsubsidized for a total of 5, 500. And [00:22:00] then let’s say we have that 1, 500 work study amount that is not going to be deducted from your bill but can be applied to some of those unbilled expenses that we put in there.
And then let’s say, so we have Broken it all down. We owe 23, 000 at the 61, 000 school. So a little bit easier number to deal with. Now let’s say the family has saved 20, 000 and they’ve said, you know, we’re going to spread it out 5, 000 over each year out of our 529 plan. So we’re going to take that off the bill off the Amounts that’s due as well.
And what’s left over is 18, 000. So that’s the real number of this family is working with to, you know, get to that bottom line. And then you can print your results as well. So this is a great tool. I love using it. I love looking at the bottom row where I can put in all of my awards or at least up to five.
And then you can see just in the [00:23:00] black and white, without all the beautiful pictures and brochures the colleges are sending you, what is each school costing? What are they giving me for free money? How much are they expecting me to borrow in student loans? And some schools might even put a plus loan on there, which is a parent loan.
And then, you know, what do I owe at each school? So it’s not just how much is that financial aid offer, but you really have to do all of this math to figure out your bottom line.
Sorry, I’m just trying to get back to my PowerPoint. There we go. Okay. So that’s what you’ll want to do with this tool. You can create a spreadsheet if you want. If you like spreadsheets, you can do that too and use, use these categories. It’s up to you, but it is a good way to really compare those results and look at what is that net price.
Then you’ll want to have the conversations internally with your family. What is [00:24:00] actually feasible? It’s, it can be a tough conversation, It can be a tough conversation to have with students and, you know, talking about money can be tough for some families, but it’s a very big investment. These aren’t small dollars we’re looking at.
Um, and it’s important for students to know, you know, what can their parents take on in debt? If, if they can take anything on, uh, for borrowing or what are they expecting the student to borrow? What can they really afford? And don’t forget. If the student’s going to a four year school, you have to do this each year, um, so you have to pay these bills each year.
If you can’t make the numbers work year one, it’s not going to get any easier years two, three, and four. So just keep in mind that four year plan, even though it is an annual process. You do want to look ahead. You know, what is this costing us overall for four years so that you can also think about as a student planning to go to graduate school.
If so, probably want to try and minimize the borrowing. Keep that undergraduate, [00:25:00] um, investment at a lower cost, knowing that the student might be taking on borrowing for graduate school, for example. And if they do go to graduate school, that might be three or four years that they can’t help make payments on, you know, their parents.
federal parent loans or something like that. So it is good to have those conversations and know what is expected of everybody in the family. Is there anybody else who can help? Um, grandma, grandpa, godmothers, godfathers, whoever it might be that may have even taken out a 529 plan to save for the student.
Maybe they are able to contribute or they’ve told you they have a little bit of money stashed aside. So take, take. Advantage of everything that’s out there and just know you know what is available for each school. But we definitely at MEFA, we want you to be thinking about limiting your borrowing, not jumping to a loan as the first resort.
So appeals are something that [00:26:00] every family can do if you have unique circumstances. So what could those be? What is an, what is an appeal? An appeal is when you are going to the financial aid office. typically to talk about your financial aid offer because the numbers, you know, just aren’t going to work for your family.
Um, you know, maybe you applied to two schools and they’re similar costs, but one gave you a lot more aid than the other school that’s a competitor college at, you know, fairly same cost structure. So you might want to ask, you know, that first school, you know, so and so gave me this much and you cost about the same.
How come there’s such a discrepancy or, you know, I lost my job, but I didn’t. I wasn’t able to report that on the FAFSA because it was taking into account my 23 income. You know, those are things that are special circumstances that you’ll want to talk to the financial aid office about how to handle those and what they can do to help you.
So anytime there’s a drop in income or assets, you with that. [00:27:00] unreimbursed medical expenses. Maybe, you know, a parent had another child, you know, during the academic year, changes in the family size. Um, you know, maybe there’s a new dependent in the family if, you know, parents are taking on, uh, care for grandma or grandpa or something like that.
Life happens is all kinds of things that could change since the time you fill out that FAFSA form in the financial aid officers want to hear about that. They want to make sure that they’re helping you access as much aid as you’re eligible for. So we had a great webinar a couple weeks ago that I was fortunate to moderate and you can see the QR code in the little.
Picture here where we had some of our colleagues talk about the process at their college. So I would definitely recommend if you’re looking to at appeals to listen in on that because it was a great webinar and they also to walk us through the process. So what kind of, you know, what’s the timing? Most colleges are going to want to know after you filed your FAFSA and after you’re [00:28:00] accepted.
Um. You know, what, what, what’s your circumstance? They want to hear from you. It could be an appeal form that you need to fill out. They might want a letter, um, depends on the situation, but the webinar really does cover a lot of it doc, but they’re going to want documentation if you’re appealing. So they’ll take that information.
You know, review the documentation and make any adjustments that they can and send you their decision. Now, an appeal is much different than a negotiation. So a lot of families will say, you know, I don’t have a reasonable appeal. Nothing’s changed, but can we negotiate our financial aid offer? And. Most colleges won’t really entertain negotiating, uh, they are trying to put their best foot forward, their best offer up front, but that doesn’t mean that you can’t go back to them and say, you know, I’m having trouble understanding how I came up with these numbers or, you know, student really, this is their top choice school, but school B over here, that’s.
You know, about the [00:29:00] same cost of giving us a lot more. Is there anything you can do, you know, it doesn’t hurt to have those conversations because schools want to enroll the students that they’re accepting, um, but they don’t have unlimited dollars either. So it is, it is kind of a, uh, you know, give and take here, but it never hurts to ask questions.
They’re always willing to entertain questions and you never know. Sometimes they might just give you a couple more thousand. Because there is a big difference from their competitor school, and they want you to feel good about their offer. So, you know, it really depends on the school, but definitely start with the financial aid office if it’s, you know, need based aid.
If it’s a merit based scholarship question you have, you would talk to the admissions office about that. If you’re wondering why you didn’t get a scholarship or why they didn’t get a bigger one, something like that, the admissions office will handle that.
Okay, so let’s talk about methods on how to pay the bill. So we figured out what we owe at each school. [00:30:00] Now we want to run some numbers at the schools that the student, you know, really likes, maybe the top three, whatever those schools are that they’re still very interested in and figure out how we’re going to pay that bill.
But before I do that, I just want to toss it over to Jennifer and Meredith and see if there’s any questions you want me to address live right now before we keep moving. I don’t have any right now. There’s been some good questions, but nothing that needs to be answered live. I don’t know, Jennifer, you saw anything else?
No, I think we’re good with the live. Okay, great. Keep plugging in those questions. Thank you, Jennifer and Meredith. All right, so we talked a little bit about scholarships earlier, um, but private scholarships can be a good way to help add to, you know, your, your free money pot. Um, this time of year. The question we get most often is where can I get more free money?
Where can I get more scholarships? Where can we apply? And at this point in time, you’ve already [00:31:00] filled out the FAFSA. So you’ve applied for scholarships, usually at the school and hopefully local community. Um, but you know, does your company offer any tuition reimbursement or any benefits, community organizations, religious organizations that you might be a member of?
Do they have any programs for their constituents? You know, look at your world around you and, you know, see, you know, what, what kind of type of organizations you’re a part of. I use an example of my nephew when he, um, went to college, he was awarded the Pop Warner scholarship because he played Pop Warner when he was in middle school.
So little things like that, that you might not remember or think of. But, you know, definitely look at them. Never play to apply for scholarships. You shouldn’t have to pay anybody to go through this process. And I mentioned, um, MEFA. org has a wealth of information on it. We actually launched a new website that’s Really great.
It has a lot of tools [00:32:00] and resources, and you can see here in the screenshot, just if you typed in scholarships, looking at the resources, we have a bunch that pop up. So we’re always sharing on MEFA social media and on our website scholarships that we’re hearing of. And you also have the national scholarship search engines like MEFA Pathway that folks can use to do those searches.
So. Keep connected with us for scholarship alerts, and definitely if you can get the student to put the time into it to do those online searches, it really is worth it. Even if it only comes up with, you know, maybe they get two 500 scholarships for those three hours they put in on a weekend. Well, that’s, you know, a good amount of money for two hours of work, so it’s good to do that.
So once we’ve looked at, you know, the financial aid and scholarships, then it comes time to figure out how to pay that balance with your own resources. So savings, always a [00:33:00] first stop. Do you have any savings? Did you open a 529 way back in the day that you’ve been putting money into a prepaid plan or, you know, dig out those savings bonds from.
You know, christenings when they were babies and things like that. Does the student, do they have money that they’ve been setting aside again? Family members, are they able to help or do they have money set aside? Uh, I remember when my niece, who’s also my goddaughter, I. When she was first grade, I think I started at 529 and it was a little bit a month that I put away and it gave gave us enough to buy some books and a laptop when she went to college.
So it was a little bit of a contribution. So every little bit helps. So look at savings first. If you do have one of the Massachusetts plans, whether it’s the U plan or the U fund, you can get in touch with us to find out us. With the year you plan, for example, how much do you have? What is it worth at the schools that the student has been accepted to give us a call?
We can help [00:34:00] you with run those numbers. If you have a youth fund and you want guidance on how to utilize the savings that you have in your balance, Fidelity managed that minute manages that plan for us. You can give them a call as well. If you need to deduct funds from your U Fund, pay the bill, whatever you might need to do, we’re here to help, um, with managing those plans as well.
So once you’ve tapped into savings, then you want to look at your current income. So money out of pocket. And that might go towards a loan payment, but it also could go towards a payment plan. So every college has an interest free payment plan, which is a monthly budget plan that you can spread out all or part of what you owe over a period of five to 12 months.
So a common plan is a 10 month payment plan. There’s no interest charge. There’s usually a Small fee. Um, maybe 50 to 100 to participate, and the plans [00:35:00] usually start in May, June or July. So you want to get on the plan at the college of students attending once you know if they’re going or not, and the college should be sending you that information after they deposit.
It should be on their website as well if they have what their payment plan specifics are. But it’s a good way to, you know, have that monthly budget throughout the year. Instead of having to come up with lump sums each semester, then borrowing is always going to be a last resort, but most families need to borrow in some capacity.
So we’re talking about borrowing. I’m talking about borrowing above and beyond that federal direct student loan. So this is really additional loan programs to pay the balance. So they are going to be credit based, unlike the federal direct student loan. So a MEFA loan, for example, you have to have good credit.
Um, so you want to, you know, get a handle on that and understand if, if you have filed bankruptcy recently, then you might need [00:36:00] a credit worthy cosigner to get the loan approved. For example, uh, only borrow, you know, the minimum of what you need. And do keep in mind that even though it’s, One year that you’re applying for each each time you borrow.
It is a four year plan, so to speak. So you want to think in terms of four years for debt. So if your monthly payment for a loan, the first year is 200 for year one, then multiply that by four, uh, and know that at the end of four years, you’re probably going to have an 800 in loan payments. Um, so definitely do that for your plan.
And if you’re hoping that the student will help you. Pay for the family loan or the parent loan or MEFA loan. Um, just make sure you know what their plans are post graduation. If they’re going into graduate school, they might not be able to enter the workforce right away. If they want to be a doctor or something like that, it’s going to take a little while before they have, you know, the finances to help pay off those loans.
So just keep that in mind and keep those expectations [00:37:00] in check. Also, As the student is deciding where to go to school and how much to borrow, is that going to, you know, pay off in the long run? Is it a career that they’re looking at that is going to pay dividends, like use any of the STEM careers, for example?
Um, then maybe borrowing is a good investment. Um, but you do want to think about what is the student going into because not all rewarding careers. are going to be paying, you know, a huge salary. Um, so you want to really just make sure that everybody knows what the student can afford when they graduate.
Now, I know it’s kind of crazy to be thinking graduation when we haven’t even deposited yet, but you really do want to create that plan now and set yourself up for success now, just based on the school that the student’s choosing. Now we do have some comparing loan option webinars coming up in June and July.
We have one on our website right now that’s recorded from last year that you can also [00:38:00] watch and we will help families go through understanding the different loan programs. We’re going to go through it in very fine detail. We’ll talk about the differences between fixed and variable rates and what that means for your budget, repayment timelines, things like that.
Um, but we’re going to compare the loans in that webinar. We’ll bring out the disclosure statements and show you, you know, what the true cost of borrowing is. And how to shop for loans. So we will get into that level of detail in that webinar. But for now, I will just give you a couple quick tips, um, just to.
No, when the repayment timeline is going to happen, because there are lots of different types of loans out there. For example, at MEFA, I’ll show you in this next slide. We have different repayment options, so it might be easy to defer the payments, but that might be a little more expensive as well with a higher interest rate and not paying principal.
And interest on that loan can cost more over time. So those are things that [00:39:00] you want to think about. And also when you are shopping, uh, multiple credit inquiries or multiple applications for an education loan, for example, within a 45 day window only count as one inquiry on your credit report. So that’s important to know when you’re shopping and applying for loans.
So here is Mipha’s, um, Monthly payment under undergraduate monthly payment calculator, and there’s a QR code to access it later on when you get the slides, so I’ll just go. This is the same page where our college cost calculator is on, and you can see it’s right here, so let’s pretend that we are borrowing 20, 000.
I’ll just use that as a round number, and you’ll want to put in four years before graduation if they’re a freshman, so that the calculator knows how much interest to assess. Now, I like to use the middle credit criteria is very good because most people fall in the middle. Um, because rates on most [00:40:00] private loans, such as loans to MEFA or any banks, lenders, they’re going to be based on credit credit scores.
So you can see here, once I hit calculate, this is going to show you for MEFA’s loan options, what the payment will be for each of them. What the rate will be. So MEFA’s rates range from 5. 75 to 8. 95, depending on the repayment option and your credit. So our 10 year loan is going to have the lowest rate and the lowest total cost because you’re paying it back in 10 years and you’re doing principal and interest right off the bat.
So you can see what the different repayment options are. We have a 15 year loan. You can also just do interest payments while the student’s in school, so. Keeping that cost down a little bit, but making those payments affordable. Or you might choose to defer and not make any payments while the student’s in school.
We also have a deferred loan with a cosigner release if that’s an option you’re looking for. But if you look at these monthly [00:41:00] payments after college, you can see. You know, those immediate repay loans stay the same, but those deferred loans, you’re going from zero to 300, you know, when the student graduates.
So just be prepared if you’re deferring loans, what that’s going to mean for your monthly budget, as well as the total cost. So MEFA compared to most private lenders has very low rates. So even at these rates, you can see the money adds up once you’re looking at paying that principal and interest, that 20, 000 loan.
Is not just 20, 000. So do your homework. Um, there are other options out there. You know, MEFA has good rates. So I definitely recommend looking at MEFA first, uh, because our rates are even lower than the federal parent plus loan. That’s over 9%. Um, so good option to look at, but not the only option out there.
You want to do your due diligence and feel good about, you know, the plan you’re choosing. So just to wrap it up, I like to call this our combination plan. It’s not [00:42:00] just one size fits all. Not every family is paying in the same way. Um, most families are doing a little bit of this, a little bit of that, and that’s a good way to look at it.
It’s a good way to get a plan together that uses borrowing as a last resort to help keep your debt down. So let’s Use our 20, 000 balance as an example, using our past income in the form of savings. Maybe the student worked over the summer and they’re going to pay 1, 000 towards the bill. Parents, maybe they saved in a 529, let’s say they saved 16, 000 and they said, we’ll do 4, 000 a year, spread it out over four years.
So there we go. Using savings, we’ve chopped 5, 000 off our bill. Then it gets into how much can you afford per month. So this family has said we can afford 600 a month. Okay, great. For a 20, 000 loan, that monthly payment would be about 200 a month. So since they can afford more than that minimum payment, we don’t need to borrow 20, 000.
We’re [00:43:00] going to borrow less. so that we can access that payment plan interest free. So they’re going to do 500 a month on a 10 month payment plan for 5, 000. So by doing payment plan and savings, we’ve chopped our bill in half. We still owe 10, 000. We’re going to take out a loan for that at 100 a month, which is our 500 on the payment plan, 100 on the loan.
That’s our 600 affordable monthly payment, and the bill is paid there. So that’s just one year, but it’s a good example of ways families can do that while utilizing all the low cost options that are available to you. All right, so what is next once you’ve looked at all your options and trying to figure this out?
If you haven’t applied for financial aid, it’s not too late to do so. Get FAFSA. Filled out. Unlike last year where we had a lot of FAFSA issues, this year the FAFSA is running very smoothly. It’s a quick and fairly easy form to fill out these days. So [00:44:00] get that done. Get everything in there before May 1st because that is a deadline for Massachusetts financial aid from the Commonwealth.
You don’t want to, you know, lose out on that because you missed the deadline. And federal aid, like the Federal Direct Student Loan, for example, you’re eligible for that throughout the year. Um, but many colleges, their financial aid deadlines may have passed, so you might not be eligible for their aid, or you might not get as much if you miss their deadline, so get all that in the door, set up those payment plans and loans once you know where the student is going to, um, be going.
But right now, just make sure you’re applying for financial aid, because payment plans and, you know, MEFA loans don’t require financial aid application, but we always recommend access all of that first before you’re borrowing. Even if it’s just getting that federal dark student loan at a lower cost, it’s worth filling out the FAFSA.
So the enrollment deposit is going to be required. Usually May 1st is the national deadline. [00:45:00] So you want to make sure you get that deposit in the door by then. A lot of you may be attending some accepted student days in March and April. Get yourself back on those campuses. Get a last look. Uh, I know that one of my colleagues last year, her daughter is a freshman right now, and um, you know, the school that she’s going to now was a school that at this point in the year, last year, she wasn’t really that interested in anymore.
She was accepted and was like, all right, we’ll go look at the school one more time. fell in love with it on the second visit and now she loves the school. So get that second look in if you can. Usually at those accepted student days, there’s going to be financial aid sessions with the financial aid office.
They might have one on one appointments. Um, me personally, I will be at Curry College and on this Saturday in April, my colleague will be at Endicott College where we’ll have, you know, other lenders to talk about payment options. So different schools have different programming, but. Try and get to those programs if you can.[00:46:00]
Um, but once you pay that deposit, you know where the student’s going. That fall semester bill will be coming in June, July. It will be due about three to five weeks later in July, August. And that’s just going to be for half the year’s cost. You want to plan for the full academic year’s cost. If you borrow, borrow your application for the full year, because interest isn’t going to assess on any disbursements until it’s sent to the school.
So you can set up your full, you know, year plan on a MEFA loan, for example. And you’re not paying interest on the spring money until it’s sent in January. So there’s no, there’s no drawback for applying for the full year up front. There’s actually drawbacks for not doing it. Um, so definitely get those, get that in once it’s time.
We always recommend if you do need to apply for loans. It’s using me for loan as an example, give yourself a couple of weeks before the bill is due. It’s an instant credit decision. You can do it online, get everything done in less [00:47:00] than an hour, but you never know. Maybe, uh, there’s an issue on a credit report.
Things happen, you know, stuff pops up. So you want, you don’t want to any surprises, you know, the day before the bill is due and set up those payment plans as soon as possible, uh, according to the school’s schedule. Okay. So let’s talk real quick about the wait list. If the student is on a wait list, what, what to expect, there are a few things that you definitely want to consider.
Many schools have a very long wait list and don’t accept any students off of it, or maybe only a couple. But that doesn’t mean that your student won’t get off that wait list, even if it is an elite university. Uh, I have a friend who said, Daughter is a sophomore now, but she was in that situation where she went to an open house or an accepted student stay.
She was on the waitlist and one of the student tour guides said, Oh, nobody gets off the waitlist at this school. But guess what she did. And now she’s at that school. So you never know, um, [00:48:00] at some schools. Folks that get off the wait list might not get very minimal financial aid. Uh, at some schools, you’ll get the same aid coming off the wait list as if you were accepted initially, so it really depends.
But you do want to know, are you going to still be eligible for aid at that school? If the answer is no, and it costs an exorbitant amount, then you can maybe move on and make a decision at another school. But if, if it is a school students still holding out hope for, Maybe hold off on that enrollment deposit until you’re closer than the May 1st deadline at any other school because that enrollment deposit is usually non refundable.
Now if the student is on the waitlist and they really want to go to that school, you’re going to need to formally accept their spot on the waitlist. You know, let the admission counselors know how much they’re still really interested in it. They have any updated grades, awards, anything can that can help boost that admissions application [00:49:00] because we’re still sort of in admissions world right now with the wait list, you know, keep in touch over social media that demonstrated interest in the school could help on the wait list, uh, and keep an eye on emails for updates from the school about it.
But you never know. It could happen, but just know. The financial aid implications of being on the waitlist. All right, so wrapping up and then we’ll do a Q& A in a minute or two. What else is next? What are your free resources? Who do you go to? If you have questions, financial aid office is going to be your number one resource to get you through the rest of this process.
They are there to help you. They want to help you. We work with colleagues in financial aid all day, every day. They’re wonderful people that really are public, you know, they’re here for the public good and trying to help your family. So They want to answer your questions. They want you to understand your financial aid offer.
If you need to do an appeal, they want to help you with that. So [00:50:00] make sure you’re in touch with them. They’ll tell you all you need to know about the renewability of any of your programs that you were awarded. And that also might be on their website too. So colleges have everything on their website.
Usually you just have to go looking for that info, but you can also set up phone calls, uh, emails, maybe even a zoom chat. Especially if it’s a school that might be, you know, across the country, that you might not be able to get there in person. You could always do a zoom chat if you like to, um, you know, have those conversations in person.
MEFA has a lot of resources. I’ll let you scan these QR codes later, but we have an email curriculum to keep you on track based on the age of your child. If you’re on this website, you probably are already getting our emails. Uh, we have a great podcast. If you like podcasts, definitely tune in, subscribe.
We have all kinds of different guest speakers that we bring on all the time. It’s a really good podcast and MEFA. org. I showed you a couple of our great free resources, but we have lots of [00:51:00] webinars, short videos, long webinars, whatever, whatever you need, however you need to, um, Understand the information.
We have lots of different ways to help you do that. And then at the end of the day, if you need one-on-one counseling, we have one-on-one appointments available as well where you can, you know, log into a Zoom, share your financial aid offer, and we can help you out with that. So we have a new program coming up next week.
We’ve never done this before, but we’re gonna give it a try if you need assistance. Or on April 16th, we’re gonna have a financial aid offer hotline. So we will, um. You know, allow folks to log in. You’ll be put in a zoom room with a financial aid professional and we can look at your financial aid offers.
You can share your screen in the zoom and we can help you understand it and figure out a way to pay that bill. So we are offering those programs. Webinar on how to use your you plan funds. If you have a weight, you plan as well as those loan webinars that I told you about that we’re going to do in June and July.[00:52:00]
But again, a lot of this stuff, especially the loan and you plan that is recorded on our website right now. If you need that information today, here are all of our social media channels and links. So definitely friend us like us, follow us all that good stuff. We’re always putting out good content on social.
A lot of the Information that you’re seeing, you know, on our website, tools, resources, scholarship, alerts, things like that. And just to wrap things up, MEFA is open nine to five, Monday through Friday. So call us, email us if that works better for you. If you have questions about this process, you know, we, we do offer loans as well.
So we can talk to you about those programs and help you pay, help you finance, um, um, This big investment and come up with a good strategy to help keep your debt low. So with that said, I’ll take a deep breath and a sip of my water and see if there are any questions from Jennifer and Meredith that we want to share with the, with the.[00:53:00]
We don’t have any open questions, but I’ll do a quick plug if I could for we have this evening from six to seven. We have an open support session for, um, filling out the FAFSA. So if you have any questions of, uh, on FAFSA, FAFSA related, um, we have go to fafsaday. org. So F A F S A. D A Y dot org. And you’ll find the dates right on that web page and you can register and join any time from six to seven if you have questions or need help with the FAFSA.
Very important form. Very, very important. Very easy to fill out. Yes. And I do see a question in there, um, about a Sallie Mae loan, and, and the only thing I’ll say about that, just wondering who qualifies for the lowest rates, I can’t speak to Sallie Mae or what their rates are, um, they are a for profit organization, MEFA is not a for profit, so we tend to have lower rates, um, but when you see [00:54:00] those low advertised rates, and this is something that we cover in my podcast, comparing loan options webinar.
When you see those low advertised rates, just know that the majority of folks do not qualify for them because you need 850 high 800 credit scores to qualify for that low advertised rate. I always recommend when you see a range of interest rates with, with MEFA, for example, it’s 5. 75. To 8. 95 with another for profit lender, it might be the three point something to 16 point something interest rate.
So you really want to look at that range and know that most people fall in the middle. So what is that middle number? Just as a quick when you’re shopping a number to look at. And just know, you know, based on your credit score, if you have an 800, 800 something credit score, then great. You might be eligible for some of those lower rates, but if your credit score is more in the, you know, six, 700 range with MEFA, you have to have a minimum 670, [00:55:00] then you’re going to be looking at the higher rates on that range.
So at least with. MEFA, the rates on the higher end are still lower than the federal programs, but many for profit lenders have double digit, very high double digit interest rates where that’s where most families are falling. So sorry, I saw that email, I saw that question in the chat and I just had to answer it.
That’s great stuff. All right, I don’t think we have any others coming in. I think we’re good. Oh, oh, I have another one. Here’s one more. I’ll just answer this one question before we leave. Um, so I have one question about, you know, if you freeze your credit. because of identity theft. You do want to call the, um, credit agency to have that freeze lifted before you apply for your loans.
And then after you’re approved, you get your loan all set, then you can put the freeze back on. But that is really important. When I said, give yourself two weeks before you apply before the bills do. That’s a good example of what I was talking about, [00:56:00] because you may have forgotten that you froze your credit and then you apply and you can’t, you can’t get that loan through.
So definitely unfreeze it right before you’re about to apply, apply, get your loan in order, and then you can put that freeze back on. But that’s a great question. And with that, I am going to end the webinar here and wish everybody a great day and. Call us, email us. Thank you Meredith and Jennifer for helping out with the Q& A behind the scenes.
And we will share this recording probably either later today or tomorrow with everybody who registered. So thank you everybody. Um, good luck with your, this whole process and we’re happy to help you. Have a great day.