Grants Are

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• Grants Are

Not Enough
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Presented By
California Association of Student Financial Aid
Administrators www.casfaa.org
California Community Colleges Student Financial
Aid Administrators Association www.cccsfaaa.org
California Lenders for Education www.clfe.org
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Agenda

• Student Borrower Statistics
• Types of Loans
• Life Cycle of a Loan

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2006/2007 Cost of Attendance 229 Billion
Parent/Student Contributions
Federal Student Loans
Other
(Includes scholarships, grants, tax relief and
other aid from states, colleges, employers and
other sources)
Private Education Loans
Source Based on estimates by Octameron
Associates, Dont Miss Out, 29th Edition
College Board, Trends in Student Aid and
Sallie Mae. Includes tuition, room, board,
transportation and miscellaneous costs for two
and four year college degree granting programs.
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2006/2007 Cost of Attendance 229 Billion

• In twenty years, the cost of tuition and fees has
  doubled at private and public institutions

In one year, private and public tuition, fees,
room and board has increased by 6

• Western region public institutions
• Lowest national tuition and fees
• Total COA greater than south and southwest
  regions

Source College Board
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Borrowing for College Today

• More than fifty percent (50) of all college
  students borrow a student loan

Source College Board, Octameron Associates
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Borrowing for College Today

• Total 2006-2007 federal loan dollars borrowed by
  students
• 139 increase in number of student loans in 10
  years
• 20 increase in 2 years

74 BILLION DOLLARS
Source College Board, Octameron Associates
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Borrowing for College Today

• Total 2006-2007 private loan dollars borrowed by
  students
• 1200 increase in 10 years
• 64 increase in 2 years

23 BILLION DOLLARS
Source College Board, Octameron Associates
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How Prevalent Are Loans In Paying For College?

• Students response to question List all types of
  loans that come to mind that people use to
  finance college education.

79 - Federal Student Loans 13 - Bank Loans
(Private) 7 - Home Equity Loans 4 - Grants
5 - Personal Loans 2 - Scholarships 1
- Work Study
Source First Marblehead Study
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Parties Involved in Loan Process

• Student/Parent Student (or parent) enrolled in a
  Title IV Eligible School at least half time US
  Citizen or Permanent Resident

School Title IV Eligible School certified to
offer student loans by the US Department of
Education
Lender Source of funds for student loan for the
purpose of financing a post-secondary education
Guarantor State or private agency which repays
the lender if the borrower fails to make payments
resulting in default
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Types of Loans

• Federal Stafford Loans
• Offered by private lenders who participate in the
  Federal Family Education Loan Program (FFELP) or
  by the Federal Government in the Direct Loan
  Program (DLP)

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More
Federal Stafford Student Loans borrowing limits
established by the US Department of Education
Academic Level Dependent Student Annual Limits Independent Student Annual Limits
Freshman 3,500 7,500
Sophomore 4,500 8,500
Junior/Senior 5,500 10,500
Graduate/Professional N/A 20,500
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Types of Loans

• Parent PLUS Loan
• Option for parents of undergraduate dependent
  students
• Loan funds borrowed by the parent to make up the
  gap up to Cost of Attendance less any other
  financial aid

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Types of Loans

• Graduate PLUS Loan
• Option for graduate students
• Used to finance the students education, not to
  exceed the students Cost of Attendance less any
  other financial aid

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Types of Loans

• Federal Perkins Loan
• Campus-based student loan program, limited funds
  available
• Not all schools participate
• Annual student borrowing limits
• 4,000 Undergraduate Students
• 6,000 Graduate Students

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Types of Loans

• Private Loans
• Credit-Based loans with or without a cosigner
• Financing up to the Cost of Attendance
• Many must be certified by a school official
• Varying interest rates and fees based on credit
  rating
• Deferred repayment options available while the
  student attends school

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Types of Loans

• Direct to Consumer (DTC) Loans
• Credit-based borrowing
• Student self-certifies their loan eligibility
  and need for the loan
• School is not typically involved in the process

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Summary Types of Loans

• Federal Stafford Loans
• Federal Family Education Loan (FFEL)
• Direct Lending (DL)

Federal PLUS Loans Parent Graduate
Federal Perkins Loan
Private Loans
Direct to Consumer (DTC)
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CSU CCC Unmet Need Comparison
Parents' Income Cal Grant Assumption CSU 30,000 Income, no Cal Grant CCC 30,000 Income, no Cal Grant
On-campus Budget 16,752 15,306
Parent Contribution 0 0
Student Contribution 0 0
Net Need 16,752 15,306

Pell Grant 4,310 4,176
Cal Grant A, B Fees 0 0
Cal B Access 0 0
SUG 2,772 0
EOPG / BOG Fee Waiver 0 600
SEOG 0 750
Work-Study 3,000 4,000
Perkins Loan 0 0
Stafford Subsidized Loan 3,500 3,500
Stafford Unsubsidized Loan 0 0
PLUS Loan 0 0
Total Aid Applied to Need 13,582 13,026

Unmet Need 3,170 2,280

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Life Cycle of a Loan
Life Cycle of a Loan
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Life Cycle of a Loan
Application/Origination Process
Student Submits FAFSA
School Certifies Loan Eligibility
Student Completes MPN
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Life Cycle of a Loan
Application/Origination Process
Guarantor Issues Guarantee to Lender
Lender Disburses Funds to School
Lender Approves Loan
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Life Cycle of a Loan
Application/Origination Process
School Credits/Pays Borrower
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Life Cycle of a Loan
Application/Origination Process
Student Submits FAFSA
School Certifies Loan Eligibility
Student Completes MPN
Guarantor Issues Guarantee to Lender
Lender Disburses Funds to School
Lender Approves Loan
School Credits/Pays Borrower
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In-School/Grace
Life Cycle of a Loan

• In-School Servicing
• Entrance Counseling
• Enrollment Status Updates
• Demographic Updates
• Loan Sales
• Exit Counseling

Grace Period
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Repayment
Life Cycle of a Loan

• Repayment
• Payments
• Paid in Full
• Deferment/Forbearance
• Delinquency
• Default

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Grants Are Not Enough
Education is the most important investment any
student will ever make during their lifetime

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EDUCATION is the best INVESTMENT
Todays Children are Californias Future
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• QUESTIONS?