Financing

Higher
Education
how to get it and
how to pay for it
Who We Are

“Making college accessible and

affordable for Illinois students.”
- ISAC’s Mission Statement
Is a college education a sound investment?

DEAL OR NO DEAL
What are the costs?

Tuition & Fees

Room & Board
Transportation
Books & Supplies
Miscellaneous Living Expenses
+
Cost of Attendance (COA)
 Cost of Attendance
Average U.S. Undergraduate Budgets, 2012-2013
$43,289
$35,312

$22,261

$15,584

Source: The College Board, Trends in College Pricing 2012; Annual Survey of Colleges.
 Increase in cost
College costs are rising, and that's a fact. In Illinois alone, tuition increases have averaged between 7 and 8
percent each year for the past 20 years.

Source: Illinois Student Assistance Commission, Historical Illinois Tuition & Fees
 Is college worth the cost? The m
in
$8.25/ . wage in IL
Individuals with higher levels of education hr is
earn more and are more likely than others = $33
to be employed. 0/wee
= $1,3 k
20/mo
= $ 15 nth
,840/y
ear

Source: Illinois Department of Employment Securities, Learn More Earn More, 2010.
 Job Trends Average Projected Growth Rate for all Jobs

All Jobs

Growth Rates
Growth Rates for Jobs That Require Some Higher Education

In Illinois, jobs that Advanced Degrees

require higher Bachelor’s Degrees

education are Associate’s Degrees

growing faster Postsecondary Vocational

Training

than those that

Growth Rates for Jobs That Do Not Require Higher Education
require less Work Experience in
a Related Occupation
education. Moderate-term on-the
job Training
Short-term on-the
job Training
Projected Rate of Increase in Number of Jobs

Source: Illinois Department of Employment Securities, Learn More Earn More, 2010.
How to get it

COLLEGE EDUCATION
Why do YOU
want to go to
college?
There is no “one-size-fits-all”
Start with
the end
in mind
Know the Players
It is in your
best interest to
know their
roles
Illinois Colleges and Universities
Different types of degrees
come from different types of
colleges for different types of
study.
•Certificates, Licensures &
Registrations
•Undergraduate (i.e.
Associate & Bachelor)
•Graduate (i.e. Master,
Doctoral, Professional)

Refer to isac.org for a

Map of Illinois Colleges.
 Community College
Myths Are Not Facts

Myth 1. “I just won’t get a high quality education at a community

college.”

Myth 2. “Financial aid is harder to get at a community college.”

Myth 3. “Transferring to a four-year college is very difficult to do after

attending a community college.”

Myth 4. “Even if I am able to transfer to a four-year college, I’ll be

unprepared for the rigors of tougher classes.”

Myth 5. “If my child attends a community college, he is likely to drop

out.”
FACT. A good student can get a good education almost anywhere.
Source: Bissonnette, Zac (2010). Debt Free U.
 Choose a Major That Makes Sense
Regional Wage and Employment
Information

Recognize that your intelligence,

motivation, passion, and choice of career
path will have a far greater impact on your
financial and life success than your choice
of major.
Source: Illinois Department of Employment Security, Economic Information and Analysis Division. Wage data for 2008Q3; Employment projections 2006-
2016 series. Visit lmi.ides.state.il.us for more detailed information.
How much can you afford, and where will you get the money?

SHOW ME THE MONEY

How will you
pay for four
years of
college?

Start Early…
What is Financial Aid?
Financial aid helps make up the difference
between what you can afford to pay and the cost
of college.
Grants
gift aid
Scholarships

self-help Work-Study
aid
Loans
Note: Funds may be merit-
based, need-based, or non need-
based.
Sources of Financial Aid
Financial aid comes from a variety of sources.
The Financial Aid Process
The Big Three
Financial Aid Programs

State of Illinois
Total = $14,518

Monetary Award
Program (MAP)

Federal Pell Grant

Federal Supplemental
Education Opportunity
Grant (FSEOG)

* Maximum award for 2013-2014

Financial Need
How much aid can a student receive?

Expected
Cost of
Family Financial
Attendance
- Contribution = Need
(COA)
(EFC)

Ask Questions
•What percentage of my financial need will you meet?
•What percentage of the financial aid offer will be made
up of loans?
“Schools are not car dealerships
where you can get a better deal
through a combination of bluff and
bluster. It’s a much more formulaic
process.”
- Zac Bissonnette, Debt-Free U (2010)
No Savings, No Loan, and No Financial Aid
Change Your Spending Habits

Pay for College Monthly

•Tuition Payment Plans
(a small set-up fee may apply

Pay-As-You-Go Method
•Hard-Work
•Short-Term Sacrifice
Tax Credits
The IRS offers federal income tax credits to certain tax payers
for higher education expenses.
TAX CREDIT VALUE DETAILS

American Up to $2,500 of the cost of Available for the first 4 years of

Opportunity Tax tuition and related expenses postsecondary education
Credit

Lifetime Up to $2,000 for qualified Applies to undergraduate, graduate, and professional

degree students and for less-than half-time study.
Learning expenses per return

See IRS Publication 970 at www.irs.gov

How to handle student loans after graduation

IT’S A BIG, BIG LOAN

What is a loan?
A loan provides borrowed funds that you
must repay with interest. It is a serious
financial and legal obligation.

The federal government requires:

•Entrance Counseling
•Exit Counseling
Subsidized vs. Unsubsidized
Within limits, the financial aid administrator of the college
determines the amount for which you are eligible.

Know the differences

Type Need or no need Interest
Subsidized • A need-based loan • Interest on the loan is paid by
Stafford Loan the federal government while
you are in school and during
authorized periods of
deferment.

Unsubsidized • NOT a need-based loan • You are responsible for paying

Stafford Loan the interest on your loan from
the date of disbursement
Federal Loan Programs (for Undergraduates)
Type Rate Grace
Subsidized 5% 9
Perkins Fixed Months

Subsidized 3.86% 6
Stafford Fixed Months
(2013-2014) Unsubsidized 3.86% 6
fixed Months
Credit-based 6.41% Could be within first
PLUS fixed 60 days

Note: Unsubsidized Stafford Loans for Graduate students have a fixed interest rate of 5.41%.

* FAFSA and Program Application(s) are Required

Borrowing Limits
How much can a student borrow?
Federal student loans have annual maximums that are
based on:

Too many students borrow amounts that are likely to cause them
difficulties, particularly if their earnings are either below average or
unusually uneven over time.
Debt Burden
How much should a student borrow?
Experts recommend that student loan payments do not exceed 8% of
the work income in year one.

For every $10,000 in

31 income, no more than
$800 in loan payments
Debt to Income Ratio
One way to look at the relationship between monthly debt
and income.

Total Total
Debt to
Monthly Monthly
Debt Net
Income
Payments Income Ratio

If the resulting percentage is:

Under 15% RELAX – The debt to income ratio is well within an acceptable range.

15%-20% BE CAUTIOUS – The borrower may want to reduce the current debt load.

Over 20% DANGER – The borrower is heavily indebted and should not consider
taking additional debt!

Source: Money Management International. Understanding Money and Credit.

Know What You’re Signing
All federal student loan borrowers must complete and sign
a Master Promissory Note (MPN), agreeing to repay:

As with any debt, you are responsible for

paying your loan even if you:
Repayment /Forgiveness Programs
Typically, qualifying borrowers are those who commit to
work for a specific amount of time in a field that has
experienced a shortage of workers.
Avoid Default
Default is defined as being 270 days delinquent or
behind in loan payments.

Loans are not dischargeable in bankruptcy.

Know Your Rights
As a federal student loan
borrower, you are entitled
to the following:
How does my student loan affect my credit?
• A defaulted student loan (270 days delinquent) will stay
on your credit report for 10 years!
• Delinquencies (late payments) reduce your credit score

What is a credit score?

• A number based on a statistical analysis of a
person's credit files

• An indicator of the likelihood that a person will pay his

or her debts
Your Credit
History Matters
Factors to consider

DO’S AND DON'TS

Graduate with Less Debt
Debt adds up quickly, so keep an eye on it.
Manage Your Debt
Look at college as a rational
investment, not a coming-of-age
ritual where money is no object.
- Zac Bissonnette, Debt-Free U (2010)

Time, Money, and Energy

Trusted Web Sites
Get your hands on up-to-date, accurate and trusted sources of information to learn what you need to
know.
 Find answers to your questions

Illinois Student Assistance Commission

800.899.ISAC (4722)
isac.org
isac.studentservices@isac.illinois.gov