YLS Financial Aid Blog

It has been said that financial aid folks have their own language speaking of FAFSAs , EFCs, COAs,  SARs and other strange terminology.  Sometimes we take it for granted that students will just understand this “jibberish”.  But seeing that our first batch of aid award letters for the class of 2015 just went out last week I wanted to insure that nothing was lost in translation.  To that effort,in clarifying elements of the aid award letter, this blog focuses on the COA otherwise known as the Cost of Attendance. 

The Cost of Attendance is just another word for your budget for the year.  It appears first in the aid award letter because it literally drives all other calculations in the all important need based aid formula :  Cost of Attendance minus Contribution= Financial Need.

Federal regulations stipulate that a Cost of Attendance must be all inclusive not just reflecting your direct expenses billed from the school (like tuition, student fees and health insurance ) but the estimated total cost of actually attending the university.  Institutions traditionally estimate those other costs which usually include books, travel and a living allowance (room and board).

So how do we know our estimates are accurate to survive and thrive at YLS ? Because each year we actually survey our current students with a Cost of Living survey asking for what they pay for rent, food, utilities, cable, internet etc.  We conducted that survey this past Fall and the average cost of living inclusive of all those expenses was $14,562- so the estimate we had been using  of $17,000 more than covered the average costs of living in the Elm City (yes,that’s New Haven’s nickname) . 

The one area in that survey which students indicated additional funding was needed were travel costs. So we changed our Cost of Attendance budgeting process for this year, and now add  a travel allotment into every student’s cost of attendance based on average costs of travel from their specific state of residence to New Haven.

Why is looking at the Cost of Attendance so important in analyzing your aid award?  Because the greater the Cost of Attendance, the more aid you should receive in the need based financial aid approach.  But you also need to look at where is that extra expense in the Cost of Attendance that is driving your increased award.  If that extra aid is just awarded to make up for a higher cost of living based on the geographic  location of the institution - what are you really gaining?  Yes,  you will have more aid but you are going to have to spend more to live there.   As suc, it’s not as simple as comparing, XYZ school gave me a $25,000 scholarship and ABC school gave me a $21,000 scholarship.  If XYZ’s Cost of Attendance shows that it costs $4,000 more per year for living and/or room and board in XYZ city– the offers are then virtually equivalent and the difference in the scholarship amount should be taken off the table as a comparative. 

There is also nothing to say that you have to spend up to the estimated living allowance.   If you can find a cheaper rent, split costs with a roommate or develop a steady diet of ramen noodles, you can maximize your financial aid because your award will still be based on the standard cost of living estimate, thereby allowing you to save funds or, more importantly, minimize your loan borrowing.  Follow the old saying:  “ live like a student today to live like a lawyer tomorrow”.   Sound advice!

Beginning in April, the Financial Aid Office will be offering the “Low Debt, High Gain” workshop series designed to give some practical, real world advice for our 3L students as they begin their transition from Yale Law School.  And while each workshop is individual, the most benefit will come if you participate in all three because, as a series,  they have been designed to build on one another.

The workshops will be held on consecutive Mondays beginning April 2 from 12:10:-1:00 p.m. in Room 128.  We start off on April 2nd with Lori Moore, Director of Financial Literacy for the Access Group. Some of you may have loans held by the Access Group and many of you may know them as the people who brought you the Need Access financial aid application each year. Lori will kick off the  series by providing an overview of loan repayment – the various plans you as the borrower can choose from,  understanding who holds your loan and who is “servicing” it, as well as your rights and responsibilities as a borrower.  

Once Lori has brought you up to speed on loan repayment and options, it’s time to see how COAP then coordinates with your repayment plan.  On April 9th,   Associate Dean Asha Rangappa and myself will present “Coping Through COAP” which will answer all the basic questions on how COAP awards are determined, what loans are covered, how and when to make application, as well as deal with the COAP intricacies of spouses, dependents, clerkships and assets. 

Finally, now that Workshop 1 and 2 has sorted out all your loan repayment, it’s time to move onto larger fiscal  issues you will face. That’s where financial planner John Caserta comes in with his workshop on April 16th  entitled “Your Financial Future Starts Now”.  John, a Yale college alum, has been offering this workshop to YLS students for a number of years and it has always been well received.  John uses the analogy of “building your financial castle” to talk about personal spending plans, investment and insurance basics, understanding employee benefit packages and even focuses on the need to start thinking about your retirement (before you have even graduated !!!). 

Even more incentive to attend- since the workshops are at lunchtime there will be food (probably pizza) – as well as some home baked dessert treats courtesy of the Financial Aid staffs’ kitchens.

As I mentioned the workshops are designed for 3Ls getting ready to leave YLS but are absolutely open for any 1L and 2L students who wish to attend.  We also plan to record the sessions and make them available on the Financial Aid website afterward for those whose schedule might not permit participating.

The phrase “limited time offer” is taking on a whole new meaning for some student loan borrowers who are being contacted by the Department of Education’s student loan servicers and offered a “Special Direct Loan Consolidation”.  This opportunity is part of President Obama’ “Pay As You Earn” initiative announced in October focused on increasing college affordability through better management of student loan debt.

The Special Direct Loan Consolidation is indeed being offered for a limited time (January 1-June 30, 2012) and only to a select group of borrowers deemed to have the greatest opportunity to benefit. In order to qualify for the Special Direct Loan Consolidation you must have:

• at least one student loan held by the Department of Education  (a Direct Loan or a Federal Family Education Loan [FFEL] owned by the Department and serviced by one of the Department’s servicers); and

• at least one commercially-held FFEL loan (a FFEL loan that is owned by a FFEL lender and serviced either by that lender or by a servicer contracted by that lender).

The requirements were set up this way to offer borrowers with both Direct and commercially held FFEL loans  the ability to better management their debt by ensuring all of their federal loans are serviced by the same entity, resulting in one bill and one payment . 

Beyond the better loan management aspects, the Special Consolidation offers two other significant benefits not available in a traditional Direct Consolidation Loan. First, the terms of each commercially held FFEL loan brought into the Special Consolidation will remain intact  such as the interest rates on the individual FFEL loans and the arranged repayment terms (i.e.10 year, 25 year, IBR). Normally when you consolidate in a traditional Direct Consolidation, all loans involved are factored into one single fixed interest rate based on weighted average of the interest rates of all the eligible loans (rounded up to the nearest one-eight of 1%, not to exceed 8.25%).  More importantly in a traditionally Consolidation Loan, the repayment terms clock starts over again ultimately leading to more interest building on the loan.  So the Special Consolidation does allow you to take advantage if you have good interest rates on your existing commercially held FFEL loans and providing you a shorter time period for repayment of those loans. 

Second, the Special Consolidation Loan is offering a very tangible financial incentive- a .25% interest rate reduction on any of the commercially FFEL loans brought into the Special Consolidation. So on top of being allowed to retain your original interest rates on the individual loans, you also get the extra .25% reduction.  And just like the traditional Consolidation Loan, the Special Consolidation still offers another .25% interest rate reduction if automatic debit is chosen for repayment.

So how do you apply for this “special” Special Consolidation Loan offer?  Well you can’t apply on your own until one of the Department of Education’s loan servicers (FedLoan Servicing (PHEAA), Great Lakes Educational Loan Services, Inc., Nelnet, and Sallie Mae) contacts you to let you know that based on your borrowing history you meet the basic eligibility of holding both the DOE Direct loans and the commercially held FFEL loans.  Notification began in late January and is expected to continue for several weeks.

If you are deemed eligible, do not hesitate to reach out to the Financial Aid Office for guidance or assistance in weighing your loan options and whether the Special Consolidation is ultimately going to be a true benefit for you. For more information on the “Special Consolidation Loan” see the Department of Education website.

All of this talk of DOE Direct loans vs. commercially held FFEL loans making your head spin?  One of the best places to get a better understanding of your student loan history is the National Student Loan Database  where you can log in and review each of your loans in depth including loan periods, amount borrowed, disbursed, balances, interest rates and most important who the lender and servicer on each loan is and how to contact them.