Money @ MIT (The Archives) : 0. About Your Award

The Blog is Dead. Long Live the Blog.

barkowitz — Thu, 30 Jun 2005 23:22:00 GMT

This blog is officially closed and will now only exist as an archive of past posts.

Please visit the new blog at http://daniel.mitblogs.com.

Self Help Redux and an Update

barkowitz — Wed, 22 Jun 2005 14:32:00 GMT

Hey all!

Sorry for the long delay in posting but life has been crazy for me... Since we last spoke:

I've traveled to Philadelphia for a 568 group meeting. We've started discussing proposed changes and refinements to the methodology we use to determine financial aid (look here for a more detailed discussion of our methodologies) and the meeting was an attempt to try to build consensus of some of these issues.
I've traveled to Fenway for a terrific Red Sox win over the Pirates. My father's day gift was seats at the game on Sunday, and a great game it was! The Red Sox won 8-0. After the game, we got to participate in the annual Father's Day Catch (where they let dads and kids on the field and hand out soft (very soft) balls, which with you can play catch with the kids). It was a BLAST! They even changed the sign on the Green Monster (the scoreboard) to honor fathers (a photo follows - note that I don't know anyone in the photo).
We all have been busy reading, reading, and doing more reading. At this time of year, we are trying to finish reading all currently completed upperclass student files so that you can have a financial aid award prior to the July 10^thbill. At this point, there are still about 200 complete files we are reviewing and we hope to have these decisions out the door in the next two weeks.
Reading and packaging Graduate Students. We have also been working with the application files of Graduate Students and notifying you of your eligibility for loan funding. At this point, we have awarded over 500 Graduate Students with more award packages on the way weekly. (As a point of information, we are adopting an email-only notification policy for Graduate Student award letters -- make sure to open the Word document we send you and print it for your records). A photo of our Graduate process manager, Elizabeth Barnes, in which she expresses joy at this move, follows:
We have been hard at work processing Self-Help forms. At this point, we have processed all of the Self-Help forms we have, assigning you the best programs for term-time work and student loans for which you are eligible. I hope in the rest of this post to expand on what you need to do now for follow-up on these programs.

So, now it is time to turn to the steps you need to take to finalize your loans and term-time work:

If you asked for student loan funding, you were awarded one (or more) of the following three loans: Federal Perkins Loan, Federal Direct Subsidized or Unsubsidized Stafford Loan, or MIT Subsidized Technology Loan. I will talk about the differences between these programs below, but first let's address what you need to do to take advantage of these programs.

For any of these programs, you must complete an online Entrance Interview. Your Entrance Interview can be completed through WEBSIS by following this navigation path: For StudentsàFinancial RecordàLoan Entrance Interview. All students who plan to take a loan during their academic career must complete a Loan Entrance Interview prior to any funds being disbursed to the student account.
For the Federal Direct Subsidized or Unsubsidized Stafford Loan, you must complete a Master Promissory Note (MPN). Students can access an online version of the MPN here. In order to access your MPN online, you will need your PIN used during your FAFSA application process. Alternatively, you can wait until Loan Signing sessions in the Fall (see below) and sign your MPN in person. Once you sign an MPN, you will no longer need to sign annually; instead, your award letter from us will identify the amount of your new disbursement under this program.
For the Federal Perkins Loan, you will need to sign your Master Promissory Note (MPN) when you arrive on campus in the Fall. We will announce loan signing dates and locations in the Fall. At that time, you will complete an MPN which will allow us to offer you loans under this program in later years without having to resign loan notes each year.
For the MIT Subsidized Technology Loan, you will need to complete a MIT Technology Loan Cosigner Application (these forms are not yet ready, we will send you one once they are complete and ready for distribution). The MIT Tech Loan is a cosigned loan so you will need to have someone serve as your cosigner. Once they have been approved as a cosigner, we will then send your cosigner a Promissory Note for them to complete and send back to us; we will then notify you that you need to come sign the same Promissory Note.

Now for some details on the loans themselves:

The Federal Perkins Loan is a subsidized loan (meaning that no interest accrues on the loan while you are in school) and features a 5.00% fixed interest rate. There are no borrowing fees on the loan. Repayment on the loan begins 9 months after graduation (or when a student withdraws or drops below half-time). The repayment period is 10 years and there is a minimum monthly payment of $40. There are specialized deferment and cancellation provisions which will be identified on the MPN.
The Federal Subsidized or Unsubsidized Stafford Loan is a loan featuring a variable interest rate (capped at 8.25%, and set annually on July 1). The loan will either be subsidized (see definition above) or unsubsidized (meaning that you can either pay the interest while you are in school, or have the interest added to the loan principal you repay). For July 1, 2005 - June 30, 2006 the in-school rate for Unsubsidized loans is 4.7% and the repayment rate for all loans in 5.3%. Fees are deducted from the loan you borrow (a 3% origination fee with a 1.5% rebate given back), and repayment begins 6 months after graduation (or withdrawal or less than half-time enrollment). The standard repayment period is 10 years with a minimum monthly payment of $50 (there are other repayment options available). There are deferment and forbearance provisions which will be spelled out in the MPN.
The MIT Subsidized Technology Loan is a subsidized loan. The interest rate is 7% fixed and repayment begins 6 months after graduation, withdrawal, or less than half-time enrollment. There are no borrowing fees, and the standard repayment period is 10 years. The minimum monthly payment is $50.

So let's talk about work:

If you asked for term-time employment, you were awarded one (or both) of two funds, either Federal Work Study or MIT Work. In either case, the majority of terms are the same; the only difference pertains to who pays your wages (either all from MIT or shared between MIT and the Federal Government). I will be providing a much longer post on Student Employment (when it is more timely) and highlighting what you need to do to find a job on campus, but at the present time, I will just briefly discuss several items of which you may want to be aware.

If you want to access the jobs that are currently available, click here. Some jobs for the Fall are already listed, but many employers will add jobs in August knowing at that point what their needs are and that you won't until August be able to apply for the jobs anyway. Think of this as kind of an “online bulletin board” for available positions.
If you were awarded Federal Work Study you may want to consider Community Service as a way to meet your term-time employment. Community Service is only available to Federal Work Study recipients; these jobs are off-campus assignments in the community at large where you can direct your passion for public service into positive use by working in a local non-profit agency and getting paid to do so. Again, much more information on Community Service jobs for 2005-2006 will be available as we get closer to the Fall. (If you didn't receive Federal Work Study but you want to participate in Community Service, you may still be able to if you received a Federal Perkins or Subsidized Stafford Loan. If this is the case, all you need to do is complete a modified Self-Help form, indicating your changed decision as to your Work / Loan distribution, and indicate your interest in participating in Community Service on the form. Make sure to return the form to us and indicate on it that it is a revised form by checking the box at the top.)
Regardless of which program you have, be sure to bring your original documents with you in the Fall to prove your eligibility to work. As you may be aware, before anyone can work in any job, we must prove your eligibility to work by completing an I-9 Form. Part of the I-9 Form, asks us to confirm your citizenship status by examining your actual eligibility documents (such documentation can include your Passport, Social Security Card, Birth Certificate, Driver's License, etc). You must have your original documents with you at MIT at the time you complete the I-9 Form, so be prepared to bring these with you to campus in the Fall.

So much more to discuss, but so little time. I need to get back to reading. Questions? Comments? General feedback?

Waive and Cosign (or is it Wave and Cosine)?

barkowitz — Fri, 10 Jun 2005 16:07:00 GMT

Hey all! Several items of update.

First off, I am back in Cambridge, having arrived during an eventful Wednesday evening thunderstorm. It was great to be in Aspen, but it is even greater to be home. The presentation in Aspen was a great success, and I even did a live demo of the blog highlighting some of your comments. I'll be doing another presentation on the blog to a different audience in the beginning of July (I'll post an update on that as we get closer).

So, to the message.

Waive: I have been receiving many questions about when you can start to provide health insurance waivers for the Fall. I called over to MIT Medical and was informed that the online waiver process will begin no later than July 11. As you all are aware, I'm sure, MITPAY statements will be produced by July 8 (the last workday before the 10th of the month), so you will all see health insurance charges listed on your bill. Once you waive the charges (by filling out the online waiver), you should deduct the amount of the health insurance from the bill you owe by August 1. Remember that you only need to waive the health insurance annually (based on what you choose), so once you have done this for the Fall, you should be able to see the credit on your account (using WEBSIS) and not need to submit a waiver for the Spring.
Cosign: In the next several days we will begin processing self-help forms for domestic freshmen and all upperclass students. As part of the process this year, we will be awarding (depending upon your eligibility for these programs) one or more of the following loans (in this priority order): Federal Subsidized Perkins Loan, Federal Subsidized Stafford Loan, Federal Unsubsidized Stafford Loan, and/or a subsidized MIT Technology Loan. If you request work funds, we will award (again in the following order and based upon your eligibility) one or both of these programs: Federal Work Study, MIT Work Study. The MIT Technology Loan does require a cosigner and the terms have been changed since the publication of Making MIT Affordable. The MIT Technology Loan now features a 7% subsidized interest rate for the life of the repayment period, and standard deferment and forbearance provisions (all of which will be in the promissory note you receive when you sign for the loan). You and your cosigner will need to sign an application for the MIT Technology loan (they are not available at the present time). We will send you an application in a separate mailing.

Well, it is nice to be back. Much more news to come in the next few days.

Rising Sophomores, Juniors and Seniors -- Your Award Letters are in the Mail

barkowitz — Fri, 03 Jun 2005 20:27:00 GMT

Well as one year ends, another begins...

Today we are sending out nearly 1200 upperclass student award letters. This is the first round of award letters for upperclass domestic students for 2005-2006 (we started sending international upperclass student award letters several weeks agi). This mailing (with some small exceptions) will include everyone who completed by our priority deadline of April 15, 2005 (and will include many of you who completed through April 29, 2005).

Enclosed with this mailing will be one or both of the following forms (depending on your eligibility for them):

The Self Help and Outside Award Reply Form (upperclass student version) -- On this form you identify to us how you want us to break out your self help into work and/or loans. Additionally, on this form you identify any outside scholarships of which we may not be aware. Please note that if you received an outside scholarship last year and told us it was a renewable scholarship, it will be included in your financial aid award letter and will have already been subtracted from your Self Help. If our information is in error please note that on your form when you return it to us.
The Student Information Review Form (upperclass student version) -- This form assists us in matching your MIT Scholarship with a “named” donor fund. Your completion of this form is crucial as it ensures that we are able to offer need-based scholarship funding while meeting expressed donor preferences.

Both forms are due back to our office no later than July 1, 2005, although you are encouraged to send them sooner. Remember that the first bill for the Fall semester will be produced on July 10, 2005 and only by submitting these forms and having us process them will your aid be present on the bill.

For those of you who are not in this first round of award letters because you completed after our priority deadline, we will continue to read and send award letters on a weekly schedule for the next several weeks (at least until the first bill is produced and mailed). At this point, we have another approximately 500 files completed pending a financial aid officer's review. This includes all of you who completed your applications through today.

For those of you who are stll not complete, you need to immediately take any necessary steps to complete your file. We would like to get all upperclass awarding done in the next month so that we can turn our attention to helping you with the next part of this process, and that is:

Processing of your Self-Help and Information Review forms -- Beginning in the next several weeks, we will begin to process submitted self help forms, removing the “Self Help Award” from your award letter, determining (based on your expressed preferences and your eligibility) from which loan and work programs you may receive funding, and providing detailed instructions on how to do what is necessary to receive this funding. These letters should start to be sent in the next two to three weeks (Freshmen and Upperclass). Keep an eye on the blog for an update!

If you want a sneak peek at your financial aid award, take a look at WEBSIS as of Monday morning. By then, our update program will have run providing you an online view of your 2005-06 award letter.

In the meantime, here is a closing shot of our upperclass student project leader, Jason Shumaker, expressing his joy at the fact that the letters are on their way out the door!

It's STILL not too late to consolidate (although it almost is) / New loan interest rates for 05-06.

barkowitz — Tue, 31 May 2005 20:00:00 GMT

Today is the last day on which 91-Day Treasury Bills can be auctioned prior to June 1. Why is this so important? Because the interest rates for Stafford and PLUS loans are based on this rate.

So with the information available now, it appears that the new interest rates for PLUS and Stafford for 2005-2006 will be as follows:

Stafford Loans: 5.30% interest during repayment and 4.70% interest during grace and in-school periods (for unsubsidized loans). This compares to rates during 2004-05 of 3.37% and 2.77% respectively.
PLUS Loan: 6.10% interest rate repayment. This compares to 4.17% for 2004-2005.

As you can tell, rates are going up. What should you do?

If you are a graduating student, you should consolidate NOW to lock in the lower interest rates for the life of your repayment (see my previous post for more information on consolidation). One concern, if you do consolidate now note that you will more than likely lose your grace period and go into immediate repayment, but over the life of the loan you will save much more by having consolidated!

If you are incoming student, and you are considering the PLUS Loan as your financing option, it is time once again to take a look at the Fixed Interest Rate option of the MEFA Loan program (the fixed interest rate on the immediate repayment option is 6.19% -- and this rate will never rise during your repayment -- see below for more information on alternative loans).

All Loans are NOT Created Equal

barkowitz — Tue, 31 May 2005 14:36:00 GMT

Time to talk a little about Alternative Loans.

First let's make sure we are all talking about the same things. When I use the term “Alternative Loans” I mean loans that are taken by parents (and/or students) which are used to finance your Expected Family Contribution. I am purposefully not including student loans (like the Perkins, Stafford or Tech Loan) in this conversation since they have different terms and are usually used to finance a part of the Self-Help.

In this discussion of Alternative Loans, first I think it is important to mention the six “biggies” that MIT uses, and later I will talk about the pros and cons of each.

MEFA Loan -- Offered by the Massachusetts Educational Financing Authority (MEFA), this credit-based, family loan has several options (fixed vs variable, immediate repayment vs. deferred repayment).
Federal PLUS Loan -- The Federal Parental Loan for Undergraduate Students (PLUS) is a credit-based, parental loan offered by MIT through the Federal government.
Citibank Alternative Loan, Sallie Mae Signature Loan, Bank of America Loan, Nellie Mae Excel Loan -- These student-based cosigned loans are offered by outside providers and usually feature variable interest rates and deferred repayment.
Another main source of financing for families is home equity loans (offered by local banks).

The first thing to remember as you consider what program is right for you is the popular (but very true) axiom “You get what you pay for.” In the realm of alternative loans, this means that the farther afield you go from the basic, “vanilla” loan (parent borrower, immediate repayment), the more expensive the option. And in many cases, what you pay for isn't worth the trouble anyway. Let's examine what I mean.

Who borrows? The first issue many parents and students concern themselves with is who is the borrower. Some parents feel more secure when their son or daughter borrows the loan, rather than serving as the primary borrower themselves. This is usually false comfort however. There are NO alternative loans which will allow a student to self-finance without a credit-worthy cosigner, so parents will need to serve as a cosigner at a minimum. Additionally under credit law, a cosigner is equally and severally liable for any loan they sign. This means that the only benefit of being a cosigner is that you aren't mailed the bills; otherwise, if the bills aren't paid, the cosigner will be as liable as the primary borrower for lack of payment. In rare cases, you may find a loan program willing to loan to a student on her/his own signature, but students borrowing under these programs will need to have significant credit histories and income sources of their own. You'll pay for these options (no cosigner, student as borrower), even though you may not derive any benefit (or you may not be able to qualify).
When do you pay? The second issue facing parents and students is the decision about when to begin repayment. Usually borrowers are given one or more of three options: immediate repayment, payment of interest only, or deferred repayment. The choice of a repayment plan is one of personal choice. If payments during the enrollment period are not possible, then certainly deferred payments may be the best choice, but you will pay for this option. Since these loans are (in every case) declining balance loans (meaning that upfront most of your payment is used to pay interest rather than principal in the beginning and as the loan carries on, the payment portions reverse), I do not recommend ever using the interest-only option. When choosing options other than the standard repayment, you will pay for this.
What interest will you be paying? Another issue of which you need to be aware is that of interest rates. While most of the loan programs available feature variable interest rates (the notable exception in this is the MEFA loan), all variable rates are not the same. Some loans are based on the Prime rate (with a modifier), some on LIBOR, one (the PLUS Loan) on the 91-day treasury bill. These rates can change regularly, and it is important (if choosing a variable rate) to understand several issues: 1) what is the rate based upon, 2) how often has the rate changed in the past, 3) does the interest rate have a cap (a protection as to the highest interest rate which can be charged). If you choose a program which features an interest rate cap, you will probably pay for it.

So how do you pay for it? There are several ways in which loan agencies will pass their costs on to you, and in all cases you want to compare these costs. I would also suggest that it is often the case that when choosing “special” options from above these options are used to pass these costs on to you.

Origination fees - These fees are either added to or subtracted from the amount of the loan you are borrowing. In some loan programs, the credit-score of your cosigner (or borrower) may result in a different origination fee (if you borrow without a cosigner, there will be a higher origination fee).
Interest rates - Again, interest rates serve as a way to pass costs on to you as the borrower. In some programs, choosing different repayment terms or cosigner options may lead to a higher interest rate than the base program.

With all of this said, therefore, the two main programs which I recommend are the MEFA Loan (Fixed Interest Rate Immediate Repayment) and the PLUS Loan (although the interest rate for next year will be much higher than the rate this year -- look here for more news in the near future). If students must borrow, then it is a toss-up between the other three programs named.

Important note for those of you choosing to use the PLUS Loan. Keep in mind that MIT is a Direct-lending institution, therefore we do not participate in any FFELP PLUS Loans (where a bank or third-party serves as a lender). So, if you are interested in using the PLUS Loan, make sure you use our application form, not one from a bank or lender.

Questions, comments, clarification needed?

Sometimes change is meaningless...

barkowitz — Thu, 12 May 2005 15:38:00 GMT

If you are an incoming Freshman student, this message is for you!

No grandiose ideas in the title. I know that change is meaningful and that you will be undertaking major changes soon as you close the book on your high school life and prepare to enter MIT for the next chapter of your saga.

But my purpose in this post is much more mundane.

We just submitted a number of FAFSA corrections for those of you who will be attending MIT next year. What this means is that we made some change to the FAFSA data you provided when you originally applied (maybe your tax information wasn't valid, maybe you left out a sibling, etc.) and we changed your record on our system. We have now reported those changes to the Feds (via a correction file) and as a result the Federal Processor will be sending you a revised Student Aid Report giving you a new Federal EFC and showing you the changes we made.

What do you need to do about this? Nothing.

Will your aid change as a result of these changes? No.

If you are curious and what to know what we changed, how do you find out? Look on the Student Aid Report. Any changes will be identified with a # sign.

Is change sometimes meaningless? Yes.

Now back to your regularly scheduled program...

Hey, Graduating College Seniors (and Graduating Graduate Students): It's Not Too Late to Consolidate!

barkowitz — Mon, 25 Apr 2005 00:41:00 GMT

Something you should know if you will be finishing your undergraduate or graduate education in the next several weeks: you may want to consider consolidating your Federal student loans now instead of waiting until after you graduate.

What is consolidation?

Consolidation allows you to combine all of your Federal student loans (Perkins, Subsidized and Unsubsidized Stafford Loans) into one loan, and allows you to take advantage of options for extended repayment plans which can extend your repayment period from 10 years to as long as 30 years (there are other repayment options as well: income contingent, standard, graduated, etc).

Why should I consolidate now?

If you are still in school, consolidate your loans with the Federal Government's Consolidation program, and consolidate now, you can take advantage of the lowest interest rate in the history of the Federal student loan programs and lock in the rate NOW so that it is fixed for the life of your repayment.

To explain: Interest rates on the Stafford program are at their lowest rate ever, and in all likelihood when they are reset on July 1, will be raising by 1 to 2 percentage points over the current rate (if the rate reset were to take place today, the new effective interest rate on Stafford Loans would be 1.8% higher than the current rate).¹ For students who are currently in school, the rates are even lower (2.77%), since the rate considered when finalizing a consolidation loan is the then current interest rate effective on the loan.

Additionally, if you consolidate while you are in school you will still maintain your six month grace period (you will lose this benefit if you consolidate after graduation).

Why might I not want to consolidate?

If you are a Perkins borrower, you may want to examine the cancellation benefits particular to the Perkins program which may enable you to have a portion or all of your Perkins loan canceled. If you consolidate your Perkins loan, you will lose these specific cancellation benefits. Additionally, the Perkins program has a 9 month grace period and if you consolidate your Perkins loans, you will lose three months of this grace period (since consolidation loans only have a 6 month grace period).

If you have not yet finished your undergraduate (or graduate) study, you may also want to wait to consolidate until your study is complete. Of course, interest rates may not be so low at that point, but consolidating too early puts you into a situation of ultimately having two or more consolidation loans (and you want to avoid that).

Where do I go for more information?

Go to the Department of Education's Loan Consolidation web page at www.loanconsolidation.ed.gov for more information and to apply. You will need your PIN to complete the application, as well as a list of your Federal loans. Get to work -- the end of the term is coming!

¹For those of you interested in the details of how I got this, here we go! The Stafford Interest Rate is based on the bond equivalent rate of 91-day Treasury Bills auctioned at the final auction held before June 1st of each year (look at http://ifap.ed.gov/ffelvarrates/07012004VariRate.html for more information). Using the current 91-Day Treasury Bill rate of 2.864% (see http://www.publicdebt.treas.gov/ for the most current rate) and comparing it to the rate determined last May (of 1.07%), you will see why consolidating now makes sense. Remember, that the effective rate on your loan is also subject to an add on to the base interest rate (for loans made after 7/1/1998 the add on is 1.7% during in-school, grace and deferment periods and 2.3% for all other periods). This means that if the new interest rate were set today, the new rates would be 4.56% (in school / grace / deferment) and 5.16% (all other), compared to the current interest rates of 2.77% and 3.37%.

Clearing the Decks (or the Desk) -- The Return of the Return of More Questions Answered.

barkowitz — Sat, 23 Apr 2005 01:01:00 GMT

Sorry all, between dealing with emails (over 200 a day), phone calls (don't even ask), questions from my staff, and just trying to spend a little time with my family, the last two weeks have been INSANE!!! So, I haven't been blogging...

Bad me!

But, just like a bad fungus (or a plague -- see: Passover starting tomorrow at the end of this post), I'm back!

So, to begin with, let me deal with the backlog of questions since last I posted:

Serene (and others) had questions about the medical insurance and whether or not it is covered by MIT financial aid. As you may know, MIT does require that all students attending the Institute have medical (hospital) insurance. If you have your own medical insurance coverage, MIT is happy to accept proof of this coverage in lieu of our own medical coverage. If not, you will be billed for the MIT Student Extended Insurance Plan (once in the Fall and once in the Spring). Details on what constitutes acceptable coverage, and what expenses are covered by the medical plan are available at http://mit.edu/medical/p-student.html. (Note that the Student Extended Insurance Plan is different than the basic MIT Student Medical Plan which covers urgent care - information on this is also at the same web page).

As for the financial aid repercussions: since medical insurance is considered a responsibility of all parents, we do not provide financial aid coverage at MIT by and large to accommodate this expense. For 2004-2005, the annualized cost of the coverage was $1,440 (for twelve months of coverage). Rates for next year have not yet been announced (to my knowledge), although they will likely be marginally higher. If meeting this cost would present an overwhelming hardship for your parents and you have no comparable coverage available (including public health insurance), you should be in touch with your financial aid counselor and keep this in mind when planning for what expenses you may need to cover through summer employment

There was a “question on behalf of someone” on a previous post which read in part:

how can I apply for financial aid from MIT if my family does not pay taxes, has never paid taxes, we have limited incomes, which although above the minimum taxable threshold, is not within the tax purview of the taxation authorities, and is barely subsistence level for a middle class large family.

What documentation should I produce, other than our own sworn personal statements of our finances, which will be acceptable to MIT (under the assumption that MIT has little reason to trust such statements - as falsehood for material gains is not an essential characteristics of peoples in poorer nations alone, which is why even in the US one is required to produce official verifiable documentations and one's word isn't enough). I do not have any officially verifiable income documentation, like the majority of the people in the nation.

You do need to provide some kind of documentation of income, whether that is simply a letter from your employer (appropriate for International Students), a copy of payment stubs, copies of checks, or simply a statement from you explaining why no other kind of statement will be available. We do ask that you do what you can to document income; we are not interested in placing insurmountable hoops but we do want to know what income is received so we can do a fair and equitable analysis.

I had no takers for CPW pics (how sad, how sad!!!), but Ben and others identified that you can see all of the CPW pics others have taken at http://mit2009.com/. (yay, Anthony!! w00t!)

Meder wanted to know about when we would be providing finalized aid awards (presumably with the Self Help award broken into loan and work). The answer to this is complicated as it depends on what is missing from your file. If you did not turn in your 2004 tax returns when your application for financial aid was originally reviewed (or some other piece of paper was missing, other than the Student Information and Self Help forms), we are reviewing your file as the information is received and if there are any changes, we will notify you by mail immediately.

If all you are/were missing is the Self Help and Student Information Review Forms and you have turned these in, we will wait until June 1 or so to mail the revised awards (since we want to only process these for those of you definitively coming). For international students, we do understand that you may have student visa issues which need to be finalized, and cannot be if the award letter from us says “tentative“, so we will likely produce your letters first (and potentially will begin processing yours sooner than June 1).

On a related note, Meder and Saad asked whether Autumn would be adjusted with the receipt of these forms, and in later feedback noted that it is being updated!

So, that's that! I think I am up to date.

But now I have an etiquette question for you. How many Livestrong (and Livestrong clone type) bracelets can one person wear without looking, hmm, a tad bizarre? I tried seven the other night and it looked offensive. Anxiously awaiting your reply.

And for those of you who will be celebrating the Passover holiday, have a sweet Pesach (for a list of MIT Passover events, look here).

When it feels like another logic puzzle... How to afford your EFC?

barkowitz — Fri, 01 Apr 2005 01:17:00 GMT

Hi all.

First off, let me say that I am really enjoying the feedback on the previous post. My one logic puzzle has turned into a thread of logic puzzles with a really hard one which Michael posted (Jane and her dad just answered it -- I think), and some easier (but still difficult) ones from Jane, Ben and Meder (and others). So keep up the fun!

Also a bit of a news update: we will be packaging about another 25 students tomorrow (we missed it today) and will be sending out these awards. This brings us up to those of you who completed as of Tuesday of this week, so keep your applications coming... We will also be sending another set of missing information letters out by email to Freshmen admits, either tomorrow or Monday.

I also will be out of town this weekend, so be aware that if you post something here I will not see it until I get back late Sunday (I'll be in New York City with a religious retreat -- 8th through 10th graders). If you are in the Big Apple, look for me this weekend!!!

Now, to the post:

I know some of you may be concerned as to how you (or really, your parents) are going to cover your EFC. As I said in one of my previous posts, the EFC is supposed to be an expectation of how much your family can absorb in costs for a year, not just how much you can pay out of pocket directly to the bill. If your EFC seems like a stretch for you and not something which you can simply pay from savings or current income, this post is for you.

Some families see their EFC and panic -- they think that the only option to them if they cannot pay it all is to borrow it all, and while that may work for your family it leaves lots of other options unexplored. So I would like to recommend the following hierarchy for you and your family.

Determine what your EFC is. If you will be using some of your Self-Help as work, add the amount of the work to the EFC you will need to cover. If you will be earning your summer expectation, subtract that amount from the EFC.
Determine what your out-of-pocket cost is. Realize that you are not billed for books and supplies. Decide if you plan on covering these with a payment plan or from a different source. Look at the budget in “Making MIT Affordable.” Keep in mind that the housing and meal costs will be estimated until you finally move into a dorm (in September) and choose a meal plan.
Determine how much you can pay directly toward the bill. Do you have money set aside for college expenses? Are there resources you can apply to (even if it doesn't completely cover) the Fall and Spring semester bills?
Examine the MIT Monthly Payment Calculator to see what combination of Loan and Monthly Payment Plan works for you.

So here we arrive at the crux of this post. To help you determine what should be the best combination of loan and payment plan works for your family, we have designed a fairly simple Excel spreadsheet which should help.

To understand how this works, let's examine a sample family -- the Joneses. The Joneses want to send their son, Ben, to MIT, and in order to make this work they need to come up with $15,000 (assume they have already done step 1 - 3 above). They download the MIT Monthly Payment Calculator and enter in the $15,000 figure (in the top line which says “Enter the amount the family needs to finance”) which presents them with twenty options they can consider as they look at financing Ben's cost at MIT (see the image below):

With the “calculator” in hand, the Joneses see that they can spend between $133 and $1,906 a month during Ben's Freshmen year to cover their $15,000 expense (see column labeled 2). They understand that each row in the sheet represents a combination of a loan (in this case, the MEFA Fixed Rate Loan) and the MIT Monthly Payment Plan. They look at the chart and notice that column 3 lists the total amount they will put in the MIT Monthly Plan while column 4 demonstrates how much they will be paying monthly (in 8 payments) under the MIT Monthly Plan. Similarly column 5 shows how much they will need to borrow using a MEFA loan while column 6 demonstrates how much the monthly payment will be for the MEFA loan (with a 15 year repayment term).

Looking at this chart, and more importantly looking at their monthly budget, they determine that a $500 monthly payment seems reasonable. They therefore will apply for a MEFA loan in the amount of $12,000 and will place $3,000 under the MIT Monthly Plan (with a payment of $381 for the MIT Monthly Plan and a payment of $106 for the MEFA Loan).

Several caveats:
There are some built in assumptions in the spreadsheet: that the payments to the MIT Monthly Plan have a generalized 8% interest rate and that payments are made on the first of every month; that the family borrows a fixed-rate MEFA loan with a 6.19% interest rate and pays on the first of every month; that the interest rates and terms of the loans do not change between now and when the family borrows; and that there are no prepayments under either program. This chart should be used for illustrative purposes only. It does not pretend to be a final representation of your actual monthly payments and should not be considered an offer of the loan.

So, enough warnings, and have at it. Here is the version with the MEFA loan, and here is one using the PLUS loan. The PLUS interest rate has not been set yet for next year, so the chart is using the rate for 2004-05.

If you have questions about any of this, feel free to ask! I will also be talking a bit about this at my presentation at CPW. In the Excel file, you will also notice a very pretty chart which illustrates the breakdown between payment types for the 20 options. It is suitable for framing, if you like!

Hey all! Enjoy. Remember I won't be around tomorrow or this weekend! And see you at CPW (I hope!).

Satisfying Your Self Help Supplications (you try finding an "S" word that means questions).

barkowitz — Mon, 28 Mar 2005 15:09:00 GMT

So sorry for the sibilant subject line, but down to business.

Many of you have had questions about how to satisfy your self help. I invite your questions here as comments to this post, and would also urge current students reading this post to offer suggestions on how they managed the self-help dilemma.

To review:

Most of you have a $5500 self help offer you will need to meet with loan, work, or a combination of both. Any outside awards will reduce the amount of your self help dollar for dollar. The choice of how to break up the self help is up to you.

So, supplicate away! (By the way, this is the sixtieth blog post since we started!)

When Your Dream Still Seems Out of Reach

barkowitz — Thu, 24 Mar 2005 20:18:00 GMT

OK, so your financial aid award has arrived (by the way, we sent 60 more decisions today), and you are somewhat (or extremely) disappointed with the result.

What do you do?

Well, first, breathe... Take a deep breath in, and exhale. Then, take a look around. Do you have other financial aid award offers from other similar institutions? Is our family contribution very different than theirs? Or are you just having a reaction to a seemingly high number without benefit of understanding what it compares to?

Let's take about three steps back.

First, remember that the EFC is supposed to be a measure of what cost your family can absorb in an entire year. It is not a measure of how much can be paid out of pocket today, and in fact in the coming month I will talk about multiple choices you have in paying your bill (monthly, by semester, by borrowing). As such, you should take another look at your EFC and see if it makes sense given that this is not an out of pocket expense. Remember also that an MIT education is an investment for your family; just as a car isn't paid back within a year of purchase, repaying the parent contribution to your MIT education may take your family some time.

Second, I would compare the EFC we have calculated with EFCs you may have received from other colleges (I will warn you that most colleges who meet only part of your need will not display their EFCs on the award letter since they don't want to reveal that they are unable to meet full need; you may need to do some investigation to determine what your EFC is at these colleges). I'm not saying that we will automatically match another colleges EFC (because we generally don't), but understanding if our EFC is in the same range as another college will help you determine if there is some problem at play with our calculation.

Third, remember that we do not offer merit-based financial aid at MIT. If you are a recipient of the “Trustee's Scholarship” or the “Presidential Scholarship” at some other institution we cannot match it. Daniel JR was right in feedback on one of my previous posts; when mit_girl asked “Does MIT give out merit-based grants for undergraduates?” Daniel Jr replied “I'll answer that question....(mit_girl) absolutely no. As the fin aid office likes to say 'who here WOULDNT qualify?' Fin aid awarded solely on a need basis.”

So, after all of this, your EFC still seems unreachable for your family. What do you do? If there are circumstances you think we didn't consider, or if there is a reason you feel we need to take another look at issues which you raised in your application, you should feel free to appeal your aid decision. Some things to keep in mind, though, to help you make your appeal successful:

We begin considering appeals on April 4th and will be meeting daily to consider new appeals through April 29th (with the exception of CPW). We will not be prepared to begin to accept appeals until April 4th, so please sit tight for now. Remember that right now, we are still trying to get awards out the door for students who have not yet heard from us. If you have not provided us your 2004 tax return (and all associated schedules and forms) you have to do that before we can even consider your appeal.
When you call, have a general sense of what you are asking us to consider. If all you can say is that your EFC is not afforable that is OK, but it generally is more helpful if you can provide more specific information. If you have had unusual expenses in the past year, if your parent lost a job in 2004 and hasn't been employed in 2005, if you have had a change in your asset situation, make sure to let us know that in your contact with us.
Recognize that we are unable to “negotiate“ aid offers, although we may ask you to send us a copy of another institution's award letter. We are interested in seeing other institutions' EFCs for you (if you are willing to share them) and may be able to tell you why our contribution is different than theirs.
Know that even if we say “no“ to your appeal, we will work with you to help you find a way to make the dream of an MIT education a reality. It is very helpful if you know upfront how much of a monthly expense your current budget can handle. With this information, we can help you construct a loan and payment plan combination which will fit within your budget and will help you manage the cost of your EFC.

Feel free to ask questions here too, although I will ask if the post is very specific to your particular situation that you either email me or the Financial Aid address (finaid.at.mit.dot.edu) directly.

With all best wishes!

More awards in the mail. More to come on Thursday.

barkowitz — Wed, 23 Mar 2005 21:28:00 GMT

Sorry I have been an absent partner...

We have been VERY busy trying to keep up with the submission of new documents for people who have not yet received their financial aid award.

So, some quick news:

We are now mailing financial aid award letters every Tuesday and Thursday -- this Tuesday we mailed about 50 more aid awards. We'll see what tomorrow brings.
We emailed on Monday tracking letters to all admitted Freshmen who are not complete for financial aid indicating what is still missing. At this point, you need to follow up with that information if you want financial aid.
For upperclass students, we emailed a “pre-deadline“ notice today (and will drop a copy in regular mail to your home address tonight) informing you what is missing to complete your applications. Upperclass review will begin in April and awards will be mailed by June 1.
For Freshmen, we are now reviewing files which became complete Tuesday. So, as long as you get your file complete SOON we can get you an award in time for CPW.
Please bear with me, a post is coming soon on what to do if your financial aid award isn't enough...

Be well all! And (if you are on Spring break) enjoy! As I posted on Ben's Blog (his haiku post):

The financial aid
Isn't all done as of yet -
No spring break for us.

How We Determined Your Award

barkowitz — Sat, 19 Mar 2005 16:24:00 GMT

In order to answer some of the questions that I am sure will be coming, I thought I would describe the process by which we award students (or put together financial aid packages for students). Much of this information is printed in the guidebook to the financial aid process, entitled “Making MIT Affordable”, you should feel free to refer to it as well for a complete run down.

The basic premise of the financial aid awarding cycle for MIT is contained in the following three formulas:

Cost of Attendance
- Expected Family Contribution
Financial Need

5500
- Excess Summer Earnings
- Total of Outside Scholarships
Self Help Amount

Financial Need
- Self Help Amount
Total Grants and Scholarships (MIT, Federal, State)

So what does all of this mean? Let's take them one at a time.

Cost of Attendance (COA) is defined as the total cost to attend a year at MIT. This is an average cost for all undergraduates, which includes an actual tuition cost and an average room and board cost. MUCH more information on our costs can be found in the booklet.

From the COA we subtract your Expected Family Contribution (EFC). Hopefully you already have a good sense of how we determine family contributions based on the material I have previously posted. If not, don't fear; the posts are easily found by looking under post categories on the sidebar of the page. If your EFC is less than your COA, we will display the figures on your award letter (broken down between PC - Parent Contribution - and SC - Student Contribution). Note that we do not separately display custodial and non-custodial parental contributions in the case of divorced or separated parents, nor can we provide this information if requested.

The remainder is your Need. This, if greater than 0, becomes the operative piece for the next part of the process. Note that if you have no need we still will send you an award letter, however your letter will simply display your eligibility for student loan and term-time employment. Of course, you are under no obligation to accept the offer we make to you.

If you do have need, the next item we need to determine is the amount of your self help. Your self help is the portion of your financial aid award which will be made up of term-time student employment and student loans. At MIT we do not make the decision for you as to which of these (work or loan) will be more appropriate to your situation; instead we let you choose how much you want to borrow and how much you expect to earn during the academic year. Your financial aid award will display an amount entitled “Self Help Offer” representing the total of what we expect you to contribute from these sources.

This amount (which starts at $5,500 for every undergraduate student) can be reduced in several ways. If you will be receiving funding from an outside private agency (i.e. National Merit, Gates Millennial Scholarship, Robert C. Byrd, etc.) we use the amount of this funding to reduce your self help. Another (less common) way we reduce your self help is by looking at prior year student earnings; if you earned a significant amount of money during the summer of the prior year, we take any amount of SC over our minimum SC (what we call “excess summer earnings“) and reduce your self help by this amount.

Once we have determined your self help amount, this amount comes off of your need, and the remainder of your financial aid is provided by a combination of Federal, State and MIT Grants and Scholarships. We meet the full demonstrated need of every undergraduate family who applies for aid at MIT. If you will be receiving a state grant of which we are not aware, this means that the state grant will reduce the amount which MIT is providing in your financial aid award.

That's it. Not much to it! Now you know how we determine your award (of course a lot more goes on behind the scenes but this gives you a good overview).

Next steps: send us the forms we've asked you to complete (the Self-Help and Outside Award Reply Form if you have a Self Help Offer in your financial aid award and the Student Information Review Form if a part of your financial aid award is covered by MIT Scholarship) as well as any other documents needed to finalize your financial aid award (tax returns, W-2 forms, etc).

Coming next on this blog:

1. Comparing Award Letters
2. When All You Wanted Wasn't Enough -- When and How to Appeal your Award
3. Seeing Us at CPW
4. Financing your EFC

In the meantime, sit back and relax. The hardest part for you is done. We will be very busy trying to complete awards for those students who completed their applications in the last week (as well as sending notes to student applicants whose files are still not complete).

If you need to reach me, you know where to find me... I hope you find this post useful.

The Letters are Out the Door

barkowitz — Fri, 18 Mar 2005 20:51:00 GMT

We just delivered the last letter to Mail Services and to our International carrier (the one with the yellow envelopes) and the letters are gone!!!

Many pictures to share.

First, some blog news. A little ways back, we passed the 15,000 hit mark, and thanks to Amrik, I have a screen shot. Now can someone tell me what “woot” means?

So, today at about 12:00 we began generating the award letters. We cross checked lists:

and checked more lists:

We printed the letters and began to stuff them:

and finally all 485 letters:

were done:

Much more tomorrow on how we determined your award and what to do next!