QUE: 3 Historical data indicate that a student\'s income for any month of school

Question

QUE: 3 Historical data indicate that a student's income for any month of school from work, parents, scholarships, and loans is consistent with the following probability distribution:

Income Probability

$750 0.20

$950 0.36

$1150 0.30

$1350 0.14

Expenses for the same student are believed to be consistent with the following probability distribution:

Expense Probability

$900 0.40

$1000 0.25

$1100 0.20

$1200 0.15

Assuming the student begins the school year with a balance of $1200, use Excel to simulate 12 months of activity and to predict the position of the student at the end of the year.

Explanation / Answer

If you are struggling to pay your tuition and other college costs, you are not alone. Unless you have an education nest-egg stashed away, or parents that are well-budgeted for college, you’re probably looking for student aid to ease the financial burden of earning a college degree.

Loans are financing options that cover your expenses today, in return for repayment (with interest) tomorrow. The cost of college goes well beyond tuition and books, so loans are used to keep students afloat during school. Living expenses including rent, transportation and groceries are real-life reminders that independence is expensive. It is not uncommon to borrow money for school, but remember that student loans add to your debt load once you graduate.

Grants and scholarships are key financial aid resources, because money you earn does not require repayment.

Scholarships are typically merit-based awards, which are distributed based on student achievement and performance. Popular scholarships are tied to athletics and academics, but others take into account charitable contributions and civil activism. A range of qualifications are applied to scholarship candidacy, in combinations that might require eligible applicants to stand-out in more ways than one.

Most scholarships, especially renewable awards, impose GPA requirements that students must maintain to remain eligible. Financial need is sometimes considered by scholarship administrators, but it is usually secondary to performance.

Grants, on the other hand, are primarily need-based. Students who need the money most are targeted first for college grants. And since most grants come from government agencies, there is no credit check required for application. If your credit is bad or your income is low, government grants are in place to augment your college cash fund.

Your limited credit history and low income will work against you in your bank’s loan office, but publicly funded government grants are issued to students with little or no credit. Start down the path to college cash with a standardized request for financial aid called the FAFSA.

Income Contingent College Money
The Free Application for Federal Student Aid (FAFSA) compiles information about your family finances, and your ability to pay for college. Income and family size are used to determine how much money your family can reasonably devote to college expenses. Your Expected Family Contribution (EFC) is used to calculate the difference between what you can afford, and what your education costs.

Your personal Student Aid Report (SAR) paints a cash-flow picture for individual colleges to use as they draw from all the available financial aid resources to create your individual financial aid offer. The first aid sources that are tapped for needy students include federal and state grants.

The Department of Education Pell Grant program provides substantial relief for low-income college students. Eligibility is determined based on the information drawn from your FAFSA. Four important criteria influence the amount of your Pell Grant:

Student financial need that exceeds EFC
Year-long enrollment status
Full-time academic standing
Cost of attending your chosen university
Pell maximums hover around $5000 per student, for each academic year, based on congressional funding. FAFSA results are generally sufficient, but some students are asked to provide additional documentation before being considered for this need-based grant.

The neediest students who file FAFSAs are considered for additional federal grant money. Federal Supplemental Educational Opportunity Grants (FSEOG) target students whose Expected Family Contribution is zero. Once applicants with this level of financial hardship are given grants, additional funds are disbursed to the next neediest groups, until the FSEOG program runs out of money. If you are counting on this aid, file your FAFSA as soon as possible, to avoid disappointment.

Other federal grants hav

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.