Transcript Slide 1

National Association of Student
Financial Aid Administrators Presents…
Financing Education
Beyond
High School
2007-08
© NASFAA 2007
Financing Your Education
• What is financial aid?
• Where does it come from?
• What aid is available?
• Who is eligible?
• How do I apply?
Slide 2 © NASFAA 2007
Agenda
• Definition of financial aid
• Definition of financial need and how it is determined
• Descriptions of major federal financial aid programs
• How to apply for financial aid, including the Free
Application for Federal Student Aid (FAFSA), and how to
avoid errors
• Descriptions of other government resources
• Where to look for information about private sources of aid,
including how to avoid being scammed
Slide 3 © NASFAA 2007
What is Financial Aid?
• Scholarships
• Grants
• Loans
• Employment opportunities
Slide 4 © NASFAA 2007
Types of Aid
• Gift aid: Grants and
scholarships (needbased or merit-based)
• Self-help aid: Loans
and employment
(need-based or nonneed-based)
Slide 5 © NASFAA 2007
Goals of Financial Aid
• Primary goal is to assist students in
paying for college and is achieved by:
– Evaluating families’ ability to pay educational
costs
– Distributing limited resources in an equitable
manner
– Providing balance of gift aid and self-help aid
Slide 6 © NASFAA 2007
Definition of Need
Cost of attendance (COA)
– Expected family contribution (EFC)
= Need
Slide 7 © NASFAA 2007
Cost of Attendance
• Tuition and fees
• Room and board
• Books, supplies, transportation, and miscellaneous
personal expenses, including documented costs for a
personal computer
• Loan fees
• Study abroad costs
• Dependent care expenses
• Disability-related expenses
• Cooperative education program costs
Slide 8 © NASFAA 2007
Need Varies Based on Cost
1
X
2
Y
3
Cost of
Attendance
(Variable)
Z
EFC
EFC
Expected Family
Contribution
Need
(Variable)
(Constant)
Slide 9 © NASFAA 2007
Principles of Need Analysis
• To extent they are able, parents have primary
responsibility to pay for dependent child’s education
• Students have a responsibility to contribute to
educational costs
• Families should be evaluated in their present financial
condition
• Family’s estimated ability to pay educational costs
must be evaluated in equitable and consistent manner,
recognizing that special circumstances may affect
family’s ability to pay
Slide 10 © NASFAA 2007
Federal Methodology
Federal Methodology
is the formula
created by Congress
to determine the
EFC.
Slide 11 © NASFAA 2007
Independent Student Definition
• At least 24 years old by December 31 of award year covered by
the FAFSA;
• Graduate or professional student;
• Married;
• Has children or dependents (other than a spouse) for whom the
student provides more than half support;
• Orphan or ward/dependent of the court;
• Veteran of U.S. Armed Forces or currently serving on active duty
(for other then training purposes) in the Armed Forces; or
• Determined to be “independent” by financial aid administrator
based on unusual circumstances
Slide 12 © NASFAA 2007
EFC for a Dependent Student
Step 1: Determine available parental income
–
–
–
–
Total income (taxed and untaxed)
Excludable income (e.g., child support paid)
Taxes paid (i.e., federal, state, local, Social Security)
Income protection allowance for basic living
expenses (e.g., food, shelter, etc.)
Employment allowance (if eligible)
= Available income (may be negative)
Slide 13 © NASFAA 2007
EFC for a Dependent Student
Step 2: Determine available parental assets
+
+
–
x
=
Value of cash, savings, and checking accounts
Adjusted business/farm net worth (total value
minus debt against business/farm)
Investment/real estate net worth (excluding home)
Education savings and asset protection
allowance (determined by age of older parent)
Asset conversion rate (12%)
Parental contribution from assets
Slide 14 © NASFAA 2007
EFC for a Dependent Student
Step 3: Determine portion of available parental
income and assets available for education
+
=
x
=
÷
Available income
Contribution from assets
Adjusted available income (AAI)
Assessment rate (varies)
Total parental contribution
Number attending college (excluding parents)
= Parental contribution for student
Slide 15 © NASFAA 2007
EFC for a Dependent Student
Step 4: Determine student contribution
Total income (i.e., taxed and untaxed)
– Excludable income
– Taxes paid (i.e., federal, state, local, and
Social Security)
– Income protection allowance
– Parental adjusted available income if < $0
= Student’s available income
Slide 16 © NASFAA 2007
EFC for a Dependent Student
Step 4: Determine student contribution
Student’s available income
x 50% assessment rate
= Income contribution from student
+ 20% of the student’s net asset worth
= Student contribution
Slide 17 © NASFAA 2007
EFC for a Dependent Student
Parental contribution from
income and assets
(as adjusted, if more than one
household member in college)
+ Student contribution from
available income and assets
= EFC
Slide 18 © NASFAA 2007
EFC for an Independent Student
• No parental contribution
• Independent with dependents:
– Student contribution similar to calculation
for parent of dependent student
– Variable percentage of available income
– 7% of net assets after protection allowance
• Independent with no dependents:
– 50% of available income
– 20% of net assets after protection allowance
Slide 19 © NASFAA 2007
Federal Pell Grants
• Awarded to eligible undergraduates pursuing
first baccalaureate degree and certain students
enrolled in post-baccalaureate teacher
certification or licensing programs
• Portable
• Actual award amount based on COA, EFC, and
enrollment status
• Maximum award for 2007-08 = $4,310
Slide 20 © NASFAA 2007
Academic Competitiveness Grant (ACG)
•
•
•
•
•
•
First and second year undergraduate students
Federal Pell Grant recipient
U.S. citizen
Full time
Completed rigorous secondary school program
Award amounts:
– $750 first year students
– $1300 second year students
• Portable
Slide 21 © NASFAA 2007
National Science and Mathematics Access to
Retain Talent (SMART) Grant
•
•
•
•
•
•
•
Third and fourth year undergraduate students
Federal Pell Grant recipient
U.S. citizen
Full time
Eligible major
3.0 GPA
Award amount:
– $4,000 for third and fourth year of study
• Portable
Slide 22 © NASFAA 2007
Federal Supplemental Educational
Opportunity Grants (FSEOG)
• Eligible students:
– Undergraduates pursuing first
baccalaureate or professional degree
– Awarded first to students with the lowest
EFCs who are Federal Pell Grant recipients
• Annual award amounts:
– $100 minimum
– $4,000 maximum
Slide 23 © NASFAA 2007
Federal Work-Study (FWS) Earnings
• Eligible students: Undergraduate, graduate, and
professional students
• Employment may be on or off campus
• Eligible employers:
– Schools
– Federal, state, or local public agencies
– Certain private nonprofit and for-profit organizations
• Schools must use portion of FWS funds for
community service employment activities
Slide 24 © NASFAA 2007
Federal Perkins Loans
• Eligible students:
– Undergraduate, graduate, and professional
students
– Priority to students who show “exceptional need,”
as defined by school
• Loan amount varies
• Maximum annual loan amounts:
– $4,000—undergraduate students
– $6,000—graduate and professional students
Slide 25 © NASFAA 2007
Federal Perkins Loans
• Interest rate: 5%
• 9-month grace period
• Repayment period may be
up to 10 years
• Deferment and cancellation
provisions available
Slide 26 © NASFAA 2007
Stafford Loans
• Student loans available under:
– Federal Family Education Loan (FFEL)
Program with funds provided by lenders
(e.g., banks and credit unions)
– Federal Direct Student Loan (Direct Loan)
Program with funds provided directly by
federal government via participating schools
• School determines loan eligibility and
delivers loan proceeds to students
Slide 27 © NASFAA 2007
Stafford Loans
• Subsidized: Must demonstrate “need”
• Unsubsidized: Not based on “need”
• Base annual loan limits (combined subsidized
and unsubsidized):
– $3,500 for 1st year undergraduates
– $4,500 for 2nd year undergraduates
– $5,500 for each remaining undergraduate year
– $8,500 for each year of graduate/professional study
Slide 28 © NASFAA 2007
Stafford Loans
• Additional unsubsidized loan eligibility for
independent undergraduate, graduate, and
dependent students whose parents are unable
to borrow PLUS:
– $4,000 per year for 1st and 2nd year
undergraduates
– $5,000 per year for remaining years of
undergraduate study
– $12,000 per year for graduate/professional study
Slide 29 © NASFAA 2007
Stafford Loans
• Fixed interest rate of 6.8%
• Loan fees based on principal amount of
each loan:
– FFEL: Up to 1.5% origination fee and 1%
default fee
– Direct Loan: Up to 2.5% loan fee
Slide 30 © NASFAA 2007
Stafford Loans
• Repayment begins after 6-month grace
period
• Maximum repayment period between
10 and 30 years depending on
repayment plan chosen
• Deferment and cancellation provisions
available
Slide 31 © NASFAA 2007
PLUS Loans
• Loan program for parents of dependent
undergraduate students as well as graduate
and professional students
• Annual loan limit: COA minus other aid
• Fixed interest rate
– FFEL: 8.5%
– Direct Loan: 7.9%
Slide 32 © NASFAA 2007
PLUS
• Loan fees based on principal amount of
each loan:
– FFEL: Up to 3% origination fee and 1%
insurance premium
– Direct Loan: Fixed 4% loan fee
• Repayment begins 60 days after loan is
fully disbursed for parent borrowers
Slide 33 © NASFAA 2007
General Student Eligibility Criteria
• Must be enrolled or accepted for enrollment in
eligible program of study
• Must be pursuing degree, certificate, or other
recognized credential
• Must be U.S. citizen or eligible noncitizen
• Must be registered with Selective Service
(if male and required)
• May not have eligibility suspended or
terminated due to being convicted of a drugrelated offense
Slide 34 © NASFAA 2007
General Student Eligibility Criteria
• Must have valid Social Security Number (SSN)
• May not be in default on a federal student loan
• Must not owe an overpayment of federal grant or
loan funds
• Must be making satisfactory academic progress
(as defined by school)
Slide 35 © NASFAA 2007
Role of the Financial Aid Office
• Determines aid eligibility using federal
formula
• Packages aid depending on availability of
funds
• Sends award notification including:
– Award amount for each program for which
student is eligible
– Disbursement methods and time frames
– Terms and conditions of each award
Slide 36 © NASFAA 2007
Application Process
• Submit FAFSA prior to school’s deadline
• Most aid awarded on “first-come, firstserved” basis
• To ensure maximum consideration for
federal, state, and institutional aid, check
information from each school to determine:
– Required application materials
– Application deadlines
Slide 37 © NASFAA 2007
FAFSA
• Collects family’s personal and financial
information used to calculate student’s
EFC
• Available in English and Spanish
• May file FAFSA in one of two ways:
– Electronically via FAFSA on the Web
– Paper FAFSA
Slide 38 © NASFAA 2007
FAFSA on the Web
• Web site: www.fafsa.ed.gov
• 2007-08 FAFSA on the Web available on
January 1, 2007
• FAFSA on the Web Worksheet:
– Used as “pre-application” worksheet
– Questions follow order of FAFSA on the Web
Slide 39 © NASFAA 2007
FAFSA on the Web
• Good reasons to file electronically:
– Built-in edits to help prevent costly errors
– Skip-logic allows student and/or parent to skip
unnecessary questions
– More timely submission of original application
and any necessary corrections
– More detailed instructions and “help” for
common questions
– Ability to check application status on-line
– Simplified renewal application process
Slide 40 © NASFAA 2007
PIN Registration
• Web site:
www.pin.ed.gov
• Can request PIN
before January 1, 2007
• Not required, but
speeds processing
• May be used by students and parents throughout
aid process, including subsequent school years
Slide 41 © NASFAA 2007
FAFSA on the Web Worksheet
2007-08 FAFSA on the
Web Worksheet—8-page
booklet containing:
• Instructions
• 97 questions in 5
sections
• Worksheets A, B, and C
Slide 42 © NASFAA 2007
FOTW Worksheet: Section 1
General student information:
• Name
• State of legal
residence
• Social Security
Number
• Driver’s license
number
Slide 43 © NASFAA 2007
FOTW Worksheet: Section 1
General student information:
• Citizenship
• Marital status
• Date of legal
residence
• Selective Service
status
Slide 44 © NASFAA 2007
FOTW Worksheet: Section 1
General student information:
• Degree type
• Grade level
• Enrollment status
Slide 45 © NASFAA 2007
FOTW Worksheet: Section 1
General student information:
• Self-help preferences
• Receipt of first
bachelor’s degree
• Parent(s) educational
background(s)
• Drug conviction status
Slide 46 © NASFAA 2007
FOTW Worksheet: Section 2
Student’s dependency status
• If all “No” responses, student is dependent
• If “Yes” to any question, student is independent
Slide 47 © NASFAA 2007
FOTW Worksheet: Section 3
Data for parents of dependent students:
• Parents’ marital status
• Date of parents’ marital status
Slide 48 © NASFAA 2007
FOTW Worksheet: Section 3
Data for parents of dependent students:
• Did anyone in the parents’ household receive benefits
from any of the federal programs listed?
Slide 49 © NASFAA 2007
FOTW Worksheet: Section 3
Financial data for parents of dependent students:
• Tax filing status and return type
• If parents filed or will file a 1040, were they
eligible to file a 1040A or 1040EZ?
Slide 50 © NASFAA 2007
FOTW Worksheet: Section 3
Financial data for parents of dependent students:
• Adjusted Gross Income (AGI) for 2006
• Parents’ income earned from work
Slide 51 © NASFAA 2007
FOTW Worksheet: Section 3
Data for parents of dependent students:
• E-mail address (optional)
• Social Security Number
• Last name
• Date of birth
Slide 52 © NASFAA 2007
FOTW Worksheet: Section 3
Data for parents of dependent students:
• Parents’ state and date of legal residence
• Parents’ income tax paid for 2006
Slide 53 © NASFAA 2007
FOTW Worksheet: Section 3
Data for parents of dependent students:
• Parents’ exemptions for 2006
• Parents’ household size
• Parents’ number in college
Slide 54 © NASFAA 2007
FOTW Worksheet: Section 3
Financial data for parents of dependent students:
• Complete the worksheets on page 8 (right hand side)
– Worksheets A and B-untaxed income
– Worksheet C-income excluded from EFC calculation
Slide 55 © NASFAA 2007
FOTW Worksheet: Section 3
Asset data for parents of dependent students:
• Cash, savings, and checking
• Net worth of investments
• Net worth of business and investment farms
Slide 56 © NASFAA 2007
FOTW Worksheet: Section 4
Student’s (and spouse’s) financial data:
• Tax filing status and return type
• If student (and spouse) filed or will file a 1040, was he or
she eligible to file a 1040A or 1040EZ?
Slide 57 © NASFAA 2007
FOTW Worksheet: Section 4
Financial data about student (and spouse)
• Adjusted gross income (AGI) for 2006
• Income tax paid for 2006
Slide 58 © NASFAA 2007
FOTW Worksheet: Section 4
Financial data about student (and spouse) :
• Exemptions claimed for 2006
• Income earned from work
Slide 59 © NASFAA 2007
FOTW Worksheet: Section 4
Data about the independent student (and spouse):
• Household size
• Number in college
• Did a member of the student’s household receive benefits
from any of the federal programs listed?
Slide 60 © NASFAA 2007
FOTW Worksheet: Section 4
Financial data for student (and spouse):
• Complete the worksheets on page 8 (left-hand side)
– Worksheets A and B-untaxed income
– Worksheet C-income excluded from EFC calculation
Slide 61 © NASFAA 2007
FOTW Worksheet: Section 4
Asset information for the student (and spouse):
• Cash, savings, and checking
• Net worth of investments
• Net worth of business and investment farms
Slide 62 © NASFAA 2007
FOTW Worksheet: Section 4
Information about student’s veteran’s benefits:
• Number of months benefits will be received during
the 2007-08 academic year
• Monthly benefit amount
Slide 63 © NASFAA 2007
FOTW Worksheet: Section 5
List of up to 6 schools to receive FAFSA data:
• Federal School
Code for each
school
• Housing plans
for each school
Slide 64 © NASFAA 2007
CAUTION!
• Avoid being charged a fee to file the Free
Application for Federal Student Aid
– Completion and processing of the FAFSA are
FREE
– If filing via FAFSA on the Web, be sure to go
directly to www.fafsa.ed.gov
– Contact financial aid office for help
completing the FAFSA
Slide 65 © NASFAA 2007
ERRORS can be COSTLY!
Errors on the FAFSA or
supplemental forms may
DELAY application
processing and result in the
LOSS of financial aid funds.
Read the instructions and
complete all forms carefully!
Slide 66 © NASFAA 2007
Frequent FAFSA Errors
• Parent and student Social Security Numbers
• Divorced/remarried parental information
• Income earned by parents/stepparents
• Untaxed income
• U.S. income taxes paid
• Household size
• Number of household members in college
• Real estate and investment net worth
Slide 67 © NASFAA 2007
FAFSA Processing Results
• Central Processing System (CPS) notifies
student of FAFSA processing results by:
– Paper Student Aid Report (SAR) if paper
FAFSA was filed and student’s e-mail address
was not provided
– SAR Acknowledgement if filed electronically
via FAFSA on the Web and student’s e-mail
address was not provided
Slide 68 © NASFAA 2007
FAFSA Processing Results
• CPS notifies student of FAFSA processing
results by:
– E-mail notification containing a direct link to
student’s on-line SAR if student’s e-mail was
provided on paper or electronic FAFSA
• Student with PIN can view SAR on-line at
www.fafsa.ed.gov
Slide 69 © NASFAA 2007
Making Corrections
• If necessary, corrections to FAFSA data
may be made by:
– Using FAFSA on the Web (www.fafsa.ed.gov)
if student has a PIN;
– Updating paper SAR (SAR Information
Acknowledgement cannot be used to make
corrections); or
– Submitting documentation to school’s financial
aid office
Slide 70 © NASFAA 2007
Where Do I Go From Here?
• Obtain and review admissions and financial aid
Web sites and materials for each school to which
you are applying
• Meet all application deadlines
– Complete FAFSA and other application
materials, such as College Scholarship
Service’s PROFILE application, if required by
school or state agency
– Submit all requested follow-up documents
• Investigate other sources of aid
Slide 71 © NASFAA 2007
Leveraging Educational Assistance
Partnership (LEAP) Grants
• Federal funds matched by state funds to
establish or expand state scholarship,
grant, and work programs
• States may use unique names for LEAP
grants
• Students apply directly to state agency or
through school
• Award amounts may vary by state
Slide 72 © NASFAA 2007
Robert C. Byrd
Honors Scholarship Program
• Federally-funded, merit-based aid program
administered by states
• Recognizes and promotes student
excellence and achievement
• States establish application requirements
and selection criteria, and select recipients
• Recipients may receive up to $1,500 a year
for up to 4 years of undergraduate study
Slide 73 © NASFAA 2007
Other Government Resources
• Corporation for National and Community
Service (AmeriCorps) – www.americorps.gov
• Veteran’s benefits – www.gibill.va.gov
• ROTC scholarships or stipends
• Bureau of Indian Affairs (BIA) Grants
– www.oiep.bia.edu/
• State Divisions of Vocational Rehabilitation
• U.S. Department of Health and Human
Services (HHS) Bureau of Health Professions
– www.bhpr.hrsa.gov/dsa
Slide 74 © NASFAA 2007
Other Sources of Funds
• State grants, scholarships, loans, and work
programs
• School need-based and non-need-based
programs (e.g., academic, athletic, and other
talent-based scholarships and grants)
• Private business scholarships (e.g., Wal-Mart,
Gates Foundation, etc.)
• Civic organization scholarships (e.g., PTA, Elks
Club, etc.)
Slide 75 © NASFAA 2007
Avoid Being Scammed
To check legitimacy of scholarship search services
or individuals, for information about financial aid
scams, and tips to avoid being scammed visit
these Web sites:
• U.S. Department of Education:
www.studentaid.ed.gov/students/publications/lsa/
index.html
• Federal Trade Commission:
www.ftc.gov/bcp/conline/publs/alerts/ouchart.htm
• Better Business Bureau: www.bbb.com
Slide 76 © NASFAA 2007
Private Scholarship Search
Free Internet scholarship search engines:
• FinAid on the Web: www.finaid.org
• College Board: www.collegeboard.com
• FastWeb: www.fastweb.monster.com
• Scholarship Resource Network Express:
www.srnexpress.com
• GoCollege: The Collegiate Websource:
www.gocollege.com
Slide 77 © NASFAA 2007
Private Scholarship Search
• Local library resources
• Local businesses and
civic organizations
• Parents’ employers
Slide 78 © NASFAA 2007
Good Luck!
Slide 79 © NASFAA 2007
Slide 80 © NASFAA 2007