Transcript Slide 1
National Association of Student
Financial Aid Administrators Presents…
Financing Education
Beyond
High School
2005-06
© NASFAA 2004
Financing Your Education
•What if financial Aid?
• Where does it come from?
•What aid is available?
•Who is eligible?
•How do I apply?
Slide 2 © NASFAA 2004
Agenda
• Definition of financial aid
• Definition of financial need & how it is determined
• Description of major federal financial aid programs
• How to apply for financial aid, including paper
FAFSA & how to avoid errors
• Description of other government resources
• Where to look for information about private sources
of aid, including how to avoid being scammed
Slide 3 © NASFAA 2004
What is Financial Aid?
• Scholarships
• Grants
• Loans
• Employment opportunities
Slide 4 © NASFAA 2004
Types of Need-Based Aid
• Gift aid: Grants &
scholarships (needbased or merit-based)
• Self-help aid: Loans &
employment (need- or
non-need-based)
Slide 5 © NASFAA 2004
Goals of Financial Aid
• Primary goal is to assist students in paying
for college & is achieved by:
-Evaluating family’s ability to pay for
educational costs
-Distributing limited resources in an
equitable manner
-Providing balance of gift aid & self-help aid
Slide 6 © NASFAA 2004
Definition of Need
Cost of attendance (COA)
– Expected family contribution (EFC)
= Financial need
Slide 7 © NASFAA 2004
Cost of Attendance
• Tuition & fees
• Room & board
• Books, supplies, transportation, & miscellaneous
personal expenses, including documented costs for
personal computer
• Loan fees
• Study abroad costs
• Dependent care expenses
• Disability-related expenses
• Cooperative education program costs
Slide 8 © NASFAA 2004
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 2004
Principles of Need Analysis
• To extent they are able, parents have primary
responsibility to pay for dependent child’s education
• Students also have responsibility to contribute to
educational costs
• Families should be evaluated in their present financial
condition
• Family’s estimated ability to pay for educational costs
must be evaluated in equitable & consistent manner,
recognizing that special circumstances may affect
family’s ability to pay
Slide 10 © NASFAA 2004
Federal Methodology
Federal Methodology
is the formula
created by Congress
to determine the
expected family
contribution (EFC).
Slide 11 © NASFAA 2004
Independent Student Definition
• At least 24 years old by December 31 of award
year covered by FAFSA;
• Graduate or professional student;
• Married;
• Has legal dependents other than a spouse;
• Orphan or ward/dependent of the court;
• Veteran of U.S. Armed Forces; or
• Determined to be “independent” by financial aid
administrator
Slide 12 © NASFAA 2004
EFC for Dependent Student
1. Determine available parent income:
–
–
–
–
Total income (taxable & 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 2004
EFC for Dependent Student
2. Determine available parental assets:
+
+
–
x
Cash, savings, & checking accounts
Adjusted farm/business net worth (value minus
debt, adjusted to protect earning capacity)
Investment/real estate net worth (excluding home)
Education savings & asset protection
allowance (determined by age of older parent)
Asset conversion rate (12%)
= Parental contribution from assets
Slide 14 © NASFAA 2004
EFC for Dependent Student
3. Determine portion of available parental
income & assets for education:
+
=
x
=
÷
Available income
Contribution from assets
Adjusted available income (AAI)
Assessment rate
Total parent contribution
Number attending college (excluding parents)
= Parental contribution for student
Slide 15 © NASFAA 2004
EFC for Dependent Student
4. Determine student contribution:
Total income (i.e., taxable & untaxed)
– Excludable income
– Taxes paid (i.e., federal, state, local, &
Social Security)
– Income protection allowance
– Parent’s adjusted available income if < $0
= Student’s available income
Slide 16 © NASFAA 2004
EFC for Dependent Student
4. Determine student contribution:
Student’s available income
x 50% assessment rate
= Income contribution from student
+ 35% of the student’s net asset worth
= Student contribution
Slide 17 © NASFAA 2004
EFC for Dependent Student
Parental contribution from
income & assets
(as adjusted, if more than 1
household member in college)
+ Student contribution from available
income & assets
= EFC
Slide 18 © NASFAA 2004
EFC for Independent Student
•No parental contribution Independent with
dependents
-Student contribution similar to calculation for parent
of dependent student
-Variable percentage of available income
-12% of net assets after protection allowance
•Independent with no dependents
-50% of available income
-35% of net assets after protection allowance
Slide 19 © NASFAA 2004
Federal Pell Grant
• Awarded to eligible undergraduates pursuing
first bachelor’s or professional degree & certain
students enrolled in post-baccalaureate teacher
certification or licensing programs
• Portable
• Actual award amount based on COA, EFC, &
enrollment status
• Maximum award for 2004-05 = $4,050
Slide 20 © NASFAA 2004
Federal Supplemental Educational
Opportunity Grant (FSEOG)
•Eligible students
-Undergraduates pursuing first baccalaureate or
professional degree
-Awarded first to students with exceptional financial
need (i.e., students with lowest EFCs at that school)
-Priority to Federal Pell Grant recipients
•Annual award amounts
-$100 minimum
-$4,000 maximum
Slide 21 © NASFAA 2004
Federal Work-Study (FWS)
•Undergraduate and graduate students are eligible
•Employment may be on or off campus
•Eligible employers
-School
-Federal, state, or local public agency
-Private nonprofit organization
-Private for-profit organization
•Schools must use portion of FWS funds for
community service employment activities
Slide 22 © NASFAA 2004
Federal Perkins Loan
•Eligible students
-Undergraduate and graduate students
-Priority to students who show “exceptional
need,” as defined by school
•Loan amount varies
•Maximum annual loan
-$4,000—undergraduate students
-$6,000—graduate & professional students
Slide 23 © NASFAA 2004
Federal Perkins Loan
• Interest rate: 5%
• 9-month grace period
• Repayment period may be
up to 10 years
• Deferment & cancellation
provisions available
Slide 24 © NASFAA 2004
Stafford Loans
• Available under:
– Federal Family Education Loan (FFEL)
Program with funds provided by lenders
(e.g., banks or credit unions)
– Federal Direct Student Loan (Direct Loan)
Program with funds provided directly by
federal government via participating schools
• School determines loan eligibility &
delivers loan proceeds to students
Slide 25 © NASFAA 2004
Stafford Loans
• Subsidized: Must demonstrate “need”
• Unsubsidized: Need is not considered
• Base annual loan limits (combined subsidized
& unsubsidized):
– $2,625 for 1st year undergraduates
– $3,500 for 2nd year undergraduates
– $5,500 for each remaining undergraduate year
– $8,500 for each year of graduate/professional study
Slide 26 © NASFAA 2004
Stafford Loans
• Additional unsubsidized loan eligibility for
independent undergraduate, graduate, &
dependent students whose parents are unable
to borrow PLUS:
– $4,000 per year for first & second years of
undergraduate study
– $5,000 per year for remaining years of
undergraduate study
– $10,000 per year for graduate & professional
students
Slide 27 © NASFAA 2004
Stafford Loans: Costs of Borrowing
• Variable interest rate, capped at 8.25%
– Interest rate for 7/1/2004 – 6/30/2005 is:
•
2.77% in school, grace, & deferment periods
•
3.37% during repayment
• Loan fees based on principal amount of each
loan:
– FFEL: Up to 3% origination fee and 1%
insurance premium
– Direct Loan: Up to 4% loan fee
Slide 28 © NASFAA 2004
Stafford Loans: Repayment
• 6-month grace period
• Maximum repayment period between
10 & 30 years depending on repayment
plan chosen
• Deferment & cancellation provisions
available
Slide 29 © NASFAA 2004
PLUS
• Parent loan program for parents of dependent
undergraduate students
• Annual loan limit: COA minus other aid
• Variable interest rate, not to exceed 9%
– Interest rate for 7/1/2004 – 6/30/2005 is 4.17%
• Loan fees based on principal amount of each
loan:
– FFEL: Up to 3% origination fee & 1% insurance
premium
– Direct Loan: 4% loan fee
Slide 30 © NASFAA 2004
PLUS
• Repayment begins 60 days after loan is
fully disbursed
• Only principal may be deferred under
certain conditions; interest may be
capitalized
Slide 31 © NASFAA 2004
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 & required)
• May not have eligibility suspended or
terminated due to drug-related conviction
Slide 32 © NASFAA 2004
General Student Eligibility Criteria
• Must have valid Social Security Number
• May not be in default on federal student
loan
• Must not owe overpayment of federal grant
or loan
• Must be making satisfactory academic
progress (as defined by school)
Slide 33 © NASFAA 2004
Role of Financial Aid Office
• Determines aid eligibility using federal formula
• Packages aid depending on availability of funds
• Sends award notification including:
–
–
–
–
Student’s COA
Student’s EFC
Amount of student’s financial need
Award amount for each program for which student
is eligible
– Disbursement methods & time frames
– Terms & conditions of each award
Slide 34 © NASFAA 2004
Application Process
• Submit Free Application for Federal Student
Aid (FAFSA) prior to school’s deadline
• Most aid on “first-come, first-served” basis
• To ensure maximum consideration for
federal, state, & institutional aid, check
information from each school to determine:
– Required application materials
– Application deadlines
Slide 35 © NASFAA 2004
FAFSA
• Collects family’s personal & financial
information used to calculate student’s
EFC
• May file FAFSA in one of two ways:
– Electronically via FAFSA on the Web
– Paper FAFSA
Slide 36 © NASFAA 2004
FAFSA on the Web
• Web site: www.fafsa.ed.gov
• 2005-06 FAFSA available on or after
January 1, 2005
• Pre-Application Worksheet & built-in edits
to help prevent costly errors
Slide 37 © NASFAA 2004
PIN Registration
• Web site:
www.pin.ed.gov
• Not required, but
speeds processing
• May be used throughout aid process
• Can get PIN before January 1, 2005
Slide 38 © NASFAA 2004
Paper FAFSA
2005-06 FAFSA is 8-page
booklet containing:
• General & specific
instructions
• 103 questions in 7 steps
• Worksheets A, B, & C
• Pre-addressed envelope
to mail completed form &
return-receipt postcard
Slide 39 © NASFAA 2004
FAFSA: Step One
General student information:
•
•
•
•
Name & address
SSN & date of birth
Telephone number
Driver’s license &
state
• E-mail address
Slide 40 © NASFAA 2004
FAFSA: Step One
General student information (Questions 14 – 24):
• Citizenship
• Marital status
• State & date of legal
residence
• Selective Service
• Degree type
• Grade level
Slide 41 © NASFAA 2004
FAFSA: Step One
General student information (Questions 25 – 31):
• High school diploma
• First bachelor’s
degree
• Self-help preferences
• Parent(s) educational
background
• Drug conviction
Slide 42 © NASFAA 2004
FAFSA: Step Two
• Student’s (& spouse’s, if married) income & asset
information
• Questions 32 – 34:
– Student (& spouse, if married) 2004 IRS income tax
return status & type
Slide 43 © NASFAA 2004
FAFSA: Step Two
Questions 35 – 42:
• Student (& spouse, if married) 2004 income & wages
• Worksheets A & B – 2004 untaxed income
• Worksheet C – 2004 income excluded from EFC
calculation
Slide 44 © NASFAA 2004
FAFSA: Step Two
Questions 43 – 47:
• Total cash, savings, & checking
• Net worth of investments
• Net worth of businesses & investment farms
• Monthly amount & number of months student is receiving
veteran’s educational benefits
Slide 45 © NASFAA 2004
FAFSA: Step Three
Student’s dependency status questions:
• If all “no” responses, student is dependent
• If “yes” to any question, student is independent
Slide 46 © NASFAA 2004
FAFSA: Step Four
• Financial & household data for parents of
dependent students
• Questions 55 – 64:
– Marital status
– SSNs, last names, first initials, & dates of birth
Slide 47 © NASFAA 2004
FAFSA: Step Four
Questions 65 – 69 for parents’:
• Household size
• Number in college
• State & date of legal residency
Slide 48 © NASFAA 2004
FAFSA: Step Four
Questions 70 – 77 for parents’ 2004:
• Federal tax return filing status
• Taxable income & wages
Slide 49 © NASFAA 2004
FAFSA: Step Four
Questions 78 – 80 for parents’ 2004:
• Untaxed income (Worksheets A & B)
• Income excluded from EFC calculation
(Worksheet C)
Slide 50 © NASFAA 2004
FAFSA: Step Four
Questions 81 – 83 for parents’:
• Total cash, savings, & checking accounts
• Net worth of investments
• Net worth of businesses & investment farms
Slide 51 © NASFAA 2004
FAFSA: Step Five
Questions 84 – 85:
• Independent student’s & spouse’s (if married)
household size & number in college
Slide 52 © NASFAA 2004
FAFSA: Step Six
List of up to 6 schools to receive FAFSA data
www.fafsa.ed.gov/fotw0405/fslookup.htm
Questions 86 – 98:
• Federal school
code for each
school
• Housing plans for
each school
• Enrollment status
Slide 53 © NASFAA 2004
FAFSA: Step Seven
Signatures & Certifications (Questions 99 – 103):
• Signatures
– Student
– Parent
– Preparer
Slide 54 © NASFAA 2004
CAUTION!
• Avoid being charged a fee to file the Free
Application for Federal Student Aid
– Processes of completing & processing 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 FAFSA
Slide 55 © NASFAA 2004
Avoid ERRORS!
Errors on the FAFSA or
supplemental forms may
DELAY application
processing & result in the
LOSS of financial aid funds.
Please read the instructions
& complete all forms
carefully!
Slide 56 © NASFAA 2004
Frequent FAFSA Errors
• Parent & 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 & investment net worth
Slide 57 © NASFAA 2004
FAFSA Processing Results
• Central Processing System (CPS) notifies
student of FAFSA processing results by:
– Paper Student Aid Report (SAR) if paper
FAFSA was filed & student’s e-mail address
was not provided
– SAR Information Acknowledgement if filed via
FAFSA on the Web & student’s e-mail
address was not provided
Slide 58 © NASFAA 2004
FAFSA Processing Results
• CPS notifies student of FAFSA processing
results by:
– E-mail notification containing direct link to
student’s on-line SAR if student’s e-mail was
provided on paper FAFSA or FAFSA on the
Web
• Student with PIN can view on-line SAR at
www.fafsa.ed.gov/studentaccess.htm
Slide 59 © NASFAA 2004
Corrections
• If necessary, corrections to FAFSA data
may be made:
– On paper SAR;
– Using Corrections on the Web
(www.fafsa.ed.gov/studentaccess.htm) if
student has PIN; or
– By school’s financial aid office
• SAR Information Acknowledgement
cannot be used to make corrections
Slide 60 © NASFAA 2004
Where Do I Go From Here?
• Obtain & review admissions & financial aid
materials from each school to which you are
applying
• Meet all application deadlines
– Complete FAFSA & any other application
materials, such as College Scholarship
Service’s PROFILE application, required by
school or state agency
• Investigate other sources of aid
Slide 61 © NASFAA 2004
Leveraging Educational Assistance
Partnership Program
• Federal funds matched by state funds to
establish or expand state scholarship,
grant, & work programs
• Some states use unique names for LEAP
grants
• Students apply to state agency or through
school
• Award amounts may vary by state
Slide 62 © NASFAA 2004
Robert C. Byrd Honors Scholarship
Program
• Federally-funded, merit-based program
administered by states
• Recognizes & promotes student excellence
& achievement
• States establish selection criteria & select
recipients
• Recipients may receive up to $1,500 a year,
for up to 4 years of undergraduate
assistance
Slide 63 © NASFAA 2004
Other Government Resources
• Corporation for National & Community
Service (AmeriCorps) –
http://www.americorps.gov
• Veteran’s benefits – http://www.gibill.va.gov
• ROTC scholarships or stipends
• Bureau of Indian Affairs (BIA) Grants
• State Divisions of Vocational Rehabilitation
• Health & Human Services (HHS) Bureau of
Health Professions – www.bhpr.hrsa.gov/dsa
Slide 64 © NASFAA 2004
Other Sources of Funds
• State grants, scholarships, loans, & work
programs
• School need-based & non-need-based
programs
– Academic, athletic, & other talent-based
scholarships & grants
• Private business scholarships
• Civic organization scholarships
Slide 65 © NASFAA 2004
Avoid Being Scammed
• To check legitimacy of scholarship search services
or individuals, for information about financial aid
scams, & tips to avoid being scammed visit these
Web sites:
– Better Business Bureau: http://www.bbb.com
– U.S. Department of Education:
http://studentaid.ed.gov/students/publications/lsa/index.
html
– Federal Trade Commission:
www.ftc.gov/bcp/conline/publs/alerts/ouchart.htm
Slide 66 © NASFAA 2004
Private Scholarship Search
• Free Internet scholarship search engines:
– FinAid.org – http://www.finaid.org
– The College Board –
http://www.collegeboard.com
– FastWeb.com – www.fastweb.com
– Scholarship Resource Network Express –
www.srnexpress.com
– GoCollege.com: The Collegiate Websource –
http://www.gocollege.com
Slide 67 © NASFAA 2004
Private Scholarship Search
• Local library resources
• Local businesses & civic
organizations
• Parents’ employers
Slide 68 © NASFAA 2004
Good Luck!
Slide 69 © NASFAA 2004
Slide 70 © NASFAA 2004