Transcript Slide 1

What is Financial Aid?
Financial aid consists of funds provided to students and
families to help pay for postsecondary educational
expenses.
Includes: Grants, Scholarships, Loans, Work Study
• Not all families qualify for financial aid
• There is no guarantee that you will get any free
money to pay for higher education
Where does the money come
from?
• Federal Government
• State Government
• School/Colleges
• Private Scholarship Sources:
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HS Counselors
Clubs and organizations
Employers
Internet scholarship searches
Basis for awarding aid…
• Merit – scholarships usually based on:
• Academic or athletic ability
• Special talent or achievement
• Program of study
• Need-based grants, loans, and employment usually
based on:
• Income
• Assets
• Other factors
The Free Application for
Federal Student Aid (FAFSA)
Online at www.fafsa.ed.gov safe, secure, fast, skip logic,
built in edits
The FAFSA (Free Application for Federal Student Aid) is a
federal form used to determine student eligibility for the
following:
• Federal programs, such as Pell Grants, work-study, and
student loans
• State programs, such as Pennsylvania State Grant ,
and other special programs
• School programs, such as need-based grants and
scholarships.
Paper FAFSA – call 1-800-433-3243
When to Apply
Seniors
• The FAFSA may be filed beginning on
January 1 of the upcoming award year.
For the 2015-16 award year this would
be January 1, 2015
• Every year in college
Information you Need to Complete
the FAFSA
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Social security numbers
2014 Federal income tax return (1040, 1040A or 1040EZ)
W-2 forms from all employers
Current bank statements (checking and savings)
Current business and farm records
Records of any stocks, bonds and other investments,
including 529 accounts
• Additional untaxed income tax records may be needed
such as: Veteran’s non educational benefits, child support
paid/received and workers compensation.
• Alien registration or permanent resident card (if not a US
citizen)
Things not counted on the FAFSA
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Primary home/residence
Qualified Insurance Policies
Retirement
Social Security
Credit Card Debt
Any Debt
www.FAFSA.gov
Whose information goes on the
FAFSA??
• Mom and Dad unless…..
• Divorced, separated parents or parents that were never
married - (where the student has lived the most for the
past 12 consecutive months or if 50% between both
parents - the parent that provides more than 50% of
students support is whose info goes on the FAFSA)
• Stepparents - yes
• Adoptive parents – yes
• Foster parents - no
• Legal guardians - no
• Anyone else the student is living with - no
PIN
Personal Identification Number
•Website: www.pin.ed.gov
•Sign FAFSA electronically
•Student and one parent signs electronically with PIN
•Do NOT lose it. Write it down and store in a safe place
•Do NOT share it with anyone
IRS Data Retrieval Tool
• While completing the FAFSA, applicant may submit
request to IRS for tax data
• IRS will authenticate taxpayer’s identity
• If match found, IRS sends results to applicant in new
window
• Applicant chooses whether or not to transfer data to
FAFSA
• Usually not available until Mid February
Know Your Deadlines!
Know all of your state and school/college deadlines and file the
FAFSA by the earliest deadline.
 Federal Deadline - end of the award year - for 2014-2015, this would be June
30, 2016
 PA State Grant deadlines –
◦ May 1, 2015 - First Time and Renewal Applicants that plan to
enroll in a degree program or a college transferable program at a
junior college or other college or university
◦ August 1, 2015 - First Time applicants that plan to enroll in a
community college; a business, trade, or technical school; a
hospital school of nursing; or a 2-year program that is not
transferable to another institution
 Know School Deadlines
Know what financial aid forms
your school may require and their
deadlines:
• Free Application for Federal
Student Aid (FAFSA)
• PA State Grant Form (SGF)
• CSS PROFILE Form (Private
schools)
• Institutional Application
Online State Grant Application
• Additional questions needed to determine PA State
Grant eligibility
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»
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enrollment status
value of PA 529 College Savings Program
program of study for students in vocational programs
employment status
• Link off the FAFSA Application CONFIRMATION Page!
• Link in an email sent to student/parent from PHEAA
• Help screens are available for all questions
Apply for PA State Grant from FAFSA
Confirmation Page
FAFSA Completion Tips
• Can use estimated income to complete – once taxes
completed MUST go back and update FAFSA
• Answer all income questions
• Carefully review untaxed income questions
• Review asset questions before completing them
• 529 Plans must be reported as parent assets
• Assets do NOT include home, retirement, or insurance
• Do not report a business if it employs less than 100
• Do not report a farm if you live on the farm
• Some people can skip asset questions
• Online Help available on the Form
Forms are
filed!
Now
what?!?
What is the Expected Family
Contribution (EFC)?
• Amount family can reasonably be expected to
contribute towards the students education
• Stays the same regardless of college
• Two components
» Parent contribution
» Student contribution
• Calculated using data from the federal form – the
FAFSA
• This is NOT the amount you will pay
How is the EFC calculated?
• Parent contribution + student contribution = EFC
• Bulk of EFC comes from income
• Home, personal property, qualified retirement funds, and
value of life insurance excluded from assets
• Asset protection allowance (based on age of older parent, or
the parent if single parent household)
• Parent asset contribution usually = roughly 6%
• Student income contribution = 50% of amount over $6,260
• Student asset contribution = 20% of assets
• Parent contribution divided by number of children in college
at the same time
What school costs are considered by
the financial aid office at the school?
School costs include:
» Tuition and fees
» Room and board
» Books and supplies
» Transportation
» Miscellaneous living expenses
• Varies widely from college to college
Calculating Financial Need
Schools/colleges receive financial aid information and
calculate financial need by the following:
School cost……………………. $26,000
EFC………………………minus… - 3,000
Financial need………………… $23,000
Financial Aid Offices “awards” student based on financial
need and available funding (varies from school to school).
Financial aid award letter sent to student.
Financial Aid Award Letter
• Is official notification from school about financial aid,
terms, and conditions
• Lists the type and amount of each award to be received
• Describes what must be done to accept or reject any
award
• Discloses students rights, responsibilities, and academic
requirements
Reviewing the Financial Aid Package
• After reviewing financial aid packages, students should
be sure they know and understand the following:
» How much is gift aid, and how much is not?
» Which awards are based on need, and which are based on
merit?
» Are there any conditions on the gift aid; in particular, is there a
GPA requirement?
» Will their awards change from year to year?
» Will institutional awards increase as tuition increases?
Special Circumstances
Contact the school and ask for a special consideration
AND Contact State Grant Division at PHEAA if:
• Recent death or disability
• Change in employment status – reduced income
• Change in parent marital status – separation or
divorce
• Student cannot obtain parent information
Financial
Aid
Programs
Federal, State,
and Schoolbased
Federal Programs
Pell Grant (2014-15 max award $5,730) *
Campus-based aid – amounts determined by FAO
• FSEOG………………… up to $4000
• Perkins loan….……….. up to $5500
• Federal work-study…… FAO determines
For most programs, student must be enrolled at least
half-time.
* Goes to most financially needy students
PA State Grant
• PA State Grant*
• Full-time, in PA…...….up to $4,011
• Part time, in PA………1/2 of the FT award
• Out of state: Up to $600 in these states ONLY - DC, DE,
MA, OH, RI, VT, WV
• Amount determined in part by the cost of the school
* Must be at least half-time to be eligible
Federal
Loans
If you need to
borrow… Go with
federal loans first!
Federal Student Loans
• Effective July 1, 2013, Federal Direct Loans
now carry variable/fixed rates
• “variable/fixed” means that the interest rate
for new loans will be set annually, but the rate
at the time of disbursement will remain fixed
for the life of the loan
• Rates on new loans reset on July 1st of each
year
Types of Federal Direct Loans
Undergraduate Students
• Subsidized
• Unsubsidized
Parents
• PLUS Loan
Graduate students
• Unsubsidized
• PLUS Loan
Federal Direct Loan Program
(for students)
Subsidized = no interest charged to student while enrolled
• Based on Financial Need
• Interest will not be charged during the grace period, if the loan
was first disbursed after June 30, 2014.
Unsubsidized = interest accrues in school and grace
• Any interest not paid during grace will be capitalized at repayment
Interest Rate on both loans - 4.66% for 2014-15 ; capped at 8.25%
There is a 1.073% fee deducted from loan amount at
disbursement.
Direct Loan Borrowing Limits
Parent Loan for Undergraduate
Students (PLUS)
PLUS Loans – Parent & GradPLUS
• 7.21% for 2014-15
• Capped at 10.50 %
• Up-front fee of 4.292% deducted at
disbursement
• May borrow up to full cost of education minus
financial aid
• Credit check is required on this loan
Federal Direct PLUS Loan
Repayment begins immediately - can defer repayment
until 6 months after student graduates or drops below
half-time enrollment.
• If defer payment – encouraged to make interest
payments
• Standard Repayment is 10 years
Additional Eligibility
Alternative/Private Education Loans
• Nonfederal loans, made by a lender such as a bank, credit
union, state agency, or a school.
• Student borrows in his or her own name
• Based on credit scoring and debt-to-income ratio
• Repayment may be deferred until education completed
• Fees, interest rates, loan amounts, and repayment provisions
vary by lender and are generally higher than federal student
loans
• Co-signers usually required. Some loan products have a cosigner release option
• Compare loans before making choice and read the fine print!
Scholarships
Get the
free money
first!
Scholarship Search Tips
• Start Searching Early
• Use FREE Scholarship Search sites –
» Fastweb.com is the largest, most accurate and
most frequently updated scholarship database.
• Don’t ignore scholarships with smaller award amounts
• Don’t miss deadlines
• Search for Scholarships every year
Scholarship Scams
Application Fees
“Guaranteed” Scholarships
Solicitations
• “You’ve been selected….”
• “You are a finalist……”
Official-looking Companies
• The logo may look like the US Dept of Education’s logo
• The company may talk about “federal” or “national” awards
Seminars
• Don’t get pressured into paying for services on the spot.
Things To Talk About (now)
• Keep borrowing in line with future earning power
(estimate loan payments at youcandealwithit.com and
research your earning potential)
• Clearly determine who will pay for what
• How much debt can the family take on?
• Are there options for cutting costs?
• Give yourself a low-cost alternative
• How much will the student work?
• How many years will college take?
Your Presenter
Marla Kane
Higher Education Access Partner
North Central Region
PA Higher Ed Assistance Agency
[email protected]