Transcript Slide 1

Please Silence
Your Cell
Phones!
Thank you for being
considerate to the
people around you.
Financial Aid
101
Paying for
Postsecondary
Education
Presenter
Jayeann Harr
Higher Education
Access Partner
412-904-8545
[email protected]
Southwest Region
(Fayette, Greene, Washington & Westmoreland)
Do these Headlines keep you up at
Night??
Is College Worth the Money?
Student Loan Burden Continues to Grow
U.S. Student-Loan Balances Increase 55% Since 2005
Paying For College - Are You and Your Student on the
Road to Going Broke Or Into a Lot of Debt?
More Kids are Moving Back Home!
Education pays in Higher Earnings
and Lower Unemployment
Source: Bureau of Labor Statistics 2011
College Majors
• The field of bachelor’s degree (major) makes a considerable
difference in a college graduate’s annual earnings, according
to 2011 American Community Survey (ACS) data released by
the U.S. Census Bureau. These differences add up over the
span of one’s work-life.
www.census.gov/newsroom
What was the highest paying college major for 2011-12?
College Expenses
The Consumer Approach – Making
College Affordable
Do your Research…
 Approach it as though you are buying an education, not a school
 What is the Net Price that you will pay? Use the Net Price
Calculator available on each school’s website.
 What is the graduation rate?
 What is the average debt of graduates?
 What is the repayment rate and default rate of the school’s
borrowers?
 What was the employment outcome for recent graduates?
Reduce the Need for Financial Aid
o Graduate on Time
o Research and find the right school and major
» Minimize transfer and change of major
o Earn college credits while in high school
» AP courses, Vo-Tech, and dual enrollment
o Consider options for cutting costs
» Commute, take summer classes, rent or buy used books, make smart
meal plan choices
o 2 + 2 Strategy
» (2 years at a Community College then transfer credits to a 4 year
school)
Transferring Colleges
» Review the college’s website
» Meet with an advisor at both schools
» Know what is expected of you
3 Things to Take Away…
* Be Informed Consumers – ask
questions!
* File the FAFSA on time
* Stay Organized & Follow Up
What is Financial Aid?
Financial Aid - Money
provided to students and
families to help pay for
postsecondary educational
expenses
Types of Financial Aid
• Gift Aid – FREE MONEY
» Grants and Scholarships
• Self Help Aid
» Loans and Work Programs
• Merit-Based Aid: academic ability, special talent or
achievement, program of study, family or ethnic background
• Need-Based Aid: grants, loans, and employment usually
based on - income, assets, other factors
Basic Principles
1. Joint responsibility of the student and
parent(s) to pay, to the extent possible.
2. Need based financial aid is subject to a
federal formula to determine need.
3. Not all families qualify for need based aid.
There is no guarantee that you will get FREE
money.
Where does the money come from?
• Federal Government
• State Government
• School/Colleges
• Private Scholarship Sources:
• HS Counselors
• Clubs and organizations
• Employers
• Internet scholarship searches
Scholarship Opportunities
for Everyone
• Scholarships for Average Students
• Video contests
• Creativity
• Unusual scholarships
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Based on Last Name – Van Valkenburg?
Grandparents Gone Wired Scholarship
Patrick Kerr Skateboard Scholarship
Common Knowledge Scholarship
Scholarship Search Tips!
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Start Searching Early
Use FREE Scholarship Search sites
Don’t ignore scholarships with smaller award amounts
Don’t miss deadlines
Search for Scholarships every year
Never pay a fee for a scholarship!
Avoid unsolicited scholarships
Avoid scholarships that use the word “Guarantee”
If it sounds too good to be true, it probably is.
Online Sources
www.fastweb.com
www.bigfuture.collegeboard.org
www.studentscholarships.org
www.scholarshipexperts.com
www.zinch.com/scholarships
www.collegeprowler.com/scholarships
www.google.com
The Free Application for
Federal Student Aid (FAFSA)
• 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
www.fafsa.gov
NOT
FAFSA.com
Who is independent for Federal
Programs?
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24 or older on Jan 1st of award year (January 1, 1990)
Veteran (includes active duty personnel)
Working on graduate level degree
Emancipated minor in legal guardianship
Orphan, in foster care, or ward of the court at
anytime when student was age 13 or older
 Have legal dependents other than spouse
 Student deemed homeless by proper authority
Whose information
goes on the FAFSA
• Parents & Student Information
• Divorced or separated parents
» Parent that the child lived with most in the last 12 months.
» If parental custody is equal, then the parent that provides
more than 50% of student’s support.
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Stepparents - yes
Adoptive parents - yes
Foster parents - no
Legal guardians - no
Anyone else the student is living with - no
Special Circumstances
• Recent death or disability
• Reduced income
• Recent Separation or Divorce
• Contact the school and ask for a special
consideration AND Contact State Grant
Division at PHEAA in writing.
FAFSA Completion Tips
1. Can use estimated income to
complete, but must update after taxes
are completed.
2. Answer all the questions that are
presented to you. If the answer
is zero, put zero. Don’t leave it
blank.
3. You do not have to complete the
online application all at once.
4. Carefully review untaxed income
questions.
5. All 529 plans must be reported as
parental assets
6. Assets do not include primary
home, qualified retirement plans or
the value of life insurance
7. Some people can skip asset
questions. If not, assets are the
value at the time of application.
8. Do not report the value of the farm
if you live on that farm.
9. Do not report a family owned
business if it employs less than 100
people.
10. There is online help available for
the form.
FAFSA - Assets
IRS DATA Retrieval Tool
Allows students and parents to access IRS tax return information
needed to complete the FAFSA. Students and parents may
transfer the data directly into their FAFSA.
• IRS Data is available:
» After 2 weeks of electronically filing federal tax return
» After 8 weeks of filing a paper federal tax return
If use estimated income to complete FAFSA, can go back once
taxes are filed and use IRS Data Retrieval Tool.
IRS Data Retrieval
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Married, Filing Separately
Filing Head of Household
Filing an amended return
Filing a Puerto Rican or
foreign tax return
 Recently filed taxes
 None of the above
Signing FAFSA Online
Student and parent sign electronically with a PIN.
Apply for a PIN at www.pin.ed.gov or while
completing the online FAFSA
PIN (Personal Identification Number)
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Select your number
Parents can use for other children & PLUS
Students will need for many uses
Can request a duplicate PIN, if necessary.
If you write it down, store it in a safe place
Apply for PA State Grant from FAFSA
Confirmation Page
On-Line State Grant Application
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Additional questions needed to determine State Grant
eligibility which includes items such as enrollment status,
value of PA 529 College Savings Program, program of study,
and employment status.
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Printing , signing, and mailing in the State Grant confirmation
page is the last step in the process. PHEAA is working on
an electronic signature capability but that is not available at
this time.
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Students will be able to view their status on Account Access
available at pheaa.org about three days after completing the
FOTW.
Other Applications?
 Know what financial aid forms are required:
 FAFSA (Free Application for Federal Student Aid) –
federal aid, PA State Grant, college aid, and private
scholarships
 State Grant Form (SGF) required for first year students
(and may be requested for subsequent years)
• CSS Profile required by some postsecondary schools
and scholarship organizations
• Institutional financial aid forms
Know Your Deadlines!!!!!
 Federal Deadline - end of the award year - for 2013-2014, this would be
June 30, 2014
 PA State Grant deadlines –
 May 1, 2013 - 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, 2013 - 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 & meet the earliest one!
FAFSA Completion Sessions
Laurel Highlands High School
FAFSA Completion Sessions
 February 28, 2013 – 6:00 PM
Rsvp by February 26, 2013
 March 21, 2013 – 6:00 PM
Rsvp by March 19, 2013
Rsvp to Mrs. Barchetti
Documents Needed
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Social Security Numbers
Drivers license (student only; this information is optional)
Federal income tax returns (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)
What happens next?
• Student Aid Report or Acknowledgment sent to student
(review and make necessary corrections)
• Information is sent to PHEAA. Student must complete State
Grant Form (SGF). Can link to this directly from the FAFSA.
• Account Access (PHEAA) - create an account at
www.pheaa.org to view PA State Grant
• Information is sent to schools/colleges. Send to all schools
being considered.
Determining need-based eligibility
• Family undergoes need analysis
• Expected Family Contribution (EFC) is determined
Expected Family Contribution (EFC)
• The EFC is a number derived from a federal formula which considers
certain factors.
- Parent income and (possibly) assets
- Student income and assets
- Family size
- Number of children in college
- Age of the older parent
• It is an index number used to determine how much financial aid you
will receive
• In reality, it is not necessarily the amount a family is required to pay.
How is the EFC calculated?
Bulk of EFC comes from income. Allowances against income
(State and Social Security tax, Income protection allowance
and Employment expense allowance)
Parental asset protection allowance (based on age of older
parent, if 2 parent household) – roughly $920 per year
Parent asset contribution is roughly 6%
Student income contribution – 50% of amount over $6,150
Student asset contribution – 20% of student assets
Parent contribution divided by number of children enrolled in
college at the same time.
Parent Contribution + Student Contribution = EFC
Calculating Financial Need
Financial Aid Office (FAO) “packages” 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 their packages, students should
be sure they know and understand the following:
1. How much of the financial aid is free money?
2. Which awards are based on need and which are based
on merit?
3. Are there any academic requirements to maintain to
keep their award?
4. Will awards change from year to year?
5. Will institutional awards increase as tuition increases?
6. How are institutional awards affected by scholarships
7. Will loans be needed?
Financial Aid
101
Federal, State
and College
Financial Aid
Programs
Federal Programs
Pell Grant (2012-13 award $5550) *….must have high
need
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 Program
• PA State Grant*
• Full-time, in PA…...….up to $4,348
• Part time, in PA………up to $2,174
• Out of state….. Up to $600 in CT, DE, MA, ME, OH,
RI, VT, WV, and DC
• All other states….up to $400 (NJ, NY, and MD = $0)
• Amount determined in part by the cost of the school
* Must be at least half-time to be eligible
State Grant Formula
• Cost of School (Tuition + Allowable Fees – provided by the
school)
Add Educational Expense Allowance ($4,000) and
Book Allowance ($1,000)
• Subtract
100% Pell Grant and EFC
= Unmet Need
• Multiply Unmet Need by a percentage based on the EFC and
by an Award Adjustment Factor (based on funding)
State Grant
Cost Tiers Minimum Award Maximum Award
School Cost
State Grant Awards
$0 - $11,000
$500 to $2,313
$11,001 to $21,000
$500 to $3,700
$21,001 to $30,000
$500 to $3,978
$30,001 to $32,000
$500 to $4,348
Cap college costs at $32,000
Other State Programs
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State Work-Study - job related to major
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Educational Assistance Grant (EAP) – National Guard
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Chafee Education and Training Grant – Foster care or discharged or
adopted out after age of 16
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Blind or Deaf Beneficiary Grant
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Postsecondary Educational Gratuity Program (PEGP) – Children of
parents who died in the line of duty
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Partnerships for Access to Higher Education (PATH)
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Pennsylvania Targeted Industry Program (PA –TIP)
(PA and other states)
For details, see the PA Guide to Student Aid, or visit www.pheaa.org
Federal Student Loans
• All federal student loans are now made
directly through the U.S. Department of
Education.
• Students and parents may apply for Direct
Stafford and Direct PLUS loans through their
post-secondary school’s website or at
www.studentloans.gov
Borrowing for Higher Education
• Always consider federal loans first.
• Borrow in the following order:
1. Perkins Loan (5% fixed) – student
2. Stafford Loan (max of 6.8% fixed) – student
3. PLUS Loan (7.9% fixed) – parent and graduate
student
4. Alternative Loan (variable rates) – last resort
Federal Direct Loan Program
Stafford student loan:
 Subsidized = no interest in school
• July 1, 2012 – June 30, 2014 – If the loan is first
disbursed during this period, interest will be
charged during the grace period,
• 3.4% fixed rate beginning 7/1/12
 Unsubsidized = interest accrues in school and grace
• Interest rate = 6.8%
• Any interest unpaid during grace will be
capitalized at repayment
Federal Direct Stafford
Loan Program Borrowing Limits
Determining Financial Need for
Subsidized Student Loans
Student A
Student B
Cost of School
$25,000
Cost of School $25,000
Grants or
Scholarships
- $5,000
Grants or
Scholarships
- $0
EFC
- $7,000
EFC
- $23,500
Need
$5,500 Subsidized
Student Loan
Need
$1,500 Subsidized
Student Loan
$4,000 Unsubsidized
Student Loan
Additional eligibility
Federal Direct PLUS Loan
 For parents of dependent students or graduate level
students
 There is no borrowing limit on the PLUS Loan
 May borrow up to full cost of education minus
financial aid
 Credit check is required on this loan, but no debt-toincome test
 4% origination fee will be deducted from
disbursements
 Interest Rate is 7.9%
 Repayment can be deferred
Alternative/Private Education Loans
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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
co-signer release option
• Compare loans before making choice and read the fine
print!
• This should be a last resort!
Calculators and Resources
Figuring out
what
works best
Enter the
Numbers
Explore
Related
Websites
Packaging Example for Year #1
Cost of School
20,000
Grants or Scholarships
(Free Money)
- 5,500 (State Grant & Private
Scholarship)
Amount Due School
14,500
Out of Pocket Costs:
Student Loan
5,500
College Savings
3,500
Other: Parent PLUS Loan,
Private Loan, etc.
5,500
Total Out of Pocket Costs
14,500
How will you cover the cost??
• In most cases, you WILL have to pay for educational expenses. This
is your ACTUAL family contribution, or AFC or out-of-pocket costs.
• Yesterday’s money
SAVINGS - 529 Plan
• Today’s money
INCOME - Tuition Payment Plans
• Tomorrow’s money
LOANS – Federal, Private, Institutional, Home Equity
Financial Aid
101
Final Thoughts
Final Thoughts
1.
2.
3.
4.
Finish on time.
Borrow only what you need
Research your earning potential
Keep borrowing in line with future earning
power (estimate loan payments at pheaa.org or
youcandealwithit.com)
What you can be doing now…
prior to completing the FAFSA
• Student and parent apply for a PIN at www.pin.ed.gov
• Visit websites with free information about college,
financial aid and careers
• Explore scholarship opportunities – locally, regionally
and nationally
• Use the FAFSA4caster – to estimate EFC and eligibility
for federal financial aid - Free online tool, available at
www.fafsa4caster.ed.gov
Resources
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pheaa.org
EducationPlanner.org
Youcandealwithit.com
Myfedloan.org
PHEAA toll free: 1-800-692-7392
Federal Student Aid Info Center – 1-800-433-3243
www.fafsa.gov
www.studentaid.gov – general financial aid info
www.studentloans.gov – information on federal
loans
www.finaid.org
Provides information on:
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Free scholarship search sites
Loans
Savings
Military Aid
Other Types of Aid
Financial Aid Forms
Financial Aid FAQs
Calculators
Questions?