Transcript Document

“Financing a College
Education”
Presented by
U.S. Department of Education
RICHARD BLASEN
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Financing Your Education
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What is financial aid?
What aid is available?
Who is eligible?
How & when do I apply?
Why should I go to College?
Average Annual Earnings
$80,000
Without High
School Diploma
High School
Diploma
Bachelor's
Degree
Advanced
Degree
$60,000
$40,000
$20,000
$0
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Salary
Census Statistics: News Release : MARCH 28, 2005
Average Salaries
Computer
Programmer
00
5
,
9
6
$
Accountant
70
6
,
0
6
$
Elementary
School Teacher
00
7
,
8
4
$
Source U.S. Department of Labor website & the 2006-2007 Occupational Outlook
Handbook
00
,0
$9
0
00
$7
5
,0
00
,0
$6
0
00
,0
$4
5
00
,0
$1
5
4
$3
0
00
40
9
,
3
2
$
,0
$0
Retail
Salesperson
Myths About Financial Aid
“…my parents make too much
money, so I won’t qualify for
aid.”
Reality: There is no income cutoff
to qualify for federal student aid.
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Myths About Financial Aid
Reality: Maintain “C” average
and complete enough courses in a
timely manner.
“…only students with good grades
get financial aid.”
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Myths About Financial Aid
“...the form is too hard to fill out.”
Reality: The FAFSA is easier than
ever, especially if you fill it out online
at WWW.FAFSA.GOV
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Where does the Aid come from?
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Federal Government
State Government
School
Private
Types of Financial Aid
• Gift Aid = Need-based or Merit-based:
– Grants and Scholarships
• Self Help Aid:
– FWS - Employment opportunities
– Loans
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Gift Aid - Federal Grant Programs
• Federal Pell Grant
Program - $5550
• Academic
Competitiveness Grant
(ACG) – $750/$1300
• Teacher Education
Assistance for College
and Higher Education
(TEACH) Grant - $4000
• Federal Supplemental
Educational
• National Science and
Opportunity Grant, or
Mathematics to Retain
FSEOG
$4000
Talent (SMART) Grant $4000
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ISAC - Illinois Student
Assistance Commission website
www.collegezone.com
•Outreach
•Applications
•Career Center
•Scholarship Search
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Federal Student Aid on the Web
www.studentaid.ed.gov
• FAFSA/FAFSA4CASTER
• Scholarship Search
• FSA Programs
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New site – What’s next Illinois
www.whatsnextillinois.org
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Self-Help Aid
• Employment:
– Federal Work Study
• Loans:
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Federal Perkins Loan
Federal Stafford Student Loans (Sub/Unsub)
Federal PLUS Loans
Private/Alternative Loans – BE
CAREFUL!!!
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Federal Loan Programs
Consider:
– Subsidized vs. Unsubsidized
– Interest rate
– Grace period
Know:
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Borrowers Rights & Responsibilities
Loan Repayment
Deferment & Forbearance
Entrance & Exit Counseling
Federal Loan Programs
Interest Rate
Federal Perkins
Loan
5% Fixed
Subsidized 4.5%
Fixed
Federal Stafford/
Direct Loan
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7.9% Fixed
Direct Lending
Schools
Additional Info
9 months after
school
6 months after
school
Unsubsidized
6.8% Fixed
8.5% Fixed
FFEL Schools;
Federal Parent
PLUS Loan
Repayment
May be deferred
until 6 months
student drop ½
time or 60 days
after loan is fully
disbursed
Subsidized: no
interest charged
while in school
Unsubsidized:
interest accrues
while in school
Interest accrues
while student is
in school
Beware of Alternative
or Private Loans
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Be informed before signing
Not federal loans
May require co-signer
May have higher interest rates
Repayment may start immediately
COST OF ATTENDANCE
(COA)
• COA includes:
• Tuition and fees
• Room and board (Meals)
• Books and supplies, equipment, transportation &
personal expenses
• Dependent or elder care expenses
• Expenses associated with a disability
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Estimated Cost of Attendance
2008/2009
Public 4Yr
$6,892
6,870
1,496
900
1,000
1,224
$18,382
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Tuition & Fees
Room
Board (meals)
Books & Supplies
Transportation
Personal Expenses
TOTAL
Private 4Yr
$17,398
6,770
1,496
900
1,000
1,160
$28,724
Expected Family Contribution
(EFC)
• Indicates the family’s financial strength
• Calculation that uses a federal form and
formula
• EFC the same regardless of college the
student attends
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Expected Family Contribution
(EFC)
•Factors:
•# of family members going to college
•Household size
•Current earnings and family savings
•Information provided on FAFSA
•Age of your oldest parent
•The lower your EFC, more financial aid
eligible to receive
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How Much Aid Will I Receive?
Cost of Attendance (COA)
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= $20,000
Expected Family Contribution (EFC) = $5,000
= Financial Need = $15,000
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How Much Aid will I Receive?
Financial Need = $15,000
Scholarships
Institutional Grant
Federal Grants
State Grants
Loans
PLUS Loans
TOTAL =
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$1,500
$2,500
$3,000
$2,000
$2,500 – Unmet need
$3,500 – Unmet need
$15,000
Who’s Eligible for Federal
Student Aid?
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U.S. Citizen or Eligible Non-Citizen
Registered with Selective Service
Social Security Number
No Drug Related Convictions
Matriculated
How Do I Apply for Aid?
• Free Application for Federal Student Aid
www.FAFSA.ed.gov
• Must file every year.
• Check with college to determine if
additional applications need to be
completed.
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FAFSA: http://www.fafsa.ed.gov/
Don’t go to:
FAFSA.COM
Can file Jan. 1st Senior Year!
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FAFSA – Be careful…
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Name & SSN should be exactly the same as appears
on your social security card
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Each question details which line on the federal
income tax return to obtain information for proper
line references
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If entry is zero or none, enter 0--don’t leave blank
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Both student and one parent have their own PINs to
sign FAFSA
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FAFSA Password is not the same as PIN Password!
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Advantages to Filing
the FAFSA Online
• Data reaches the school within 3 to 5 days
• Paper application takes 3 to 6 weeks to reach
schools
• Edits built into online system
• More accurate - Less data is missed so there are
fewer rejects
• Skip Logic
• Saves time and effort
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Which Parent(s) Fill Out FAFSA?
• If biological/adoptive parents married, report
information for both parents
• If biological/adoptive parents are divorced or
separated, provide information for parent:
• Student lived with the most in last year
• Or, if lived equal periods with each parent,
parent who provided the most financial support
in last year or most recent year support provided
• If that parent remarried, include stepparent’s
information, even if stepparent did not adopt
student.
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Special Circumstances
• Professional Judgment
– Divorce, Separation, Death
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Job Loss
High Medical Expenses
Elementary and Secondary Expenses
Case-by-Case basis
Document
Am I Independent?
1. At least 24 years old by December 31st of the award year
covered by the FAFSA
2. Graduate or professional student
3. Married
4. Has legal dependents other than a spouse who receive
more than one half of their support from the student
5. Is an orphan, in foster care, or ward of the court
6. On active duty or veteran of the U.S. Armed Forces
7. Emancipated minor or in legal guardianship as determined
by a court
8. Has been determined to be homeless by an authorized
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Student Aid Report (SAR)
• If corrections needed:
• Make them online
• Mail SAR back to FAFSA processor
• Have Financial Aid Office send it in
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Award Letter
(How much do I get?)
• Sent to you from schools you selected to
attend on FAFSA
• Displays the type and amount of financial aid
school willing to provide if you attend
• Amount varies from school to school
• Compare and decide
• Look at quality and affordability
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Verification
• Certain applications are selected for
verification
• Family must complete verification worksheet
sent by financial aid office
– Must attach tax returns, W2 statements
and other supporting documentation
– Don’t make corrections after verification
without consulting financial aid
administrator!!
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QUESTION?
“Do I have to fill out a FAFSA in
order to get an estimate
regarding Financial Aid?”
NO! Go to:
www.FAFSA4caster.ed.gov
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Financial Aid Estimator Tool:
FAFSA4caster
• Informed decisions for planning for
college.
• Calculates an estimate for Federal
Student Aid
• Helps reduce the time it will take to
complete the FAFSA
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http://www.fafsa4caster.ed.gov/
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Save for College
• Prepaid Tuition Plans
• Lock in today’s tuition rate
• Protect from future tuition inflation and the uncertainty
of the stock market
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529 College Savings Plans
• Earn money over time through interest.
• Earnings may fluctuate with the performance of the
market.
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• www.CollegeIllinois.com
529 – Benefits:
• 100% exempt from federal & Illinois
state income tax
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Individuals can deduct up to $10,000 per year
Married couples filing jointly can deduct up to $20,000
per year.
Federal Higher Education
Tax Advantages
• American Opportunity Tax Credit (formerly
Hope Tax Credit)
• Lifetime Learning Tax Credit
• Tuition and Fees Deduction
• Penalty Free IRA Withdrawals
• Coverdell Education Savings Account
• Student Loan Interest Deduction
• See Publication 970 at: www.irs.gov for details
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American Opportunity Tax
Credit (formerly Hope Tax Credit)
• Available for tax years 2009 and 2010
• Covers up to $2,500 in tuition and fees not
covered by gift aid
• Available for incomes up to:
– $90,000 single filer
– $180,000 joint filers
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Things you should know…
• Begin early:
– (FAFSA4caster/Documents/Scholarships)
• Find scholarships that match
academic interests, hobbies
• Don’t pay for scholarship searches
• Be wary of promised results
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Things you should know…
• Sit down and speak with your children:
• Know what your parents are paying for and what you
are expected to cover.
• Understand your financial aid.
• Know what grants, work study & scholarships are
available.
• Buy used textbooks.
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Things you should know…
• College & Scholarship Fair
• Beware Credit Cards.
• Don't forget student discounts.
• Internships increase your hiring power.
• Professional email
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What if I have Questions?
• Contact:
• High School Counselor
• College Counselor
• ISAC - 800-899-4722
• 1-800-4FED-AID
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