Transcript Slide 1

Applying for Financial Aid
2014-2015 Academic Year
Patricia Buono, Assistant Director
Financial Aid Services
Telephone: 860-439-2058 E-Mail: [email protected]
Where do I start?
• Visit college web sites for:
– application requirements and
–deadline dates
• Net Price Calculator
– on each college’s web site to help you determine
what your estimated family contribution
– Each calculator is unique to that college’s
awarding policies.
NET PRICE CALCULATOR
TIPS
• Carefully read all instructions and pop ups.
• All calculators are not alike.
• Each college builds theirs based on their policies.
• Try to guesstimate as close as possible.
• Don’t forget untaxed income
• Outcome is a ball park -- not an offer.
More Advice
www.finaid.com
www.studentaid.ed.gov
Funding a College Education
Who Are the Players?
Federal & State
Governments
Family
Outside
agencies
The
college
How Much Financial Aid
Will Be Offered?
• Dependent on a family’s ability to pay
• Dependent on the funding available from the federal
and state governments and the college.
• Does the college offer merit or athletic scholarships?
• Were the financial aid applications and supporting
documentation submitted by the deadline date?
Definition of Financial Need
Cost of Attendance
LESS
Expected family contribution (EFC)
LESS
Other financial assistance
EQUALS
Financial need
Comparison of Need by Cost
(Assumes full-time enrollment)
4 Year Private
4 Year Public
2 Year Public
Cost of Education
$60,000
$25,000
$ 7,000
Expected Family
Contribution (EFC)
$10,000
$10,000
$10,000
Need
$50,000
$15,000
0
Meeting the Full Need or Gapping
College
A
B
Cost of Education
$60,000
$60,000
Expected Family
Contribution (EFC)
Need
$ 10,000
$ 10,000
$50,000
$50,000
Aid Awarded
$50,000
$35,000
Unmet Need
0
$15,000
Add this to EFC!
Cost of Attendance
 Tuition and Fees
 Room and Board
 Books and Supplies
 Transportation
 Disability Expenses
 Miscellaneous and Personal Expenses (purchase of a
computer, sometimes health insurance fee)
Family Contribution Components
 Parent(s)’ 2013 income
 Student’s 2013 income
 Parent’s assets value at the time of the application
 Exclude value of retirement accounts or primary residence home equity
 Include trusts, equity value of investment properties, business net worth (IM)
 Include 529 plans set up by parents (not UGMA/UTMA accounts)
 Student’s assets
value at the time of the application
 Include trusts, if student is beneficiary and UGMA/UTMA accounts
 Number of household members: must provide at least 50% support
 Number of dependents attending college at least half-time
Untaxed Income
Where do I find these?
FROM THE FEDERAL INCOME TAX RETURN, FORM 1040
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Child Support Received (not on 1040)
Pension contributions (W2 box 12 D, E, F, G, H & S)
Tax Exempt Interest (1040, line 8b)
Untaxed portions of Pension/Annuity withdrawals (1040, line 16a – 16b)
Untaxed portions of Retirement account withdrawals (1040, line15a – 15b)
Untaxed portion of Social Security benefits (1040, line 20a – 20b)
IRA or SEP/SIMPLE/Qualified Plan contributions (1040, line 28 & 32)
Military/Clergy housing allowance benefit (not on 1040)
Health Savings Account deduction (1040, line 25)
Education credits (1040, line 49)
Earned Income Credit (1040, line 64a)
Additional Child Tax Credit (1040, line 65)
Untaxed Income
Where do I find these?
FROM THE FEDERAL INCOME TAX RETURN, FORM 1040
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Child Support Received (not on 1040)
Pension contributions (W2 box 12 D, E, F, G, H & S)
Tax Exempt Interest (1040, line 8b)
Untaxed portions of Pension/Annuity withdrawals (1040, line 16a – 16b)
Untaxed portions of Retirement account withdrawals (1040, line15a – 15b)
Untaxed portion of Social Security benefits (1040, line 20a – 20b)
IRA or SEP/SIMPLE/Qualified Plan contributions (1040, line 28 & 32)
Military/Clergy housing allowance benefit (not on 1040)
Health Savings Account deduction (1040, line 25)
Education credits (1040, line 49)
Earned Income Credit (1040, line 64a)
Additional Child Tax Credit (1040, line 65)
Eligibility Assessed Using
Federal Methodology (FM)
Based on information reported on the 2014-2015 FAFSA (Free
Application for Federal Student Aid) www.fafsa.ed.gov
Formula (determined by Congress) used to calculate eligibility for
federal/state aid
Home equity excluded
No information from the non-custodial parent
Custodial parent and stepparent incomes are included
Parent contribution divided by the # of dependents attending
college at least half-time—parents in college not included in this number
New for 2014-2015: Common law marriages and same sex
marriages: In states that recognize these unions, both incomes
are used—must be added together.
One parent & the student must apply for a PIN: www.pin.ed.gov
www.fafsa.ed.gov
Eligibility Assessed Using
Institutional Methodology (IM)
 Based on information provided on the CSS Profile or a custom
institutional application
 Used by schools to award their own funds
 Home equity might be added in
 Information from the non-custodial parent is required
 Tax losses may be added back
 Depreciation associated with a business or investment property
may be added back
 Parent contribution might not be divided equally for # in college
and no allowance for dependents in graduate school and reduced
allowance for dependents in a lower cost institution (i.e.
community college).
 Minimum student contribution – can be anywhere from $750 to
$2,000.
http://student.collegeboard.org/css-financial-aid-profile
Remember!
Grants/Scholarships do not have to be repaid
 unless a student withdraws during a term.
 May be considered taxable income -- depending on the amount of grants
received -- generally anything over the cost of tuition and books is taxable.
Student loans must be repaid.
 Additional online requirements must be completed.
Federal Work Study provides income from a campus job
 This does not go toward the tuition bill.
 This is taxable income that you (the student) will need to claim, if you
file a tax return.
Sources of Need Based Aid
Federal Grants
Federal Pell Grant – up to $5,645
Federal SEOG Grant – up to $4,000
Federal TEACH Grant – up to $4,000
Funding for 2014-2015 has not yet been determined.
www.studentaid.ed.gov for detailed information about these
programs.
Sources of Need Based Aid
Federal Student Loans
 Federal Perkin Loans – up to $5,500
 Interest rate is 5% fixed, no origination fees
 Program may change for next year
 Federal Direct Loan –
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1st year = up to $5,500 ($3,500 maximum subsidized)
2nd year = up to $6,500 ($4,500 maximum subsidized)
3rd-5th year = up to $7,500 ($5,500 maximum subsidized)
Current interest rates/fees 2013-2014
 3.86% interest rate
 1.072% origination fee
 For more information go to: www.studentloans.gov
 There are online requirements for both types of federal loans.
Sources of Need Based Aid
Student Employment
Federal Work Study 
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There is no limit -- but average range is $1,200 to $2,000.
Students work approximately 8 – 10 hours per week.
Pay is usually issued via direct deposit.
Some colleges issue jobs and others have you apply for the jobs that
interest you.
 Student must provide proof of identification and eligible citizenship
status to the college BEFORE WORKING.
 List of acceptable identification documents on the I9 form
 Documents must be originals and unexpired
 Must also complete federal and state tax forms: W4s
 This is wage income that must be claimed, if the student is filing an
income tax return.
Sources of Need Based Aid
State Grants
For CT residents attending a college in CT
www.ctdhe.org
Ranges from $2,000 or $4,000 (approx.)
Governor’s Scholarship Program:
FAFSA required – must file by February 15, 2014
Need based: EFC less than $11,000
Merit based: Class rank: top 20%, testing scores of at least
1800 or higher for SAT or 27 or higher for ACT
Sources of Institutional Grants
and Outside Resources
Institutional Grants/Scholarships are
provided by the college either from tuition
revenue and/or endowed funds and annual gifts.
Outside Resources – such as:
Employee Tuition Benefit
Contributions from relatives
National Merit, Rotary, Garden Club, etc. Scholarships
Use High school guidance office as a resource
www.finaid.org
Student Eligibility Requirements
• U.S. Citizen or
• Eligible non-citizen
--a permanent U.S. resident with a Permanent Resident
Card (I-551);
– a conditional permanent resident (I-551C);
– the holder of an Arrival-Departure Record (I-94) from
the Department of Homeland Security showing any
one of the following designations: “Refugee,” “Asylum
Granted,” “Parolee” (I-94 confirms paroled for a
minimum of one year and status has not expired) or
“Cuban-Haitian Entrant.”
Student Eligibility Requirements, con’t.
• If a male and age 18 must register by law for Selective
Service;
• Have a valid social security number;
• Must be enrolled as a regular student in an eligible degree
or certificate program;
• Must have a high school diploma or an equivalent (i.e.
home schooled);
• While enrolled in college, must make satisfactory
academic progress (including # of credits and GPA).
• Must have resolved any drug conviction issues.
Forms That May Be Required
College
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B
C
FAFSA
X
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X
X
CSS Profile
College’s Own
Form
X
Tax Returns &
W2 Statements
X
X
Non-Custodial
Parent’s Form
X
X
Business
Supplement
X
X
02/15
02/01
Due Date May
Be
03/15
Free Application for Federal Student Aid, 2014-2015
FAFSA
• Can’t file prior to 01/01/2014
• Required by all schools
• Used to determine eligibility for federal/state need
based aid
• Student and one parent must apply for a PIN in
order to sign the FAFSA electronically
– Will use this all four years for FAFSA and other online
documents.
www.pin.ed.gov
Helpful Tips When Completing the FAFSA
Print out the FAFSA on the Web Worksheet
Have your 2013 federal tax return and W2 statements in
front of you or prepare a draft 2013 federal tax return.
You can also use your 2012 federal tax return IF income
will be similar to 2013. Be careful!
It is okay to estimate in order to meet early deadline dates
required by colleges.
State of Connecticut deadline: 2/15/2014.
Go to College Goal Sunday for help with the FAFSA—
January, 2014 www.collegegoalsundayct.org .
Helpful Tips When Completing the FAFSA
• Make sure you use your LEGAL NAME.
• Parents and students must provide their SSNs – if a
parent does not have a SSN, enter zeros.
– The name and number MUST match the Social Security
Administration records – or the FAFSA will reject.
• When reporting assets, report the value as of the date the
FAFSA – Do not change that value later.
 Investment property equity value (value – mortgage)
 Stocks, bonds, money market funds, CDs, mutual funds, stock
options and ownership in legal trusts
 Coverdell savings accounts, 529 college savings plans
 If 529 is in parent’s name, include in parent’s investment balances.
 Business/investment farm value
Helpful Tips When Completing the FAFSA
• Assets not to report:
– Equity value of your home
– Retirement plans (pension funds, annuities, noneducation IRAS, SEP/Keogh plans)
• Must also report as income:
– Annual contributions to a retirement plan
– Housing allowance paid to members of the military,
clergy and others
– Tax Exempt interest earned (not tax exempt dividends)
– Child support
• Make sure all date of birth data is accurate.
What is the Federal Definition of a Parent?
• If your parents are divorced or separated, answer the FAFSA
questions about the parent you lived with more during the past
12 months.
• If you did not live with one parent more than the other, give
answers about the parent who provided more financial support
during the past 12 months.
• New for 2014-2015, parents who are together but unmarried
(common law marriage) or same sex marriages:
– If your state recognizes common law and same sex marriages, the
incomes will need to be combined for FAFSA filing purposes.
What is the Federal Definition of a Parent?
• If your parent has remarried, you must include
information about the stepparent.
• If your parent is widowed or single, answer the
questions about that parent only.
• The following people are not your parents unless
they have adopted you: grandparents, foster
parents, legal guardians, older brothers or sisters,
and uncles or aunts.
What if parent information is not available?
– If
(among a few other reasons)
• the student has no contact with the parent(s) and does not
know where they are and
• the student has not been adopted by someone else or
• Student has left home due to an abusive situation or
• Can be considered an unaccompanied youth / homeless,
– then the College will ask you to provide:
• third party documentation to verify your living situation
from: i.e. an attorney, court officer, social worker.
• Some colleges also require that you complete their own
waiver form in addition to submitting the 3rd party docs.
IRS Data Retrieval Tool
IRS Data Retrieval Process
• Option to have the IRS populate the FAFSA – strongly
recommended. Referred to as IRS Data Retrieval.
• You will not be able to participate in the IRS Data
Retrieval if the following applies:
– You are married but filed separate returns
– Filed an amended tax return
– Had a change in marital status after the end of the tax year
(December 31, 2013)
IRS Transcript
• If you are unable to successfully use the IRS
Data Retrieval tool, then you will be required to
provide an official IRS transcript. You can
request one from the IRS here: www.irs.gov
– Available two weeks after an electronic submission
– Available six weeks after a paper submission
– The transcript must come to you and then you send
it to the college --with your student’s name noted on
the form.
How to Sign the FAFSA
Making Corrections to the FAFSA
• Corrections can be made after the FAFSA has
been submitted and processed.
– Can add a college, update income data, etc.
• If you have submitted your federal income tax
return after your initial FAFSA submission, you
can go back in to the FAFSA to use the IRS
Data Retrieval tool.
– Did I say it was highly recommended!!!!!?
CSS/Financial Aid Profile
https://profileonline.collegeboard.com/
Not required by all schools
$25 for the initial application and $16 for each
additional college
Non-Custodial Parent’s Form = $25
Forms used to determine eligibility for need-based
institutional grants.
CSS Profile Tips
In addition to the assets reported on the FAFSA,
you will be required to report:
– Value of your home, purchase price, purchase date and
current debt (i.e. mortgage balances)
– Value of your retirement accounts
– Business value data.
CSS Profile Tips
• Once the Profile has been submitted, you will not be
able to make corrections.
– If necessary, you can print out a hard copy of the submitted
profile, write the corrections on the form (different color ink
is helpful) and send it to each school that requires the Profile.
• Many colleges participate in the College Board’s IDOC
document imaging service.
– You send your federal income tax returns, W2 forms, income
statements and other required documents to IDOC
– Participating colleges listed on your profile can then access
the docs electronically.
– Saves you multiple copying /mailing time and expense.
Sample Financial Aid Award – Full Need Met
Tuition & Fees
$45,000
Room & Board
13,000
Books & Supplies 1,000
Miscellaneous
500
Transportation
500
Total
$60,000
Parent Contribution $ 2,250
Student Contribution $ 1,750
Family Contribution $ 4,000
Need
$56,000
Financial Aid Award (Cost less Resources)
Federal Pell Grant
Federal Supplemental Educational Opp. Grant
Connecticut Independent College Grant
Federal Perkins Loan
Federal Direct Subsidized Loan
Federal Work Study
College Grant
Total Award
Federal Direct Unsubsidized Loan
$ 2,500
$ 2,500
$ 2,500
$ 1,000
$ 3,500
$ 1,400
$42,600
$56,000
2,000
Shopping Sheet
(Helpful when trying to compare awards)
Tuition & Fees
Room & Board
Books & Supplies
Miscellaneous
Transportation
Total Cost
$45,000
13,000
1,000
500
500
$60,000
Federal Pell Grant
Federal Supplemental Educational Opp. Grant
Connecticut Independent College Grant
College Grant
Total Grants
$ 2,500
$ 2,500
$ 2,500
$42,600
$50,100
Net Price (Cost less grants)
Options to pay Net Price:
$ 9,900
Federal Direct Subsidized Student Loan
Federal Perkins Loan
Federal Direct Unsubsidized Student Loan
$ 3,500
$ 1,000
$ 2,000
Remaining balance
Other options:
Federal Work Study $1,400
Parent Payment Plan
Parent PLUS loan
Private alternative loan
$ 3,400
How Aid is Applied to the Bill
 Tuition & Fees =
 Room & Board =
Total Charges =
$45,000
13,000
$58,000
Less aid:
 Grants
 Loans (subsidized)
Total Aid Applied to the Bill
Balance Due
Balance with unsubsidized loan
$50,100
$ 4,500
$ 2,000
$54,600
$ 3,400
$1, 400
Must be paid in two installments:
One-half of balance to be posted on or about September 1
One half of balance to be posted on or about January 1
Federal Work Study is not applied to the bill.
What if my family contribution seems unreasonable?
Compare aid awards from similar colleges. If the family
contribution is significantly different:
• Ask how the contribution was determined
Is there a contribution expected from the noncustodial parent?
Were losses reported on the tax return added back?
What is the minimum student contribution?
How were family members in college treated?
Was home equity included in the analysis?
• Has there been a change in family dynamics since the
FAFSA was filed?
• Request procedures for an “Appeal” or “Review” and
what the submission deadline is.
How do I pay the bill?
 Withdrawals from Savings / Investments / 529 Plans
 The College’s Installment Payment Plan (not a loan)
 Home Equity loans, 401K loans, Stock loans
 Alternative Student Loans through private lenders (i.e. banks, credit
unions, state institutions and national student loan lenders)
 Federal PLUS program (Parent Loan for Undergraduate Student)
 Apply for other outside scholarships
 Check with your financial planner or CPA for other options open
to you specifically.
Federal PLUS Program
PLUS = Parent loan to undergraduate student (student
must be a dependent)
offered by the Department of Education to custodial and non
custodial parents
Annual loan limit: cost of attendance minus other aid
Fixed interest rate 6.41%, Loan origination fees 4.288%
Repayment begins 60 days after the full loan is disbursed.
Can defer payments (interest will still accrue) while
student is enrolled at least half-time.
Aid Award in Subsequent Years
“The Four Year Plan”
 Most Colleges make you apply every year for financial aid.
But ask: Is this award for just this year?
 Loan amounts increase as the student advances to the next grade
level (causing grants to decrease).
 If the family income and/or assets increase/decrease, the family
contribution will most likely increase/decrease.
 If the number of dependents enrolled in college changes, the family
contribution will change.
Remember that only for federal purpose is graduate school
included in # in college
 If the number in family changes, the family contribution will change.
 Federal and state funding levels change from year to year
Resources
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High School Guidance Office
Financial Aid Offices
College’s Websites
www.studentaid.ed.gov
www.finaid.org
www.fafsa.ed.gov
COLLEGE GOAL SUNDAY
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Get FREE help filling out the FAFSA!!
www.collegegoalsundayct.org
Sunday, January, 2014 (date not determined)
1:30 p.m. – 4:30 p.m.
Local sites:
– New London: Science and Technology Magnet HS
– Norwich: Norwich Free Academy
Thank you for your attention.
What questions can I answer for you?
Good Luck in your College journey!