what is financial aid? financial aid consists of funds provided to students and families to help pay...
TRANSCRIPT
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:• 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 editsThe 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
• 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
• 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 formsyour 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
» 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 School-
based
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 co-signer 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 KaneHigher Education Access Partner North Central RegionPA Higher Ed Assistance [email protected]