An Overview of Financial Aid

1. An Overview of Financial Aid Lauren Coburn & Bryan Hacke 2012-2013

2. Highlights What is Financial Aid? Financial Aid Formula Categories/Types/Sources of Financial Aid How to Apply for Financial Aid Role of the Financial Aid Office Resources Questions

3. What is Financial Aid? Financial Aid is any money provided to students and families to help pay for postsecondary educational expenses. Examples: Scholarships, Grants, Loans, Work-Study, Tuition Benefits, etc.

4. Financial Aid Formula Cost of Attendance minus Expected Family Contribution equals Financial Need COA – EFC = NEED

5. Cost of Attendance (COA) • Direct Costs (payable to the Institution) • Tuition and Fees • Room and Board (if on-campus) • Indirect Costs (other expenses) • Room and Board (if not on-campus) • Books & Supplies • Transportation • Other Personal Expenses • Loan Fees • Varies widely from college to college

6. Expected Family Contribution (EFC) A formula used to measure the relative financial strength of a family to contribute to educational expenses NOT a measure of cash flow or cash on hand Think of it as an index or scale Calculated using data from the Free Application for Federal Student Aid (FAFSA) that goes into a federal formula Remains consistent at every college

7. EFC cont. Parent: Income, # in Family, Taxes, Assets, # in College Student: Income, Taxes, Assets Income Protection Allowances Asset Protection Allowances State and Other Tax Allowance Age of Parent Closest to Retirement FAFSA Expected Family Contribution (EFC)

8. Financial Need • Remember the rule: COA – EFC = Need • EFC remains consistent at every college • Need will vary from college to college

9. Sources of Financial Aid • Federal Government • Largest source of financial aid • To be eligible, must complete FAFSA each year • States • Usually have residency requirements • Colleges/Universities • Offer both merit and need-based aid • Private Sources • Small amounts add up!

10. Federal Grants • Federal Pell Grant • Gift aid, Exceptional financial need • 2012-13: EFC between 0 and 4995 • 2012-13: Grants between $5,550 and $602 • Federal Supplemental Educational Opportunity Grant (Federal SEOG) • Gift aid, Exceptional financial need • Each college awards differently

11. Federal Loans • Federal Perkins Loan • Self-help aid, Need-based • Low, fixed interest rate (5%) • Interest does not accrue while student is enrolled at least half-time • Repayment begins 9 months after graduation or no longer enrolled at least half-time • Funding varies from college to college so awards will vary

12. Federal Loans cont. • Federal Direct Stafford Loans • Self-help aid • Repayment begins 6 months after graduation or when no longer enrolled at least half-time • Borrowing limits based on year in school ($5,500 Freshmen; $6,500 Sophomores; $7,500 Juniors & Seniors) • Subsidized (Need-based) • Fixed interest rate (3.4% 2012-13) • Government pays interest while the student is enrolled at least half-time • Unsubsidized (Non-need based) • Fixed interest rate (6.8% 2012-13) • Student responsible for interest that accrues

13. Federal Loans cont. • Federal Direct Parent Loan for Undergraduate Students (PLUS) • Non-need based • Credit-based approval process • Fixed interest rate of 7.9%, accrues while student is in school • Repayment begins 60 days after last disbursement or can request deferral until graduation or no longer enrolled half-time

14. Federal Work-Study Self-help aid, Need-based Gives students an opportunity to seek part-time employment to help pay for educational expenses Each college awards differently based on the school’s allocation and internal policies Student is responsible for finding a position

15. State Grants MARCH 2 Gift aid, Need-based Administered by the California Student Aid Commission (CSAC) Can create an account to monitor application, school of enrollment, payment, etc. at https://mygrantinfo.csac.ca.gov AB540 students can apply using a Cal ISIR Deadline to apply via FAFSA or Cal ISIR and GPA verification form is:

16. Institutional Aid • Scholarships(Gift aid, usually non-need based) • From college funds or donations • The college’s investment in the student • Merit-based (GPA and test scores) • Skill/Unique Characteristic/Major • Athletic • Sometimes require an application • Grants (Gift aid, usually need-based) • FAFSA, Profile, and/or Institutional Aid Application • Loans and Work-Study • Self-help aid, need-based or non-need based

17. Private Sources • Outside Scholarships (Gift aid, Need-based or Non-need based) • Civic and local organizations • Churches • Employers • Websites/Private Searches • Alternative Loans (Self-help aid, Non-need based) • Requires credit approval • Variable or Fixed interest rate and fees • Repayment varies by lender

18. How to Apply • Free Application for Federal Student Aid (FAFSA) • CSS/Financial Aid PROFILE • Usually available October 1 each year • Service of the College Board • Not required by every institution • Fee-based • Collects additional financial information including home equity, non-custodial parent financials, unusual circumstances, etc. • Institutional Aid Application • Usually part of admissions packet

19. FAFSA FREE Application for Federal Student Aid 2013-14 FAFSA will be available on or after January 1, 2013 Colleges may set priority deadlines Collects demographic and financial information about the student and family to calculate the EFC and determine eligibility for federal financial aid Can file online or with a paper form

20. FAFSA on the Web (FOTW) • Reasons to file electronically: • Built-in edits prevent costly errors • Skip logic allows you to skip unnecessary questions • IRS Data Import allows for direct reporting of financial information • Simplified application process in future years • Faster processing, check status online • More detailed instructions • Can use FAFSA on the Web worksheet to prepare answers before submitting information online

21. FOTW: Websitewww.fafsa.gov

22. FOTW: Worksheet • 4-page booklet containing: • Instructions • Questions in 4 sections

23. FOTW Worksheet: Section 1 • Student Information • Name and Address • State of Legal Residence • Social Security Number • Citizenship Status • Marital Status • Selective Service Registration • Drug conviction questions • Parent Education levels

24. Database Matches • The information provided on the FAFSA is verified with various other federal databases including: • Social Security Administration • Selective Service System • Department of Homeland Security • National Student Loan Data System • Department of Veterans Affairs • If your information does not match one or more of the databases, you will be notified on your Student Aid Report (SAR).

25. FOTW Worksheet: Section 2 • Student Dependency Status • Determines student’s dependency status • Just because a student is 18 or files his/her own income taxes DOES NOT make him/her independent

26. FOTW Worksheet: Section 3 • Parent Financial Information • Name, SSN, DOB for parent 1 and parent 2 • Dislocated worker status • Tax return and income information (IRS Data Retrieval Tool) • Public Assistance Programs • Additional financial information • Untaxed income • Asset information (if skip, may still need to provide for Cal Grant)

27. FOTW Worksheet: Section 4 • Student Financial Information • Dislocated worker status • Tax return and income information (IRS Data Retrieval Tool) • Public Assistance Programs • Additional financial information • Untaxed income • Asset information (if skip, may still need to provide for Cal Grant)

28. IRS Data Retrieval Tool Import tax information directly from the Internal Revenue Service (IRS) into FOTW Identity authentication If match found, opens new window where you can review your information Applicant or Parent chooses whether or not to transfer the data from the IRS to FOTW Can speed up your Financial Aid Award

29. Additional Information • College and housing information • Enter in FAFSA on the Web, no space on the Worksheet • List most expensive California school first • List up to 10 schools; if more needed, update FAFSA after submission • Signature • Sign FAFSA on the Web using PIN • Parent also signs using own PIN

30. After Submission • Student Aid Report (SAR) sent to student once FAFSA is completed and submitted • Can contain important information about completed FAFSA and what you need to do next… • READ and REVIEW!!! • Institutional Student Information Record (ISIR) sent to colleges listed on the FAFSA • Can take 2 days to 2 weeks • Colleges may request additional information • Data is sent to the California Student Aid Commission (CSAC) for Cal Grant review

31. Making Corrections Can only update certain fields Can be done using FOTW (www.fafsa.gov) Can use paper SAR (not SAR Information Acknowledgement) Financial Aid Office may make corrections and you will receive an updated SAR as notification

32. Errors can be Costly • Can delay application processing which can result in a loss of funds • Can change your EFC so you do not qualify for aid • Frequent Errors: • Parent & Student Social Security Numbers • Divorced/Remarried Parental Info • Income earned, Untaxed Income, Taxes paid • Household size, Number in College • Real Estate & Investment Net Worth

33. Role of the Financial Aid Office • Answer questions • Equitably distribute limited resources • Apply the Financial Aid Formula (COA – EFC = Need) to determine Financial Need at the institution • Create and update a student’s Financial Aid Award Package and notifies the student of the award • Monitor continued eligibility for aid • Complete verification, if needed • Review Special Circumstances, if requested

34. Special Circumstances • Cannot report on the FAFSA • Call the Financial Aid Office to determine institution’s policy on applying for a “Special Circumstance” or “Professional Judgment” • Will most likely require a written explanation and documentation • Could result in an increase in EFC and thus a decrease in Financial Need • Examples: • Change in Employment/Loss of Income • High Medical Expenses • Death of a Parent

35. Final Tips • FAFSA is FREE to apply • Apply for everything – little awards add up • Meet Deadlines (Cal Grant is March 2) • Reapply every year • Notify the Financial Aid Office of any unusual family circumstances • Ask for help when needed

36. Helpful Resources • FAFSA: www.fafsa.gov • FAFSA application, apply for a PIN • Federal Student Aid: www.studentaid.gov • Information on Federal aid programs • Cal Grants: www.calgrants.org • Monitor your Cal Grant • College Board: www.collegeboard.org • Financial Aid tip sheets, general information • Fin Aid: www.finaid.org • Financial aid information, loan calculators • Fast Web: www.fastweb.com • Scholarship search engine