Paying for College: Financial Aid Facts

1. Paying for College: Financial Aid Facts

2. What we’ll cover tonight • What is financial aid? • How is financial need determined? • The “Big 4” financial aid types • How to apply for financial aid

3. Financial Aid : The Goal • To assist students in paying for college! • Determine each family’s ability to pay • educational costs • Spread out limited funds in a fair • manner

4. What is Financial Aid? • Scholarships • Grants • Loans • Work study

5. Two forms of aid • Merit-based(based on student performance) • -Test scores • -Class rank and GPA • -Sports, other extracurriculars • Need-based(Provides access to higher education for students based on financial need) • -Gift aid – Grants and Scholarships • -Self-help aid – Loans and Work study

6. How is need defined? • Financial need = COA – EFC • Cost of attendance (COA) • minus • Expected Family Contribution (EFC)

7. What is Cost of Attendance (COA) • Includes • Tuition & Fees • Room & Board • Books, supplies, transportation, and misc. personal expenses • Sometimes can include • Loan fees • Study abroad costs • Dependent care expenses • Varies widely from college to college

8. What is the Expected Family Contribution (EFC) • Amount family can reasonably be expected to contribute • Stays the same regardless of college • Two components • Parent contribution (from income and assets) • Student contribution (from income and assets) • Calculated using data from FAFSA using a federal formula

9. Need Varies Based on Cost

10. Scholarships and Grants • Money that does not have to be paid back • Awarded on the basis of merit, skill, or unique characteristic • Usually awarded on the basis of financial need

11. Scholarships • Many, many different types available • Typically awarded by colleges, states, businesses, the military, unions, trade groups, other associations • Key for finding scholarships – the scholarship search website should not charge you money. • A great place to start : fastweb.com • Create a CSS Profile through College Board

12. Sources of Financial Aid • Federal government • States • Private sources • Civic organizations and churches • Employers

13. Federal Government • Largest source of financial aid • Aid awarded primarily on the basis of financial need • Must apply every year using the Free Application for Federal Student Aid (FAFSA)

14. States • Residency requirements • Award aid on the basis of both merit and need • Use information from the FAFSA • Deadlines vary by state; check FAFSA website

15. Private Sources • Foundations, businesses, charitable organizations • Deadlines and application procedures vary widely • Begin researching private aid sources early

16. Civic Organizations and Churches • Research what is available in community • To what organizations and churches do student and family belong? • Application process usually spring of senior year • Small scholarships add up!

17. Employers • Companies may have scholarships available to the children of employees • Companies may have educational benefits for their employees

18. Common Federal Aid Programs • Federal Pell Grant • Teacher Education Assistance for College and Higher Education Grant • Federal Supplemental Educational Opportunity Grant • Cal Grants • Federal Perkins Loan • Federal Work-Study • Subsidized and Unsubsidized Loans • PLUS Loans

19. Federal Pell Grant • Awarded amount based on EFC, COA, and enrollment status (full-time, half-time, etc.) • Generally awarded to undergraduate students only, few exceptions • Maximum award for 2012-2013 = $5,550

20. TEACH Grant • U.S. citizen • Be enrolled in course work that is necessary to begin a career in teaching or plan to complete such course work. • Meet certain academic achievement requirements • Sign a TEACH Grant Agreement to Serve • Teach full time as a highly qualified teacher at a low income school in a high need field for 4 years after degree completion. • If you do not complete the required teaching service obligation, TEACH grant funds you received will be converted to a Federal Direct Unsubsidized Stafford Loan that you must repay, with interest charged from the date of each TEACH Grant disbursement.

21. FSEOG (Federal Supplemental Educational Opportunity Grant) • Annual award amounts vary from $100 to $4,000 a year • Students with the lowest EFC’s are awarded first • Priority goes to Federal Pell Grant recipients

22. California State Grants • Grants are given as need-based aid • Only applicable for colleges in California • Awards are based on GPA requirements - >3.0 for the highest amounts • Award ceiling is based on type of school (CSU, UC or Private)

23. Cal Grant Application Requirements Free Application for Federal Student Aid (FAFSA) Cal Grant GPA Verification Form

24. Federal Work-Study • Jobs funded by the federal government, at the college you end up attending • Facts: • Paid at least federal minimum wage, but often higher • Many of these jobs help the local community • Some schools restrict how many hours you can work, or have a minimum GPA req.

25. Federal Work Study (FWS) • Provides part-time employment while you are enrolled in school • Employment may be on or off campus • Even if you don’t qualify for FWS you may still be able to have an on campus job! • Inquire about jobs at your college’s Student Employment Office

26. Loans • Money students and parents borrow to help pay college expenses • Repayment usually begins after education is finished • Only borrow what is really needed • Look at loans as an investment in the future

27. Federal Loans – three types Perkins Loan : 0% interest rate during school, no fees. Up to $5500/year, must begin repayment 9 months after graduation. 5% rate Stafford Loan : Two flavors – subsidized : government pays interest on loan during college, unsubsidized – interest accrues during college. 6.8% rate PLUS Loan : Higher interest rate – around 8% - meant to cover any remaining gaps after all other aid is secured

28. Federal Perkins Loan • Priority to students who show exceptional need • Interest rate: 5% fixed • Nine month grace period, repayment may be up to 10 years • Deferment and cancellation provisions available for qualifying employment • Maximum annual award • $4,000 for undergraduate students • $6,000 for graduate students

29. Federal Direct Loans • Subsidized • must demonstrate need • U.S. Department of Education will pay (subsidize) the interest that accrues while in school • Unsubsidized • not based on need • most everyone can qualify

30. Direct Loans – Annual Loan Limits • Annual Loan Limits (combined subsidized and unsubsidized) • Classification Dependent Independent • Freshman $5,500 $9,500 • Sophomore $6,500 $10,500 • Each remaining year $7,500 $12,500 • Graduate/Professional N/A $20,500

31. Direct Plus Loans • Parents of dependent undergraduate students • Graduate/Professional students • Repayment begins immediately but can be deferred upon request • Direct interest rate: 7.9% • If a parent is unable to borrow (denied) a parent PLUS loan, a student may be eligible for additional unsubsidized loan

32. How to apply! • Scholarships – read rules for each • Grants, Loans, Work-Study: FAFSA

33. FAFSA • Free Application for Federal Student Aid • Submit online between January 1st and March 2nd – every year! • First, generate PIN at www.pin.ed.gov • Fill out FAFSA Worksheet • www.fafsa.ed.gov • Doesn’t obligate you to accept offers

34. FAFSA on the Web • Website: www.fafsa.gov • 2012–13 FAFSA on the Web available on January 1, 2012 • FAFSA on the Web Worksheet: • Used as “pre-application” worksheet • Questions follow order of FAFSA on the Web

35. FAFSA on the Web Good reasons to file electronically: • Built-in edits to prevent costly errors • Skip logic allows student and/or parent to skip unnecessary questions • Option to use Internal Revenue Service (IRS) data retrieval • More timely submission of original application and any necessary corrections • More detailed instructions and “help” for common questions • Ability to check application status on-line • Simplified application process in the future

36. IRS Data Retrieval • While completing FAFSA online, applicant may submit real-time request to IRS for tax data • IRS will authenticate taxpayer’s identity • If match found, IRS sends real-time results to applicant in new window • Applicant chooses whether or not to transfer data to FOTW

37. IRS Data Retrieval • Available early February 2012 for 2012–13 processing cycle • Participation is voluntary • Reduces documents requested by financial aid office

38. Federal Student Aid Personal Identification Number (FSA PIN) • Website: www.pin.ed.gov • Sign FAFSA electronically • Not required, but speeds processing • May be used by students and parents throughout aid process, including subsequent school years

39. Fafsa.ed.gov Click Here >

40. Login: (Student’s Info) First Name Last Name SSN Date of Birth

41. <Click Here

42. Type Password Twice

43. Help & Hints BOX STUDENT Demographic Information

44. SOME Eligibility Questions

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46. Does the student have to use their parents information?

47. What if the parents refuse?

48. PARENT Demographic Information

49. Did Parents File Taxes?

50. Linking to the IRS is quick, easy and may save the student and/or parent from having to get a copy of their Tax Return Transcript.