What you Need to Know About Financial Aid For 2013-14

1. What you Need to Know About Financial Aid For 2013-14 A Presentation by Dorothy Gilliard

2. Topics We Will Discuss Tonight • Financial aid Definition • Cost of attendance (COA) • Expected Family Contribution (EFC) • Financial need Definition • Categories, types, and sources of financial aid • Free Application for Federal Student Aid (FAFSA) • Special circumstances

3. Financial Aid Definition Financial aid consists offunds provided to students and families to help pay for postsecondary educational expenses

4. Cost of Attendance -Definition • 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

5. Expected Family Contribution (EFC) • Amount family can reasonably be expected to contribute • Stays the same regardless of college • Two components • Parent contribution • Student contribution • Calculated using data from a federal application form and a federal formula

6. Financial Need vs. Financial Aid Cost of Attendance –Expected Family Contribution = Financial Need Need will vary based on the cost of the school.

7. Four Types of Financial Aid • Scholarships • Grants • Loans • Employment

8. 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

9. 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

10. Employment Allows student to earn money to help pay educational costs • A paycheck; or • Non-monetary compensation, such as room and board

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

12. 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)

13. States • Residency requirements • Award aid on the basis of both merit and need • Use information from the FAFSA • Deadlines vary by state; check paper FAFSA or FAFSA on the Web site

14. Common Federal Aid Programs • Federal Perkins Loan • Federal Work-Study • varies • Subsidized and Unsubsidized Loans • PLUS Loans • Federal Pell Grant • $5,550 • Teacher Education Assistance for College and Higher Education Grant • $4000 • Federal Supplemental Educational Opportunity Grant • $100 - $4000

15. FSEOG (Federal Supplemental Educational Opportunity Grant) • Students with the lowest EFC’s are awarded first • Priority goes to Federal Pell Grant recipients

16. Federal Work Study (FWS) • Provides part-time employment while you are enrolled in school • Employment may be on or off campus • Inquire about jobs at your college’s Student Employment Office

17. 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

18. 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

19. 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

20. Direct Loans • The interest rate on Direct loans first disbursed on or after July 1, 2013 will be 3.4%: • Repayment begins after 6 month grace period • Maximum repayment period between 10 and 30 years

21. 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

22. THE FAFSA –FEDERAL AID-STATE AID – COLLEGE CONNECTION

23. New Jersey State Financial Aid • NJ State Aid • Governor’s Urban Scholarship - UP TO $1000 • NJ World Trade Center Sch UP TO $5000 • Law Enforcement Officer’s Mem Sch COA – OTHER AID • NJ BEST Scholarship (freshman only) UP TO $1500 • TAG – Tuition Aid Grant- Maximum Awards for 2012-13 • $3, 092 - $11,550 • PART-TIME TAG (AT COUNTY COLLEGES) • $546-$1900 • NJ Stars • New Jersey residents who graduate in the top 15.0 percent of their high school class, complete a rigorous high school course of study and achieve the required score on a college placement test to determine college readiness may be eligible for free tuition to attend one of NJ Community Colleges,. Funded for up to 18 credits per academic year. • NJ Stars II • For students that have graduated from a community college to transfer into a public or private NJ institution to complete their education. Funded up to $7000. • Educational Opportunity Fund (EOF) • UP TO $2500

24. New Jersey Financial Aid, cont’d NJ Class Loan • A state supplemental loan program that provides eligible students with an additional source of affordable funds • Low interest rate not based on creditworthiness • The option for students or parents to borrow • Loan Interest Rates & Features • 10 YR REPAYMENT AT 6.15% • Immediate repayment of princ and interest • 15 YEAR REPAYMENT AT 7.05% • Immediate repayment of princ and interest • Immediate repayment of interest only • 20 YEAR REPAYMENT AT 8.05% • Full deferment until out of school • 3% Administrative Fee for all loans

25. NJHESAA AID Application Requirements • NJ requires addtl data elements other than what is reported on the FAFSA to determine eligibility for TAG and NJ STARS I and II • Driver’s License Info • Veterans Education Benefits (independent students) • Untaxed Social Security Benefits • Earned Income Credit • Once you get to the confirmation page of the FAFSA you should select the second option to report this information to HESAA.

26. NJHESAA aid application REQUIREMENTS

27. HOW TO APPLY FOR FINANCIAL AID? • Free Application for Federal Student Aid (FAFSA) • Required for all types of federal aid • May be filed electronically (preferred) or via paper form • File online at www.fafsa.ed.gov after January 1, 2013 • Sign the electronic form with a PIN. • Later this year you will be able to download a paper form or you can have one mailed to you by calling 800-4-FED-AID (1-800-433-3243) • Results sent electronically to you (if you give your email address) and to the institutions you list on the FAFSA

28. FAFSA on the Web • Website: www.fafsa.gov • FAFSA on the Web Worksheet: • Used as “pre-application” worksheet • Questions follow order of FAFSA on the Web • PDF FAFSA will also be available if you want to complete the FAFSA online; then download the form and mail it in.

29. 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

30. 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

31. WWW.FAFSA.GOV Click Here >

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

33. Help & Hints BOX STUDENT Demographic Information

34. Student’s Demographic Information • SSN (data match) • Name • DL • DOB • Address • Citizenship Status (data match) • Selective Service Registration (data match) • Male students ages 18-25

35. Student’s Income and Asset Information • Tax Return Status • Income (50%) • IPA – income protection allowance – allows a certain percentage of income/assets to not be included in the formula • It varies according to the number in the parents’ household and the number in college • Assets (20%) • Cash, Savings, Checking • Other Investments****

36. Dependent vs. independent Does the student have to use their parents information?

37. Dependency questions How do you determine if a student is “independent”? • Born before January 1, 1989 • Married • Pursuing an advanced degree • Veteran of the Armed Forces • Legal Dependents (do not provide information on the FAFSA) • Parents deceased or student was or is in Foster Care • Ward of the Court • Unaccompanied Youth who was Homeless

38. If a student is dependent parents must participate in the fafsa process!!!!! What if the parents refuse? If parent’s refuse the student will not be able to get any financial aid.

39. Information parents are required to provide PARENT Demographic Information

40. Parental Information PARENTAL INFORMATION SECTION OF THE FAFSA • Parent Information • Marital Status • Married or Remarried • Single • Divorced or Separated • Widowed • SSNs/DOBs/Last Names and First Initial (IRS Match) • Email Address • # in Household (72) • # in College

41. Parent’s Income Information • Type of Tax Return you filed (or will file) • Dislocated Worker Status • Receiving unemployment benefits due to being laid off or losing a job • Was self-employed but is now unemployed due to economic conditions • Is a displaced homemaker: a person who previously provided unpaid services to the family, e.g. a stay-at-home mom or dad, is no longer supported by the spouse and is having trouble finding meaningful work • Adjusted Gross Income from your Income Tax Return • Taxes Paid from your Income Tax Return • Breakdown of Income from work for both parents • Allowances: • Living Expense Allowance • Employment Tax Offset (based on the highest salary) • Income Protection Allowance • State Tax Allowance Once the allowances are applied to your income the resulting amount is used in the calculation of the EFC.

42. Simplified Needs Test • Anyone included in the parents’household size (as defined on the FAFSA) received benefits during 2011 or 2012 from any of the designated means-tested Federal benefit programs: (SSI) the Food Stamp Program, the Free and Reduced Price School Lunch Program, TANF) Program, OR • the student’s parents: • • filed or were eligible to file a 2011 IRS Form 1040A or 1040EZ, • • filed a 2011 IRS Form 1040 but were not required to do so, or • • were not required to file any income tax return; the student’s parent is a dislocated worker. • AND • (2) The 2011 income of the student’s parents is $49,999 or less. • • For tax filers, use the parents’ adjusted gross income from the tax return to determine if income is $49,999 or less. • • For non-tax filers, use the income shown on the 2011 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $49,999 or less. • Assets are not considered in the simplified EFC formulas.

43. Who Qualifies for An Automatic Zero EFC? • Anyone included in the parents’household size (as defined on the FAFSA) received benefits during 2011 or 2012 from any of the designated means-tested Federal benefit programs: SSI, Food Stamps, the Free and Reduced Price School Lunch Program, TANF, and WIC; OR • The student’s parents: • • filed or were eligible to file a 2012 IRS Form 1040A or 1040EZ, • • filed a 2012 IRS Form 1040 but were not required to do so, or • • were not required to file any income tax return; OR • the student’s parent is a dislocated worker. • AND • (2) The 2012 income of the student’s parents is $23,000 or less. • • For tax filers, use the parents’ adjusted gross income from the tax return to determine if income is $23,000 or less. • • For non-tax filers, use the income shown on the 2012 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $23,000 or less.

44. Parents Income Information Taxable Income Sources:

45. Parent’s asset information • Assets you DO INCLUDE: • Cash, Savings, Checking • Real Estate (other than your primary residence) The Federal need analysis methodology ignores the net market value of the family's primary residence. Sometimes, however, the family's primary residence is a multi-family dwelling. For example, the family might own a duplex, living in one half and renting out the other. For multi-family homes and apartment buildings where the owner occupies a unit, the portion not occupied by the owner is treated as an investment asset • Non-Retirement Investments • Business Value (if you are self-employed and employ more than 100 people) • 529 College Savings Plans ******

46. 529 PLANS • A 529 account owned by a parent for a dependent student is reported on the federal financial aid application (FAFSA) as a parental asset. • A student--owned 529 account is to be reported as parental assets, if the student files the FAFSA as a dependent and has to include parent assets and income. This treatment confers a financial aid benefit as the parental rate of inclusion is considerably less l than the 20% rate on non-529 assets owned by the student.

47. Parent’s asset information • Assets you DO NOT INCLUDE • The value of Life Insurance • Retirement plans (401K) • Pension Funds • Annuities • Non-Education IRAs, • Keogh Plans, etc. • UGMA and UTMA accounts for which you are the custodian, but not the owner. A percentage of your asset value is used in the calculation along with the Education Savings and Asset Protection Allowance. That percentage usually does not exceed around 5.64%

48. Education Savings and Asset Protection Allowance

49. FAFSA Processing Results Central Processing System (CPS) notifies student of FAFSA processing results by: • Paper Student Aid Report (SAR) if paper FAFSA was filed and student’s e-mail address was not provided • SAR Acknowledgement if filed FAFSA on the Web and student’s e-mail address was not provided • Student with PIN may view SAR on-line at www.fafsa.gov

50. 7 Ways to Blow Your FAFSA • Playing the Waiting Game • FAFSA requires all sorts of tax-related information, so a lot of parents wait till they've filed their taxes by April to start working on the form. That's a big no-no, especially as many states have their own deadlines for submission of their own info. • Fudging your Tax Information • If your household earns enough to file taxes, you won't have a hope of getting financial aid until you've filed. The Dept. of Education and IRS are working together to crack down on families who under-report their taxable income on FAFSA forms, Kantrowitz says, in the hopes of lowering the existing 4-5% fraud rate.  • Other tax errors: Reporting your total income tax as equal to your Adjusted Gross Income (AGI) Reporting taxes withheld or tax due instead of total income tax. "Be sure you are reporting the total total income tax (the total tax liability) and not just the withholdings or the additional taxes due