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FINANCIAL AID: Demystifying The Process

FINANCIAL AID: Demystifying The Process. Presented by: Dan Yannuzzi yannuzzi@arcadia.edu Senior Assistant Director of Enrollment Management. Introduction. Talk The Talk: Financial Aid Lingo The Application Process Sources of Financial Aid Sticker Shock Comparing Aid Offers.

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FINANCIAL AID: Demystifying The Process

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  1. FINANCIAL AID: Demystifying The Process Presented by: Dan Yannuzzi yannuzzi@arcadia.edu Senior Assistant Director of Enrollment Management

  2. Introduction • Talk The Talk: Financial Aid Lingo • The Application Process • Sources of Financial Aid • Sticker Shock • Comparing Aid Offers

  3. Financial Aid • Financial Aid=Assistance for students to fund their education in the form of: • Grants • Scholarships • Loans • Employment

  4. Merit-Based Aid vs. Need-Based Aid • Merit-Based Aid=aid given to students strictly on the basis of merit. May be based on: Academic record Special characteristics Skills or talents Involvement -Does not have to be repaid; usually renewable from year to year. • Need-Based Aid=aid awarded to students on the basis of financial need. Re-evaluated each year as financial situations may change.

  5. What Is The FAFSA? • FAFSA=Free Application For Federal Student Aid • Application for federal and state aid (may be application for college aid as well, depending upon the school) • Parent/Student Sections color-coded • File one FAFSA per year per student (not one per college) • List up to ten colleges--Title IV Code or school name; schools receive info. electronically

  6. How/When to File the FAFSA? • Ways To Complete the FAFSA: • On-line at www.fafsa.gov (this is STRONGLY encouraged) • Download pdf version of FAFSA at www.FederalStudentAid.ed.gov. • Complete as soon as possible after January 1, by filing electronically at www.fafsa.gov beginning January 1, prior to the fall for which student seeks aid.

  7. FAFSA On The Web • If filing over the Internet, 2 choices: • Parent and student mail signature page in OR • Parent and student apply for PIN # at www.pin.ed.gov • PIN # serves as e-signature • PIN # will be mailed or e-mailed ahead of time to student • Use PIN # to submit info. and make corrections, sign promissory notes

  8. Whose Info. Is On the FAFSA? • Dependent: parental & student financial data required • In cases of divorce or legal separation, complete with info of custodial parent (and his/her new spouse, if applicable) • Independent: student & spouse financial data required • Student must meet one of following criteria to be considered independent: • 24 years of age • Veteran of the U.S. Armed Forces • Active Duty in Military • Emancipated minor or in a legal guardianship • Unaccompanied youth who is homeless • Enrolled in a graduate or professional program • Married • Orphan or ward of the court until age 18 • Have legal dependents for which the student provides at least 50% of the support

  9. Filing The FAFSA • Based on prior calendar year tax information • May use estimated income and taxes • Don’t wait to be accepted to college to complete • PA residents must file by May 1for state grant consideration for following fall term; state will follow up with student • MAKE COPIES OF EVERY FORM!

  10. Corrections to the FAFSA • Receive colored SAR (Student Aid Report or summary of FAFSA information) 3-4 weeks later (link will be emailed if FAFSA filed on-line) • Review for corrections • Add additional colleges & make address corrections over phone 1-800-4FEDAID or on web using PIN # • Make all other corrections on SAR & return it to Federal Student Aid Programs or use PIN # to make corrections on Internet.

  11. When Completing the FAFSA: • Common Mistakes To Avoid: • Be sure student uses his/her correct SS# as this CAN NOT be corrected • Don’t leave questions blank • Report only dollar amounts (not cents!) • Enter “U.S. income tax paid” (not U.S. income tax “withheld”!) • A parent AND the student must sign form or use PIN # as e-signature

  12. Financial Need Cost of Attendance (COA) -Expected Family Contribution (EFC) Financial Need • Cost of Attendance typically includes tuition, fees, room & board, books & supplies, personal expenses and a transportation allowance

  13. What Is The EFC? • Basis of financial aid package • EFC=determined by a federal formula that calculates need via the FAFSA • EFC & Financial Need are guidelines used by schools to determine aid package • EFC not necessarily = to out-of-pocket cost of family. • Colleges will attempt to meet as much need as they can, but funding does have limits.

  14. How Is The EFC Calculated? Primary Factors Looked At: • Taxable Income: AGI (wages earned+interest dividends+other taxable income) • Untaxed income & benefits • Number in family & Number in Household • Number of dependent children in college • Assets

  15. Treatment of Assets ASSETS • Assets: includes cash/savings, value of other real estate and investments; excludes value of primary home • Asset protection allowance acc. to age of oldest parent (ex:-Oldest Parent’s Age=50, $52,900 of assets protected (if married; $20,500 if single) • 12% of parents assets counted toward EFC • 20% of student’s assets counted beginning with 2007-2008 FAFSA, previously was 35% • Does not include: value of life insurance policies, retirement plans (ex.-IRA, 401k, or Keogh Plan) • When reporting assets, investment debt cannot be greater than investment value

  16. Institutional Methodology • Some schools may require CSS Profile Form • Primarily private schools • Collects supplemental data (i.e.-home equity, financial data of non-custodial parent, value or retirement plans, etc.) • Calculate IFC (Institutional Family Contribution) • Basis for awarding institutional need-based aid

  17. Help! Sources of Aid • Federal • State • The College/University • Outside Organizations • Civic organizations (ex.-local Rotary Club), parent’s employer, high school

  18. Federal Government • To qualify for Federal Aid, students MUST: • Be a U.S. citizen or eligible non-citizen • Have h.s. diploma or equivalent (GED) • Be matriculating in a degree/certificate program at accredited Title IV school • Be registered with Selective Service if a male between ages of 18 and 25 • Pell Grant (need-based): • Max of $5,550/year in 2010-2011 • EFC of $5,273 or less

  19. Federal Government • Federal Stafford Loan • Federal Direct Loan Program • Lender is Department of Education • In student’s name/no credit check • Available to all students, regardless of need • Repayment begins 6 months following graduation or withdrawal • Fixed 6.8% interest rate as of 7/1/2006 • Interest rate for Subsidized loans for undergraduate students only will be 3.4% for 2011-2012 school year, back to 6.8% after. • Unsubsidized Loans remain at 6.8%

  20. Federal Government • STAFFORD LOAN, SUBSIDIZED VS. UNSUBSIDIZED • Subsidized • Based on financial need • Govt. pays interest on loan while student is enrolled • Unsubsidized • Available to ALL students, regardless of need • Interest paid either quarterly or capitalized upon repayment: rate=currently 6.8% • Stafford amount caps by grade level • $3,500 freshmen year + $2,000 Unsubsidized • $4,500 sophomore year + $2,000 Unsubsidized • $5,500 junior/senior year + $2,000 Unsubsidized • Add’l. unsub available to students whose parent(s) are denied on PLUS Loan

  21. Federal Government • Plus Loan (Parent Loan for Dependents) • loan in parent’s name • interest cap of 9% • current rate: 7.9% Direct • repayment begins within 60 days of 2nd disbursement coming in to school, but may request deferrals • credit check involved • borrow up to cost of attendance minus other financial aid student is receiving • 3-4% Origination Fee typically applies

  22. Federal Campus-Based Aid • Schools receive limited funds (i.e. a specific “pot” of money). • Student will not necessarily receive Campus-Based Aid from all schools • SEOG Grant-exceptional need-$100-4,000/yr • Perkins Loan-exceptional need-$100-3000/year; 5% interest rate • Federal Work Study: typically not deducted from bill

  23. TEACH Grant • $4000 annually for 4 years as undergraduate; available for 2 years as graduate student. • Must be in degree program taking coursework to prepare for a career in teaching • Must annually sign Agreement to Serve (ATS), agreeing to teach 4 out of 8 years upon graduation in a low income school, in a high need field • Failure to meet teaching requirements causes grant to revert to a Direct Unsubsidized Stafford loan • Not based on financial need • Visit www.teachgrant.gov for more information

  24. State • Pennsylvania State Grant (for PA Residents): $3,541 max/year for 2010-2011 for students attending a PA school • Eligibility based on the family’s EFC • Max PHEAA Grant that can transfer out-of-state, $600, to: CT, DE, MA, ME, OH, RI, VT, DC, WV • $400 maximum transfers to other states, except NJ, MD and NY--$0 transfers there • Student must file FAFSA by May 1 for upcoming fall term • PHEAA sends student status notice beginning mid-May; student must complete and return to PHEAA

  25. State • Robert Byrd Scholarships: • $1,500 per year for four years • Eligibility Requirements: • Top 5% of graduating class or ranked 1, 2, or 3 in a class of 60 or less. • 3.5 GPA on 4.0 scale • SAT’s: 1150 or better (Critical Reading and Math Combined) or ACT Composite Score of 25 or better • U.S. Citizen and Pennsylvania Resident • Completed Application (see high school guidance office) • May 1st filing deadline for FAFSA

  26. Other State Aid • NETS Scholarship: at least sophomore, 3.0 cum GPA, PA resident, graduate of PA high school enrolled full-time in approved science or technology bachelor’s degree program ($3,000 max/year) • Technology Scholarship: PA resident, graduate of PA high school enrolled at least part-time in an associate’s degree program or equivalent, 3.0 cum ($1,000 max/year) • Must agree to work in PA following graduation, one year for each year of grant • Apply at www.aessuccess.org

  27. College/University • Factors that may influence institutional aid, particularly merit-based aid: Academics Athletic Ability* SAT’s Geographic Diversity AP Courses Legacy (child of alumni) Academic Track Talent Gender/Ethnicity H.S. Attended Class Rank Activities *Athletic awards offered by NCAA Division I and Division II schools only.

  28. College/University Investigate sources of Merit-Aid first • How & When To Apply • Criteria • Limited number? • Renewable? • Criteria for renewal

  29. College/University Investigate Sources of Need-Based Aid • How & When To Apply • Criteria • Re-apply every year • What factors will cause change? (i.e.-number in college, income increase) • Beware: Bait/Hook & Switch Tactic

  30. What Happens Next? • Receive financial aid award letter from each college/university • Deposit at college of choice (non-refundable usually) • May 1=Candidate Reply Date • File for any loans • Investigate payment plans

  31. State vs. Private • State schools: lower cost with lower or no endowment; Private schools: higher cost with higher endowment • Often translates into more sources of institutional grant/scholarship aid at private schools and, maybe even lower cost. • Federal Pell Grant and PHEAA State Grant may be reduced at state institution due to lower COA • Don’t rule out private institutions just due to COA

  32. XYZ State School: $13,684 tuition/R&B* -$3,500 Stafford Loan $10,184 Cost *In-state student Private School $23,000 tuition/R&B -$10,000 school grant -$3,500 Stafford Loan $9,500 Cost State vs. Private

  33. Comparing Aid Offers • Look at same “bottom line” for each school. Compare “apples” to “apples.” • Consider: • What is amount of loan in package vs. amount of grant? • What is amount of work study? • Are grants/scholarships automatically renewable? If so, what are criteria?

  34. Comparing Aid Offers • Will package change if outside scholarships are received? • What factors will cause change? (i.e.-number in college, income increase) • Beware: Bait/Hook & Switch Tactic • Is there room for movement? Check with the F.A. Office—there might be but it’s not “Let’s Make A Deal!”

  35. Comparing Aid Offers School ASchool BSchool C Cost $6,000 $15,000 $30,000 EFC $3,000 $3,000 $3,000 Need $3,000 $12,000 $27,000 Pkg. #1: $2,500 Grants $11,500 Grants $26,500 Grants $3,500 Loans $3,500 Loans $ 3,500 Loans Pkg. #2 $1,500 Grants $7,000 Grants $14,000 Grants $4,500 Loans $7,000 Loans $15,000 Loans $1,000 Work $ 1,000 Work Pkg. #3 $1,000 Grants $4000 Grants $ 5,000 Grants $3,500 Loans $9,000 Loans $23,500 Loans $1,500 Work $2,000 Work $ 1,500 Work

  36. Financing Options • Federal PLUS Loan • Alternative Loans (in student’s name) • Home Equity Loans • Interest payments tax deductible (loans<$100,000) • Individual college payment plans-many are interest free with nominal one-time fee • 401(k) Retirement Accounts • Cash value of life insurance policies

  37. Outside Sources • Private sources of scholarship funds include: • Service/Fraternal Organizations • Employers/Business • Churches/Religious Groups • Sources of Information • Internet: see www.pasfaa.org for helpful websites Books: Peterson’s Guide, Barron’s Guide to Colleges, “Don’t Miss Out” (Octameron Assoc.) • Guidance Office Computer Programs • FastWeb: www.fastweb.com

  38. Outside Sources • When using services like FastWeb, you create a profile that helps to locate scholarships you qualify for • Out of their listing of 1.5 million scholarships, you will receive a “short list” of any that match with your profile • The more information you put in your profile, the better your results will be

  39. Outside Sources • Things to remember: • Each organization has their own application/process • Have someone read your essay!! • Save all your essays, you may be able to reuse them • Don’t rule out smaller scholarships!

  40. Education Tax Credits • American Opportunity Tax Credit • Available for four years of undergraduate study for dependents enrolled at least half-time • Deducted from family’s actual tax liability • Max tax credit of $2,500/year per student for anything paid out of pocket for tuition, fees, and books for prior year • Filers who don’t earn enough to owe any taxes can get refund checks for 40% of their tuition and books expenses up to $1,000. • Income cutoff: $80,000 single filer; $160,000 for joint filer

  41. Education Tax Incentive • LifeTime Learning Tax Credit • Can claim up to 20% of first $10,000 paid out-of-pocket for tuition and fees paid after January 1, 2010 (for 2010 taxes) or maximum tax credit of $2,000/year • Family based (unlike American Opportunity Credit) • Can’t claim American Opportunity & Lifetime credits on the same student • For more information visit www.irs.ustreas.gov • Tuition & Fees Deduction off AGI

  42. What To Do NOW! • Check with colleges/universities on early financial aid estimate services offered • I.E.-Arcadia University online calculator (free and easy online financial aid calculator located at www.arcadia.edu/calculator). • Research Outside Scholarships • Guidance Office • Local Libraries • Internet-see handout • www.fastweb.com

  43. Remember… • When filing the FAFSA use www.fafsa.govNOT fafsa.com • MAY 1! It’s the deadline for State Aid consideration • It’s never too early to begin researching outside scholarships- just be cautious about services that charge you money to find you money • Aid offices will often be willing to help you with questions, don’t be afraid to ask

  44. The End... yannuzzi@arcadia.edu Thank You For Coming!

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