FINANCIAL AID: Demystifying The Process

1. FINANCIAL AID:Demystifying The Process

2. Goals of Financial Aid • Primary goal is to assist students in paying for college & is achieved by: • Evaluating family’s ability to pay educational costs • Distributing limited resources in an equitable manner • Providing balance of gift aid and Self-help aid

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

6. Principles of Need Analysis • To extent they are able, parents have primary responsibility to pay for dependent child’s education • Students also have responsibility to contribute to educational costs • Families should be evaluated in their present financial condition • Family’s estimated ability to pay educational costs must be evaluated in equitable & consistent manner, recognizing that special circumstances may affect family’s ability to pay

7. What Is The EFC? • Basis of financial aid package • EFC=determined by a formula that calculates need • EFC & Financial Need are guidelines used by schools to determine aid package • EFC not necessarily = to out-of-pocket cost of family

8. Federal Methodology • Federal Methodology (FM) is the formula created by Congress to determine the EFC • Used to determine eligibility for Federal and State aid. Some schools use FM to determine eligibility for their own aid • FM is calculated based on information on the FAFSA

9. 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 of retirement plans, etc.) • Calculates IM (Institutional Methodology) • Basis for awarding institutional need-based aid only • Register to complete form at www.collegeboard.com • Fee $5 plus $18 per school

10. How Is The FM EFC Calculated? Primary Factors Looked At: • Taxable Income: AGI (wages earned+interest dividends+other taxable income) • Untaxed income & benefits • Number in family • Number of dependent children in college • Assets Change this year: business value not included if business has less than 100 employees

11. Learn more about the EFC • Utilize a Financial Aid Calculator to familiarize yourself with more details and to get an early estimate of your EFC • Go to www.collegeboard.com and click on tab “Pay for college” and select Fin. Aid Calculator from the options on the left, then select EFC and insert your personal information

12. 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 six colleges--Title IV Code or school name; schools receive info. electronically

13. How/When to File the FAFSA? • Available in most guidance offices or on the Internet; college/university may mail to student as well; PHEAA mails to PA SAT takers • Ways To Complete the FAFSA: • On-line at www.fafsa.ed.gov • Mail paper FAFSA to Federal Student Aid Programs • Complete as soon as possible after January 1, or file electronically at www.fafsa.ed.gov beginning January 2 prior to the fall for which student seeks aid.

14. 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 over Internet at www.pin.ed.gov

15. 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!

16. Whose Information is on the FAFSA? • Dependent: parental & student financial data required • 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 • Enrolled in a graduate or professional program • Married • Orphan or ward of the court until age 18 • Have legal dependents that student provides at least 50% support for

17. Whose Information is on the FAFSA? • When filing FAFSA, financial information of parent that student resides with for more than half of the year (if equal time, information of the parent that provides the most financial support) should be provided • If re-married, the financial data of new spouse must be included

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

19. Federal • Must: • Be a U.S. citizen or eligible non-citizen • Have h.s. diploma or equivalent • 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 • Free of drug possession or sale conviction • Pell Grant (need-based): • $4, 310 max/year for 2007-2008 year

20. Federal Campus-Based Aid • SEOG Grant-exceptional need -$100-4,000/year (typically have to receive Pell) • Perkins Loan-exceptional need -$100-4,000/year; 5% interest rate • Federal Work Study Colleges have set allocations -(student may receive award from one school & not another!)

21. Two new programs • Academic Competitiveness Grant $750 for first year students $1,300 for second year students • SMART Grant $4,000 for third and fourth year students in selected science, math and critical language majors Must be U.S. Citizens and eligible for Pell Grants

22. Federal Stafford Loan • In student’s name/no credit check • Available to all students, regardless of need • Repayment begins 6 months following graduation or withdrawal • Competitive interest rate • 6.8% cap rate Amount varies by class $3,500 for freshman $4,500 for second year students $5,500 for third year and beyond (undergrads)

23. Federal Plus Loan (Parent Loan for Undergraduate Students) • Loan in parent’s name • Interest rate set at 8.5% • Repayment begins 60 days after 2nd disbursement • Credit check involved • Borrow up to cost of attendance minus other financial aid student is receiving • Add’l. unsub available to students whose parent(s) are denied on PLUS Loan due to poor credit

24. State • Pennsylvania State Grant (for PA Residents): $4,500 max/year for students attending a PA school • Eligibility based on need and family’s unique circumstances • PHEAA has their own adjusted family income cutoff • 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 (some exceptions) • 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. College/University • Factors that may influence institutional aid, particularly merit-based aid: Academics Athletic Ability*SAT’s Geographic Diversity AP Courses Legacy (child of Activities alumni) Academic Track Talent H.S. Attended Class Rank *Athletic awards only offered by NCAA Division I and Division II schools only.

26. Outside Sources • Private sources of scholarship funds include: • Service/Fraternal Organizations • Employers/Business • Churches/Religious Groups • Sources of Information • Internet: www.pasfaa.org www.finaid.org www.nasfaa.org www.collegeboard.com www.fastweb.monster.com www.srnexpress.com • Guidance Office Computer Programs • Local library resources

27. Comparing Aid Offers • Don’t assume that more expensive schools will necessarily cost you more! • Look at same “bottom line” for each school. Compare “apples” to “apples.” • 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?

28. Comparing Aid Offers School ASchool BSchool C Cost $5,500 $15,800 $35,000 EFC $3,000 $3,000 $3,000 Need $2,500 $12,800 $32,000 Pkg. #1: $2,500 Grants $6,000 Grants $26,000 Grants $6,800 Loans $4,000 Loans $2,000 Work Pkg. #2 $1,500 Grants $5,500 Grants $17,000 Grants $1,000 Loans $5,000 Loans $ 8,000 Loans $1,000 Work $ 1,500 Work Pkg. #3 $500 Grants $4,000 Grants $11,000 Grants $1,500 Loans $4,000 Loans $9,000 Loans $500 Work $1,500 Work

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

30. Open Discussion Your concerns? Question?