Financial Aid 101 Understanding the Basics

Workshop Agenda Resource Information What is Financial Aid? –Application process –Determination of eligibility –Types and sources of aid Side Notes –College planning services –Scholarship searches and scams

Sources of General FA Information The Student Guide (U.S. Dept. of Ed.) College Financial Aid Brochures Websites –Financial Aid Information Page –U.S. Department of Education –The College Board –Educaid

The Financial Aid Information Page Accurate, Comprehensive and Objective Information Links to Free Scholarship Searches Scholarship Scam Alerts Financial Aid Consultant Guide Loan Calculators Strategies--Maximizing Aid Eligibility Answers to Frequently Asked Questions

Financial Aid Myths Students with highest GPAs get all the aid Income is too high, so don’t bother to apply Sibling didn’t qualify, so neither will I Attend the college that offers the most aid Cost is the only way to compare colleges

What is Financial Aid? Money given, paid or loaned to help pay for college Gift Aid Grants and Scholarships (free money) Self-Help Aid Work-Study (job opportunity to earn money) Loans (money borrowed that must be repaid)

Philosophy of Financial Aid Parents have the primary responsibility to pay for their dependent children’s education. Students also have a responsibility to pay for a reasonable portion of their educational expenses. Evaluation of family circumstances should be consistent and equitable.

Application Process ~ALL SCHOOLS~ Free Application for Federal Student Aid (FAFSA)  Required for federal and state aid  Deadlines vary from school to school  Several filing methods: –Paper version –FAFSA on the WEB ( –FAFSA Express (800-4-FED- AID)

Application Process ~SOME SCHOOLS~ Institutional Aid Application CSS/Financial Aid PROFILE - Available in September  Filed earlier than the FAFSA  Not all schools require  $ 6 registration fee  $15 fee per school

Application Tips ( Making Your Efforts Count!) 1. Find out application requirements and deadlines 2. Fill out forms completely, accurately and legibly 3. Make copies of all completed forms 4. Comply with all information requests 5. Meet deadlines (obtain proof of mailing!)

Is There Life After Missed Deadlines? Yes, but Award letter may be delayed Certain funds may be unavailable: –Institutional grants and scholarships –Free federal money –Work-Study –Lower interest or interest free loans

Basic Application Flow Student and school receive FAFSA information from federal processor (student receives the Student Aid Report (SAR), school receives the info electronically) School matches admissions record with financial aid application and determines eligibility School mails award letter to student Student mails award letter back to school

Financial Aid Timeline Apply for Aid (January-February) Receive Award Letter (March-May) Comply with Information Requests (March-May) Verification and Aid Coordination (Spring&Summer) Financial Aid Disbursed (Start of first term) Re-apply for Aid (January-February the following year)

Categories of Financial Aid Need-based –Aid based on your financial situation Merit-based (or non-need) –Aid based on your grades, test scores, hobbies and special talents (artistic, athletic, etc.)

Definition of Need Analysis Need Analysis Simply Defined Is: A process of determining a student’s financial need by analyzing information provided by the student and parent on a financial aid form. Need analysis forms include the FAFSA and CSS/Financial Aid PROFILE

Basic Equation of Need Cost of Attendance (COA) Expected Family Contribution (EFC) Student’s Financial Need (eligibility)

Cost of Attendance (varies from school to school) Tuition and fees Room and board Books and supplies Transportation Miscellaneous personal expenses Loan fees, study abroad costs, dependent or elder care expenses, expenses associated with a disability, or expenses for cooperative education program

Determining the Expected Family Contribution (EFC) Income Asset Equity (excluding home equity) Family Size Number of Family Members in College (excludes parent enrolled in college) Age of Parents

Sources of Financial Aid Federal and State Grants Federal Work-Study Federal Loans Institutional Aid Private / Other Government Aid

Federal Pell Grant Program Eligible students –Undergraduates pursuing first baccalaureate or professional degree –Aid administrator determines actual award amount based on Cost Of Attendance, enrollment status, and EFC Annual award amounts –$400 minimum –$4,731 maximum (as of 2009)

Federal Supplemental Educational Opportunity Grant (FSEOG) Eligible students –Undergraduates pursuing first baccalaureate or professional degree –Awarded first to students with exceptional financial need (i.e., students with the lowest EFCs at that school) –Priority to Federal Pell Grant recipients Annual award amounts –$100 minimum –$4,000 maximum

Federal Work-Study Employment during school Job may be on or off campus Income is taxable (state and federal) Excluded from student’s total income reported on next year’s FAFSA Program varies from school to school

Federal Perkins Loan Eligible students (priority to those with exceptional need) –Undergraduate or graduate students –Determination of Federal Pell Grant eligibility Annual and aggregate loan limits –$4,000 annually for undergraduates –$6,000 annually for graduates Grace period may be available Deferment and cancellation provisions available

Federal Stafford Loan (Subsidized and Unsubsidized) Determination of Federal Pell Grant eligibility Annual loan limits –Vary from year to year –Undergraduate and Graduate amounts differ Subsidized Stafford: must demonstrate “need” Unsubsidized Stafford: “need” is not a consideration

Additional Eligibility for Unsubsidized Federal Stafford Additional eligibility for independent undergraduate and graduate students (and dependent students whose parents are unable to borrow PLUS)

Costs of Borrowing Federal Stafford Loan Interest Rate –variable; changes every July 1 Fees –origination fee to Department of Education –insurance premium to Guarantor

Federal PLUS Loan Parent borrows on behalf of dependent undergraduate Approval subject to credit check Loan limits –Annual limit: cost of attendance less other aid –Aggregate limit: none Interest rate variable; origination fee; insurance premium Repayment begins 60 days after final disbursement

William D. Ford Federal Direct Loan Program Began July 1, 1994 Includes: –Direct Subsidized –Direct Unsubsidized –Direct PLUS Loans Terms and conditions of loans made under the Direct Loan Program are same as FFEL, except that borrowers are afforded somewhat different repayment options

Institutional Aid Academic Scholarships Performance Scholarships Entitlement Scholarships Need-based Grants and Loans

Private Aid Community Organizations Employers and Labor Unions Professional Associations Corporations / Foundations Private Loans

Other Government Aid Veteran Educational Benefits –Montgomery GI Bill and VEAP Military Academies Reserve Officer Training Corps (ROTC) Native American Bureau of Indian Affairs AmeriCorps*NCCC, AmeriCorps*VISTA

Inquire about tuition installment plans –Spreads tuition payments over 12 months –Low sign-up fees, low to no interest charged Consider alternative loan programs –Federal non-need based educational loans –Private educational loans –Home equity or line-of-credit loans Additional Financial Resources

Check into tax benefits for education –Hope Scholarship (tax credit) –Lifetime Learning Credit –Educational IRAs –Withdrawals from traditional IRAs –Deduction for interest payments on educational loans (consult your tax advisor) Additional Financial Resources (cont.)

Provided by: College Aid Advisors Admissions Consultants CPAs FA Consultants Financial Planners FA Brokers Services Offered: 4 College Selection Service 4 Educational Consulting 4 College Aid Advising 4 Education Credit Company 4 College Financial Services 4 Scholarship Searches College Planning and Financial Services

‘Financial Aid’ Related Services Estimate aid eligibility Suggest strategies for maximizing eligibility Prepare financial aid applications –FAFSA, CSS/Financial Aid PROFILE Review, interpret and negotiate awards

Financial Aid Consultants ~Several Things You Should Know~ Free assistance is available Be wary of any consultant who encourages you to use strategies that seem unethical to you Avoid consultants who encourage you to over-estimate your income $

Consultants’ Fees Vary Widely Size of fee depends upon: –types of services requested –complexity of financial situation Fees range from: –hourly charges of up to $125 per hour –package prices of $275 to $595 or more CAUTION: Paying more for services does not necessarily mean you’ll receive more financial aid.

Scholarship Searches “Billions of Dollars Unclaimed...” Several warning signs of a possible scam –Guaranteed winnings –‘Free seminars’ on financial aid –1-900 telephone numbers CAUTION: As a general rule, if you must pay money to get money, it might be a scam.

Free Scholarship Searches Via The World Wide Web FastWEB SRN Express ExPAN Scholarship Search CollegeNET MACH25 NOTE: If you use a scholarship search service, consider using the cheapest possible service to minimize your losses. You won’t get a better response from the more expensive databases.

Something to Think About... “Education is one of the best financial investments you can make. A bachelor’s degree yields an increase in lifetime earning potential of nearly half a million dollars according to Census Bureau data. This is equivalent to a 20% annual return on investment.” THE FINANCIAL AID INFORMATION PAGE (