Understanding Financial Aid: Information Session Presented by Triena Bodart, UW-Milwaukee

Financing Your Education Goal of financial aid How to apply Determining eligibility Types of aid available 2

Goal of Financial Aid To assist students in paying for college. To provide opportunity and access to higher education. Helps “bridge” the gap between what the family can pay and the cost of education. 3

Paying for College is a … …Shared Responsibility Students and Parents State and Federal Governments Private Sources 4

Financial Aid Regulations Are determined by federal and state statutes and legislators Establish your eligibility for most types of aid Apply to all schools 5

You may be eligible for aid, but ….. YOU MUST APPLY TO FIND OUT! And it’s free! 6

Completing the FAFSA ♦ The earliest you may file the FAFSA is January 1 of the year you graduate high school ♦ Check with the colleges where you plan to apply for deadlines and institutional requirements. ♦ The FAFSA is student specific. ♦ It is o.k. to estimate income ♦ Who is considered a parent? ♦ You must re-apply for aid every year.

What IS a PIN? Personal Identification Number –Electronic Signature Students and parents must get PINs PIN delivered immediately Can also be used for: –Renewal on the Web –Corrections on the Web –National Student Loan Database –Signing promissory notes for student/parent loans 8

Applying Online is so Easy: Complete and send FAFSA on the internet directly to federal processor Automatically edits data as you enter it and detects errors before submission Skip logic: asks only what you must answer English or Spanish versions Electronic Signature notification of results Detailed online help screens Real-time online chat for immediate answers Instant access to EFC estimate Parents with more than one child in college only need to enter parental information once. 9

Get Help College Goal Sunday Free program to help families complete the FAFSA February 20-21, 2010 Scholarship drawing at each site 25 sites throughout Wisconsin ( 866)-578-GOAL SHOW UP. CASH IN.

Proceed with Caution! Never pay a fee to file the FAFSA –When filing a FAFSA, make sure you go directly to: (not –Contact the financial aid office if you need help in completing the FAFSA Never pay for financial aid assistance! –Financial aid nights –Campus tours –Scholarship searches 11

Expected Family Contribution (EFC) (Federal Methodology established by U.S. Congress) 12 Determined by filing the FAFSA

Main Determinants of the EFC Income Assets Family size Number in College Age of the older parent 13 Adjustments to EFC may be made due to Verification and/or Special Circumstances that limit ability to pay

Expected Family Contribution (EFC) Is the sum of four separate calculations: Contribution from Parental Income Contribution from Parental Assets Contribution from Student Income Contribution from Student Assets 14

Assets and the FAFSA Assets Not Included Home in which you live Family farm which you live on and operate Value of Business land, buildings, equipment, inventory, etc. for companies with under 100 employees. Value of life insurance and retirement plans (pensions, annuities, Keogh’s non- education IRA funds, etc.) 15 Assets Included Cash, Savings & Checking Accounts Rental Real Estate equity Value of Business land, buildings, equipment, inventory, etc. for companies with 100 or more employees. Trust Funds, Mutual Funds CD’s, Money Market Funds Stocks, Bonds Education IRA’s College Savings Plans (529’s) Value of prepaid college tuition plans

Dependency Status At least 24 years old; Graduate or professional student; Married; Has child for whom student provides more than half support; Has dependent other than child or spouse who lives with student and for whom provides more than half support; Orphan; In foster care or a ward of the court, at any time when the individual is 13 years of age or older; Is an emancipated minor or is in legal guardianship; Has been verified as an unaccompanied youth who is homeless or at risk of homelessness and is self-supporting; Veteran of the U.S. Armed Forces or currently serving active duty for other than training purposes in the U.S. Armed forces; or Determined to be independent by the financial aid administrator via Professional Judgement (Parents refusal to provide support or financial data is insufficient to make a student independent regardless of tax filing status) 16

Frequent FAFSA Errors Missing Signatures/PIN Wrong Social Security Number Divorced/remarried parent information Untaxed income U.S. income taxes paid Household size Number in postsecondary education Not using real name NOT APPLYING AT ALL 17

Financial Need Defined Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need 18

What Are the Costs? (Direct & Indirect) Tuition and Fees +Room and Board +Transportation +Books & Supplies + Miscellaneous Personal Expenses =Cost of Attendance (COA) 19

Financial Need Varies by School 123 Cost$ 35,374 $ 21,808$ 13,864 Less EFC$ 9,000 Need $ X $12808 Y $ 4864 Z 20

Special Circumstances? Call the Financial Aid Office Divorce/Separation after filing the FAFSA Loss of income or benefits One-time income Death or Disability of parent/disability of student Medical/Dental expenses not covered by insurance Elementary or secondary school tuition Dependency override 21

Timelines The earliest a student can file the FAFSA for the academic year - January 1, 2010 Check with the colleges at which the student plans to apply for institutional deadlines and requirements. Failure to apply early may result in less aid even if eligible. Students must re-apply for aid every year. 22

After you file the FAFSA Results are sent electronically to the college(s) the student selected. Students may be required to verify the information submitted on the FAFSA (submit tax forms). Contact the college with any Special Circumstances. After the student is admitted to a college, a financial aid package will be prepared. 23

What is Financial Aid? Grants Scholarships Loans Employment opportunities 24

Three primary sources of Funding: US Department of Education –the federal agency that provides college funding in the form of grants, scholarships, work study, and loans State –most states have agencies that administer state scholarship and grant programs, college savings and prepaid tuition programs, and loans. (In WI it is HEAB, the Higher Educational Aids Board.) Colleges & Universities –schools may offer their own scholarship, grant, work- study and loan programs, with each college setting its requirements 25

Gift Aid (FREE $$$) Grants & Scholarships Federal (Administered by schools) Federal Pell Grant Federal SEOG Academic Competitiveness Grant (ACG) National SMART Grant TEACH Grant State (Administered by HEAB, DPI-WEOP & Schools) Institutional (Endowment funds from Schools) Private (Various outside organizations) 26

Need versus Merit Aid Aid based on financial need – Most government grants – Subsidized student loans – Federal Work-Study Aid based on merit – Academic and athletic scholarships – Some government grants Some scholarships require merit and need 27

Avoid Being Scammed For information about financial aid scams and tips to avoid being scammed check: –Department of Education ’ s web site at: ations/lsa/index.html –Federal Trade Commission ’ s web site at: uchart.htm To check the legitimacy of scholarship search organizations or individuals check Better Business Bureau ’ s web site at: 28

Self-Help Aid Loans ( must be repaid with interest ) Federal Stafford Loan Federal Perkins Loans Federal PLUS (Parents or Grad students) State or Institutional Loans Private-Educational Loans Employment ( must be earned as wages ) Federal work study Institutional work-study programs 29

FEDERAL STAFFORD LOAN Two types of Stafford Loans: –Subsidized - no interest accrues while in school or in deferment; Student who has remaining need; (Interest rate of 4.5% for , 3.4% ) –Unsubsidized - interest begins immediately, although repayment is not required immediately: Student has no remaining need; interest rate of 6.8% 30

Stafford Loan Limits –Freshman $5,500 –Sophomore $6,500 –Junior $7,500 –Senior $7,500 –5 th Year & beyond $7,500 Cumulative maximum for dependent undergraduate is $31,000, with no more than $23,000 in subsidized loans. 31

- Borrow conservatively! Remember: Loans have to be paid back - Keep detailed records - Borrow only what is needed for direct educational expenses - Utilize Tax Benefits like Interest Deductibility & the American Opportunity Tax Credit and/or Lifetime Learning Credit 32 Tips for Borrowing

Federal Student Loans Every family should file a FAFSA. Regardless of income, every student qualifies for a Federal Stafford loan, if they meet the basic eligibility requirements. Benefits of a federal student loan:  You don’t have to repay until you leave school  Lower interest rates than private loans or credit cards  Credit record is not needed  Co-signer is not required 33

- Parent PLUS (Parent Loan for Undergraduate Student) - Private Educational Loans - Monthly Payment Plans - Home Equity Loans 34 Other Financing Options

Other Sources of Funds Parental Affiliations –Employers & Labor Unions –Religious and Community Organizations –Clubs and Civic groups Civic organization scholarships –High School –Local Public Library Private business scholarships 35

Government Resources Corporation for National and Community Service Veteran ’ s benefits ROTC Scholarships and/or stipends Bureau of Indian Affairs (BIA) Grants State Divisions of Vocational Rehabilitation (DVR) Health and Human Services Loan and Scholarship Programs 36

How to Compare College Financial Aid Offers Start with tuition, fees, room and board Subtract grant and scholarship offers only The difference is your “ net cost ” Always compare net cost Do not subtract Federal Work Study as a lump sum disbursement 37

FAFSA4caster FAFSA4caster will: –Automatically generate a Federal Student Aid PIN for use when signing the FAFSA –Instantly calculate eligibility for federal student aid –Generate a FAFSA – a FAFSA populated with student FAFSA4caster data will be available when the student is ready to file the official FAFSA 38

Questions? Thank you for attending! 39 Presentation Author, 2006

Helpful Websites to Remember: