1. Paying for Postsecondary Education
Financial Aid 101
Paying for Postsecondary Education

2. Know where the money comes from and how you apply for it
Things to take away…
Know where the money comes from and how you apply for it
File the FAFSA
Know your DEADLINES
Be a Smart Consumer

3. What is Financial Aid?
Financial aid consists of funds provided to students and families to help pay for postsecondary educational expenses

4. Basic Principles
Joint responsibility of the student and parent(s) to pay, to the extent possible
Need-based financial aid subjected to federal formula to determine financial need
Not all families qualify for need-based aid. There is no guarantee that you will get any free money to pay for higher education

5. Types of Financial Aid Gift Aid – FREE MONEY Self Help Aid
Grants and scholarships
Self Help Aid
Loans and work programs
Merit-Based Aid based on - academic ability, special talent or achievement, program of study, family or ethnic background
Need-based grants, loans, and employment usually based
on - income, assets, other factors

6. Where does the money come from?
Federal Government
State Government
School/Colleges
Private Scholarship Sources:
HS Counselors
Clubs and organizations
Employers
Internet scholarship searches

7. Federal, State and College Financial Aid Programs

8. Federal Direct Stafford Loan Program Borrowing Limits

9. Additional eligibility

10. Federal Direct PLUS Loan
For parents of dependent students or graduate level students
There is no borrowing limit on the PLUS Loan
May borrow up to full cost of education minus financial aid
Credit check is required on this loan, but no debt-to-income test
4% origination fee will be deducted from disbursements

11. Federal Direct PLUS Loan
Repayment begins immediately, but can defer repayment until 6 months after student graduates or drops below half-time enrollment.
If defer payment – encouraged to make interest payments
All loans must be repaid within 10 years
PLUS loan
Interest rate = 7.9%
$10,000 = $125/mo; $40,000 = 500/mo;
2 or 3 kids???

12. Alternative/Private Education Loans
Student borrows in his or her own name
Based on credit scoring and debt-to-income ratio
Repayment may be deferred until education completed
Fees, interest rates, loan amounts, and repayment provisions vary by lender and are generally higher than federal student loans
Co-signers usually required. Some loan products have a co-signer release option
Compare loans before making choice and read the fine print!

13. Financial Aid 101
College Fund
FORMS

14. The Free Application for Federal Student Aid (FAFSA)
The FAFSA (Free Application for Federal Student Aid) is a federal form used to determine student eligibility for the following:
Federal programs, such as Pell Grants, work-study, and student loans
State programs, such as Pennsylvania State Grant, and other special programs
School programs, such as need-based grants and scholarships

15. Applying for Financial Aid
Know what financial aid forms are required:
FAFSA (Free Application for Federal Student Aid) – federal aid, PA State Grant, college aid, and private scholarships
State Grant Form (SGF) required for first year students (and may be requested for subsequent years)
CSS Profile required by some postsecondary schools and scholarship organizations
Institutional financial aid forms

16. Know Your Deadlines!!!!!
Know all of your state and school/college deadlines and file the FAFSA by the earliest deadline.
Federal Deadline - end of the award year - for , this would be June 30, 2014
PA State Grant deadlines –
May 1, First Time and Renewal Applicants that plan to enroll in a degree program or a college transferable program at a junior college or other college or university
August 1, First Time applicants that plan to enroll in a community college; a business, trade, or technical school; a hospital school of nursing; or a 2-year program that is not transferable to another institution
Know School Deadlines

17. Free Application for Federal Student Aid (FAFSA)
Complete the FAFSA as soon as possible after January 1 of the year for which the student is seeking financial aid.
Two ways to complete the FAFSA:
Online at (highly recommended)
- safe, secure, fast, skip logic, built-in edits
- complete FAFSA on the Web Worksheet
- print the confirmation page when finished
Paper FAFSA – call

18. www.FAFSA.GOV New FAFSA Entry Renewal Application Entry
FAFSA Corrections
Providing Signatures
Continuing a Saved FAFSA
Viewing Transaction History

19. Apply for PA State Grant from FAFSA Confirmation Page

20. Who is independent?
24 or older on Jan 1st of award year (January 1, 1990)
Veteran (includes active duty personnel)
Working on graduate level degree
Emancipated minor in legal guardianship
Orphan, in foster care, or ward of the court at
anytime when student was age 13 or older
Have legal dependents other than spouse
Student deemed homeless by proper authority

21. Special Circumstances
Recent death or disability
Reduced income
Loss of employment
Recent Separation or Divorce
Contact the school and ask for a special consideration AND Contact State Grant Division at PHEAA

22. Financial Aid Forms are Filed – What’s Next?

23. Determining need-based eligibility
Student submits FAFSA
Family undergoes need analysis
Expected Family Contribution (EFC) is determined based on:
- Parent income and assets
- Student income and assets
- Family size
- Number of children in college
- Age of the older parent
This is NOT the amount you will pay each year!

24. How will you cover the cost??
In most cases, you WILL have to pay for educational expenses. This is your ACTUAL family contribution, or AFC. You have three ways to cover your share:
Yesterday’s money
SAVINGS – have you been able to save?
Today’s money
INCOME – is anything left at the end of the month?
Tomorrow’s money
LOANS – how much can you afford to borrow?

25. What happens next?
Student Aid Report or Acknowledgment sent to student (review and make necessary corrections)
Information is sent to PHEAA. Student must complete State Grant Form (SGF). Can link to this directly from the FAFSA.
Account Access (PHEAA) - create an account at to view PA State Grant
Information is sent to schools/colleges. Send to all schools being considered.

26. Calculating Financial Need
Schools/colleges receive financial aid information and calculate financial need School cost……………………. $26,000 EFC…………………………….. - 3,000 Financial need………………… $23,000 Financial Aid Office (FAO) “packages” student based on financial need and available funding (varies from school to school). Financial aid award letter sent to student.

27. Packaging Example Free Money $ 6,000 $ 8,000 $18,000
Cost $15, $25,000 $45,000
EFC $ 3, $ 3,000 $ 3,000
Need $12, $22,000 $42,000
Free Money $ 6, $ 8,000 $18,000
Loans $ 5, $ 7,000 $ 8,000
Work $ $ 2,000 $ 3,000
Total Aid $11, $17,000 $29,000
Gap (Cost – Aid) $ 3, $ 8,000 $16,000
Actual Cont.
(Cost – Free Money) $ 9, $ 14,000 $24,000

28. Financial Aid Award Letter
Is official notification from school about financial aid, terms, and conditions.
Lists the type and amount of each award to be received
Describes what must be done to accept or reject any award.
Discloses students rights, responsibilities, and academic requirements.

29. How to Cover the Actual Family Contribution
Savings – Family
529 Plans – Family
Scholarships – Various Sources
Grants – Federal and State
Tuition Payment Plans – School
Federal Student Loans – Department of Education
Institutional Loans – School
Private Education Loans – Bank
Home Equity Loans – Bank

30. Financial 101
Tips and Strategies

31. Reduce the Need for Financial Aid
Graduate on Time
4 year for Bachelors Degree / 2 year Associates Degree
Research and find the right school and major
Minimize transfer and change of major
Earn college credits while in high school through AP courses, Vo-Tech, and dual enrollment
Consider options for cutting costs (commute, take summer classes, buy used books, make smart meal plan choices
2 + 2 Strategy (2 years at a Community College then transfer credits to a 4 year school)
3 + 2 (Master’s Degree)

32. Beware of the 5 Year Plan!
Things like double majors, study abroad, internships, and athletics can enhance the educational experience and improve marketability. But it comes at a price:
Total cost just increased by 25%.
The fifth year likely costs 20% more than the 1st year did.
Loss of institutional funds if they only allow for four years.
Loss of PA State Grant if all four years have been received.
Reduction in student borrowing capacity if maximum loans received in the first four years (only $4,000 left).
Talk it over and plan ahead!

33. Reduce the Impact of Borrowing
Don’t borrow more than you need
Maximize Federal loans vs. Private loans
Don’t borrow more to get your degree than you plan on making the very first year after graduation
Utilize institutional or private payment plans – monthly payments, little or no interest

34. Be a Smart Consumer Do your Research…
What is the Net Price that you will pay? Use the Net Price Calculator at schools student is interested in attending to get an estimate of your “net price” to attend. Net Price calculator available on each school’s website.
What is the graduation rate?
What is the average debt of graduates?
What is the repayment rate and default rate of the school’s borrowers?
What is the employment outcome for recent graduates?
In accordance with the Higher Education Opportunity Act of 2008 (HEOA), by October 29, 2011, each postsecondary institution that participates in Title IV federal student aid programs must post a net price calculator on its website that uses institutional data to provide estimated net price information to current and prospective students and their families based on a student’s individual circumstances. This calculator should allow students to calculate an estimated net price of attendance at an institution (defined as cost (price) of attendance minus grant and scholarship aid) based on what similar students paid in a previous year. The net price calculator is required for all Title IV institutions that enroll full-time, first-time degree- or certificate-seeking undergraduate students.
Institutions may meet this requirement by using the U.S. Department of Education’s Net Price Calculator template or by developing their own customized calculator that includes, at a minimum, the same elements as the Department’s template.
Shopping Sheet:
The Department of Education partnered with the Consumer Financial Protection Bureau to develop the Financial Aid Shopping Sheet to promote transparency in student financial disclosures. The Shopping Sheet is designed to help students better understand the amount of grants and scholarships they would receive from a given institution, and the amount of loans an institution recommends a student take out to cover out-of-pocket costs. While the Shopping Sheet isn’t mandatory, the Department of Education requests that schools adopt this format to deliver financial aid offer information to students beginning with the year.

35. Financial Aid 101
Final Thoughts

36. Carol Handlan PHEAA chandlan@pheaa.org 717-514-9038
Presenter Contact Information
Carol Handlan
PHEAA