1. Please Silence Your Cell Phones!
Thank you for being considerate to the people around you.

2. Amy Sloan Higher Education Access Partner asloan@pheaa.org
Your Presenter
Amy Sloan Higher Education Access Partner

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

4. College Expenses

5. Do these Headlines keep you up at Night??
Student loan burden continues to grow
Paying For College - Are You and Your Student on the Road to Going Broke Or Into a Lot of Debt?
Is College worth the money?
U.S. Student-Loan Balances Increase 55% Since 2005
When Kids Come Back Home
"More Americans between the ages of 25 and 34 are living with their parents," the Wall Street Journal reports. "The U.S. Census puts the number at 5.9 million, up 26% from 4.7 million before the recession began. Based on the most recent Census data, 14.2% of young adults are bunking with their parents - up from 11.8% in 2007.

6. Did you know?
College grads are moving back in with mom and dad in historic numbers
A U.S. Census report from May concluded that the percentage of young adults residing with their parents has jumped to 34 percent, largely because of bleak economic prospects

7. 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 DEADLINES
Be a Smart Consumer

8. What is Financial Aid?

9. Types of Financial Aid Gift Aid – FREE MONEY Self Help Aid
Grants and scholarships
Self Help Aid
Loans and work programs

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

11. Applying for Financial Aid
Know what financial aid forms each school requires:
FAFSA required by all schools, PHEAA, and some scholarship organizations
SGF (State Grant Form) 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

12. 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, state work-study, and other special programs
School programs, such as need-based grants and scholarships.

13. Ways to apply
Complete the FAFSA as soon as possible after January 1 of the year for which the student is seeking financial aid
Online at
safe, secure, fast, skip logic, built in edits
complete FAFSA on the Web Worksheet
print the confirmation page when complete

15. 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

16. Whose information goes on the FAFSA?
Divorced or separated parents (Give information about the parent you lived with the most in the last 12 months and provided more than 50% support. If you did not live with one parent more than the other, give the information about the parent who provided you the most financial support during the last 12 months or during the most recent year you received support.)
Stepparents - yes
Adoptive parents - yes
Foster parents - no
Legal guardians - no
Anyone else the student is living with - no

17. Who is independent?
24 or older on Jan 1st of award year (January 1, 1989)
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

18. Information You May Need to Complete the FAFSA:
Social security numbers
Drivers license (student only; this information is optional)
Federal income tax return (1040, 1040A or 1040EZ)
W-2 forms from all employers
Current bank statements (checking and savings)
Current business and farm records
Records of any stocks, bonds and other investments, including 529 accounts
Additional untaxed income tax records may be needed such as: Veteran’s non educational benefits, child support paid/received and workers compensation.
Alien registration or permanent resident card (if not a US citizen)
Information concerning income and assets is needed in order to complete a FAFSA. Please note if an applicant uses the FAFSA-IRS Data Retrieval Process, they may not need to have an actual copy of a tax return with them to complete the FAFSA.

19. IRS Data Retrieval Tool
While completing FAFSA on the Web (FOTW), applicant may submit real-time request to IRS for tax data
IRS will authenticate taxpayer’s identity
If match found, IRS sends real-time results to applicant in new window
Applicant chooses whether or not to transfer data to FOTW
IRS Data Retrieval Tool will be available early February, for award year

20. FAFSA Completion Tips
Can use estimated income to complete – once taxes completed MUST go back and update FAFSA
Answer all income questions
Carefully review untaxed income questions
Review asset questions before completing them
529 Plans must be reported as parent assets
Assets do NOT include home, retirement, or insurance
Do not report a business if it employs less than 100
Do not report a farm if you live on the farm
Some people can skip asset questions
Online Help available on the Form

21. Signing FAFSA Online
Student and parent sign electronically with a Personal Identification Number (PIN)
Apply for PIN at prior to January 1, or apply for a PIN when completing the FAFSA
Create your own PIN or have one assigned
Do not lose it. Write it down and store in a safe place
Can use for future FAFSA filing and parent can use for other children FAFSAs
Use to sign Stafford Loan application and Parent PLUS loan application
Can request a duplicate PIN, if necessary

22. Apply for PA State Grant from FAFSA Confirmation Page

23. On-Line State Grant Application
Students who click on the link will be automatically moved to the PA State Grant Form and will be presented with the additional questions needed to determine State Grant eligibility which includes such items as enrollment status, value of PA 529 College Savings Program, program of study, and employment status.
Printing , signing, and mailing in the State Grant confirmation page is the last step in the process. PHEAA is working on an electronic signature capability but that is not available at this time.
Students will be able to view their status on Account Access available at pheaa.org about three days after completing the FOTW.

24. Expected Family Contribution (EFC)
An EFC will be provided to you on your confirmation page of the FAFSA. This is the final result of completing the FAFSA.

25. 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!

26. Expected Family Contribution (EFC)
The EFC is a number derived from a federal formula which considers a family’s income, assets, and other factors
In theory, the EFC is the amount a family can reasonably be expected to pay toward college expenses each year
In reality, it is not the amount a family is required to pay and it rarely is the amount a family actually pays.

27. How is the EFC calculated?
Parent contribution + student contribution = EFC
Bulk of EFC comes from income
Home, personal property, qualified retirement funds, and value of life insurance excluded from assets
Asset protection allowance (based on age of older parent, or the parent if single parent household)
Parent asset contribution usually = roughly 6%
Student income contribution = 50% of amount over $6,130
Student asset contribution = 20% of assets
Parent contribution divided by number of children in college at the same time

28. Where does my FAFSA go?

29. Where does my FAFSA Go?
The information on your FAFSA and your resulting EFC are sent to the schools/colleges that you listed on the FAFSA and to PHEAA.
You will also receive notification that it has been processed.

30. Federal, State and College Financial Aid Programs

31. Federal Programs
Pell Grant ( award $5550) *….must have high need
Campus-based aid – amounts determined by FAO
FSEOG………………… up to $4000
Perkins loan….……….. up to $5500
Federal work-study…… FAO determines
For most programs, student must be enrolled at least half-time.
* Goes to most financially needy students

32. Federal Work-Study (FWSP)
FWSP provides job opportunities for financially needy students.
Students can generally work between hours per week during the academic year and up to 40 hours per week during the summer.
The hourly rate is at least the federal or state minimum wage, whichever is greater, and may be higher depending on the required job skills.

33. Federal Programs TEACH (must meet teaching commitment)
Iraq and Afghanistan Service Grant
Americorps (for details, go to

34. PA State Grant Program PA State Grant*
Full-time, in PA…...….up to $4,348
Part time, in PA………up to $2,174
Out of state….. Up to $600 in CT, DE, MA, ME, OH, RI, VT, WV, and DC
All other states….up to $400 (NJ, NY, and MD = $0)
Amount determined in part by the cost of the school
* Must be at least half-time to be eligible

35. Other State Programs State Work-Study - job related to major
Educational Assistance Grant (EAP) – National Guard
Chafee Education and Training Grant – administered by the Department of Public Welfare
Blind and Deaf Beneficiary Grant
Postsecondary Educational Gratuity Program (PEGP)
Partnerships for Access to Higher Education (PATH)
PA Targeted Initiative Program (PA TIP Program)
For details, see the PA Guide to Student Aid, or visit

36. Federal Student Loans
Effective July 1, 2010, all federal student loans are made directly through the U.S. Department of Education.
Students and parents may apply for Direct Stafford and Direct PLUS loans through their post-secondary school’s website or at

37. Federal Direct Loan Program
Stafford student loan:
Subsidized = no interest in school
Interest will be charged during the grace period, if the loan is first disbursed July 1, 2012 through June 30, 2014.
3.4% fixed rate for loan disbursed from 7/1/12 to 6/30/12
1% origination fee deducted from disbursement
Unsubsidized = interest accrues in school and grace
Interest rate = 6.8%
Any interest unpaid during grace will be capitalized at repayment
NEW - limit on eligibility for Direct Subsidized Loans for new borrowers on or after July 1, A new borrower on or after July 1, will not be eligible for new Direct Subsidized Loans if the period during which the borrower has received such loans exceeds 150 percent of the published length of the borrower’s educational program. The law also provides that a borrower reaching the 150 percent limit becomes ineligible for interest subsidy benefits on all Direct Subsidized loans first disbursed to that borrower on or after July 1, 2013.

38. Calculating accrued interest
To calculate your daily interest accrual, use the following formula:
Interest rate x current principal balance ÷ number of days in the year = daily interest
Example:
Sara Student has a $10, current principal balance and 6% interest rate this year. Using the formula:
.06 x $10, ÷ 365 = … (round to $1.64)

39. Federal Direct Stafford Loan Program Borrowing Limits

40. Federal Direct PLUS Loan
For parents of dependent students or graduate level students
There is no borrowing limit on the Parent PLUS Loan
May borrow Cost of Attendance minus other Financial Aid Credit check is required on this loan, but no debt-to-income test
4% origination fee will be deducted from disbursements
Principal payment can be deferred while student is in school (interest will continue to accrue).
All loans must be repaid within 10 years
Interest rate = 7.9%
$10,000 ~ $125/mo.

41. If Parent is denied a PLUS Loan…

42. 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!

43. Borrowing for Higher Education
Always consider federal loans first. They have the best interest rates and repayment provisions.
Borrow in the following order:
Perkins Loan (5% fixed) – student
Stafford Loan (max of 6.8% fixed) – student
PLUS Loan (7.9% fixed) – parent and graduate student
Alternative Loan (variable rates) – last resort

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

45. Financial Aid Award Letter

46. 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.

47. Reviewing the Financial Aid Package/Award Notice
After reviewing their packages, students should be sure they know and understand the following:
How much of their financial aid is gift aid, and how much is not?
Which awards are based on need, and which are based on merit?
Are there any conditions on the gift aid; in particular, is there a GPA requirement?
Will their awards change from year to year?
Will institutional awards increase as tuition increases?

48. What school costs are considered by the financial aid office at the school?
School costs include:
Tuition and fees
Room and board
Books and supplies
Transportation
Miscellaneous living expenses

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

50. 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
Remaining costs $ 3, $ 8,000 $16,000
Actual Cont.
(Cost – Free Money) $ 9, $ 14,000 $24,000

51. 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

52. Special Circumstances
Recent death or disability
Reduced income
Contact the school and ask for a special consideration AND Contact State Grant Division at PHEAA

53. Financial Aid 101
Final Thoughts

54. What you can be doing now… prior to completing the FAFSA
Student and parent apply for a PIN at
Visit websites with free information about college, financial aid and careers
Explore scholarship opportunities – locally, regionally and nationally
Use the FAFSA4caster – to estimate EFC and eligibility for federal financial aid
Free online tool, available at

55. How do you identify offers that should be avoided?
Anyone who charges you a fee:
for information about financial aid
to complete the FAFSA
Do not use:
to apply/receive a scholarship

56. Did you know?
For the first time, student loan debt will be approaching $1 trillion. In 2000, that number was around $200 billion.
For the first time, last year student loan debt outpaced credit card debt.
In the 1990s, less than half of those graduating with a bachelor's degree did so with debt. Now it's two-thirds.
The average 2011 graduate entered the job market carrying around $27,200 of debt, according to Mark Kantrowitz of the financial aid websites Fastweb.com and Finaid.org.

57. Reduce your Cost 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)

58. Beware 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!

59. Determining Affordability
Approach this as though you are not buying a school, you are buying an EDUCATION.
Look at sticker price!! Tuition costs in PA range from $2,500 to more than $40,000….PLUS room and board.
Understand that in higher education there is no direct correlation between cost and quality.
Be open minded and diverse in college searches.
Think in terms of yesterday’s money, today’s money, and tomorrow’s money.
Determine how much you can afford to borrow.
Set some parameters right up front.

60. Things to Talk About
Keep borrowing in line with future earning power (estimate loan payments at pheaa.org or youcandealwithit.com)
Clearly determine who will pay for what
How much debt can the family take on?
Are there options for cutting costs?
Give yourself a low-cost alternative
How much will the student work?
How many years will college take?

61. Think loan balances are no big deal?
Stafford borrowing (est. based on sub./unsub. loans &10 year repay)
5.0% = $212.13/mo
5.0% = $530.32/mo
5.0% = $848.52/mo
5.0% = $1,484.91/mo
5.0% = $2,121.13/mo
Parent PLUS (assuming no cap. Int., 10 year repay)
7.9% = $327.48/mo
7.9% = /mo
7.9% = $1,309.95/mo
7.9% = $2,292.41/mo
7.9% = $3,274.88/mo

62. Resources pheaa.org EducationPlanner.org Youcandealwithit.com
Myfedloan.org
PHEAA toll free:
Federal Student Aid Info Center –
– general financial aid info
– information on federal loans

63. 3 Key Reminders…
File the FAFSA
Meet Deadlines
Follow up

65. Presenter Contact Information
Amy Sloan
Higher Education Access Partner