1. Financial Aid 101 EVERYTHING YOU NEED TO KNOW ABOUT FINANCIAL AID

2. Financial Aid 101 Objectives  What is financial aid?  Types of financial aid  How financial aid is awarded  The financial aid process

3. What Is Financial Aid?

4.  Money to help you pay for college  From the federal government, state government, colleges, and private organizations

5. What Is Financial Aid Who Is Eligible?  You must:  Be a citizen or eligible non-citizen of the U.S.  Have a high school diploma or GED  Be enrolled at least half-time at an eligible institution  Register with the Selective Service (men only)  Maintain satisfactory academic progress as determined by your college

6. Types of Financial Aid

7. Three Types of Aid  Gift money  Earned money  Borrowed money

8. Types of Financial Aid  Gift Money - Grants  Based on financial need  Available from: –Colleges –State governments –Federal government

9. Types of Financial Aid  Gift Money - Grants  Five federal grants: –Pell Grants –Supplemental Educational Opportunity Grant (SEOG) –Academic Competitiveness Grants (ACG) –National Science and Mathematics Access to Retain Talent Grants (National SMART Grants) –Teacher Education Assistance for College and Higher Education Grant (TEACH Grant)

10. Types of Financial Aid  Gift Money – Scholarships  Based on various criteria  From colleges and other organizations  Fill out the FAFSA even if you receive scholarships  Begin searching early  Look out for scams

11. Types of Financial Aid  Earned Money - Federal Work-Study Program  Students work part time, usually on campus  Money earned helps pay for college

12. Types of Financial Aid Borrowed Money  Two types of loans –Federal –Private  Must be paid back

13. Types of Financial Aid Federal Loans – Perkins  Borrower: Student  Based on Need? Yes  Interest Rate: 5%  Repayment Begins: 9 months after graduating or dropping below half-time status  Maximum Amount Per Year: $5,500

14. Types of Financial Aid Federal Loans – Subsidized Stafford  Borrower: Student  Based on Need? Yes  Interest Rate: Loans disbursed 7/01/08–6/30/09 = 6.0% Loans disbursed 7/01/09–6/30/10 = 5.6% Loans disbursed 7/01/10–6/30/11 = 4.5% Loans disbursed 7/01/11–6/30/12 = 3.4%  Repayment Begins: 6 months after graduating or dropping below half-time status  Maximum Amount Per Year (for freshman): $3,500

15. Types of Financial Aid Federal Loans – Unsubsidized Stafford  Borrower: Student  Based on Need? No  Interest Rate: 6.8%  Repayment Begins: 6 months after graduating or dropping below half-time status  Maximum Amount Per Year (for freshman): $2,000

16. Types of Financial Aid Federal Loans – PLUS  Borrower: Parent  Based on Need? No  Interest Rate: 8.5%  Repayment Begins: Within 6o days of loan being fully disbursed, but deferment options that will delay repayment are available*  Maximum Amount Per Year: Difference between the cost of attendance and financial aid offered to the student

17. Types of Financial Aid Private Loans  Offered by private lenders  Terms and conditions vary  Should be considered last

18. Types of Financial Aid Education Tax Benefits - Hope Credit  Federal tax credit of up to $1,800  Student must be in their first two years of college  Based on qualifying educational expenses paid during the year  Claim a separate Hope credit for each student who qualifies A family with two dependent students in their first or second year of college can claim up to $3,600 in Hope credits.

19. Types of Financial Aid Education Tax Benefits - Lifetime Learning Credit  Federal tax credit of up to $2,000 for each year you pay for college  Based on qualifying educational expenses paid during the year  Can be claimed only once per tax return Note: You can’t claim the Hope and lifetime learning credit for the same student in the same year.

20. Types of Financial Aid Education Tax Benefits – Tuition and Fees Federal Tax Deduction  Up to $4,000 deduction for eligible tuition and fees  Complete Form 8917 and submit it with Form 1040 or 1040A Learn more about the tuition and fees tax deduction from IRS Publication 970 or a tax professional.

21. Types of Financial Aid Education Tax Benefits - Federal Tax Deductions  Up to $4,000 deduction of student loan interest from federal taxable income  Form 1098-E estimates how much interest you have paid for the previous tax year Learn more about tax deductions from IRS Publication 970 or a tax professional.

22. How Is Financial Aid Awarded

23. How Financial Aid Is Awarded Financial Need  Many (but not all) types of aid are based on financial need –Grants –Perkins loans –Subsidized Stafford loans –Federal Work-Study Program  How much aid do you need to pay for college?

24. How Financial Aid Is Awarded Cost of Attendance  Tuition  Room and board  Books  Transportation  Personal expenses

25. How Financial Aid Is Awarded Expected Family Contribution (EFC)  The EFC is the amount you may be expected to contribute  You don’t pay it up front  Used to determine how much aid you’re eligible for  Calculated from information you provide

26. The Financial Aid Process

27.  Applying for Financial Aid  To get aid, you have to apply –The Free Application for Federal Student Aid (FAFSA) –Additional forms –Scholarships  Apply regardless of family income –You and your family don’t make too much or too little to apply

28. The Financial Aid Process The FAFSA  It’s free!  Complete as soon as possible after January 1  Complete the FAFSA4caster (fafsa4caster.ed.gov) for an early estimate of your financial aid eligibility

29. The Financial Aid Process The FAFSA  Online (fafsa.ed.gov) or on paper  Online benefits –Instant access to help –Built-in error checking –Skip questions that aren’t required –Faster processing time –Easier to check status –Easier renewal process

30. The Financial Aid Process Preparing for the FAFSA  Apply for a Department of Education PIN (pin.ed.gov) –Can be used each year applying for aid –You and your parents need separate PINs  Complete the FAFSA on the Web Pre-Application Worksheet –Available before January 1 –Organized like the FAFSA on the Web –Collect information and prepare answers

31. The Financial Aid Process Information for the FAFSA  Have financial information and records available for both you and your parents –Bank statements –Income amounts (Forms W-2 or tax returns) –Investment records –Other

32. The Financial Aid Process FAFSA Tips  Don’t pay! Remember it’s free at fafsa.ed.gov  Use the FAFSA4caster  Interested in student loans?  Interested in work-study?  College possibilities  Apply for the FAFSA every year

33. The Financial Aid Process Get help with the FAFSA!  College Goal Sunday –Free program to help families complete the FAFSA –Held nationwide For more information, visit collegegoalsundayusa.org

34. The Financial Aid Process Additional Forms and Scholarships  Are additional forms needed? –Check with individual colleges  Apply for scholarships! –Find lists of scholarships on the Internet collegeboard.com fastweb.com finaid.org

35. The Financial Aid Process Student Aid Report (SAR)  Sent to you after FAFSA is processed –If you provided an email address, you get a notification containing a link to it online –Paper version via mail  Contains your Expected Family Contribution (EFC)  Info sent automatically to colleges you listed  Verify information is correct and make necessary corrections

36. The Financial Aid Process Award Letters and Offers  Received from the financial aid office  Compare offers –Amount of aid vs. cost of attendance –Gift money vs. borrowed money –Types of loans  Accept an offer from the college you will attend  Select lenders and sign Master Promissory Notes (MPNs) for accepted loans  Funds directed to college

37. The Financial Aid Process Comparing Award Offers  Package B has advantages despite being $1,000 less Type of AidPackage APackage B Grants$1,500$3,500 Perkins$2,500 Sub. Stafford$1,000$2,625 Unsub. Stafford$1,625$0 Work-Study$3,000$0 Total Aid$9,625$8,625

38. The Financial Aid Process PLUS Loans and Private Loans  Options if you need additional funds after seeing how much aid you are offered by the college  Applications and information available from colleges or lenders

39. The Financial Aid Process Review  Apply for a Department of Education PIN  Submit the FAFSA  Ask colleges if other forms are required  Apply for scholarships  Review your SAR  Compare award packages  Accept an award package  Select a lender and sign MPNs  Look into PLUS or private loans if necessary

40. Questions? Thanks for attending Financial Aid 101! ©2009 Great Lakes Higher Education Guaranty Corporation. All Rights Reserved. ( 01/2009)