1. Financial Aid: What You Need to Know South High School December 1, 2015 Sandy Sundstrom St. Olaf College

2. Agenda 0 General Overview and Philosophy of Financial Aid 0 Family Contribution 0 Financial Need 0 Types of Financial Aid 0 Financial Aid Applications 0 Financial Aid Notifications/Award Letters 0 Myths and Realities 0 Questions

3. What is Financial Aid? Financial aid is money (i.e., grants, scholarships, work, loans) provided to students and their families to help supplement their ability to pay for postsecondary educational expenses.

4. Philosophy of Financial Aid Savings Loans Current Income Primary responsibility for postsecondary educational expenses rests with the student and his/her family Families with like circumstances will be treated in a similar manner Family contribution assumes a contribution from savings, current income, and future income

5. How is Aid Eligibility Determined? 0 The Free Application for Federal Student Aid (FAFSA)  Required for federal, state and institutional aid programs 0 The CSS/Financial Aid PROFILE  May be required by higher-cost, private colleges to determine eligibility for institutional aid programs 0 College supplemental application  May be required Always check with individual colleges to find out required applications and deadlines!

6. How is the Family Contribution Calculated? 0 Data from applications is used to determine eligibility for federal, state and institutional aid 0 “EFC” or “Expected Family Contribution” is calculated

7. Cost of Attendance Direct Costs Tuition & Fees Room & Board* (*if on campus ) Indirect Costs Books & SuppliesTransportationPersonal Expenses

8. What is “Financial Need”? * Family share Note: This is not the same as the student’s bill or the amount a family will actually pay for the student to attend college Total Cost of Attendance Expected Family Contribution (EFC)* Financial Need

9. Financial Need at Three Schools School ASchool BSchool C Cost of Attendance$52,000$26,000$14,000 (-) EFC$4,000$2,000 Financial Need$48,000$24,000$12,000

10. Types of Financial Aid 0 Grants 0 Based on financial need 0 Scholarships 0 Typically based on merit, academic achievement, talent, etc. 0 Employment (Work-Study) 0 Loans 0 Student loans 0 Parent loans

11. Sources of Assistance Federal Government Pell Grant Supplemental Grant TEACH Grant Perkins Loan Direct Loan Submit the FAFSA State Government Submit the FAFSA Each state has a different FAFSA submission deadline Eligibility criteria is different from state to state Colleges & Universities Scholarships & grants Loan programs Applications FAFSA Possibly additional aid application Private Organizations Community Foundations Fortune 500 Companies Non-Profit Agencies Application requirements vary

12. Federal Grants 0 Federal Pell Grant 0 Up to $5,775 in 2015-16 0 Need-based, based on EFC and enrollment 0 Federal SEOG 0 Up to $4,000 0 Undergraduates only 0 Exceptional financial need 0 Based on school’s funding level

13. State Grant Programs 0 The Free Application for Federal Student Aid (FAFSA) is used to apply for most state loan, grant, and scholarship programs, in addition to the federal loans and grants. 0 When you submit the FAFSA to the US Department of Education, they forward the information on the form to the state student assistance agency. 0 MN HS graduates attending a MN college may be eligible for MN State Grant.

14. Student Employment/Work-Study 0 Federal Work-Study 0 Institutional campus employment 0 Some states have work-study 0 Typically students work up to 20 hours per week while enrolled 0 Paid hourly, at variable wage rate, around class schedule

15. Loans 0 Student or parent debt 0 Must be repaid 0 Payments can be deferred while enrolled 0 Repayment typically 10 years 0 Students don’t need to borrow every dollar in their financial aid package 0 Repayment calculator available at www. finaid.org www. finaid.org

16. Federal Direct Subsidized Loans 0 Interest subsidized while student is enrolled 0 6 month grace period 0 $3,500 1 st year max 0 $4,500 2 nd year max 0 $5,500 3 rd and 4 th year max 2015-2016 Interest Rate4.29% Origination Fee1.068%

17. Federal Direct Unsubsidized Loans 0 Not need-based 0 Interest NOT subsidized at any time 0 6-month grace period 0 Between Subsidized and Unsubsidized Federal Direct Loans students can receive: 0 $5,500 1 st year max 0 $6,500 2 nd year max 0 $7,500 3 rd and 4 th year max 2015-2016 Interest Rate4.29% Origination Fee1.068%

18. Federal Direct PLUS Loans 0 Parent loan for a dependent undergraduate 0 Interest NOT subsidized at any time 0 6.84% fixed interest rate 0 4.272% origination fee 0 No grace period 0 Not need-based 0 Must file FAFSA 0 Credit worthiness (credit check)

19. Private/Alternative Loans 0 NOT federal loans 0 Direct from banks, lenders 0 Based on student’s credit, plus often co- signer 0 Higher interest, possible fees 0 Fewer repayment options 0 To be used only as last resort

20. How Much Is Too Much? For the Class of 2014, nationally, 69% borrowed. Of those who borrowed, average indebtedness was $28,950. (Source: The Project on Student Loan Debt) Translates into a monthly payment of approximately $320/month for 10 years. (Source: finaid.org)o One rule of thumb: Student’s total borrowing shouldn’t exceed what he/she expects to make the first year out of school. This is a family discussion and decision – how much should/can the student borrow, and how much should/can parents borrow?

21. Institutional Aid 0 Many schools have their own funds to award students, including: 0 Need-based grants 0 Merit-based (non need-based) scholarships (i.e., academic, leadership, athletics, etc.) 0 Student loans 0 Employment 0 Spectrum – some institutions (very selective) offer no merit and & lots of need-based aid, others (less selective) offer lots of merit aid but very little need-based aid. 0 Institutions vary in ability to meet demonstrated need

22. Private Scholarships 0 Scholarships the student receives from private organizations (high school, church, service organizations, companies, foundations, etc.) 0 Outside scholarships must be considered as a financial resource in the aid package 0 Each school determines their policy

23. Other Resources 0 Designed to help students/families meet their part of educational expenses 0 Programs 0 529 Plans 0 Monthly payment plan 0 Reciprocity Programs 0 ROTC 0 VA benefits

24. Financial Aid Applications: Used to Determine Your EFC (Expected Family Contribution)

25. FAFSA On The Web www.fafsa.gov

26. FAFSA on the Web 0 Never pay a fee to file a FAFSA 0 2016-2017 FAFSA available January 1, 2016 0 Also Available in Spanish FAFSA on the Web Worksheet (FOTW) 0 “Pre-application” worksheet 0 Questions follow order of the FAFSA on the Web www.fafsa.gov

27. Information Needed for FAFSA Student and Parent(s) 0 Prior year federal tax returns, including W-2 form(s) 0 Driver’s license and Social Security Numbers 0 Checking, savings, other investment account values 0 Federal PIN # for electronic signatures (www.pin.ed.gov) Separated/Divorced Parents 0 Determine which parent to report

28. Who is Considered a Parent on FAFSA? 0 If your legal parents (biological/adoptive) are married to each other, report information about both of them regardless of whether they are same or opposite sex. 0 If your legal parents are not married to each other and live together, report information about both of them regardless of whether they are same or opposite sex.

29. Who is Considered a Parent on FAFSA? (Continued) 0 If your parents are divorced or separated and don’t live together, answer the questions about the parent with whom you lived more during the past 12 months. 0 If that parent has remarried, report information for the stepparent too. 0 If you lived the same amount of time with each divorced or separated parent, report information about the parent who provided more financial support during the past 12 months. 0 If your divorced/separated parents live together, report information about both of them. 0 Grandparents, foster parents, legal guardians, aunts and uncles, and other family members ARE NOT considered parents unless they have legally adopted the student. More detailed information available at: https://studentaid.ed.gov/fafsa/filling- out/parent-info#divorced-separated-living-togetherhttps://studentaid.ed.gov/fafsa/filling- out/parent-info#divorced-separated-living-together

30. Independent Student Criteria 0 At least 24 years old by December 31 of the award year –born before January 1, 1993. 0 Graduate student 0 Married 0 Has legal dependents who receive more than half of their support from the student 0 Is an orphan, in foster care, or ward of the court 0 On active duty or veteran of U.S. Armed forces 0 Emancipated minor or in legal guardianship as determined by court 0 Has been determined to be homeless by an authorized official Not living with parents or not being claimed by them on tax forms does not automatically make the student an independent student for federal aid purposes.

31. Put your name and SSN on FAFSA exactly how it appears on your social security card Refer to completed federal income tax return and consult instructions for proper line references If entry is zero or none, enter 0--don’t leave blank Enter school code(s) Student and one parent must both sign dependent student’s FAFSA Be careful…

32. FAFSA data with most impact on EFC calculation Dependent Student Parents’ income (majority of EFC comes from income) and assets Household size Number of dependents attending college Student’s income and assets

33. CSS/Financial Aid PROFILE 0 May be required by private, high-cost, selective colleges to award their institutional need-based grant dollars 0 Asks for more detailed information than the FAFSA 0 May require application information from non- custodial parent too 0 Fee is charged ($25 for application and 1 school report; $16 for each additional school). Fee waivers are granted for low-income filers

34. CSS/Financial Aid PROFILE ® https://student.collegeboard.org/css-financial-aid-profile

35. To Save or Not to Save 0 For parents – value of retirement accounts and primary residence are not included in the federal formula. 0 Other assets are protected in part (or full) by Education Savings and Asset Protection Allowance. 0 Approximately 12% of parent net worth exceeding the allowance is included in EFC. 0 There is no asset protection allowance for student savings – federal formula assesses student assets at 20%.

36. Special Circumstances Adjustments may be made on a case-by-case basis for: Change in employment status One-time income Medical expenses not covered by insurance Change in parents’ marital status Unusual dependent or elder care expenses

37. Net Price Calculator 0 Colleges are required to post a net price calculator on their websites 0 Net price = cost of attendance less scholarship/grant aid 0 Net Price Calculator = ESTIMATE of a family’s net price based on data students can input into calculator

38. Review Aid Awards Carefully Compare: Costs of Attendance (COA) Total amount of aid Types of aid offered Amount of gift aid (grant/scholarship) Amount of loan (interest rate, repayment terms, etc.) Ask Questions: Is the grant and/or scholarship renewable? What are the terms for renewing? (GPA, number of credits, course of study, etc.) Is the amount of work-study realistic? Will aid change from year to year? Will aid increase if costs increases?

39. Financial Aid Notification/Award Letter 0 Notifications are sent at different times based upon each school’s admissions cycle 0 No set standard 0 Financial Aid Notification comparison tools are available https://bigfuture.collegeboard.org/pay-for-college/financial-aid-awards/compare-aid-calculator

40. Myths and Realities “The college with the lowest price tag is the cheapest to attend.” Colleges with the lowest price tags may not be the cheapest, nor the best option. “We make too much money to qualify for financial aid.” There is no income cut-off to qualify for federal student aid. Many factors besides income – from the size of your family and number of siblings in college to the age of the parents – are taken into account. A student’s eligibility is determined by a mathematical formula, not by income alone. Don’t make assumptions – fill out the applications to determine your financial aid eligibility.

41. Myths and Realities Continued “We are receiving less (no) financial aid because we have saved.” Saving for college is always a good idea. Savings could mean fewer loans to repay or more options. A family’s share of college costs is based mostly on income, not assets such as savings. “We can negotiate a better deal.” Many colleges will be sensitive to a family’s specific financial situation. But most colleges adhere to specific financial aid award guidelines and will not adjust an award for a family who feels they got a better deal from another school.

42. 2011 Where can I get more information? U.S. Department of Education: www.studentaid.ed.gov Minnesota Office of Higher Education: www.ohe.state.mn.us FinAid! - The Financial Aid Information Page: www.finaid.org The College Board: www.collegeboard.org FAFSA (Free Application for Federal Student Aid) – fafsa.gov