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Bristol Eastern High School
December 6, 2011
For High School Students and Their Parents
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This presentation was developed by Stacey Musulin in concert with other staff members at the University of Connecticut Office of Student Financial Aid Services.
This presentation uses materials created by the National Association of Student Financial Aid
Administrators
The information in this presentation was based on rules and regulations interpreted as of the date of its
creation. Please note that programs may change over time. Also, many forms of aid are based on individual
schools’ policies and available funding. Examples used in this presentation should not be considered
guarantees of aid a student would receive. Contact your school for details about application procedures
and eligibility questions.
Topics We Will Discuss Tonight What is financial aid? Cost of attendance (COA) Expected Family Contribution (EFC) What is financial need? Types of financial aid Free Application for Federal Student Aid
(FAFSA) Post-Application processes
Special circumstances appeals
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What is Financial Aid?
Financial aid consists of funds provided to students and families to help pay for postsecondary educational expenses
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Sources of Aid 5
Federal Department of Education
Largest source of aidStudents apply every year using Free Application for Federal Student Aid (FAFSA)
State Departments of EducationSchool/ Institutional sourcesPrivate sources
Professional OrganizationsClubsEmployers
CONCEPTS & DEFINITIONS
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What is Cost of Attendance (COA)?7
Also known as the “budget” Varies widely from school to school
Also dependent on student status (in-state vs. out-of-state, full-time vs. part-time) and housing
Combined direct and indirect costs related to educational program Direct: Billed by the college (e.g., tuition, room
& board) Indirect: Anything not on the fee bill, but
necessary to program (e.g., books, computer expenses, dependent care, mileage) Indirect costs estimated by the college, may not be what
student actually pays
What are the costs?8
Tuition & Fees (billed)
Room & Board (billed if on-campus)Transportation
Books & Supplies
Miscellaneous Living Expenses
Cost of Attendance (COA)
+
What is the Expected Family Contribution (EFC)?
Misnomer: EFC is NOT necessarily what a family will actually pay! It is a measure of a family’s financial strength
Calculated using data from a federal application (FAFSA) form and a federal formula
Determines the types and amounts of aid that students are eligible to receive
Stays the same regardless of college Exception: Special Circumstance appeal
Two components for dependent students: Parent contribution Student contribution
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EFC for Dependent Student (basic Federal Methodology version)
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Parental contribution from income & assets
+ Student contribution from available income & assets
= Expected Family Contribution
(adjusted if more than one dependent in college)
Institutional Methodology
Some schools, through the CSS Profile application or their own financial aid applications, may require different information to calculate a separate, Institutional EFC
The Institutional EFC and those schools’ policies determine how institutional aid is distributed
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Financial “Need”12
Cost of Attendance (COA)- Expected Family Contribution
(EFC)
= Financial Need
(billed and miscellaneous non-billed expenses)
(schools will use this figure to determine eligibility for need-based aid)
NB: The official “Need” figure is not necessarily what is needed to pay the bill
“Need” Based on Cost13
X
Y
Z
Cost of Expected Family NeedAttendance Contribution (Va ria b le ) (Va ria b le ) (Co ns ta n t)
1
2
3
EFC EFC
Important Tips: Cost of Attendance14
KNOW YOUR COST OF ATTENDANCE!
COA may be adjusted to meet individual students’ needs, if the school accepts an appeal
COA increase may result in more need-based aid Must be able to document additional expenses
E.g., fee bill for more-expensive meal plan or receipt for computer purchase
Contact your school for details!
TYPES OF FINANCIAL AID
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Types of Financial Aid16
Scholarships (not repaid)Need or merit-based
Grants (not repaid)Need-based
Loans (must be repaid)Need and non-need typesFederal or private lendersStudent or parent as borrower
Employment ($ earned through work)Need and non-need typesWork-Study (need-based)
Scholarship Searches Guidance Counselor Local businesses and
civic organizations State Dept. of
Education Places of employment
Student or parent
Internet - many sites, including:
http://fastweb.com http://fastap.org
College or University Academic, athletic,
and other talent-based scholarships
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Important Tip: There are scholarship scams! Do not pay for scholarship searches/ applications. Important Tip: Start Early! Application deadlines and procedures vary depending on source of aid!
Federal Grant Programs
(FAFSA needed for all – Apply annually)
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Federal Pell Grant Federal Supplemental Educational
Opportunity Grant (SEOG) Federal Teacher Education Assistance
for College and Higher Education (TEACH) Grant
Pell Grant19
Awarded to high-need, eligible undergraduates pursuing first Bachelor’s degree and certain students enrolled in post-baccalaureate teacher certification or licensing programs
Portable (not attached to a particular school)
Actual need-based award amount based on COA, EFC, and enrollment status (more to come later)
Maximum authorized award for 2011-2012 academic year was $5,550
Federal Supplemental Educational Opportunity Grant (FSEOG) 20
Need-based – High-need students a priority
Maximum award $4,000, but dependent on school packaging policy and available funds
TEACH Grant21
Schools choose whether to participate and what specific requirements are
U.S. citizen or eligible non-citizen FAFSA completion required, but not need-
based Award amounts up to $4000 per year Conditions
GPA 3.25 or qualifying score on admissions test Sign “Agreement to Serve”: Teach in school
serving low-income students (Title I) for 4 years within 8 years of leaving university for each agreement signed
Must teach in identified high-need field If conditions not met, grant will turn into
Unsubsidized Stafford loan with accumulated interest from time of initial disbursement
Federal “Self-Help” Aid22
Federal Work-Study (FWS)
Federal Perkins Loan Federal Stafford Loan
Subsidized Stafford Loan Unsubsidized Stafford
Loan Federal Parent PLUS
Loan
Federal Work Study (FWS)23
Eligibility based on need, available funding, and school policies
Allows student to earn money to help pay educational costs
Paycheck or other compensation (e.g., payments off fee bill)
Determined by school policy
Employment may be on or off-campus (per school policies) Eligible employers may be:
School that student attends Federal, state, or local public agencies Certain private nonprofit and for-profit organizations
Tip: FWS earnings, if indicated specially on the FAFSA, do not count in the expected family contribution (EFC) calculation for the following school year!
Federal Perkins Loan24
School lends Federal funds Student is borrower – no cosigner or credit check No fees! Amount dependent on funding and school policies
but there are maximums Interest rate: 5%
Does not accrue while in school or in grace period 9-month grace period after graduation (or if
student drops below ½-time status) Repayment period may be up to 10 years Deferment and cancellation provisions available
Federal Direct Stafford Loans25
Student is borrower – no cosigner or credit check Amount undergraduate and graduate students can
borrow varies by academic year/ # of completed credits
½ % fee charged i.e., if $100 borrowed, $99.50 will disburse
No repayment required while in school at least ½-time
6-month grace period after graduation or if drop below ½-time status
Maximum repayment period between 10 and 30 years depending on repayment plan chosen
Deferment and cancellation provisions available
Federal Direct Stafford Loans26
Subsidized: Must demonstrate “need” Unsubsidized: Not based on “need” Annual loan limits (combined subsidized
and unsubsidized) for dependent students: $5,500 for 1st year undergraduates
$3,500 maximum subsidized $6,500 for 2nd year undergraduates
$4,500 maximum subsidized $7,500 for each remaining undergraduate year
$5,500 maximum subsidized Total/aggregate limit for dependent undergrads:
$31,000 $23,000 maximum subsidized
Federal Direct Subsidized Stafford27
Need-based, dependent on Cost of Attendance (COA) and Expected Family Contribution (EFC) figures
Annual maximum eligibility to borrow dependent on student status
Interest Rate fixed 6.8% for undergrads as of the 2012-2013 school year
Interest does not accrue while in school at least ½-time or in grace period
Federal Direct Unsubsidized Stafford
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Not need-based, but should fill out FAFSA to borrow maximum possible subsidized loan
Interest Rate fixed 6.8% and accrues from time money is disbursed
Can pay interest while in school!
Amount eligible to borrow dependent on student status
Students whose parents refuse to complete a FAFSA may be able to borrow a limited amount of unsubsidized Stafford loan in special circumstances
Parent Direct Plus Loans29
Loan program for parents (biological, adoptive, or step-parent in household) of dependent undergraduate students
Applicants must be considered “credit–worthy” Annual loan limit: COA minus other aid Fixed interest rates
7.9% Direct PLUS Loans 2.5% fee charged
i.e., if $100 borrowed, $97.50 will disburse
Repayment begins 60 days after loan is fully disbursed for parent borrowers
Parents may defer payment while student is in school at least ½-time Must apply for deferment with Dept of Education – not automatic! Other deferments, forbearances, cancellations possible in special
circumstances
Financing Alternatives30
Monthly Payment Plans Allows payments to be spread over 10 months
or less Dependent on school
Contact school for information
Alternative/Private Loans Applicants must be “credit–worthy” Payments may be deferred while student is in
school Dependent on lender
Usually the loan of “last resort” Interest rates, fees, and repayment policies
determined by individual lenders and subject to change
Tips for Borrowing31
Additional unsubsidized loan eligibility available for independent undergraduate and dependent students whose parents are unable to borrow PLUS (credit denied): $4,000 per year for 1st and 2nd year undergraduates $5,000 per year for remaining years of undergraduate study
Parents and students who will be applying for PLUS or private/alternative loans should:
Consider lower-cost/interest Federal loan options first Consider the total cost of borrowing Double-check credit scores (www.annualcreditreport.com)
prior to filling out applications Consider co-signing options for better interest rates
THE AID APPLICATION PROCESS
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The Forms33
• Required for all types of Federal and some state and institutional aid
• www.fafsa.ed.gov • DO NOT go on the .com site – that’s a service for fee
FAFSA (Free Application for Federal Student Aid)
• Used primarily by private colleges• Pay for each report sent to a school plus small
registration fee• https://profileonline.collegeboard.com
CSS Profile Application
Check school publications and websitesInstitutional Applications
What is the FAFSA?34
A standard form that collect demographic and financial information about the student and family Information is used to calculate the EFC using
the federal formula
Electronic version is preferred & faster English and Spanish versions
Information is sent to secure Dept. of Education system called CPS
Did I mention it’s free?
General Federal Student Aid Criteria
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Must be enrolled or accepted for enrollment in eligible program of study
Must be pursuing degree, certificate, or other recognized credential
Must be U.S. citizen or eligible noncitizen Must be registered with Selective Service
(if male and required) May not have eligibility suspended or
terminated due to drug-related conviction
General Federal Student Aid Criteria (Continued)
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Must have valid Social Security Number (SSN) Including parent of dependent student
Must not be in default on a federal student loan Applies to parent applying for PLUS loan
Must not owe an overpayment of federal grant or loan funds
Must continue to make Satisfactory Academic Progress (as defined by school) GPA , % of completed credits, maximum credit limit
About Deadlines:37
Each college may set its own deadline for filing the FAFSA, the Profile, or an additional institutional financial aid application Know the deadline for each school to which you
apply! For the 2012-2013 academic year, the FAFSA is
available on January 1, 2012 The FAFSA may be filed at any time during the
academic year to be considered for Pell Grant and Stafford and/or PLUS loans Understand that if you file late, you may miss out
on forms of aid that are limited
First Step: Get a Student & Parent Financial Aid Personal Identification Numbers (PIN)38
Web site: www.pin.ed.gov
Can request PIN now Sign FAFSA
electronically May be used by
students and parents throughout aid process, including subsequent school years’ FAFSAs and signing Federal Direct Loan MPNsTip: Get student AND parent PINs now!
FAFSA on the Web
Website: www.fafsa.gov 2012–13 FAFSA on the Web available on
January 1, 2012 FAFSA on the Web Worksheet:
Used as “pre-application” worksheet Questions follow order of FAFSA on the Web
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Good reasons to file electronically Built-in edits to prevent errors
Skip logic allows student and/or parent to skip unnecessary questions
Option to use Internal Revenue Service (IRS) data retrieval
More timely submission of original application and any necessary corrections
More detailed instructions and “help” for common questions
Ability to check application status on-line Simplified application process in the future
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IRS Data Retrieval
Available early February 2012 for 2012–13 processing cycle
Participation is voluntary
Reduces documents requested by financial aid office
Not available when filing status is Married-Separately (all others possible)
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How IRS Data Retrieval Works While completing FAFSA, the student
and/or parent 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 Student and parent choose whether or
not to transfer data to the online FAFSA These are separate transfers, one for the
student and one for the parent
FAFSA on the Web Worksheet
Tips:
Using this worksheet might help to organize information prior to going online
Have this and supplemental information handy to make data entry easier
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4-page PDF booklet
Cautions: Worksheet does not include all FAFSA questions
Section #s on Worksheet don’t necessarily coincide with section #s on paper FAFSA
Many families will be asked to provide additional information
Child Support Paid
Untaxed Income (including untaxed interest, IRA deductions, Child Support received)
Assets (NOT IRAs) Businesses/Investment Farm value
What information to collect before starting the FAFSA process:44
Social Security Numbers (student and parents) Alien Registration # (permanent residents only) Student’s driver’s license number State residency information Marital information (dates) 2011 W-2 Forms (statement of earned wages)
May estimate for initial completion by deadlines
2011 Tax forms (student & parent, if applicable) May use last year’s data to estimate for initial completion by deadlines
Email addresses Other income info (contributions to tax-deferred pensions/savings, child
support paid/received, etc.) Investment information (NOT IRAs) School codes (also available on online FAFSA)
General Tips for completing the FAFSA:
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Read each question carefully Some questions apply to students, others to parents –
don’t mix! Some questions tell you what income/ asset data NOT to
include – be careful! Double-check all data entry If estimating income/ asset information, supply your best
HONEST guess You may go back and make corrections (possibly IRS Data
Retrieval) if there are significant changes When using tax forms, double-check the type of form you are
using (1040EZ, 1040A, 1040) to reference the correct specific line numbers
Section 1 – General Student Info
General student information Citizenship information Drug conviction status Parent’s educational background Grade level for the 2012-2013 school year
First year undergraduate
Type of Program? Certificate/ Diploma Associates degree Bachelor’s degree
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TIPS FOR SECTION 1:
“Your” and “Yourself” refer to the Student!
Use full, legal names – no nicknames!
You are not a 1st year Graduate student - yet
Section 2 – Dependency StatusTo determine whether or not parent information required on FAFSA
Students may be only considered Independent if they are Born before January 1, 1989 Married at time of application Have children/ dependents for whom student provides over ½ financial
support during upcoming year In Graduate school (already earned a Bachelor’s degree) On active duty stats in US Armed Forces A veteran of the US Armed Forces An orphan, Ward of the Court, or in foster care
anytime when age 13+
Considered “unaccompanied youth” and “homeless” / “at risk of being homeless” As determined by director/ professional staff of shelter or program any time on/after 7/1/2011
Legally considered “emancipated minor” or in “legal guardianship” NOTE: THIS IS DIFFERENT FROM A DIVORCED PARENT HAVING
CUSTODIAL STATUS!!!!
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Tip: In extreme circumstances, dependency status may be appealed. Contact your school’s financial aid office for more details.
Section 3: Dependent Student’s Parent Info
Household size & # in college
Dislocated Worker Status Receiving unemployment benefits and unlikely to return to that field/job
Is “displaced homemaker,” laid-off, or lost own business due to economic conditions
Parent(s) Financial Data Tax Filing Status and type of return (1040EZ, 1040A, 1040)
Eligible to file 1040 EZ or A if make less than $100,000, does not itemize, and does not have income from self-employment, own farm, alimony, or capital gains on a required Schedule D
Adjusted Gross Income for 2011
Income earned from work (may be different than AGI)
Federal Income Tax for 2011
Untaxed Income
Receipt of benefits from “means-tested programs” (e.g., SSI,TANF, WIC, Food Stamps)
Investment/Business information
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Tips for Section 3 – Parent Info
“Parents” do not include grandparents or other relatives/ friends/ legal guardians with whom the student may live, but who have not formally adopted the student
When parents are divorced, give information about the primary custodial parent (with whom the student lived longer during the past year)
To break a tie, give information about which parent provided more financial support
When parents are remarried, given information about the primary custodial parent AND that parent’s spouse (the stepparent in whose household the student lives most)
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Tips for Section 3 – Parent Info(continued)
Household Questions: Include student and siblings if parent(s) will provide over half support
from 7/1/2012- 6/30/2013 even if the student will not be living with the parent during that time (i.e., in college)
Include other dependents if they live in the house and if parent(s) will provide over half support from 7/1/2012- 6/30/2013
# in college figure must be children/ dependents who are enrolled at least ½-time
Do not include parents in # in college even if the parents are in college
Income tax info: What was OWED, not paid! Enter tax amount on 1040 – not necessarily what was on
W-2 Double-check all data entry!
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Tips for Section 3 – Parent Info(continued)
Do NOT include these in assets questions: Net worth of the home you live in
Retirement accounts (e.g., 410K, IRA, pensions)
Net worth of family-owned (greater than 50% ownership) business employing less than 100 people
Net worth of family farm on which you live
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Tips for Section 3 – Parent Info(continued)
Do include these in assets questions: Cash, savings, checking account balances Net worth (Value – Debt) of rental/investment properties
If you live in your investment property, do NOT include the percentage of the area in which you reside
Educational benefit/ savings accounts (e.g., 529, Coverdell)
Include as parent asset even if the student is the beneficiary
Net worth of family business if employs over 100 employees
Net worth of investment farm
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Section 4: Student’s Financial Info
If independent, household information Dislocated Worker Status
Receiving unemployment benefits and unlikely to return to that job Is “displaced homemaker”
Financial Data: Tax Filing Status and type of return (1040EZ, 1040A, 1040)
Eligible to file 1040 EZ or A if make less than $100,000, does not itemize, and does not have income from self-employment, own farm, alimony, or capital gains on a required Schedule D
Adjusted Gross Income for 2011 Income earned from work (may be different than AGI) Federal income Tax for 2011 Untaxed Income If independent, receipt of benefits from “means-tested programs” (e.g.,
SSI,TANF, WIC, Food Stamps) Investment/Business information
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Tips for Section 4 – Student Info
See previous tips for:
1040 A/ EZ eligibility question
Income tax (enter what was on 1040, not W-2)
Asset inclusion/ exclusion
Do NOT include scholarship/ financial aid amounts as income UNLESS you will pay taxes on it (i.e., if you must include this as taxable income on 1040)
This usually occurs only if the scholarship exceeds the billed educational expenses
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Additional Info & Tips55
Obtain Federal School Code for each college Up to 10 codes allowed – Feds will send info to schools
Available online if you don’t have them handy (follow prompts)
Housing plans for each college (used by schools to determine Cost of Attendance) On-campus (allows for billed room & board/meals)
Off-campus (allows for rent & meals)
With parent (allows for meals)
Signatures56
Required Student One parent (dependent
students) Use PIN number for
Electronic signature Missing signatures =
FAFSA rejection!
Frequent FAFSA Errors:57
Transposed letters and Social Security Numbers Double-check everything!
Including divorced non-custodial parent information when not required
Forgetting to include untaxed income Indicating taxes paid on W-2 and not OWED on 1040 Household size mistakes Including parents in # in college Forgetting to include required investment information Including family business information when not
required Missing Signatures!
POST APPLICATIONPROCESSES
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FAFSA Processing Results:59
Central Processing System (CPS) notifies student of results by:
Student Aid Report (SAR) email if FAFSA filed and student’s email address was provided
Direct link to online SAR Students with PINs may view SARs
online at www.fafsa.ed.gov Paper SAR sent if no email address
provided
Tip: Review your SAR carefully for accuracy and keep a hard copy!
FAFSA Processing Results: (continued)
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Central Processing System (CPS) notifies school of results by:
Institutional Student information Record (ISIR)
Based on codes specified on FAFSA Information sent within 10-14 days
after FAFSA submitted to CPS College reviews ISIR
Colleges may request additional information for verification or to resolve database mismatches or conflicting information
Tip: Respond to requests for additional information/ documentation ASAP!
After the FAFSA is processed…
FAFSA Processing Log in and make corrections online
Remember IRS Data Retrieval Option Send information to school to change ISIR
& send to CPS Federal Verification
30% of applicants must supply documentation verifying FAFSA info
Give specific documentation to schools only if they request it
If selected, provide requested documentation ASAP!
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Special Circumstances
Contact each financial aid office about unusual/ extreme circumstances such as: (not exhaustive list)
Change in employment status Medical expenses not covered by insurance Change in marital status or household size Student inability to obtain parent information
School will request additional documentation to review on case-by-case basis
Different schools may interpret cases differently per their policies
School decisions are final and cannot be appealed to US Dept. of Education
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The Financial Aid “Barrel”63
$25,000 - $5,000 = $20,000 COA - EFC = Need
EFC = $5,000
Unmet Need = $6,000
Gift Aid = $5,000 Grant
Need-based loans = $3,500 Subsidized Stafford
$1,500 Perkins
PLUS Loan eligibility, Unsubsidized Stafford, or alternative loans may be used to “fill” unmet need and EFC
Work study = $2,000
Other loans: $2,000 Unsubsidized Stafford
Hypothetical example only!
The Award Notification64
School, College, or University prepares an award package and then notifies the student May be sent by email, letter, or made
available via a online system Continue to check email or online systems in
case aid office requests additional information
Student responds to the award notification Meet all deadlines! Keep copies for your records!
How it works - Summary65
Student submits completed FAFSA
Federal processor determines Expected Family Contribution (EFC)
Federal processor sends Student Aid Report (SAR), which includes your EFC
Using your EFC, your prospective college determines your financial need
Prospective college develops a financial aid package to try and meet need. Sends student an award package
Tips: Making Decisions @ Aid66
Never decline aid you don’t understand! Ask questions!
Borrow Federal loans before private ones, as these offer fixed interest rates and guaranteed benefits: Perkins Subsidized Direct Stafford Unsubsidized Direct Stafford Direct Parent PLUS
Tips: Making Decisions @ Aid (continued)67
If applicable, shop around for lenders (private loan programs) Origination, Default Fees may vary by lender Private loan interest rates (dependent on
credit, can vary significantly) Repayment terms/ benefits (e.g., auto-
withdrawal for reduced interest?) Customer Service/ Reputation (e.g., selling
loans) Ask if school has “suggested” lender list and
review their selection criteria
Tips: Making Decisions @ Aid (continued)68
Consider the long-term costs of borrowing Will student be borrowing the same amount
for 4+ years? Will student/parent pay the interest while in
school? (best) Will interest not be paid while in school?
(interest accrues on interest, increasing total cost)
www.finaid.org – Great Resource! See calculator section to see total cost of
borrowing over various terms, including monthly payment estimates and amount of interest paid
Where Do I Go From Here?
Obtain aid application requirements from each school Forms Deadlines
Research private scholarships Applications Deadlines
Apply for PIN for FAFSA Assemble financial information
FAFSA Worksheet
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Resources70
Federal Student Aid http://studentaid.ed.gov (US Dept of
Education) – links to FAFSA sites 1-800-4-FED-AID (1-800-433-3243) TTY: 1-800-730-8913
FAFSA4caster online tool (early estimate – not EFC guarantee: www.fafsa4caster.ed.gov)
www.pin.ed.gov - to get PIN www.fafsa.ed.gov – to fill out FAFSA
See Help>Getting Started>“Before You Apply” Filling Out a FAFSA FAQs
Resources71
More from Federal Student Aid: www. studentaid.ed.gov/pubs
Funding Education Beyond High School: The Guide to Federal Student Aid
Your Federal Student Loans: Learn the Basics…
EFC formula College Goal Sunday:
www.collegegoalsundayct.org January 29, 2012 Locations across the state Get 1-1 assistance in filling out the FAFSA
Resources(continued)
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FinAid! (independent and objective financial aid information) http://www.finaid.org
Mapping Your Future (tips on applying for aid, saving for college, budgeting, etc) http://www.mappingyourfuture.org
School/ College Financial Aid Office websites Check each school’s website for
information!
QUESTIONS?
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Stay informed as you begin your higher ed journey!
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