Please Silence Your Cell Phones! Thank you for being
considerate to the people around you.
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Financial Aid 101 Paying for Postsecondary Education
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Presenter Jayeann Harr Higher Education412-904-8545 Access
Partner [email protected][email protected] Southwest Region (Fayette,
Greene, Washington & Westmoreland)
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Is College Worth the Money? Student Loan Burden Continues to
Grow U.S. Student-Loan Balances Increase 55% Since 2005 Paying For
College - Are You and Your Student on the Road to Going Broke Or
Into a Lot of Debt? More Kids are Moving Back Home! Do these
Headlines keep you up at Night??
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Education pays in Higher Earnings and Lower Unemployment
Source: Bureau of Labor Statistics 2011
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The field of bachelors degree (major) makes a considerable
difference in a college graduates annual earnings, according to
2011 American Community Survey (ACS) data released by the U.S.
Census Bureau. These differences add up over the span of ones
work-life. www.census.gov/newsroom What was the highest paying
college major for 2011-12? College Majors
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College Expenses
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Do your Research Approach it as though you are buying an
education, not a school What is the Net Price that you will pay?
Use the Net Price Calculator available on each schools website.
What is the graduation rate? What is the average debt of graduates?
What is the repayment rate and default rate of the schools
borrowers? What was the employment outcome for recent graduates?
The Consumer Approach Making College Affordable
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o Graduate on Time o Research and find the right school and
major Minimize transfer and change of major o Earn college credits
while in high school AP courses, Vo-Tech, and dual enrollment o
Consider options for cutting costs Commute, take summer classes,
rent or buy used books, make smart meal plan choices o 2 + 2
Strategy (2 years at a Community College then transfer credits to a
4 year school) Reduce the Need for Financial Aid
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Review the colleges website Meet with an advisor at both
schools Know what is expected of you Transferring Colleges
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*Be Informed Consumers ask questions! *File the FAFSA on time
*Stay Organized & Follow Up 3 Things to Take Away
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Financial Aid - Money provided to students and families to help
pay for postsecondary educational expenses What is Financial
Aid?
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Gift Aid FREE MONEY Grants and Scholarships Self Help Aid Loans
and Work Programs Merit-Based Aid: academic ability, special talent
or achievement, program of study, family or ethnic background
Need-Based Aid: grants, loans, and employment usually based on -
income, assets, other factors Types of Financial Aid
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Basic Principles 1. Joint responsibility of the student and
parent(s) to pay, to the extent possible. 2. Need based financial
aid is subject to a federal formula to determine need. 3. Not all
families qualify for need based aid. There is no guarantee that you
will get FREE money.
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Federal Government State Government School/Colleges Private
Scholarship Sources: HS Counselors Clubs and organizations
Employers Internet scholarship searches Where does the money come
from?
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Scholarships for Average Students Video contests Creativity
Unusual scholarships Based on Last Name Van Valkenburg?
Grandparents Gone Wired Scholarship Patrick Kerr Skateboard
Scholarship Common Knowledge Scholarship Scholarship Opportunities
for Everyone
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Start Searching Early Use FREE Scholarship Search sites Dont
ignore scholarships with smaller award amounts Dont miss deadlines
Search for Scholarships every year Never pay a fee for a
scholarship! Avoid unsolicited scholarships Avoid scholarships that
use the word Guarantee If it sounds too good to be true, it
probably is. Scholarship Search Tips!
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 The Free Application for Federal Student Aid
(FAFSA)
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www.fafsa.gov NOT FAFSA.com
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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 Who is independent for Federal Programs?
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Parents & Student Information Divorced or separated parents
Parent that the child lived with most in the last 12 months. If
parental custody is equal, then the parent that provides more than
50% of students support. Stepparents - yes Adoptive parents - yes
Foster parents - no Legal guardians - no Anyone else the student is
living with - no Whose information goes on the FAFSA
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Recent death or disability Reduced income Recent Separation or
Divorce Contact the school and ask for a special consideration AND
Contact State Grant Division at PHEAA in writing. Special
Circumstances
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FAFSA Completion Tips 1.Can use estimated income to complete,
but must update after taxes are completed. 2. Answer all the
questions that are presented to you. If the answer is zero, put
zero. Dont leave it blank. 3. You do not have to complete the
online application all at once. 4. Carefully review untaxed income
questions. 5. All 529 plans must be reported as parental assets 6.
Assets do not include primary home, qualified retirement plans or
the value of life insurance 7. Some people can skip asset
questions. If not, assets are the value at the time of application.
8. Do not report the value of the farm if you live on that farm. 9.
Do not report a family owned business if it employs less than 100
people. 10. There is online help available for the form.
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FAFSA - Assets
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Allows students and parents to access IRS tax return
information needed to complete the FAFSA. Students and parents may
transfer the data directly into their FAFSA. IRS Data is available:
After 2 weeks of electronically filing federal tax return After 8
weeks of filing a paper federal tax return If use estimated income
to complete FAFSA, can go back once taxes are filed and use IRS
Data Retrieval Tool. IRS DATA Retrieval Tool
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IRS Data Retrieval Married, Filing Separately Filing Head of
Household Filing an amended return Filing a Puerto Rican or foreign
tax return Recently filed taxes None of the above
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Signing FAFSA Online Student and parent sign electronically
with a PIN. Apply for a PIN at www.pin.ed.gov or while completing
the online FAFSAwww.pin.ed.gov PIN (Personal Identification Number)
Select your number Parents can use for other children & PLUS
Students will need for many uses Can request a duplicate PIN, if
necessary. If you write it down, store it in a safe place
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Apply for PA State Grant from FAFSA Confirmation Page
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Additional questions needed to determine State Grant
eligibility which includes items such 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. On-Line State Grant Application
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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 Other Applications?
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Federal Deadline - end of the award year - for 2013-2014, this
would be June 30, 2014 PA State Grant deadlines May 1, 2013 - 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, 2013 - 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 & meet the earliest one! Know Your
Deadlines!!!!!
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FAFSA Completion Sessions Laurel Highlands High School FAFSA
Completion Sessions February 28, 2013 6:00 PM Rsvp by February 26,
2013 March 21, 2013 6:00 PM Rsvp by March 19, 2013 Rsvp to Mrs.
Barchetti
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Social Security Numbers Drivers license (student only; this
information is optional) Federal income tax returns (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:
Veterans non educational benefits, child support paid/received and
workers compensation. Alien registration or permanent resident card
(if not a US citizen) Documents Needed
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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 www.pheaa.org to view PA State Grant Information is sent to
schools/colleges. Send to all schools being considered. What
happens next?
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Family undergoes need analysis Expected Family Contribution
(EFC) is determined Determining need-based eligibility
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The EFC is a number derived from a federal formula which
considers certain factors. - Parent income and (possibly) assets -
Student income and assets - Family size - Number of children in
college - Age of the older parent It is an index number used to
determine how much financial aid you will receive In reality, it is
not necessarily the amount a family is required to pay. Expected
Family Contribution (EFC)
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How is the EFC calculated? Bulk of EFC comes from income.
Allowances against income (State and Social Security tax, Income
protection allowance and Employment expense allowance) Parental
asset protection allowance (based on age of older parent, if 2
parent household) roughly $920 per year Parent asset contribution
is roughly 6% Student income contribution 50% of amount over $6,150
Student asset contribution 20% of student assets Parent
contribution divided by number of children enrolled in college at
the same time. Parent Contribution + Student Contribution =
EFC
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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. Calculating Financial
Need
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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. Financial Aid Award Letter
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1.How much of the financial aid is free money? 2.Which awards
are based on need and which are based on merit? 3.Are there any
academic requirements to maintain to keep their award? 4.Will
awards change from year to year? 5.Will institutional awards
increase as tuition increases? 6.How are institutional awards
affected by scholarships 7.Will loans be needed? Reviewing the
Financial Aid Package After reviewing their packages, students
should be sure they know and understand the following:
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Financial Aid 101 Federal, State and College Financial Aid
Programs
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Pell Grant (2012-13 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 Federal Programs
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PA State Grant* Full-time, in PA....up to $4,348 Part time, in
PAup 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 PA State Grant Program
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State Grant Formula Cost of School (Tuition + Allowable Fees
provided by the school) Add Educational Expense Allowance ($4,000)
and Book Allowance ($1,000) Subtract 100% Pell Grant and EFC =
Unmet Need Multiply Unmet Need by a percentage based on the EFC and
by an Award Adjustment Factor (based on funding)
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Cost Tiers Minimum Award Maximum Award Cap college costs at
$32,000 State Grant School CostState Grant Awards $0 - $11,000$500
to $2,313 $11,001 to $21,000$500 to $3,700 $21,001 to $30,000$500
to $3,978 $30,001 to $32,000$500 to $4,348
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State Work-Study - job related to major Educational Assistance
Grant (EAP) National Guard Chafee Education and Training Grant
Foster care or discharged or adopted out after age of 16 Blind or
Deaf Beneficiary Grant (PA and other states) Postsecondary
Educational Gratuity Program (PEGP) Children of parents who died in
the line of duty Partnerships for Access to Higher Education (PATH)
Pennsylvania Targeted Industry Program (PA TIP) For details, see
the PA Guide to Student Aid, or visit www.pheaa.org Other State
Programs
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All federal student loans are now 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
schools website or at www.studentloans.gov www.studentloans.gov
Federal Student Loans
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Always consider federal loans first. Borrow in the following
order: 1.Perkins Loan (5% fixed) student 2.Stafford Loan (max of
6.8% fixed) student 3.PLUS Loan (7.9% fixed) parent and graduate
student 4.Alternative Loan (variable rates) last resort Borrowing
for Higher Education
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Stafford student loan: Subsidized = no interest in school July
1, 2012 June 30, 2014 If the loan is first disbursed during this
period, interest will be charged during the grace period, 3.4%
fixed rate beginning 7/1/12 Unsubsidized = interest accrues in
school and grace Interest rate = 6.8% Any interest unpaid during
grace will be capitalized at repayment Federal Direct Loan
Program
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Federal Direct Stafford Loan Program Borrowing Limits
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Determining Financial Need for Subsidized Student Loans Cost of
School$25,000 Grants or Scholarships - $0 EFC- $23,500 Need$1,500
Subsidized Student Loan $4,000 Unsubsidized Student Loan Cost of
School$25,000 Grants or Scholarships - $5,000 EFC- $7,000
Need$5,500 Subsidized Student Loan Student AStudent B
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Additional eligibility
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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 Interest Rate is 7.9% Repayment can be
deferred Federal Direct PLUS Loan
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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! This should be a last resort!
Alternative/Private Education Loans
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Calculators and Resources Figuring out what works best Enter
the Numbers Explore Related Websites
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Packaging Example for Year #1 Cost of School 20,000 Grants or
Scholarships (Free Money) - 5,500 (State Grant & Private
Scholarship) Amount Due School 14,500 Out of Pocket Costs: Student
Loan 5,500 College Savings 3,500 Other: Parent PLUS Loan, Private
Loan, etc. 5,500 Total Out of Pocket Costs14,500
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In most cases, you WILL have to pay for educational expenses.
This is your ACTUAL family contribution, or AFC or out-of-pocket
costs. Yesterdays money SAVINGS - 529 Plan Todays money INCOME -
Tuition Payment Plans Tomorrows money LOANS Federal, Private,
Institutional, Home Equity How will you cover the cost??
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Financial Aid 101 Final Thoughts
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1.Finish on time. 2.Borrow only what you need 3.Research your
earning potential 4.Keep borrowing in line with future earning
power (estimate loan payments at pheaa.org or youcandealwithit.com)
Final Thoughts
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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? Things to Talk About
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Student and parent apply for a PIN at
www.pin.ed.govwww.pin.ed.gov 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 www.fafsa4caster.ed.gov
www.fafsa4caster.ed.gov What you can be doing now prior to
completing the FAFSA
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o pheaa.org o EducationPlanner.org o Youcandealwithit.com o
Myfedloan.org o PHEAA toll free: 1-800-692-7392 o Federal Student
Aid Info Center 1-800-433-3243 o www.fafsa.gov o www.studentaid.gov
general financial aid info o www.studentloans.gov information on
federal loans Resources
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Provides information on: Free scholarship search sites Loans
Savings Military Aid Other Types of Aid Financial Aid Forms
Financial Aid FAQs Calculators www.finaid.org