The Nuts and Bolts of Financial Aid

PLUS

State and Federal Scholarship, Grant, and Loan Programs

The Financial Aid Process Overview

Identify the state and federal financial aid agencies

Know the eligibility requirements for ISAC and FSA programs

Define the role of FAFSAUnderstand the loan processUnderstand program requirements

Objectives:By the end of this lesson, you will be able to:

The purpose of need-based financial aid is to make education accessible to students who can’t afford it on their own, to enable that student to apply to school based on fit and match and not cost

It is assumed that families will contribute to their child’s education to the extent they are ABLE (not willing).

Students must reapply annually for all aid. The federal formula uses the FAFSA, the institutional formula uses the CSS Profile and then schools may ask for additional information/proof of income such as tax returns, W-2 forms or a non-custodial letter.

Purpose, Assumptions and How to Apply

Sources of Financial Aid

• www.collegeillinois.org• The agency in the State of

IL that administers state and federal grant, scholarship, and prepaid tuition programs.

U. S. Department of Education (ED)

• www.FederalStudentAid.ed.gov

• The federal agency that provides college funding in the form of grants, scholarships, work-study and educational loan programs.

These funds may be merit-based, need-based, or non need-based.

Type of Financial AidThere are two basic types of financial aid.

gift aid

self-helpaid

Grants

Scholarships

Work-Study

Loans

Collegeboard’s College Scholarship Service (CSS) Profile is required by some college/universities and scholarship agencies. The CSS Profile determines whether or not you are eligible for private grants and scholarships from the member organizations.

CSS Profile costs $25 for the initial application, $16 for each additional report you send. Limited fee waivers available.

Deadlines vary depending on type of application (ED, EA) and college; can range from Nov. – April

This is NOT a substitute for the FAFSA. You still need to complete the FAFSA to receive federal financial aid (grants, loans, some university grants/scholarships, work-study, etc.).

The CSS Profilehttps://profileonline.collegeboard.com

What is a FAFSA?It is the first step in the financial aid process. A FAFSA is used to apply for IL scholarships and grants and for Federal student financial aid such as grants, loans and work-study. In addition, colleges and universities use it to award institutional aid. It is FREE to apply.

There are 3 ways to access the FAFSA:

Paper FAFSA1-800-4-FED-AID

FAFSA on the Webwww.FAFSA.gov

.pdf FAFSAwww.FAFSA.gov

Free Application for Federal Student Aid

Important Dates! FAFSA goes live on January 1st

Colleges may have their own dates. Check witheach college.

MAP Grant also goes live on January 1st

Federal Pell Grant is awarded up until June 30th

Remember: IL is a first-come, first-served state, i.e. funds are dispersed in the order the FAFSA is submitted and NOT according to need!!

When to apply for the FAFSA

What information is needed to complete the FAFSA? Social Security Number Records of Income, such as income earned from work or business, child

support paid or received and any other untaxed income. If available, refer to the W-2 Forms and the Federal Income Tax Return IRS 1040, 1040A or 1040EZ.

Information about assets, such as cash, checking, savings, certificates of deposit, stock options, bonds, 529 plans and other college savings programs; and investment real estate, business and farm.

Driver’s License Number Dates of Birth Month and year of marriage, separation, divorce or other change in marital

status Alien Registration Number for non-US citizens

Completing the FAFSA

What’s next?4 steps:

1. Check the status of a Submitted FAFSA or print a signature page

2. Make corrections to your FAFSA once you have your taxes filed

3. Add or Delete Schools (if necessary)4. View and Print your Student Aid Report (SAR)

After you submit your FAFSA

What is a SAR?The SAR summarizes information that is reported on the FAFSA. It usually contains an Expected Family Contribution (EFC), the number used in determining a student’s eligibility for federal aid.

Student Aid Report (SAR)

A need analysis formula determines the student’s Expected Family Contribution (EFC).◦ The U.S. Department of Education calculates

financial need using a formula established by Congress called Federal Methodology.

◦ A comparative measure of how much a family can be expected to contribute toward the cost of a student’s education for a year.

◦ Used to determine a student’s eligibility for most federal and state assistance.

Estimated Family Contribution (EFC)

Go to www.fafsa4caster.ed.gov https://www.aidcalc.com/EFC.aspx

REMEMBER – These are just estimates until you complete the 2014-15 FAFSA in January 2014 and then make corrections with 2013 tax information.

How can I calculate an estimate of my EFC?

Dependency Status

INDEPENDENT students fit into at least one of the following categories:

Born before January 1, 1989 (for the 2012-13 academic year) Married Graduate or professional student Veteran or currently serving on active duty for other than training purposes Have legal dependents other than a spouse , for whom more than 50% of the

support is provided through June 30, 2013 Orphan, ward of the court, or in foster care when student was 13 or older Emancipated minor or in legal guardianship as determined by a court in the legal

state of residence Unaccompanied youth who was declared homeless or self-supporting and at risk of

being homeless on or after July 1, 2011 by a school official or director of a shelter

** DEPENDENT students must report personal and parental income and assets

New!

Question Answer

What is it? Federal Student Aid and the IRS collaborated to develop a quick, easy way for students and parents to import tax data from the IRS to the online FAFSA application

When is it available? •It went live on February 1, 2012.•The data is available in both English and Spanish.•FAFSA relevant information will become available within 1-2 weeks if IRS forms are filed electronically; 6-8 weeks if filed by paper.

Who can use it? •Filed a tax return•Have a valid SSN•Have a FAFSA pin•Have not experienced a change in marital status since December 31, 2012

Who should NOT use it? •Have filed an amended tax return•Did not file a tax return•Filing status is married filing separately

New to FAFSA! IRS Data Retrieval Tool

State Programs

Illinois Residency Requirement

Most ISAC programs require a student to be a resident of IL.

Dependent Student: The parent that is required to report data on the FAFSA must

physically reside in IL IL must be a parent’s fixed and permanent home

Independent Student: Must reside in IL at the time of application Must have resided in IL for 12 continuous months prior to the start of

an academic year for which aid is requested IL must be a student’s fixed and permanent home

Funding is limited; to ensure full-year consideration, apply EARLY!

Monetary Award Program*for a complete list of state programs, go tohttp://www.collegeillinois.org/students/during-college/types-of-financial-aid/illinois-and-federal-financial-aid-programs.html

Acronym MAP

Type Need-based grant

Award Up to $4720 in 2011-2012

Purpose Tuition and Mandatory Fees

Recipient Undergraduate

Some Criteria •Demonstrate Financial Need•Be enrolled for a minimum of 3 credit hrs and a maximum of 15 credit hrs per term in a degree or certificate program•Meet satisfactory academic progress standards set by college

Limit Up to 135 semester credit hours; no more than 75 credit hours at freshman or sophomore level

Application FAFSA

Use IL public, private 2 and 4 year degree granting institutions

The nation’s largest source of student aid More than $150 billion in aidFederal Student Aid (FSA) administers a variety of

programs Grants Work-Study Loans Loan Repayment ProgramsEligibility is based on factors such as: Financial Need Academic Achievement Chosen Field of Study

Federal Programs

Federal Pell Grant

Top Federal Aid Programs

Type Need-based grant

Award Up to $5500

Purpose Anything in Cost of Attendance (COA)

Recipients Undergraduate

Criteria •Need-based•Award amount is dependent on EFC, COA and enrollment status

Limits Up to 18 semesters or equivalent

Application FAFSA

Use ED-approved institutions

*Pell Grant recipients get priority

Federal Supplemental Educational Opportunity Grants (FSEOG)

Type Grant (campus-based program)

Award $100 - $4000 per year

Purpose Anything in COA

Recipients Undergraduate

Criteria •Exceptional financial need, i.e. lowest EFC•Amount of other aid received•Availability of funds at school

Application FAFSA

Use ED-approved institutions

A student can work part-time while enrolled to help pay for educational expenses.

Federal Work Study

Type Need-based employment program

Award Varies; at least minimum wage

Purpose Anything in COA

Recipients Undergraduate and Graduate

Criteria •Must be earned•Student is paid by college for hours worked•Availability of funds is limited and the college may give deadlines for applying

Application FAFSA

Use ED-approved institutions that participate

Life Cycle of a Student LoanThe loan has 7 phases and a number of steps in each phase – from applying for aid to

paying it off!

Phase 1. Loan application (FAFSA)Phase 2. Sign Master Promissory NotePhase 2. Disbursement of FundsPhase 3. While in SchoolPhase 4. Grace PeriodPhase 5. Repayment ProcessPhase 6. Payment of Debt in FULL

College Loan Programs

This is legal document in which a borrowerpromises to repay a loan(s) and any accruedinterest and fees. It also explains the termsand conditions of a loan(s).

Master Promissory Note (MPN)

A variety of loan options are available to

students and parents: Federal Perkins Loan Federal Direct Stafford Loan Program Federal Direct PLUS Loan Program

Subsidized VS. Unsubsidized

For a subsidized loan, the Federal Government

pays the interest. For an unsubsidized loan, the

borrower pays the interest.

Grace Period How long is a grace period?

Terms can range from immediate payment to a year or more. Most are 6-9 months. What does it mean?

A student is excused from repaying a loan while in school and for several months after graduation.

When will it start?

It may start when a student drops below half-time enrollment or leaves school without graduating. When will loan repayment start?

After the end of the grace period.

Loan Programs

Type Rate Grace

Perkins Subsidized 5% Fixed 9 months

Stafford Subsidized

Unsubsidized

3.4% Fixed

6.8% Fixed

6 months

6 months

PLUS Credit-based 7.9% Fixed Within first 60 days

Federal Loan Programs

Tuition & Fees

Room & Board

Transportation

Books & Supplies

Miscellaneous Living Expenses

Cost of Attendance (COA)

+

How is the Cost of Attendance determined?

How is eligibility for financial aid determined?

Cost of Attendance-EFC (Estimated Family Contribution)__________________________________= Student’s Financial Need

COA - EFC = Financial Need

College A $10,000 $3,000 $7,000

College B $20,000 $3,000 $17,000

College C $35,000 $3,000 $32,000

The financial aid administrators at the colleges that you areconsidering will ‘package’ all available financial aid optionsand send them to you for consideration.

Financial Aid Awards

What is the total cost of attendance?

What is the Expected Family Contribution?

What is your financial aid eligibility?

How is your financial need being met?

Was your financial need met?

What is the out-of-pocket cost?

Institutions participating in Title IV Student Financial Aid Programs were required to install a net price calculator on their websites.

The calculator allows prospective students to calculate an estimated net price of enrollment at that school.

The calculations will be based on the basic formula of price of attendance minus grant aid. The calculator will generate an estimate based on the student's unique information and what similar students paid in the previous year. The estimate generated from the calculator will not represent a final or binding determination of the institution's cost.

Have the following things handy in order to complete the calculator: tax forms, W-2 forms, social security numbers, GPA, standardized test scores

Net Price Calculators

◦The College Board www.collegeboard.com◦SmartStudent Guide to Financial Aid

www.finaid.org◦Federal Government www.ed.gov◦FAFSA www.fafsa.gov◦ISAC www.collegeillinois.org◦Scholarship websites◦School’s financial aid web pages◦Managing College Cost

www.managingcollegecost.com

Online Resources

Questions????

1. Complete the EFC calculator. Print a copy and bring it in to your CKJR teacher.

2. Pick one of your prospective colleges and complete its Net Price Calculator. Print a copy and bring it in to your CKJR teacher.

Both assignments are due May 25th.

Homework