1. FINANCIAL AID 101for High School Seniors& Their Families High School1Presentation Date

2. This presentation was developed by Stacey Musulin in concert with other staff members at the University of ConnecticutOffice of Student Financial Aid Services. This presentation uses materials created by the National Association of StudentFinancial Aid Administrators The information in this presentation was based on rules andregulations interpreted as of the date of its creation. Pleasenote that programs may change over time. Also, many forms of aid are based on individual schools policies and availablefunding. Examples used in this presentation should not beconsidered guarantees of aid a student would receive. Contact your school for details about application procedures andeligibility questions. 2 3. 3 Topics to Discuss Cost of attendance (COA) Expected Family Contribution (EFC) Financial Need Types of financial aid Free Application for Federal Student Aid(FAFSA) Post-Application processes Special circumstances appeals 4. 4 5. What is Cost of Attendance (COA)?Combined direct and indirect costs related to educational program Direct: Billed by the college (e.g., tuition, room &board) Indirect: Usually estimates not on the fee bill, butneeded (e.g., books, computer expenses, dependentcare, mileage)Varies according to: School (tuition/fee rates differ) Student status (in-state vs. out-of-state, full-time vs.part-time) Housing status (on-campus, off-campus, with parent) 5 6. What is the Expected FamilyContribution (EFC)?9Misnomer: EFC is NOT necessarily what a family will actually pay! Measurement of a familys financial strengthCalculated using data from a federal application (FAFSA) form and a federal formulaStays the same regardless of college Exception: Special Circumstance appealTwo components for dependent students: Parent contribution Student contributionDetermines the types and amounts of aid that students are eligible to receive 7. EFC for Dependent Student(very basic Federal Methodology version)Parental contribution from(adjusted if more thanone dependent inincome & assets college)+ Student contribution fromavailable income & assets= Expected Family Contribution 7 8. Financial Need - Federal Methodology NB: The official Need figure is not necessarily what is needed to pay the bill (billed & miscellaneous non-Cost of Attendance (COA) billed expenses)- Expected Family Contribution(EFC) (schools will use this figure= Financial Need to determine eligibility for need-based aid) 8 9. Need Based on Cost 1X 2 Y3Z EFC EFCCost of Expected FamilyNeedAttendance Contribution (Variable)(V ariable)(Constant) 9 10. Institutional Methodology Some schools, through the CSS Profileapplication or their own financial aid applications,may require different information to calculate aseparate, Institutional EFC The Institutional EFC and those schools policiesdetermine how institutional aid is distributed 10 11. Important Tips: Cost of Attendance KNOW YOUR COST OF ATTENDANCE!COA may be adjusted to meet individual studentsneeds, 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 orreceipt for computer purchase Contact your school for details! 11 12. 12 13. Types of Financial Aid Scholarships (not repaid) Need or merit-based Grants (not repaid) Need-based Loans (must be repaid) Need and non-need types Federal or private lenders Student or parent as borrower Employment ($ earned through work) Need and non-need types Work-Study (need-based) 13 14. Scholarship SearchesLocal businesses and Internet - many sites, including: civic organizations http://fastweb.comState Dept. of Education http://fastap.org School Counselors College or UniversityPlaces of employment Academic, athletic, and other talent-based Student or parentscholarshipsImportant Tip: There are scholarship scams! Do notpay for scholarship searches/ applications.Important Tip: Start Early! Application deadlinesand procedures vary depending on source of aid! 14 15. Federal Grant Programs(FAFSA needed for all Apply annually)Federal Pell GrantFederal Supplemental Educational Opportunity Grant (SEOG)Federal Teacher Education Assistance for College and Higher Education (TEACH) Grant15 16. Pell GrantAwarded to high-need, eligible undergraduates pursuing first Bachelors degree and certain students enrolled in post-baccalaureate teacher certification or licensing programsPortable (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 2012-2013 academic year was $5,550 16 17. Federal Supplemental EducationalOpportunity Grant (FSEOG)Need-based High-need students a priorityMaximum award $4,000, but dependent on school packaging policy and available funds 17 18. TEACH GrantSchools choose whether to participate and what specific requirements areU.S. citizen or eligible non-citizenFAFSA completion required, but not need-basedAward amounts up to $4000 per yearConditions GPA 3.25 or qualifying score on admissions test Sign Agreement to Serve: Teach in school servinglow-income students (Title I) for 4 years within 8 yearsof leaving university for each agreement signed Must teach in identified high-need field If conditions not met, grant will turn intoUnsubsidized Stafford loan with accumulated interestfrom time of initial disbursement 18 19. Federal Self-Help AidFederal Work-Study (FWS)Federal Perkins LoanFederal Stafford Loan Subsidized Stafford Loan Unsubsidized Stafford LoanFederal Parent PLUS Loan 19 20. Federal Work Study (FWS) 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 organizationsTip: FWS earnings, if indicated specially on the FAFSA, do not count inthe expected family contribution (EFC) calculation for the followingschool year!20 21. Federal Perkins Loan School lends Federal funds Student is borrower no cosigner or credit check No fees! Amount dependent on funding and school policies butthere are maximums Interest rate: 5% Does not accrue while in school or in grace period 9-month grace period after graduation (or if studentdrops below -time status) Repayment period may be up to 10 years Deferment and cancellation provisions available 21 22. Federal Direct Stafford Loans Student is borrower no cosigner or credit check Amount undergraduate and graduate students can borrowvaries by academic year/ # of completed credits 1 % fee charged i.e., if $100 borrowed, $99.00 will disburse No repayment required while in school at least -time 6-month grace period after graduation or if drop below -time status Maximum repayment period between 10 and 30 yearsdepending on repayment plan chosen Deferment and cancellation provisions available 22 23. Federal Direct Stafford LoansSubsidized: Must demonstrate needUnsubsidized: Not based on needAnnual 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 subsidizedTotal/aggregate limit for dependent undergrads: $31,000 $23,000 maximum subsidized 23 24. Federal DirectSubsidized Stafford Need-based, dependent on Cost of Attendance (COA),Expected Family Contribution (EFC) figures, and otheraid sources Annual maximum eligibility to borrow dependent onstudent status Expected interest rate fixed 6.8% for undergrads as of the2013-2014 school year (currently 3.4%) Interest does not accrue while in school at least -time 24 25. Federal DirectUnsubsidized Stafford 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 circumstances25 26. Parent Direct PLUS Loans Loan program for parents (biological, adoptive, or step-parent inhousehold) of dependent undergraduate students Applicants must be considered creditworthy Annual loan limit: COA minus other aid Fixed interest rates 7.9% Direct PLUS Loans 4% fee charged i.e., if $100 borrowed, $96.00 will disburse Repayment begins 60 days after loan is fully disbursed for parentborrowers Parents may defer payment while student is in school at least -time Must apply for deferment with Dept of Education not automatic! Other deferments, forbearances, cancellations possible in special circumstances26 27. Financing AlternativesMonthly Payment Plans Allows payments to be spread over 10 months or less Dependent on school Contact school for informationAlternative/Private Loans Applicants must be creditworthy 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 byindividual lenders and subject to change 27 28. Tips for Borrowing Additional unsubsidized loan eligibility available forindependent undergraduate and dependent students whoseparents 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 studyParents and students who will be applying for PLUS orprivate/alternative loans should: Consider lower-cost/interest Federal loan options firstConsider the total cost of borrowingDouble-check credit scores (www.annualcreditreport.com) prior tofilling out applicationsConsider co-signing options for better interest rates28 29. 29 30. The FormsFAFSA (Free Application for Federal Student Aid) Required for all types of Federal and some state andinstitutional aid www.fafsa.ed.gov DO NOT go on the .com site thats a service for feeCSS Financial Aid PROFILE Used primarily by private colleges Pay for each report sent to a school plus small registrationfee https://profileonline.collegeboard.comInstitutional Applications Check school publications and websites 30 31. What is the FAFSA?A standard form that collect demographic and financial information about the student and family Information is used to calculate the EFC using thefederal formulaElectronic version is preferred & faster English and Spanish versionsInformation is sent to secure Dept. of Education system called CPSDid I mention its free? 31 32. General Federal Aid CriteriaMust be enrolled or accepted for enrollment in eligible program of studyMust be pursuing degree, certificate, or other recognized credentialMust be U.S. citizen or eligible noncitizenMust be registered with Selective Service (if male and required)May not have eligibility suspended or terminated due to drug-related conviction32 33. General Federal Aid Criteria(Continued) 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 orloan funds Must continue to make Satisfactory AcademicProgress (as defined by school) GPA , % of completed credits, maximum credit limit 33 34. About Deadlines: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 2013-2014 academic year, the FAFSA is available on January 1, 2013The 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 onforms of aid that are limited34 35. First Step: Get Student & Parent Financial AidPersonal Identification Numbers (PINs) Web site: www.pin.ed.gov Can request PIN now Sign FAFSA electronically May be used by studentsand parents throughoutaid process, includingsubsequent school yearsFAFSAs and signingFederal Direct Loan MPNs Tip: Get student AND parent PINs (1 each) now! 35 36. What information to collectbefore starting the FAFSA: Social Security Numbers (student and parents) Alien Registration # (permanent residents only) Students drivers license number State residency information Marital information (dates) 2012 W-2 Forms (statement of earned wages) May estimate for initial completion by deadlines 2012 Tax forms (student & parent, if applicable) May use last years data to estimate for initial completion by deadlines Email addresses Other income info (contributions to tax-deferred pensions/savings, childsupport paid/received, etc.) Investment information (NOT IRAs) School codes (also available on online FAFSA) 36 37. FAFSA on the Web Worksheet 4-page PDF bookletTips: Cautions: Using this Worksheet does not include all FAFSA questions worksheetmight help to Section #s on Worksheet dont necessarily coincide organize with section #s on FAFSA informationprior to going Many families will be asked to provide additionalonline information Have this and Child Support Paidsupplementalinformation Untaxed Income (including untaxed interest, IRAdeductions, Child Support received) handy to makedata entry Assets (NOT IRAs) Businesses/Investment Farmeasiervalue 37 38. Good reasons to file electronically40 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 39. 39 FAFSA on the Web Website:www.fafsa.ed.gov 2013-14 FAFSA on theWeb available onJanuary 1, 2013 FAFSA on the WebWorksheet: Used as pre- application worksheet Questions follow order of FAFSA on the Web 40. General Tips for completing theFAFSA: Read each question carefully Some questions apply to students, others to parents dontmix! Some questions tell you what income/ asset data NOT toinclude be careful! Double-check all data entry If estimating income/ asset information, supply your bestHONEST guess You may go back and make corrections (possibly IRS DataRetrieval) if there are significant changes When using tax forms, double-check the type of form you areusing (1040EZ, 1040A, 1040) to reference the correct specificline numbers40 41. General Info Section Citizenship information TIPS for GeneralInformation: Drug conviction status Your and Parents educational background Yourself refer tothe Student! Grade level for the 2013-2014 school year Use full, legal First year undergraduate names nonicknames! Type of Program? Certificate/ Diploma You are not a 1styear Graduate Associates degreestudent - yet Bachelors degree41 42. Dependency Status(Whether or not parent information required on FAFSA)Students may be only considered Independent if they are: Born before January 1, 1990 Married at time of application Have children/ dependents for whom student provides over financial support during upcoming year In Graduate school (already earned a Bachelors degree) Tip: In extremecircumstances, On active duty stats in US Armed Forcesdependency status may A veteran of the US Armed Forces be appealed. Contact your An orphan, Ward of the Court, or in foster careschools financial aid anytime when age 13+ office for more details. Considered unaccompanied youth and homeless / at risk of being homeless As determined by director/ professional staff of shelter or program any time on/after 7/1/2012 Legally considered emancipated minor or in legal guardianship NOTE: THIS IS DIFFERENT FROM A DIVORCED PARENT HAVING CUSTODIAL STATUS!!!!42 43. Who is a Parent? Parents do not include grandparents or other relatives/ friends/legal guardians with whom the student may live, but who have notformally adopted the student When parents are divorced, give information about the primarycustodial parent (with whom the student lived longer during thepast year) To break a tie, give information about which parent provided more financial support When parents are remarried, given information about the primarycustodial parent AND that parents spouse (the stepparent inwhose household the student lives most) 43 44. Tips for Household Info Include student and siblings if parent(s) will provide over half support from7/1/2013- 6/30/2014 even if the student will not be living with theparent during that time (i.e., in college) Include other dependents if they live in the house and if parent(s) willprovide over half support from 7/1/2013- 6/30/2014 # in college figure must be children/ dependents counted in the householdwho are enrolled at least -time Do not include parents in # in college even if the parents are in college Dislocated Worker Status for Parents: Receiving unemployment benefits and unlikely to return to that field/job Is displaced homemaker, laid-off, or lost own business due to economicconditions 44 45. IRS Data Retrieval41 Available early February 2013 for 2013-2014processing cycle Participation is voluntary Makes updating FAFSA information easier Reduces documents requested by financial aid office Not available when filing status is Married-Separately 46. How IRS Data Retrieval WorksSo long as the tax returns have already been processed:While completing FAFSA, the student and/or parent may submit real-time request to IRS for tax dataIRS will authenticate taxpayers identityIf match found, IRS sends real-time results to applicant in new windowStudent and parent choose whether or not to transfer data to the online FAFSA These are separate transfers, one for the student andone for the parent46 47. Tips for Student/Parent Income Info OK to estimate and correct later! 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, anddoes not have income from self-employment, own farm, alimony, or capital gainson a required Schedule D Adjusted Gross Income for 2012 not always the same as income from work onW-2 May include income from other sources and certain deductions Income earned from work May be different than AGI Include Self-Employment! Federal Income Tax for 2012 (What was tax liability on 1040 NOT necessarilypaid on W-2) 47 48. Additional Tips for Income Info Untaxed Income : DO include specified IRA/pension savings, WorkmansCompensation, untaxed disability, untaxed IRAdistributions/pension/interest, and child support RECEIVED Do NOT include Unemployment Compensation, untaxed SocialSecurity benefits, SSI, IRA rollovers, and other such specifiedincome. 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 billededucational expenses48 49. Tips for Asset InfoDo 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 49 50. Tips for Asset Info (continued)Do include these in assets questions: Cash, savings, checking account balances Net worth (Value Debt/Mortgage) of rental/investmentproperties If you live in your investment property, do NOT include thepercentage 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 employ over 100 employees Net worth of investment farm 50 51. Additional Info & Tips Federal School Codes needed for each college Up to 10 codes allowed Feds will send data to schools Available online if you dont have them handy (follow prompts) Housing plans for each college (used by schools to determineCost of Attendance) On-campus (allows for billed room & board/meals) Off-campus (allows for rent & meals) With parent (allows for meals) For Dependent Students: Both Parent and Student must signwith separate PINs! 51 52. 52 53. FAFSA Processing Results:Central Processing System (CPS) calculates and sends info including EFC:Tip: Review yourSAR carefully for Student gets Student Aid Report (SAR) accuracy and by email with direct link to online SAR keep a hard by snail mail if no email address providedcopy! Students with PINs may view SARs online anytime at www.fafsa.ed.gov Schools get Institutional Student informationRecord (ISIR) Information sent electronically within 7-14 days after FAFSA submitted to CPS 53 54. After the FAFSA is processedStudents check SARs for accuracy of informationStudents log in and make corrections online Remember IRS Data Retrieval Option Schools review ISIRs and then develop financial aidpackages Schools may request additional information for verification or to resolve database mismatches or conflicting informationFederal Verification CPS/ Dept of Ed. determines which applicants must supply documentation verifying FAFSA info Give specific documentation to schools only if they request it Remember IRS Data Retrieval option If selected, provide requested documentation to schools ASAP!54 55. 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 Schools may request additional documentation toreview on case-by-case basis Different schools may interpret cases differently pertheir policies School decisions are final and cannot be appealed toUS Dept. of Education 55 56. How it works - SummaryStudent submits completed FAFSA Federal processor determines Expected Family Contribution (EFC)Federal processor sends Student AidReport (SAR), which includes your EFCUsing your EFC, your prospectivecollege determines your financialneedProspective college develops a financialaid package to try and meet need.Sends student an award package 56 57. The Award NotificationMay be sent by email, letter, or made available via a online system Continue to check email or online systems in case aidoffice requests additional informationMeet all deadlines to respond to the award notificationsKeep copies for your records!57 58. Tips: Making Decisions @ AidNever decline aid you dont understand!Know whether or not aid is guaranteed throughout program! Need-based aid is reconsidered each year after annual renewal ofFAFSA Are there GPA or Major requirements for renewal of institutionalaid? Are there aggregate maximums for institutional aid?Consider Federal loans before private ones, as these offer fixed interest rates and guaranteed benefits: Perkins Subsidized Direct Stafford Unsubsidized Direct Stafford Direct Parent PLUS 58 59. Tips: Making Decisions @ Aid(continued) If applicable, shop around for private loan lenders 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 criteria59 60. Tips: Making Decisions @ Aid(continued)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 paid60 61. Where Do I Go From Here? Obtain aid application requirements fromeach school Forms Deadlines Research private scholarships Applications Deadlines Apply for PIN for FAFSA Assemble financial information FAFSA Worksheet 61 62. 62 63. ResourcesFederal Student Aid http://studentaid.ed.gov (US Dept of Education) links to FAFSA sites http://studentaid.ed.gov/fafsa 1-800-4-FED-AID (1-800-433-3243) TTY: 1-800-730-8913 FAFSA4caster online tool (early estimate notEFC guarantee:http://studentaid.ed.gov/fafsa/estimate)www.pin.ed.gov - to get PINwww.fafsa.ed.gov to fill out FAFSA See in Help Getting Started/Before You Apply General Questions and Completing Your FAFSA63 64. Resources(continued)More from Federal Student Aid:www. studentaid.ed.gov/pubs Funding Your Education: The Guide to Federal Student Aid Federal Grant/ Federal Student Loan Programs Videos/ PDFs/ calculatorsCollege Goal Sunday: www.collegegoalsundayct.org January 27, 2013 Locations across the state Get 1-1 assistance in filling out the FAFSA 64 65. Resources (continued)FinAid! (independent and objective financial aid information) http://www.finaid.orgMapping Your Future (tips on applying for aid, saving for college, budgeting, etc) http://www.mappingyourfuture.orgIndividual School/ College Financial Aid Office websites Check each schools website for information! 65