Financing a College Education Gates Chili Financial Aid Night December 5, 2012

1. Financing a College EducationGates Chili Financial Aid NightDecember 5, 2012

2. Agenda • Definition of financial aid, cost of attendance and expected family contribution • Financial need • Category/types of aid • Major financial aid programs • Applying for financial aid • Special Circumstances • Information about other sources of aid • Tax credits and deductions

3. Goal of Financial Aid • Primary goal is to assist students in paying for their educational investment. It is achieved by: • Evaluating family’s ability to pay for educational costs • Distributing limited resources in an equitable manner • Attempting to provide a balance of gift aid and self-help aid

4. Principles of Need Analysis • To the extent they are able, parents have primary responsibility to pay for their dependent children’s education • Students also have a responsibility to contribute to their educational costs • Families should be evaluated in their present financial condition • A family’s ability to pay for educational costs must be evaluated in an equitable and consistent manner

5. What is Cost of Attendance (COA) • Direct costs • Indirect costs • Direct plus indirect costs equal cost of attendance • Vary widely from college to college

6. What is the Expected Family Contribution (EFC) • Amount family can reasonably be expected to contribute • Stays the same regardless of college • Two components • Parent contribution • Student contribution • Calculated using data from a federal application form (FAFSA) and a federal formula

7. Financial Need Analysis • Cost of Attendance Tuition and fees, books and supplies, room and board, personal and travel • - Expected Family Student’s Contribution + Contribution Parent’s Contribution • = Documented Financial Total attempted to be • Need covered by financial aid

8. NeedVaries with College Costs • College ACost $40,000 • Expected Family Contribution $ 5,000 • Financial need $35,000 • College BCost $20,000 • Expected Family Contribution $ 5,000 • Financial need $15,000

9. Net Price Calculator (NPC) • Helpful tool to compare relative cost of different schools • Each school must provide • Provide to family: • Cost of Attendance • Average grants and scholarships • Average loans • Average Work-Study Award • Net Cost to Family

10. Categories of Financial Aid • Need-based • Non-need-based

11. Types of Financial Aid • Scholarships • Grants • Loans • Work Opportunities

12. Scholarships • Free money awarded to a student because of merit, skill or characteristic such as grades, activities, personal traits and interests, etc. • Students normally would research and apply for them on their own.

13. Grants • Money that does not have to be paid back • Usually awarded on the basis of financial need

14. Federal Pell Grant • Awarded to eligible undergraduates pursuing first baccalaureate degree • Portable • Actual award amount based on cost of attendance, expected family contribution (EFC), and enrollment status • Expected maximum award of $5,550 for 2013-2014

15. Federal Supplemental Educational Opportunity Grant (FSEOG) • Eligible students • Undergraduates pursuing first bachelor’s degree • Awarded first to students with exceptional financial need (i.e., students with the lowest EFC’s at that school) • Priority to Federal PELL Grant recipients • Annual award amounts • $100 minimum • $4,000 maximum or less as set by school

16. Teacher Education Assistance for College and Higher Education (TEACH) • $4000 a year, not to exceed $16,000 for undergraduates or $8,000 for graduate students • Used for tuition, fees, and room and board if living on campus • Prorated for less than full-time

17. TEACH continued • Must agree to serve as a full-time teacher for at least four academic years at a high-need school within eight years • Must teach in the certain fields including Math, Science, Foreign Language, Bilingual Education, Special Education, Reading Specialist.

18. TEACH Continued • Eligible students • 3.25 high school GPA or score in the 75th percentile on at least one school admissions test • College GPA of 3.25 • Completing (or plan to complete) coursework and requirements necessary to teach • Students who do not complete their obligations will have their grant aid converted to a Federal Unsubsidized Stafford Loan

19. State Grants • Tuition Assistance Program (TAP) • Full-time undergraduate • Based on New York State taxable income • Must be a New York State resident and attend a New York State college • Processed for first New York State school listed on FAFSA • Part-time awards • Part-time TAP • Aid for Part-time Study (APTS)

20. Loans • Money students and parents borrow to help pay educational expenses • Repayment usually begins after education is finished • Only borrow what is really needed • Look at loans as an investment in the future

21. Federal Stafford Loans • Subsidized • Interest is paid for by the government while the student is attending school for at least six credit hours • Unsubsidized • Interest is not paid for the student while attending school • The student receives quarterly statements from lender

22. FederalStafford Loans Continued Base annual loan limitsCombined subsidized and unsubsidized • $3,500 for 1st year undergraduates • $4,500 for 2nd year undergraduates • $5,500 for each remaining undergraduate year Additional unsubsidized eligibility • $2,000 for undergraduates

23. Federal Stafford Loans Continued • Additional unsubsidized loan eligibility for independent undergraduate, graduate, and dependent students whose parents are unable to borrow PLUS: • $4,000 per year for 1st and 2nd year undergraduates • $5,000 per year for remaining years of undergraduate study • $20,500 per year for graduate/professional study

24. Repayment of Federal Stafford Loans • 3.4% fixed interest for Federal Subsidized Stafford (effective until 7/1/13) • 6.8% fixed interest for Federal Unsubsidized Stafford • Six-month grace period • Maximum repayment period between 10 and 25 years depending on repayment plan chosen • Deferment and cancellation provisions available

25. Temporary Suspension of Interest Subsidy During Grace Period • Recent change temporarily suspends government interest subsidies • For Direct Subsidized Stafford Loan first disbursed between July 1, 2012, and June 30, 2014 • Borrower responsible for interest during grace period.

26. Federal Perkins Loan • A low interest loan for both undergraduate and graduate students who have exceptional financial need • This is a campus-based loan, which means the student’s eligibility would be determined by each individual institution • Maximum annual loan amount • $5,500 – undergraduate students • $8,000 – graduate students

27. FederalPerkinsLoansContinued • Interest rate: 5% • 9-month grace period • Repayment period may be up to 10 years • Deferment and cancellation provisions available

28. Federal PLUS • Federal PLUS Loan • This is a loan taken out by a parent to help cover the cost of attending a college. • The amount varies according to the cost and other aid received. • Fixed interest rate of 7.9% • Principal may be deferred while student enrolled at least half-time • Also available to graduate students

29. Alternative Loans • These are student loans that go through a private lender • The amount of this loan can not exceed the cost of attendance minus other aid received at a particular school

30. Debt Management: How to minimize student loans • Ask the school about a college payment plan • Student working a summer or other job • Student might compare the cost of commuting verses the costs of living on campus

31. Employment • Allows student to earn money to help pay educational costs • A paycheck or non-monetary compensation, such as room and board • May be earned while enrolled or during breaks and summer periods

32. WorkOpportunities • Federal Work-Study • This is a federal program awarded to qualified students • A student may work on or off campus • Funds are to be used for college related expenses • Schools must use portion of funds for community service activities

33. Work Opportunities(Cont’d) • Institutional based work programs • Any type of job that is not paid for through work-study funds • Student should contact each individual school separately

34. THE APPLICATION PROCESS

35. Personal Identification Number (PIN) Use for: • Federal financial aid identification • Filing of Free Application for Federal Student Aid (FAFSA) • Loan entrance and exit counseling • Signing of loan promissory notes • Access to National Student Loan Data System (NSLDS) • More to follow

36. PIN Continued • Who needs a PIN: • Both student and a parent • Do not share the PIN • You may choose your own PIN • Obtaining a new PIN • Apply at www.pin.ed.gov • FAFSA on the web • FAFSA4caster • Already have a PIN • Request a duplicate at www.pin.ed.gov, PIN displayed online

37. Free Application for Federal Student Aid (FAFSA) • A standard form that collects demographic and financial information about the student and family • May be filed electronically or using paper form • Available in English or Spanish

38. FAFSA • FAFSA Information is used to calculate the Expected Family Contribution or EFC • The amount of money a student and his or her family may reasonably be expected to contribute towards the cost of the student’s education for an academic year • Colleges use EFC to award financial aid

39. FAFSA • May be filed at any time during an academic year, but no earlier than the January 1st prior to the academic year for which the student requests aid • Colleges may set FAFSA filing deadlines (varies)

40. FAFSA on the Web • Web site:www.fafsa.gov • 2013-14 FAFSA on the Web available on or after January 1, 2013 • Pre-Application Worksheet: • Available prior to January 1st • Questions follow order of FAFSA on the Web

41. Beware of www.fafsa.com

42. FAFSA on the Web • Good reasons to file electronically • Built-in edits to help prevent costly errors • Skip-logic allows student and/or parent to skip unnecessary questions • 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 renewal application process • Encouraged to use Internal Revenue Service (IRS) Data Retrieval

43. IRS Data Retrieval Tool • While completing FOTW, applicant 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 • Applicant chooses whether or not to transfer data to FOTW

44. IRS Data Retrieval Tool • Available early February 2013, for 2013-14 processing cycle • Participation is voluntary • Could reduce subsequent documents requested by financial aid office

45. Financial Aid Process Continued IRS Data Retrieval Process • Possible to input tax information onto FAFSA directly from IRS • Recommended to file federal tax return at least two weeks before filing FAFSA • Certain exceptions based on IRS tax filing status. Check FAFSA instructions for details • FAFSA filers using estimated tax information may be required to: • Provide official IRS Tax Transcript (IRS form 4506-T) to school • Correct FAFSA data via web using IRS Data Retrieval process • Copies of federal tax returns are generally no longer acceptable to verify data

46. FAFSA4caster • FAFSA4caster • www.fafsa4caster.ed.gov • Provides tips and estimates to help students prepare for college • Tips on funding college expenses • Federal financial aid estimates • Tips on college selection

47. FAFSA4caster Continued • Estimate your Federal Aid eligibility prior to completing the FAFSA • Uses projected income • Provides aid estimates • Makes it easier to apply for aid • Transfers data to the online FAFSA • Reminders sent to complete the FAFSA and update data • Data reviewed and students notified of any issues • Can request PIN

48. Avoid Errors! • Errors made in completing the FAFSA and/or supplemental forms may delay application processing and result in the loss of financial aid funds. • Please complete all forms carefully!

49. Frequent FAFSA Errors • Parent and student social security numbers • Divorced/remarried parent information • Income earned by parents/stepparents • Untaxed income • U.S. income taxes paid • Household size • Number in college • Real estate and investment net worth

50. Student Dependency Status • Born before January 1, 1990 • Married (Answer “Yes” if you are separated but not divorced) • Working on a master’s or doctorate program • Serving on active duty in the U.S. Armed Forces for purposes other than training • Veteran of the US Armed Forces • Have children who will receive more than half of their support from you between July 1, 2013 and June 30, 2014 • Have dependents (other than your children or spouse) who live with and receive more than half of their support from now and through June 30, 2014