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Your Presenter. Fran C. McKeown Higher Education Access Partner Southeast Region of PA fmckeown@pheaa.org. Financial Aid 101. Paying for Postsecondary Education. T hings to take away…. Know where the money comes from and how you apply for it File the FAFSA Know your DEADLINES

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  1. Your Presenter • Fran C. McKeown • Higher Education Access Partner • Southeast Region of PA • fmckeown@pheaa.org

  2. Financial Aid 101 Paying for Postsecondary Education

  3. Things to take away… • Know where the money comes from and how you apply for it • File the FAFSA • Know your DEADLINES • Be a Smart Consumer

  4. What is Financial Aid? Financial aid consists of funds provided to students and families to help pay for PostsecondaryEducational expenses

  5. Where Does the Money Come From? • Federal Government • State Government • School/Colleges • Private Scholarship Sources: • HS Counselors • Clubs and organizations • Employers • Internet scholarship searches

  6. Types of Financial Aid • Merit-Based Aid – scholarships usually based on: - academic ability, special talent or achievement, program of study, family or ethnic background • Gift Aid – FREE MONEY (grants and scholarships) -Need-Based Aid (usually based on - income, assets, other factors) • Self Help Aid – strings attached -Loans and work programs

  7. Basic Principles • Joint responsibility of the student and parent(s) to pay, to the extent possible • Need-based financial aid subjected to federal formula to determine financial need • Not all families qualify for need-based aid. There is no guarantee that you will get any free money to pay for higher education

  8. Financial Aid 101 College Fund FORMS

  9. FAFSAFree Application for Federal Student Aid FAFSA is the primary means of filing for financial assistance to attend postsecondary school A Federal formused to determine: Expected Family Contribution (EFC), Need and Eligibility for: • Federal programs (Pell Grants, Work-study, Student Loans) • State programs(PA State Grant, State Work-Study and other special programs) • School programs(Need-based grants and scholarships) Must file a FAFSA to be eligible for these programs each year a student attends school

  10. Applying for Financial AidKnow what Financial Aid Forms your School Requires • FAFSA (Free Application for Federal Student Aid) • REQUIRED FOR: Federal Aid, PA State Grant, College Aid • and some Private Scholarships • STATE GRANT FORM (SGF) Required for First Year Students and may be requested for subsequent years. • CSS PROFILE Form Required for some postsecondary schools and scholarship organizations • INSTITUTIONAL AID Forms Internal forms at the school

  11. FAFSA Confirmation Page Apply for your State Grant From the FAFSA Confirmation Page Start your state application to apply for Pennsylvania state based financial aid CLICK HERE TRANSFERS FOTW data to the State Grant Application

  12. Online State Grant Application • Additional questions needed to determine PA State Grant eligibility • enrollment status (full time/part time) • value of PA 529 College Savings Program • program of study for students in vocational programs • employment status • Link off the FAFSA Application CONFIRMATION Page! • Students will be able to view their status on Account Access available at pheaa.org about three days after completing the FOTW. • Missed the link or it wasn’t available? Link in an email sent to student/parent from PHEAA Go to PHEAA.org; State Grant Program; Complete Form • Help screens are available for all questions

  13. All Done….. After mailing! Print & Mail You MUST print, sign and mail in the Grant Confirmation Page to complete the process.

  14. When and How to Apply Page 10 PA Student Aid Guide The FAFSA may be completed anytime on or after January 1 of the upcoming Award Year • For 2013/2014 – that would be Jan. 1, 2013 • Will be rejected if you apply BEFORE Jan 1 Two ways to complete the FAFSA: • ONLINE at www.FAFSA.Gov(NOTE: .GOV ) • Safe, Secure, Fast,Skip Logic, Built In Edits • FAFSA on the Web Worksheet (optional) • FAFSA 4Caster, to practice • print the confirmation page when complete • Paper FAFSA (…slow….) • call 1-800-433-3243 • download PDF at www.fafsa.gov

  15. Know Your Deadlines!!!!! Know all of your state and school/college deadlines and file the FAFSA by the earliest deadline. • 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

  16. www.FAFSA.GOV • New FAFSA Entry • Renewal Application Entry • FAFSA Corrections • Providing Signatures • Continuing a Saved FAFSA • Viewing Transaction History

  17. Personal Identification Number (PIN) • Sign FAFSA electronically • Not required, but speeds processing • Website: www.pin.ed.gov • BOTH Student and one Parent sign electronically with PIN • Create your own PIN or have one assigned • Do NOT lose it. Write it down and store in a safe place • Do NOT share it with anyone • Links for PIN are within the FAFSA form too

  18. Whose Information Goes on the FAFSA • Dependent Student and Parent(s) - yes - Independent student – only their info (& Spouse) • Divorced or separated parents (the parent that provides more than 50% of students support) - yes • Stepparents - yes • Adoptive parents - yes • Foster parents - no • Legal guardians - no • Anyone else the student is living with - no

  19. Documents Needed to Complete the FAFSA • Applicants may need the following items: • 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: Veteran’s non educational benefits, child support paid/received and workers compensation. • Alien registration or permanent resident card (if not a US citizen)

  20. FAFSA TIPS • Don’t mix answers for student and parent information • Ensure SSN accuracy • Gender question is optional – answer it! • Have federal income tax and other related information • as references. • It’s OK TO ESTIMATE if taxes aren’t filed yet • Updates/Corrections can be done later with • IRS Data Retrieval Tool • Don’t delay

  21. IRS DATA Retrieval Tool The IRS Date Retrieval Tool 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.

  22. IRS Data Retrieval ALSO in Student Section if student is filing taxes

  23. Special Circumstances If things change…. • Recent divorced or separated parents • Recent death or disability • Reduced income • Contact the school and ask for a special consideration AND Contact State Grant Division at PHEAA

  24. Financial Aid 101 Financial Aid Forms are Filed – What’s Next?

  25. After the FAFSA…. Page 11 PA Student Aid Guide Department of Education’s Central Processing System uses the information to calculate and create your Need Analysis • Expected Family Contribution (EFC) is determined • Student Aid Report or Acknowledgment sent to student (review and make necessary corrections) • Information is sent to schools/colleges listed on the FAFSA, and to PHEAA • Schools listed on FAFSA will send financial aid award letters upon acceptance • Compare award letters • Determine true cost of school

  26. What is Need Analysis? Schools use SAR calculations to determine a student’s financial need through a process called “need analysis” Need analysis has two components • The student’s Cost Of Attendance at the chosen institution • The student’s Expected Family Contribution (EFC).

  27. How is the EFC calculated?Expected Family Contribution The EFC is a number derived from a federal formula which considers a family’s income, assets, and other factors when determining what a family can reasonably be expected to pay each year. Although, it is NOT the amount you will pay each year. • Parent contribution + student contribution = EFC • Bulk of EFC comes from income • Home, personal property, qualified retirement funds, and value of life insurance is excludedfrom assets • Asset protection allowance (based on age of older parent, or the parent if single parent household) • Student income contribution = 50% of amount over $6,130 • Student asset contribution = 20% of assets • Parent contribution divided by number of children in college at the same time

  28. Cost of Attendance Page 7 PA Student Aid Guide The Financial Aid Office will include the Direct Costs and Indirect Costs in determining the student’s annual cost of attendance at that school: • Direct College Costs Indirect College Costs • Tuition -> Transportation • Required Fees -> Personal expenses • Room -> Dependent care expenses • Meals • Books and Supplies

  29. Calculating Financial Need Schools/colleges receive financial aid information and calculate financial need School cost……………………. $26,000 EFC…………………………….. - 3,000 Financial need………………… $23,000 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.

  30. Packaging Example Cost$15,000 $25,000 $45,000 EFC $ 3,000 $ 3,000 $ 3,000 Need $12,000 $22,000 $42,000 Free Money $ 6,000 $ 8,000 $18,000 Loans $ 5,500 $ 7,000 $ 8,000 Work$ 0 $ 2,000 $ 3,000 Total Aid$11,500 $17,000 $29,000 Gap (Cost – Aid) $ 3,500 $ 8,000 $16,000 Actual Cont. (Cost – Free Money)$ 9,000 $ 17,000$27,000

  31. Financial Aid Award Letter Page 14 PA Student Aid Guide Is an official notification from the 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.

  32. Reviewing the Financial Aid Package After reviewing their packages, students should be sure they know and understand the following: • How much of the financial aid is free money? • Which awards are based on need, and which are based on merit? • Are there any conditions on the free money; in particular, is there a GPA requirement? • Will awards change from year to year? • Will institutional awards increase as tuition increases? • Will loans be needed? If so, how much?

  33. Financial Aid 101 Federal, State and College Financial Aid Programs

  34. Federal Programs Page 22; PA Student Aid Guide Pell Grant ………….... up to $5550 (2012-13) Amount determined by Need Calculations and awarded to most financially needy students Campus-based aid – amounts determined by FAO • FSEOG…………………… up to $4000 • Perkins Loan ………….... up to $5500 (fixed 5% interest rate) • Federal Work Study …… FAO determines For most programs, student must be enrolled at least half-time and meet satisfactory academic progress.

  35. Federal Programs Page 22 PA Student Aid Guide • TEACH Grant …… up to $4000 Grant becomes a loan if teaching commitment is not met. • Iraq and Afghanistan Service Grant • DEA (US Dept of Veterans Affairs, Dependents Education Assistance) • Vocational Rehabilitation Program (students with disabilities) • Americorps(for details, go to www.americorps.gov)

  36. PA State Grant Program :Page 16; PA Student Guide • PA State Grant* • Full-time, in PA…...….up to $4,348 • Part time, in PA………up to $2,174 • Out of state….. Up to $600 in CT, DE, MA, 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

  37. Other State Programs Page 20; PA Student Guide • State Work-Study - job related to major • Educational Assistance Grant (EAP) – National Guard • Chafee Education and Training Grant – administered by the Department of Public Welfare • Blind or Deaf Beneficiary Grant • Postsecondary Educational Gratuity Program (PEGP) • Partnerships for Access to Higher Education (PATH) • Pennsylvania Targeted Industry Program (PA –TIP) For details visit www.pheaa.orgor refer to the PA Student Guide

  38. Borrowing for Higher Education • Always consider federal loans first. They have the best interest rates and repayment provisions. • Borrow in the following order: • Perkins Loan (5% fixed) – student • Stafford Loan (max of 6.8% fixed) – student • PLUS Loan (7.9% fixed) – parent and graduate student • Alternative Loan (variable rates) – last resort

  39. Federal Student Loans Page 25 PA Student Aid Guide On March 30, 2010, President Obama signed the Health Care and Education Reconciliation Act of 2010, which mandates all schools process loans through the Federal Direct Loan Program (FDLP). • Effective July 1, 2010, all federal student loans are funded directly through the U.S. Department of Education. • Students and parents may apply for Direct Stafford and Direct PLUS loans through their post-secondary school’s website or at www.studentloans.gov • ALL students are eligible for Federal Student Loans • Must sign the Master Promisory Note; Entrance Counseling

  40. Federal Direct Loan Programavailable to ALL students REGARDLESS OF NEED Page 28 PA Student Aid Guide • Stafford student loan: (student’s name) • Subsidized= no interest in school status; accrues in grace • 3.4% fixed rate beginning 7/1/13, 1% fees …one more year ….. Unsubsidized= interest accrues in school and grace • 6.8% fixed interest rate, 1% fees • Parent PLUS loan (parent’s name) • Principal payment may be deferred while student attends • 7.9% fixed interest rate; 4% fees • Graduate PLUS loan (grad student’s name) • Interest rate = 7.9%; 4% fees

  41. Federal Direct Stafford Loan Program Borrowing Limits Page 27 PA Student Aid Guide

  42. Additional Unsubsidized Option

  43. Federal Direct PLUS Loan Page 29 PA Student Aid Guide For Parents or Graduate level students • Can borrow up to the Cost of Attendance • In the Parent’s name; for the Student’s costs • Education Cost minus Financial Aid equals the amount of which you can borrow • No Debt-to-Income test, Only lenient Credit Check • Fees will be deducted from disbursements • Principal payment can be deferred while student is in school (interest will continue to accrue). • 10 year repayment term or optional repayment programs

  44. Federal Direct PLUS Loan • Repayment begins immediately, but can defer repayment until 6 months after student graduates or drops below half-time enrollment. • If defer payment – encouraged to make interest payments • All loans must be repaid within 10 years • PLUS loan • Interest rate = 7.9% • $10,000 = $125/mo; $40,000 = 500/mo; • 2 or 3 kids???

  45. Alternative/Private Education Loans From private lenders or financial institutions • Student borrows in his or her own name • Co-signers usually required. Some loan products have a co-signer release option • Can borrow up to the Cost of Attendance • Based on credit scores and debt-to-income ratio • Repayment may be deferred until education completed • Fees, interest rates, loan amounts, and repayment requirements and options vary by lender • Compare loans before making choices to see what’s right for you READ THE FINE PRINT

  46. Financial 101 Tips and Strategies

  47. Reduce the Need for Financial Aid • Graduate on Time • 4 year for Bachelors Degree / 2 year Associates Degree • Research and find the right school and major • Minimize transfer and change of major • Earn college credits while in high school through AP courses, Vo-Tech, and dual enrollment • Consider options for cutting costs (commute, take summer classes, buy used books, make smart meal plan choices • 2 + 2 Strategy (2 years at a Community College then transfer credits to a 4 year school) • 3 + 2 (Master’s Degree)

  48. Beware of the 5 Year Plan! Things like double majors, study abroad, internships, and athletics can enhance the educational experience and improve marketability. But it comes at a price: • Total cost just increased by 25%. • The fifth year likely costs 20% more than the 1st year did. • Loss of institutional funds if they only allow for four years. • Loss of PA State Grant if all four years have been received. • Reduction in student borrowing capacity if maximum loans received in the first four years (only $4,000 left). • Talk it over and plan ahead!

  49. Be a Smart Consumer Do your Research… • What is the Net Price that you will pay? Use the Net Price Calculator at schools student is interested in attending to get an estimate of your “net price” to attend. Net Price calculator available on each school’s website. • What is the graduation rate? • What is the average debt of graduates? • What is the repayment rate and default rate of the school’s borrowers? • What is the employment outcome for recent graduates?

  50. Financial Aid 101 Final Thoughts

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