Financial Aid Basics & New Regulations

1. Parts of this presentation come from the National Association of Student Financial Aid Administrators (NASFAA) Financial Aid Resource Guide for CounselorsLeAndra Ross, IUPUI Office of Student Financial Services

2. Financial Aid Basics & New Regulations

3. Must be enrolled or accepted for enrollment in an eligible program of study, pursuing a degree, certificate or other recognized credential. • Must be a U.S. citizen or eligible non-citizen. • If male student, must be registered with Selective Service. Can register on-line at: www.sss.gov. • Must not have had eligibility suspended or terminated due to a drug-related conviction while receiving financial aid. • Must have a valid social security number . • May not be in default of a student loan or owe repayment of a federal grant. • Must meet Satisfactory Academic Progress as defined by college (Quantitatively-GPA Qualitatively-credit hours taken and completed.) General Eligibility Requirements

4. TYPES: • Grants and Scholarships • Loans and Work – Self Help SOURCES: • Federal Government • State Government • College • Private Donors • Lenders Types and Sources of Financial Aid

5. Federal Title IV Programs • Grants/Scholarships • Supplemental Educational Opportunity Grant (FSEOG) (Campus-Based) • Pell Grant • T.E.A.C.H Grant Self Help • Work Study (FWS) (Campus-Based) • Perkins Loan (Campus-Based) • Direct Loan • Parent Loan for Undergraduate Students (PLUS Loans)

6. Awarded to eligible undergraduates pursuing first bachelor’s or professional degree and certain students enrolled in post-baccalaureate teacher certification or licensing programs. Considered an “entitlement” program. • Actual award amount based on Cost of Attendance, Expected Family Contribution (EFC), and Enrollment Status. Unlike other financial aid, other aid that the student qualifies for will not affect the amount of the Pell Grant. • $5,550 Maximum for 2012-2013 AY Federal Pell Grant

7. Changes made by the Consolidated Appropriations Act of 2012 limits the duration of a student’s eligibility to receive a Pell Grant • Beginning with the 12-13 AY • Six year maximum or 600% usage or 12 FT semesters • No grandfathering New Federal Pell Grant Regulation

8. Prepares students to teach in high-need field • Must teach 4 years at Title I school • School determines additional eligibility requirements • Reverts to loan if requirements of grant are not met • Not all schools participate T.E.A.C.H. Grant

9. Supplemental Educational Opportunity Grant, Work Study, Perkins Loan • Federal government provides a defined amount of money to the college, the college determines the recipients and award amount. • Some colleges choose not to participate in the campus-based aid programs, so when comparing award letters among institutions this point should be noted. Campus-based Federal Programs

10. Students pursuing first bachelor’s or professional degree • Awarded first to students with exceptional “need” • Awarded on a first-come, first-serve basis • Can be awarded to students attending less than full-time • Annual award maximum: $4,000 Federal Supplemental Education Opportunity Grant (FSEOG)

11. Allows student to earn a set amount of dollars for their education in exchange for employment. • Eligible employers may be on/off campus (federal, state, or local public agency). • Student usually awarded funding to work 15-20 hours per week. Studies indicate workload does not negatively impact student’s grades. • Schools must use a portion of funding offered for community service. Federal Work-Study

12. Another new regulation for 12-13 AY Ability to Benefit • Students who pass an ability-to-benefit test or who satisfactorily complete six credit hours will no longer be eligible for federal student aid. • Students who have a high school diploma or the equivalent, as well as home-schooled students, will continue to be eligible for federal student aid. • The loss of aid eligibility applies only to students who first enroll in a program of study on or after July 1, 2012.

13. Federal Loan Programs

14. Priority to students who show exceptional need. • Maximum annual loan • $5,500 undergraduate students/$27,500 maximum • Revolving loan fund – amount college has to lend depends upon repayments received – very little capital contribution from the feds each year. • Interest rate: 5% • Nine-month grace period. • Repayment period may be up to 10 years. • Deferment and cancellation provisions available. Federal Perkins Loan

15. William D. Ford Federal Direct Loan Program (Direct Loan Program) with funds provided directly by the federal government. • College determines loan eligibility and delivers loan proceeds to the student. Federal Stafford Loans

16. Federal Stafford Loans (Subsidized and Unsubsidized) • Subsidized Stafford: Must demonstrate need • Cost of Attendance – EFC – other aid • Unsubsidized Stafford: “Need” is not a consideration. • Base annual loan limits (combined subsidized and unsubsidized) • $3,500for 1st year undergrad • $4,500 for 2nd year undergrad • $5,500 for each remaining undergraduate year • Students have the option to apply for an additional unsub loan of $2,000 • Undergraduate Aggregate Loan Limits • $31,000 dependent student ($23,000 is subsidized) • $57,500 independent student ($23,000 is subsidized)

17. Additional Unsubsidized Stafford Loan • Additional unsubsidized loan eligibility for independent undergraduates and dependent students whose parents are unable to borrow under the PLUS Loan Program: • $4,000 per year for first and second years of undergraduate study • $5,000 per year for remaining years of undergraduate study

18. Federal Stafford Loans Interest Rates2012-2013 • Subsidized Loan – 3.4% fixed rate (7/1/2012 – 6/30/2013) • Unsubsidized Loan – 6.8% fixed rate

19. New Federal Stafford Loan regulation for 12-13 AY New subsidized Stafford loans made from July 1, 2012 to June 30, 2014 (12-13 & 13-14 AY) will not be eligible for subsidized interest benefits during the six-month grace period after a student graduates or falls below half-time enrollment. Interest will accrue during the grace period and will be capitalized if unpaid by the borrower.

20. Federal Parent PLUS Loan • Borrowers are parents of dependent. • Annual loan limit: cost of attendance minus other aid • Interest rate for a Direct PLUS loan is 7.9% fixed rate

21. Federal Parent PLUS Loan • Repayment begins 60 days after loan is fully disbursed - i.e. after second semester disbursement • Deferment provisions; only principal is deferred, but interest may be capitalized • Credit check required – if not passed, undergraduate student may be able to borrow additional unsubsidized Stafford loan funds

22. Other Government Resources • Veterans benefits • ROTC scholarships and/or stipends • Bureau of Indian Affairs (BIA) grants • Health and Human Services loan and scholarship programs • State Divisions of Vocational Rehabilitation • State grants, scholarships, loans, and work programs

23. Other Miscellaneous Sources of Funds • College need-based and non-need based programs: • Academic, athletic, merit, other talent-based scholarships, and need-based grants. • Private/Civic business grants and scholarships. • Scholarships/awards which are not federal, state, or college funded must be reported to the Financial Aid Office at the college so that they may be included in the student’s financial aid package. • Alternative education loans • IRS – federal tax income credits (tax credits offer dollar-for-dollar reduction in tax liability for education expenses (Hope Tax Credit – first and second year up to $1500 per student; and Lifetime Learning Tax Credit – tax benefit to 20% of tuition expenses up to $10,000.) Students should check with their accountant for all possible tax benefits available to them.

24. Free Application For Federal Student Aid (FAFSA)

25. Free Application for Federal Student Aid (FAFSA) • Provides a snapshot of the family’s personal and financial information (number in household, number in college, income and assets to determine financial strength) • Federal Methodology is applied to calculate Expected Family Contribution (EFC). • EFC = Parent Contribution (PC) + Student Contribution (SC) • May file the FAFSA by: • FAFSA on the Web (FOTW) at www.fafsa.gov. Parents and students must each get a PIN at www.pin.ed.gov prior to completing FAFSA on the Web. Helps to complete pre-application worksheet as well.

26. FAFSA Application Requirements • Submit the FAFSA prior to the college or state deadline, whichever is first. • To ensure maximum consideration for federal, state, and college aid, check with each school to determine: • + Required application materials • + Application deadlines

27. FIRST, must register for a Personal Identification Number (PIN) at www.pin.ed.gov The PIN is available immediately. Student/parent may self select a number. PIN is used for all federal resources. • If the student is dependent for financial aid purposes: BOTH student and parent must each apply for their own PIN . • Go to www.fafsa.gov (not fafsa.com!) To File FAFSA On The Web

28. FAFSA4caster • Free financial calculator that gives an early estimate of eligibility for federal student aid. • Can be completed by anyone who is not ready to file a FAFSA. • Once financial and other questions are answered, the tool displays  a worksheet to help student/parent determine the net cost of attending chosen school. • Important to remember that the FAFSA4caster is not an application for aid; it’s a planning tool. https://fafsa.ed.gov/FAFSA/app/f4cForm?execution=e2s1

29. FAFSA4caster

30. Financial Aid Package

31. May request any documentation needed to complete the awarding process • Citizenship • Selective Service registration • Verification • Bankruptcy • Loan default resolved • Etc. • Once documentation is received and processed, financial aid awarding/packaging can occur What happens after the school receives the FAFSA

32. Packaging Objectives • Finding the best combination of aid to meet a student’s financial need given limited resources and constraints • Distribute resources fairly and equitably • Set realistic self-help expectations • Offer relevant work experience • Recruit students

33. Considerations in Packaging • Type and amount of funds available • Institutional priorities • Length of academic year • Cost of attendance • Community service • Programs requirements • Student’s year in school • Academic major • Availability of other resources • Debt level of students • Family financial strength • Enrollment for multiple start dates

34. Generally speaking, a college will construct a financial aid package in this order: • 1st: gift aid from the federal and state programs for which a student is eligible; • 2nd: college and/or private donor gift aid (can include non-need based aid); and • 3rd: self-help programs (loan and work) are added last. • But, each college will have its own packaging philosophy, subject to aid program regulations and availability of funds Construction of the Financial Aid Package

35. If a “full-ride” package is presented to a student for a college which is not a good personal fit or does not offer the academic programs in which the student is interested, the “economics” at play may lead the student to accept that package and enroll at the college anyway. • An unhappy student is not likely to complete the term and that is time and money that can not be recovered. No Matter How Good The Financial Aid Package…..

36. Searching for Scholarships

37. Scholarship Sources • Institutional • Federal • State • Private

38. Federal Sources • U.S. Department of Education • www.students.gov • Click “Scholarship Searches” • U.S. Department of Health and Human Services • http://www.hrsa.gov/loanscholarships/index.html • U.S. Armed Forces • http://aid.military.com/scholarship/search-for-scholarships.do

39. State Sources • Check with your state’s financial aid division • For Indiana, Division of SFA – Grants and Scholarships Overview • http://www.in.gov/ssaci/2359.htm • For more information on the grant/scholarships offered by SFA: • Contact SFA’S office at AHDC40@sfa.che.in.gov • Or call 317-232-2355 or 1-888-528-4719

40. Foundations • Community organizations and civic groups • Religious or ethnicity-based organizations • Local businesses and employers • Organizations related to student’s field Private Sources

41. Private Scholarship Search Sites Free Internet scholarship search engines: • FastWeb: www.fastweb.com • College Board: www.collegeboard.com • CollegeNet: www.collegenet.com/mach25

42. Avoiding Financial Aid Fraud

43. Fraud Warning Signs • “Buy now or miss this opportunity” • “We guarantee you’ll get aid” • “I’ve got aid for you; give me your credit card or bank account number” • Social Media messages that may be too good to be true

44. Common Fraud/Scam Complaints • Paying for “guaranteed financial aid” and not receiving as much aid as you paid for • Remember that loans are considered financial aid • Paying to file the FAFSA • Always remember the first “F” in FAFSA stands for “Free” • Make sure you use www.fafsa.gov

45. Resources for Avoiding Financial Aid Fraud • Knowledge • Awareness of free resources prevents fraud/scam opportunities • US Department of Education Website • Federal Trade Commission Website • Office of the Inspector General hotline • Institution’s Financial Aid Office

46. Knowledge • College Goal Sunday • Free, on-site professional assistance completing the FAFSA • Typically held in February • Nationwide • www.collegegoalsundayusa.org • ISFAA Financial Aid Nights • Regional Coordinators • Check w/ your state or region for FA associations

47. Federal Resources • US Department of Education Website • www.ed.gov/misused • Federal Trade Commission Website • http://www.ftc.gov/bcp/edu/microsites/scholarship/index.shtml • Office of the Inspector General hotline • 1-800-MIS-USED

48. Federal Student Aid Information for Counselors http://www.fsa4counselors.ed.gov/PORTALSWebApp/cotw/main.jsp • Federal Student Aid Information (General Public) http://studentaid.ed.gov/ • 2012-2013 FAFSA on the Web Worksheet (Available in Spanish and in Braille) Order: www.FSAPubs.org or call 1-800-394-7084. Shipping will begin in October • 2012-2013 Free Application for Federal Student Aid (FAFSA) (Available in Spanish or Braille). Order: www.FSAPubs.org or call 1-800-394-7084 • Counselors and Mentors Handbook on Federal Student Aid: A Guide for those advising students about Financial Aid for Postsecondary Education: Available to order NOW! Order: www.FSAPubs.org or call 1-800-394-7084 Common Websites/Phone Numbers or Reference Materials Available

49. Questions?