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Financial Aid 101 De-Mystifying the Process

Learn about the different types of financial aid available, including scholarships, grants, loans, and employment opportunities. Understand the difference between merit-based and need-based aid. Find out how to apply for financial aid and avoid common mistakes on the FAFSA. Get helpful resources and information to navigate the financial aid process.

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Financial Aid 101 De-Mystifying the Process

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  1. Financial Aid 101De-Mystifying the Process John Iacovelli Dean of Enrollment “emeritus”

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

  3. Sources of Aid • Federal • State • The University/College • Private • Civic organizations (i.e., local Rotary Club, parent’s employer, high school awards, etc.)

  4. Types of Financial Aid • Scholarships • Grants • Loans • Employment Opportunities

  5. Merit-Based Aid vs. Need-Based Aid • Merit-Based Aid - aid given to students strictly on the basis of merit. May be based on: • Academic record • Special characteristics • Skills or talents • Involvement • Does not have to be repaid; may be renewable from year to year. • Need-Based Aid - aid awarded to students on the basis of financial need. Re-evaluated each year as financial situations may change.

  6. Grants • Federal • PELL • State • TAG • EOF • Institutional • Private Grants and Scholarships

  7. Loans • Federal Direct Loan Program • Subsidized Loan (5.05%) • Unsubsidized Loan (5.05%) • PLUS (4.24%) • Loan Limits: • First-year students – $3,500 • Second-year student – $4,500 • All other grade levels remain at $5,500 • All students eligible for additional $2000 of unsubsidized loan.

  8. NJ Class Loan • NJ Class Supplemental Loan Program • Low fixed interest rates beginning with: • 10 Year Repayment Loan of 4.79% • Immediate Repayment of Principal & Interest Only • 15 Year Repayment Loan(s) of 5.60% • Immediate Repayment of Principal & Interest Only • Immediate Repayment of Interest Only, while in school • 20 Year Repayment Loan of 7.20% • Full deferment until out of school

  9. Application Process • Submit the Free Application for Federal Student Aid (FAFSA) prior to the college’s deadline • Early FAFSA: Apply as early as October 1st • To ensure maximum consideration for federal, state, and institutional aid, check information from each college to determine: • Required application materials • Application deadlines

  10. Free Application for Student Aid(FAFSA) • FAFSA on the Web at www.fafsa.gov • New federal regulation: Prior Prior Year (PPY) Students can begin the FAFSA process starting October 1st • Collects family’s personal and financial information used to calculate the student’s EFC

  11. A FAFSA Must Be Filed on the Web

  12. Common Mistakes Madeon the FAFSA • Correct name, social security #, birth date • Number of people in the household • Divorced/remarried households • Parental and student assets • Worth of a second home • “Zero is a number”Please note: for parents who complete a FAFSA from a completed tax return, the IRS Data Retrieval Tool (DRT) will avoid income mistakes.

  13. Definition of Need Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need

  14. What is EFC? • Basis of financial aid package • EFC is determined by a federal formula that calculates need via the FAFSA • EFC & Financial Need are guidelines used by schools to determine a financial aid package • EFC not necessarily equal to the out-of-pocket cost of the family

  15. Cost of Attendance • Tuition and fees • Room and board • Books and supplies, equipment, transportation, and miscellaneous personal expenses • Study abroad costs • Dependent care expenses • Expenses related to a disability • Expenses for cooperative education program

  16. 1 X 2 Y 3 Z EFC EFC Cost of Attendance (Variable) Expected Family Contribution (Constant) Need (Variable) Need Varies Based on Cost

  17. The Cycle of Financial Aid Oct-March • Student /Parents complete FAFSA Nov-April • School sends award letter June-July • School sends Fall semester bill

  18. HESAA and Federal Student Aid Services • HESAA Web Site www.hesaa.org • HESAA Financial Aid Hotline • 800-792-8670 8:00 am – 8:00 pm Monday thru Thursday 8:00 am – 5:00 pm Friday • NJBEST – College Savings Plan • Federal Aid Website and Toll-free Numberwww.studentaid.gov/completefafsa1-800-433-3243

  19. Additional Resources • Services and Forms: Fin Aid! “The SmartStudent Guide to Financial Aid”: www.finaid.org FastWeb www.fastweb.com FAFSA on the Web: www.fafsa.gov“Practice” FAFSA:www.fafsa4caster.ed.gov

  20. Student Loan Debt = $1.4 TRILLION

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