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Bristol Eastern High School December 6, 2011

Financial Aid 101. For High School Students and Their Parents. Bristol Eastern High School December 6, 2011.

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Bristol Eastern High School December 6, 2011

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  1. Financial Aid 101 For High School Students and Their Parents Bristol Eastern High School December 6, 2011

  2. This presentation was developed by Stacey Musulin in concert with other staff members at the University of Connecticut Office of Student Financial Aid Services. This presentation uses materials created by the National Association of Student Financial Aid Administrators The information in this presentation was based on rules and regulations interpreted as of the date of its creation. Please note that programs may change over time. Also, many forms of aid are based on individual schools’ policies and available funding. Examples used in this presentation should not be considered guarantees of aid a student would receive. Contact your school for details about application procedures and eligibility questions.

  3. Topics We Will Discuss Tonight 3 • What is financial aid? • Cost of attendance (COA) • Expected Family Contribution (EFC) • What is financial need? • Types of financial aid • Free Application for Federal Student Aid (FAFSA) • Post-Application processes • Special circumstances appeals

  4. What is Financial Aid? 4 Financial aid consists offunds provided to students and families to help pay for postsecondary educational expenses

  5. Sources of Aid • Federal Department of Education • Largest source of aid • Students apply every year using Free Application for Federal Student Aid (FAFSA) • State Departments of Education • School/ Institutional sources • Private sources • Professional Organizations • Clubs • Employers

  6. CONCEPTS & DEFINITIONS

  7. What is Cost of Attendance (COA)? • Also known as the “budget” • Varies widely from school to school • Also dependent on student status (in-state vs. out-of-state, full-time vs. part-time) and housing • Combined direct and indirect costs related to educational program • Direct: Billed by the college (e.g., tuition, room & board) • Indirect: Anything not on the fee bill, but necessary to program (e.g., books, computer expenses, dependent care, mileage) • Indirect costs estimated by the college, may not be what student actually pays

  8. What are the costs? Tuition & Fees(billed) Room & Board (billed if on-campus) Transportation Books & Supplies + Miscellaneous Living Expenses Cost of Attendance (COA)

  9. What is the Expected Family Contribution (EFC)? 9 • Misnomer: EFC is NOT necessarily what a family will actually pay! • It is a measure of a family’s financial strength • Calculated using data from a federal application (FAFSA) form and a federal formula • Determines the types and amounts of aid that students are eligible to receive • Stays the same regardless of college • Exception: Special Circumstance appeal • Two components for dependent students: • Parent contribution • Student contribution

  10. EFC for Dependent Student (basic Federal Methodology version) Parental contribution from income & assets + Student contribution from available income & assets = Expected Family Contribution (adjusted if more than one dependent in college)

  11. Institutional Methodology • Some schools, through the CSS Profile application or their own financial aid applications, may require different information to calculate a separate, Institutional EFC • The Institutional EFC and those schools’ policies determine how institutional aid is distributed

  12. Financial “Need” NB: The official “Need” figure is not necessarily what is needed to pay the bill Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need (billed and miscellaneous non-billed expenses) (schools will use this figure to determine eligibility for need-based aid)

  13. “Need” Based on Cost

  14. Important Tips: Cost of Attendance • KNOW YOUR COST OF ATTENDANCE! • COA may be adjusted to meet individual students’ needs, 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 or receipt for computer purchase • Contact your school for details!

  15. TYPES OF FINANCIAL AID

  16. 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)

  17. Scholarship Searches • Guidance Counselor • Local businesses and civic organizations • State Dept. of Education • Places of employment • Student or parent • Internet - many sites, including: • http://fastweb.com • http://fastap.org • College or University • Academic, athletic, and other talent-based scholarships Important Tip: There are scholarship scams! Do not pay for scholarship searches/ applications. Important Tip: Start Early! Application deadlines and procedures vary depending on source of aid!

  18. Federal Grant Programs(FAFSA needed for all – Apply annually) • Federal Pell Grant • Federal Supplemental Educational Opportunity Grant (SEOG) • Federal Teacher Education Assistance for College and Higher Education (TEACH) Grant

  19. Pell Grant • Awarded to high-need, eligible undergraduates pursuing first Bachelor’s degree and certain students enrolled in post-baccalaureate teacher certification or licensing programs • Portable (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 2011-2012 academic year was $5,550

  20. Federal Supplemental Educational Opportunity Grant (FSEOG) • Need-based – High-need students a priority • Maximum award $4,000, but dependent on school packaging policy and available funds

  21. TEACH Grant • Schools choose whether to participate and what specific requirements are • U.S. citizen or eligible non-citizen • FAFSA completion required, but not need-based • Award amounts up to $4000 per year • Conditions • GPA 3.25 or qualifying score on admissions test • Sign “Agreement to Serve”: Teach in school serving low-income students (Title I) for 4 years within 8 years of leaving university for each agreement signed • Must teach in identified high-need field • If conditions not met, grant will turn into Unsubsidized Stafford loan with accumulated interest from time of initial disbursement

  22. Federal “Self-Help” Aid • Federal Work-Study (FWS) • Federal Perkins Loan • Federal Stafford Loan • Subsidized Stafford Loan • Unsubsidized Stafford Loan • Federal Parent PLUS Loan

  23. 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 organizations Tip: FWS earnings, if indicated specially on the FAFSA, do not count in the expected family contribution (EFC) calculation for the following school year!

  24. Federal Perkins Loan • School lends Federal funds • Student is borrower – no cosigner or credit check • No fees! • Amount dependent on funding and school policies but there are maximums • Interest rate: 5% • Does not accrue while in school or in grace period • 9-month grace period after graduation (or if student drops below ½-time status) • Repayment period may be up to10 years • Deferment and cancellation provisions available

  25. Federal Direct Stafford Loans • Student is borrower – no cosigner or credit check • Amount undergraduate and graduate students can borrow varies by academic year/ # of completed credits • ½ % fee charged • i.e., if $100 borrowed, $99.50 will disburse • No repayment required while in school at least ½-time • 6-month grace period after graduation or if drop below ½-time status • Maximum repayment period between 10 and 30 years depending on repayment plan chosen • Deferment and cancellation provisions available

  26. Federal Direct Stafford Loans • Subsidized: Must demonstrate “need” • Unsubsidized: Not based on “need” • Annual 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 subsidized • Total/aggregate limit for dependent undergrads: $31,000 • $23,000 maximum subsidized

  27. Federal Direct Subsidized Stafford • Need-based, dependent on Cost of Attendance (COA) and Expected Family Contribution (EFC) figures • Annual maximum eligibility to borrow dependent on student status • Interest Rate fixed 6.8% for undergrads as of the 2012-2013 school year • Interest does not accrue while in school at least ½-time or in grace period

  28. Federal Direct Unsubsidized 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 circumstances

  29. Parent Direct Plus Loans • Loan program for parents (biological, adoptive, or step-parent in household) of dependent undergraduate students • Applicants must be considered “credit–worthy” • Annual loan limit: COA minus other aid • Fixed interest rates • 7.9% Direct PLUS Loans • 2.5% fee charged • i.e., if $100 borrowed, $97.50 will disburse • Repayment begins 60 days after loan is fully disbursed for parent borrowers • Parents may defer payment while student is in school at least ½-time • Must apply for deferment with Dept of Education – not automatic! • Other deferments, forbearances, cancellations possible in special circumstances

  30. Financing Alternatives • Monthly Payment Plans • Allows payments to be spread over 10 months or less • Dependent on school • Contact school for information • Alternative/Private Loans • Applicants must be “credit–worthy” • 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 by individual lenders and subject to change

  31. Tips for Borrowing • Additional unsubsidized loan eligibility available for independent undergraduate and dependent students whose parents 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 study • Parents and students who will be applying for PLUS or private/alternative loans should: • Consider lower-cost/interest Federal loan options first • Consider the total cost of borrowing • Double-check credit scores (www.annualcreditreport.com) prior to filling out applications • Consider co-signing options for better interest rates

  32. THE AID APPLICATION PROCESS

  33. FAFSA (Free Application for Federal Student Aid) CSS Profile Application • Used primarily by private colleges • Pay for each report sent to a school plus small registration fee • https://profileonline.collegeboard.com Institutional Applications • Check school publications and websites The Forms • Required for all types of Federal and some state and institutional aid • www.fafsa.ed.gov • DO NOT go on the .com site – that’s a service for fee

  34. 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 the federal formula • Electronic version is preferred & faster • English and Spanish versions • Information is sent to secure Dept. of Education system called CPS • Did I mention it’s free?

  35. General Federal Student Aid Criteria • Must be enrolled or accepted for enrollment in eligible program of study • Must be pursuing degree, certificate, or other recognized credential • Must be U.S. citizen or eligible noncitizen • Must be registered with Selective Service (if male and required) • May not have eligibility suspended or terminated due to drug-related conviction

  36. General Federal Student 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 or loan funds • Must continue to make Satisfactory Academic Progress (as defined by school) • GPA , % of completed credits, maximum credit limit

  37. 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 2012-2013 academic year, the FAFSA is available on January 1, 2012 • The 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 on forms of aid that are limited

  38. First Step: Get a Student & Parent Financial Aid Personal Identification Numbers (PIN) • Web site: www.pin.ed.gov • Can request PIN now • Sign FAFSA electronically • May be used by students and parents throughout aid process, including subsequent school years’ FAFSAs and signing Federal Direct Loan MPNs Tip: Get student AND parent PINs now!

  39. FAFSA on the Web 39 • Website: www.fafsa.gov • 2012–13 FAFSA on the Web available on January 1, 2012 • FAFSA on the Web Worksheet: • Used as “pre-application” worksheet • Questions follow order of FAFSA on the Web

  40. Good reasons to file electronically 40 • 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

  41. IRS Data Retrieval 41 • Available early February 2012 for 2012–13 processing cycle • Participation is voluntary • Reduces documents requested by financial aid office • Not available when filing status is Married-Separately (all others possible)

  42. How IRS Data Retrieval Works • While completing FAFSA, the student and/or parent 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 • Student and parent choose whether or not to transfer data to the online FAFSA • These are separate transfers, one for the student and one for the parent

  43. FAFSA on the Web Worksheet • 4-page PDF booklet • Cautions: • Worksheet does not include all FAFSA questions • Section #s on Worksheet don’t necessarily coincide with section #s on paper FAFSA • Many families will be asked to provide additional information • Child Support Paid • Untaxed Income (including untaxed interest, IRA deductions, Child Support received) • Assets (NOT IRAs) Businesses/Investment Farm value Tips: • Using this worksheet might help to organize information prior to going online • Have this and supplemental information handy to make data entry easier

  44. What information to collect before starting the FAFSA process: • Social Security Numbers (student and parents) • Alien Registration # (permanent residents only) • Student’s driver’s license number • State residency information • Marital information (dates) • 2011 W-2 Forms (statement of earned wages) • May estimate for initial completion by deadlines • 2011 Tax forms (student & parent, if applicable) • May use last year’s data to estimate for initial completion by deadlines • Email addresses • Other income info (contributions to tax-deferred pensions/savings, child support paid/received, etc.) • Investment information (NOT IRAs) • School codes (also available on online FAFSA)

  45. General Tips for completing the FAFSA: • Read each question carefully • Some questions apply to students, others to parents – don’t mix! • Some questions tell you what income/ asset data NOT to include – be careful! • Double-check all data entry • If estimating income/ asset information, supply your best HONEST guess • You may go back and make corrections (possibly IRS Data Retrieval) if there are significant changes • When using tax forms, double-check the type of form you are using (1040EZ, 1040A, 1040) to reference the correct specific line numbers

  46. Section 1 – General Student Info • General student information • Citizenship information • Drug conviction status • Parent’s educational background • Grade level for the 2012-2013 school year • First year undergraduate • Type of Program? • Certificate/ Diploma • Associates degree • Bachelor’s degree TIPS FOR SECTION 1: • “Your” and “Yourself” refer to the Student! • Use full, legal names – no nicknames! • You are not a 1st year Graduate student - yet

  47. Section 2 – Dependency StatusTo determine whether or not parent information required on FAFSA • Students may be only considered Independent if they are • Born before January 1, 1989 • Married at time of application • Have children/ dependents for whom student provides over ½ financial support during upcoming year • In Graduate school (already earned a Bachelor’s degree) • On active duty stats in US Armed Forces • A veteran of the US Armed Forces • An orphan, Ward of the Court, or in foster care • anytime when age 13+ • Considered “unaccompanied youth” and “homeless” / “at risk of being homeless” • As determined by director/ professional staff of shelter or program any time on/after 7/1/2011 • Legally considered “emancipated minor” or in “legal guardianship” • NOTE: THIS IS DIFFERENT FROM A DIVORCED PARENT HAVING CUSTODIAL STATUS!!!! Tip: In extreme circumstances, dependency status may be appealed. Contact your school’s financial aid office for more details.

  48. Section 3: Dependent Student’s Parent Info • Household size & # in college • Dislocated Worker Status • Receiving unemployment benefits and unlikely to return to that field/job • Is “displaced homemaker,” laid-off, or lost own business due to economic conditions • Parent(s) Financial Data • 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, and does not have income from self-employment, own farm, alimony, or capital gains on a required Schedule D • Adjusted Gross Income for 2011 • Income earned from work (may be different than AGI) • Federal Income Tax for 2011 • Untaxed Income • Receipt of benefits from “means-tested programs” (e.g., SSI,TANF, WIC, Food Stamps) • Investment/Business information

  49. Tips for Section 3 – Parent Info • “Parents” do not include grandparents or other relatives/ friends/ legal guardians with whom the student may live, but who have not formally adopted the student • When parents are divorced, give information about the primary custodial parent (with whom the student lived longer during the past year) • To break a tie, give information about which parent provided more financial support • When parents are remarried, given information about the primary custodial parent AND that parent’s spouse (the stepparent in whose household the student lives most)

  50. Tips for Section 3 – Parent Info(continued) • Household Questions: • Include student and siblings if parent(s) will provide over half support from 7/1/2012- 6/30/2013 even if the student will not be living with the parent during that time (i.e., in college) • Include other dependents if they live in the house and if parent(s) will provide over half support from 7/1/2012- 6/30/2013 • # in college figure must be children/ dependents who are enrolled at least ½-time • Do not include parents in # in college even if the parents are in college • Income tax info: What was OWED, not paid! • Enter tax amount on 1040 – not necessarily what was on W-2 • Double-check all data entry!

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