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Paying For Higher Education

Karla Weber Financial Aid Advisor Office of Student Financial Aid University of Wisconsin – Madison Karla.weber@finaid.wisc.edu. Paying For Higher Education. 2014-2015 Academic Year. Tonight’s Discussion. Financial Aid & College Cost Basics Types of Financial Aid Available

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Paying For Higher Education

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  1. Karla Weber Financial Aid Advisor Office of Student Financial Aid University of Wisconsin – Madison Karla.weber@finaid.wisc.edu Paying For Higher Education 2014-2015 Academic Year

  2. Tonight’s Discussion • Financial Aid & College Cost Basics • Types of Financial Aid Available • The FAFSA & Application Process • Questions

  3. WARNING!!!

  4. Financial Aid Regulations • Federal and state statues and legislation • Establish unique eligibility requirements • Applicable to ALL schools that receive funding

  5. Financial Aid & College Cost Basics Need Analysis Cost of Attendance Expected Family Contribution Financial Need

  6. Principles of Need Analysis • Financial aid narrows the gap between what the family can pay and the cost of education • To extent they are able, parents have the primary responsibility to pay for their dependent children’s education. • Students have a responsibility to contribute • Evaluated in current financial situation • Ability to pay evaluated in an equitable and consistent manner • Recognize that special circumstances can have major financial implications.

  7. What are the costs? Tuition and Fees + Room and Board + Transportation + Books and Supplies + Miscellaneous Living Expenses =Cost of Attendance (COA) ** Direct versus Indirect Costs**

  8. 2013/14 Estimated Costs of Attendance (approx)

  9. Expected Family Contribution (EFC) • Determined by filing the FREE Application for Federal Student Aid (FAFSA) at www.fafsa.gov (NOT .com!) • Ways to think about the purpose of the EFC • An index number used to calculate eligibility for aid • NOT an estimate of “extra” cash available • NOT what you will pay for school • Stays the same regardless of college/university • What WILL you be expected to contribute? • Whatever costs the financial aid is unable to cover

  10. EFC Calculation • A complicatedformula established by Congress – sometimes referred to as Federal Methodology • Uses both parent AND student information (for dependent students) • Has income and asset protection allowances • Ranges from 0 to 999,999 # in family Taxes Paid # in college Assets Income FAFSA Expected Family Contribution (EFC)

  11. Financial Need Cost of Attendance (COA) - Expected Family Contribution (EFC) = Financial Need

  12. Need Varies

  13. Types of Financial Aid Sources of Aid Gift Aid Versus Self Help

  14. Three Primary Sources • US Department of Education • The federal agency that provides funding in the form of grants, work study, and loans. • State • Higher Educational Aids Board (HEAB) manages aid for Wisconsin • Administers state scholarships, grants, loans, college savings programs. • Colleges & Universities • May offer their own scholarships, grant, and loan programs with each setting its own requirements • Availability eligibility varies WIDELY between schools

  15. Types of Financial Aid • Grants • Federal – Pell Grant, Supplemental Educational Opportunity Grant (SEOG) • State – WI Higher Ed Grant, WI Tuition Grant • Scholarships – Institutional, Community, Business, Organizational • Work Study/Other Employment • Loans • Subsidized/Unsubsidized Federal Direct Loans • Perkins Loan • Parent Loan for Undergraduate Students (PLUS) • Private/Alternative Loans Gift Aid - FREE Self-Help Aid

  16. Federal Pell Grant • Pell Grant • Based on EFC range; this current year 0 – 5,081 • Award amount varies based on EFC and enrollment status • Maximum award for 2013/14 - $5,645 • Lifetime Pell Grant eligibility • decreased from 18 semesters (900%) to 12 semesters (600%)

  17. State of WI Funding - HEAB • Wisconsin Higher Education Grant (WHEG) or Wisconsin Tuition Grant (WTG) • UW System, Technical and Tribal Colleges • Independent Colleges & Universities (does NOT include for-profit institutions) • Academic Excellence Scholarship • Questions/Issues? Nancy.wilkison@wisconsin.gov • WI Covenant • Questions/Issues? Garth.beyer@wisconsin.gov • Minnesota-Wisconsin Reciprocity – MUST apply • http://heab.state.wi.gov/reciprocity • Other various programs – most require add’l application – see website • http://heab.state.wi.us

  18. Wisconsin Covenant • Senior Checklist • A confirmation form signed by student, a parent, and the Primary Contact (School Counselor/Principal) • A record of service form • Two letters of recommendation, if necessary due to a suspension • Make copies! Certify mail! • Min award $250, Max award $2,500 for full-time enrollment • Important Dates • December 1st – Confirmation forms made available • January 1st – Confirmation process begins • April 1st– Confirmation/FAFSA deadline!

  19. Scholarships • Colleges/Universities • Need-based & non-need based: Academic, athletic, music, or other talent • Alumni Organizations • Civic/Community Organizations • Churches, PTA, Elks, Kiwanis, cultural leagues, etc • Private businesses • Wal-mart, Best Buy, Dell, Gates Foundation, etc • Parents’ and/or students’ employers or labor unions

  20. FREE Scholarship Searches • Department of Labor, Employment, and Training • www.careerinfonet.org/scholarshipsearch • College Scholarships: • www.collegescholarships.org • FastWeb: • www.fastweb.com • High School Counselors • Local community or library resources

  21. Employment • Federal Work Study (FWS) • Must show a specified amount of need • Part-time employment may be on or off campus (public/private non-profit) • Receive funds through a regular paycheck • Earnings do not count against future aid eligibility • Institutional Work Programs • Off campus/summer employment

  22. Loans • Perkins Loan • Priority to students who show “exceptional need” as defined by the school and the amount received varies • Subsidized – Gov’t. covers interest as long as student is at least ½ time. • Fixed Interest Rate: 5% • 9 month grace period/10 year standard repayment period • State Loans • Institutional Loans • Vary in availability and eligibility depending on college/university • Private/Alternative Loans

  23. Federal Direct Loans Regardless of income, EVERY student qualifies if they meet the basic eligibility requirements! • William D Ford Federal Direct Loan Program (DL) • Subsidized: MUST demonstrate financial need • Unsubsidized: Not based on need (EVERY student is eligible – no matter what!!) • EFFECTIVE July 1,2013 for NEW BORROWERS 150% Rule for Subsidized Direct Loans • If a borrower exceeds the total enrollment allowed for their program, they become ineligible for any additional subsidized loans, AND • They become responsible for the accruing interest on all previously borrowed subsidized loans from that point forward.

  24. Federal Direct Loans - Benefits • No credit score or co-signer requirements • Currently low and fixed interest rate • In-School Deferment: student must maintain at least ½ time enrollment • 6 month grace period • Repayment period between 10 & 30 years depending on repayment plan • Deferment and cancellation provisions available

  25. Direct Loan Amounts • Annual Loan Limits • Freshmen - $5,500 total ($3,500 max subsidized) • Sophomore - $6,500 total ($4,500 max subsidized) • Junior/Seniors - $7,500 ($5,500 max subsidized) • Grad Student - $20,500 (as of 12/13 no longer have subsidized eligibility) • Career Maximums • Dependent Undergrads - $31,000 ($23,000 max subsidized) • Independent Undergrads - $57,500 ($23,000 max subsidized) • Grad & Law - $138,500 • Med, Vet Med, Pharm, Dentist - $224,000

  26. Direct Loan Interest – NEW! EFFECTIVE July 1, 2013 – Bipartisan Student Loan Certainty Act of 2013 • ALL federal loan interest rates will be tied to the 10-Year Treasury note with a statutorily defined add-on • Fixed/Variable Rate – interest rate will adjust each year, but will remain fixed once applied to a specific loan. • There are interest rate caps • Undergrad Direct Loans 8.25% • Graduate Direct Loans 9.50% • PLUS Loans 10.50%

  27. Direct Loan Interest – NEW!

  28. Direct Loan Fees – NEW! • All federal loans have an Origination Fee that is charged at the time of disbursement • Due to Sequestration – any loans disbursed after December 1, 2013 • Federal Direct Loans (Subsidized & Unsubsidized) • 1.072% • Federal PLUS Loans (Parent & Grad) • 4.288%

  29. Repayment Basics • National Student Loan Data System • www.nslds.ed.gov • Repayment Plans • Standard(10 years, minimum $50/month) • Graduated (10 years, low payments gradually increase) • Extended (Up to 25 years, fixed or graduated payments) • Income Based (Up to 25 years, 15% of discretionary income) • Pay As You Earn (Up to 20 years, 10% of discretionary income) • Forgiveness Programs • Teacher • Public Service • Nursing

  30. Parent Loan for Undergrad Students (PLUS) • Must pass a basic credit check • Annual Loan Limit: COA minus other accepted aid • 2013/14 fixed interest rate – 6.41% • Origination Fee – 4.288% • 60 day grace period – “opt-in” to in-school deferment • Compare to Private/Alternative Loans • Additional unsubsidized loan eligibility for undergrads whose parent was denied PLUS: • $4,000 per year for 1st and 2nd year students • $5,000 per year for 3rd and 4th year students

  31. www.studentloans.gov

  32. Borrowing Tips • Consider ability to make monthly payments when you leave school • Loan repayment calculators available online • Shop around! Choose any participating lender. • Compare the differences: Fixed/Variable, co-signer requirements, min/max amounts, deferment and/or forbearance options, fees, repayment period, etc • Borrow only what you need for direct educational expenses and avoid borrowing for discretionary spending • ALWAYS check with the Financial Aid Office BEFORE pursuing to make sure all other options have been exhausted

  33. Other Resources • Other Government Related • AmeriCorps www.americorps.gov • Veteran’s benefits/tuition waivers • ROTC scholarships and/or stipends • Bureau of Indian Affairs Grants • Dept of Vocational Rehab (DVR) • School payment plans – may or may not be available • Home equity loans • Life insurance policy loans • Retirement Plan loans • 529 Education Savings Plans (EdVest) www.edvest.com

  34. The Application Process FAFSA IRS Data Retrieval Common Questions/Confusion Special Circumstances Comparing Offers

  35. College Scholarship Service/PROFILE • Used by SOME colleges/universities (mostly private) • The school should notify if required • Don’t trust the website’s list of participating schools (Ex. Edgewood) • Collects data beyond what’s required on FAFSA • Uses institutional methodology and targets their dollars ONLY • Supports early estimates/admission - became available October 1st • Application fee is $25, plus $16 for each additional school it needs to be sent to

  36. www.fafsa.GOV

  37. Application Process Overview • Apply for a PIN – student and one parent • www.pin.ed.gov – can request at any point either prior to or during FAFSA • Submit: • the FREE Application for Federal Student Aid (FAFSA) prior to your school’s deadline • www.fafsa.GOV (not .com!!!!) • Becomes available January 1stfor the upcoming academic year • Must reapply EVERY year!!! • Any requested/required documents for Verification to the school(s) • Any institutional application materials (if required/requested by your school) • Finalize school admissions • Make sure to meet ALL required deadlines!

  38. What is the PIN? • www.pin.ed.gov Personal Identification Number • Electronically sign the FAFSA, but can also be used to: • Make corrections to a completed FAFSA • Sign-in to the National Student Loan Data System • Sign promissory notes for student/parent loans (Perkins, Federal Direct, PLUS) • The student and at least one parent (if dependent) must get their own • The PIN should NEVER be shared

  39. PIN Main Page

  40. FAFSA.gov – Student Sign-In

  41. Documents to Have Ready • Social Security number (Student and parents) • Student’s driver’s license number (not required) • Alien Registration Number if not a U.S. citizen • Federal tax info or W-2 information, for student and parents • IRS 1040, 1040A, 1040EZ • Foreign tax return and/or • Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau • Records of untaxed income for student and parents, such as child support received, interest income, and veterans non-education benefits • Information on cash, savings and checking account balances, investments, business/farm assets if required to include

  42. FAFSA Steps • Student Demographics • School Selection • Dependency Status • Parent Demographics • Financial Information • Sign & Submit! • Confirmation

  43. IRS Data Retrieval Tool • Request and retrieve income and tax data directly from the IRS • VOLUNTARY! • “Should” be available beginning early February • Can be used: • After at least 2 – 3 weeks of electronic tax filing • After at least 8 – 11 weeks of paper tax filing • If tool not used or changes made, may request “Tax Return Transcript”

  44. IRS Data Retrieval Tool • 3 Possible Responses • You are not eligible to transfer information • Too soon since taxes filed – may not be available • Recommend to try!

  45. Citizenship - Explained • Only the STUDENT is required to be a U.S. citizen, permanent resident, or eligible non-citizen to receive aid • Undocumented students are currently ineligible for federal and state aid • Students with Deferred Action Status are also not eligible for financial aid • What options do undocumented students have? • Very few…

  46. Parents Explained – NEW! Beginning with the 14/15 FAFSA- Who is considered a parent? • Two biological or adoptive parents REGARDLESS of marital status OR gender, if those parents live together • Both parents information will be included on the FAFSA • Divorced or Separated parents • Will use information for whichever is determined to be the custodial parent • Step-parents • Widowed parent • Impact of DOMA?

  47. Divorced/Separated Explained • Complete FAFSA using the parent with whom the student lived with more in the past 12 months • Believe it’s equal? Use the parent who provided MORE financial support during the last 12 months or during the most recent year the student actually received support • If the parent has remarried, the step-parent information MUST be included on the FAFSA • Step-parent income and assets represent significant info about the family’s financial resources and help to form an accurate picture of the family’s financial strength

  48. Assets - Explained • Investments INCLUDE: • Real estate (but not the home you live in), trust funds, UGMA/UTMA accounts, money markets, mutual funds, stocks, bonds, other securities, installment and land sale contracts, etc • Qualified educational benefits or education savings accounts – 529 Plans • Investments DO NOT INCLUDE: • The home you live in, the value of life insurance, retirement plans (401k’s), pension funds, annuities, non-education IRAs, Keogh plans, etc. • Business and/or investment farm assets are excluded IF: • Related family members own 51% or more of the business AND • It has less than 100 full-time or equivalent employees

  49. College Goal Wisconsin! • A statewide event (29 sites) that offers FREEhelp to families completing the FAFSA • 8 $1,000 & 4 $500 scholarships will be awarded • In and around Milwaukee • Saturday, February 22nd • Madison College – 1701 Wright Street • Sunday, February 23rd • Deforest High School, 815 Jefferson Street • Edgewood College, 1000 Edgewood College Avenue www.collegegoalwi.org

  50. Once FAFSA’s filed… Keep a Copy! • Results are sent electronically: • To the selected school(s) • To the student/parent – Student Aid Report (SAR) • If corrections are necessary, log back in and proceed as instructed • If FAFSA rejects, student/parent must correct before information will be released • Student may be required to verify their FAFSA data and will need to submit tax forms, but school(s) will request documentation • Once student has been admitted, a financial aid package will be prepared • Contact the school with any special circumstances

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