Demystifying Financial Aid: Essential Steps and Information

1. What You Need to Know about Financial Aid Ruth Pusich Elmhurst College

2. Topics We Will Discuss Tonight • What is financial aid • How to Apply for financial aid • What is the FAFSA, EFC, COA, Need • Types, Categories and Sources of financial aid • What will it cost • Special circumstances • Student/Family Responsibilities

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

4. How to Apply • Apply for admission to a college • Complete the FAFSA • Free Application for Federal Student Aid • Complete any other forms required by the institution • Internal Financial Aid/Scholarship Application • CSS Profile

5. FAFSA – www.fafsa.gov • A web-based form that collects demographic and financial information about the student and family • Available in English and Spanish • May be filed at any time during the school year, beginning January 1st • Apply for a PIN number at www.pin.ed.gov – real time! • Colleges may set FAFSA filing deadlines • Colleges use the calculation results to award financial aid

6. CSS/Financial Aid PROFILE • www.collegeboard.com • Colleges/universities and scholarship programs use to determine eligibility for non-federal student aid funds • Available October 1, 2011 for 2012-2013 year • $25.00 initial application fee for one college or program plus additional • $16 per additional college or program • Review priority filing dates for all schools • More questions regarding home equity and personal assets • Data is analyzed and sent to the colleges or scholarship programs • Institutional Methodology (IM) is used to determine eligibility

7. Federal Student Aid Personal Identification Number (FSA PIN) • Website: www.pin.ed.gov • Sign FAFSA electronically • Speeds processing • May be used by students and parents throughout aid process, including subsequent school years

8. FAFSA on the Web – Step 1 • www.fafsa.gov • available on January 1, 2012 • Print off FAFSA on the Web Worksheet • Actual form may ask for additional information • Need • SSN# and birth date of student and one parent • Selective Service registration for males • 2011 tax information and W2s for student and parent(s) • Assets for student and parent(s)

9. FAFSA • Frequently Asked Questions • Who is a dependent student? (13 questions) • Who is a parent? • Who lives in the student’s home? • Who counts as a college student? • What if my taxes are not completed? • What is additional financial data? • What is untaxed income? • What assets must be included?

10. FAFSA • Untaxed Income: • Annual contributions to retirement accounts • Child support received • Assets to include: • Cash, savings, money market accounts, savings bonds • College savings plans • Assets NOT to include: • Personal residence • Full value of any retirement fund (IRA, 401K, etc) • Life insurance

11. FAFSA - IRS Data Retrieval • While completing FAFSA, applicant 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 • Applicant chooses whether or not to transfer data to FAFSA • Available early February 2012 for 2012–13 processing cycle • Reduces documents requested by financial aid office

12. FAFSA – Step 2 • Watch for your Student Aid Report (SAR) • Review for errors • Make corrections and/or update estimated information Do NOTHING if correct • Institutions receive FAFSA results • Can be sent to up to 10 different colleges • College reviews data Wait for Colleges to send award letters

13. FAFSA – Step 3 • Verification • 35% random selection • Higher percent if IRS data retrieval is not used • Typical data requested: • Verification of number in household and college • IRS transcripts to verify income if data retrieval wasn’t used • W2s • Verification of untaxed income • Amount of food stamps received (2010 and/or 2011) • Documentation of child support paid • Schools may request additional documentation

14. FAFSA – Step 4 • Wait to hear from your colleges • Once accepted to the college and the FAFSA has been received, the financial aid department gets busy • Schools determine a student’s eligibility for all types of financial aid – including loans • FAFSA and/or PROFILE are data analysis tools only • Schools have different processing methods • Watch for your financial aid package • Sent either through the mail to the home or via the student’s email

15. What is the EFC (Expected Family Contribution)? • The EFC is a number used by schools to calculate the amount of financial aid a student may be eligible to receive • It is NOT the amount of money your family will have to pay for college NOR is it the amount of federal student aid you will receive • Calculated using data from a FAFSA and a federal formula • Stays the same regardless of college • Two components • Parent contribution • Student contribution

16. What is COA (Cost of Attendance)? • Direct and indirect costs combined into cost of attendance • Direct costs • Tuition, fees, room, board • Indirect costs • Books, travel expenses, other expenses • Varies widely from college to college

17. What is Financial Need Cost of Attendance –Expected Family Contribution = Financial Need

18. Financial Need

19. Types of Financial Aid • Gift • Money that generally does not need to be paid back • Scholarships • Grants • Self Help • Student Employment • Allows student to earn money to help pay direct and indirect educational expenses • A paycheck • Non-monetary compensation, such as room and board

20. Types of Financial Aid • Self-Help • Loans • Money students and parents borrow to help pay college expenses • Look at loans as an investment in the future • Repayment usually begins after education is finished • Only borrow what is really needed

21. Loan Types • Student • Perkins – 5% • Stafford • Subsidized – 6.8% • Unsubsidized – 6.8% • Parent • PLUS – 7.9% • Student/Parent • Private alternative

22. Categories of Financial Aid • Need-based • Grants – usually awarded on the basis of financial need • Federal Work Study • Loans (Perkins, Subsidized) • Non-need-based • Scholarships – awarded on the basis of merit, skill, or unique characteristics • Student employment • Loans (Unsubsidized, PLUS, Private Alternative)

23. Sources of Financial Aid • Federal government • States • Institutions • Civic organizations and churches • Employers

24. Federal Government • Largest source of financial aid • Aid awarded primarily on the basis of financial need • Must apply every year using the (FAFSA)

25. Federal Pell Grant Federal Supplemental Educational Opportunity Grant TEACH - Teacher Education Assistance for College and Higher Education Grant Federal Work-Study Federal Perkins Loan Subsidized and Unsubsidized Loans PLUS Loans Common Federal Aid Programs

26. States • Residency requirements • Awards based on both merit and need • Use information from the FAFSA • Illinois recommends early filing – by March 1

27. Institutions • College and Universities • Athletic scholarships • Academic scholarships • Private Institutions • Need-based grants • Endowed scholarships

28. Private Sources • Foundations, businesses, charitable organizations • Deadlines and application procedures vary widely • Begin researching private aid sources early • Usually late fall/early spring of senior year • Employers

29. Suggested Websites • www.collegeillinois.org • State of Illinois Student Financial Assistance • www.fastweb.com • FinAid on the web • www.collegeboard.org • College Board • www.gocollege.com • The Collegiate Websource

30. What Will It Cost? Direct Cost -Gift Aid Unmet Cost

31. Special Circumstances • Cannot report on FAFSA • Send written explanation to financial aid office at each college • Change in employment status • Medical expenses not covered by insurance • Change in parent marital status • Unusual dependent care expenses • Private school expenses

32. Annual Renewal • Each school will have guidelines for renewing institutional aid • FAFSA must be filed each year of enrollment for need-based aid and loan consideration • Student loan eligibility is determined by FAFSA results and student’s year in school

33. Financial Aid Scams Be skeptical if: • A fee is charged • You are told to attend an information session • You are promised or guaranteed an amount of money…

34. What Can I Do Now? • Net-Price Calculator • Apply for a PIN number www.pin.ed.gov • Follow deadline recommendations • Apply early to maximize eligibility • Compare award packages • Ask questions when in doubt

35. Conclusion • Keep up good grades • Research and visit schools of interest • Check out local scholarship opportunities • READ EVERYTHING – ASK QUESTIONS