Decoding Financial Aid: Your Guide to Scholarships, Grants, & Loans

1. Financial Aid 101

2. Financial aid definitions • Financial Aid: Financial aid is a catch-all term referring to any program that offers money to assist with the costs associated with being a student. This includes tuition help, scholarships, living stipends, textbook costs, child care benefits, work grants, entrepreneurship support and more. Aid can come from any number of sources--state, local and federal government, the college itself, professional organizations, private charities and many others.

3. What are the different types of financial aid? • Scholarships • A type of financial aid that does not have to be repaid by the recipient. Scholarships are most often given to students for one of two reasons: achievement in academics/other areas or financial need. • Grants • A grant is form of federal or state aid that does not have to be repaid. Grants are typically given to people who demonstrate financial need. Grants are great sources of financial aid for people with need, which is determined by the FAFSA. • Loans • A loan is offered to students to pay off education-related expenses, such as tuition, books, or room and board. LOANS MUST BE PAID BACK IN FULL WITH INTEREST. Many loans are offered to students with a lower interest rate, such as the Stafford Loan. In general, students are not required to pay back these loans until after a grace period upon completion of their education. A FAFSA is used to determine if a student qualifies for a lower interest-rate loan. • Work-Study • Of or relating to any of various programs at a university which enable students to engage in part-time employment while continuing their studies. Can be able to pay off loan instead of getting a paycheck.

4. Who Gets Federal and State Aid? • Requirements: • Demonstrate financial need • Be a U.S. Citizen with a valid Social Security Number • Certify that you are not in default on a federal loan • Certify that you will use the aid for educational purposes • Be working toward a degree in an eligible program • Show you have qualified for post-secondary education by: • Have a high school diploma or GED • Pass an ATB Test • Complete high school education in homeschool setting • Register with selective service if you are a male between 18 and 25 • Maintain satisfactory progress while in school • Possession or sale of illegal drugs: • Typically cannot receive federal aid for a period of time based on type and number of convictions BUT should still submit FAFSA for state and other non-federal aid

5. How do you get federal and state financial aid? • Through the FAFSA (Free Application for Federal Student Aid) • FASFA = A form required by the government for application to any federal education aid program. • The FAFSA is used to determine the expected family contribution based on family financial information. An expected family contribution (EFC) is calculated for every student who applies, even if the family is not going to contribute that amount. • A FAFSA is used to determine the specific Financial Aid programs that can contribute to a student’s total financial aid package and in what proportions. • Many universities also use the information provided to determine other grants and scholarships as well • The Federal Student Aid Office is part of the US Department of Education • It is highly recommended that every prospective college student fill one of these out even if qualification for grants is not a possibility • Student could qualify for scholarships or favorable loans.

6. In 2008-2009 • 665,400 students (more than half enrolled) received aid • Total Aid Received = $6.427 billion • Loans = 58% • Grants = 41% • Work-Study = 1%

7. Federal aid • www.fafsa.ed.gov • Grants • SMART Grants • Academic Competitiveness Grant • Pell Grant • Federal Supplemental Educational Opportunity Grant (FSEOG) • Teacher Education Assistance for College and Higher Education (TEACH) Grant • Loans • Subsidized and Unsubsidized Stafford Loans • Subsidized and Unsubsidized Federal Direct Loans • PLUS Loans • Perkins Loans

8. State aid • www.collegeforalltexans.com • Grants • TEXAS Grant (4-year public institutions) • Requires Recommended or Distinguished graduation plans • May be getting merit-based requirements • Meet 2 of the 4 following criteria: • Distinguished graduation plan • Graduate with at least a 3.0 GPA on a 4.0 scale • Meet College Readiness Standards • 23 on ACT • 1590 on SAT (All 3 sections combined) • Be in the top 1/3 of class • Texas Educational Opportunity Grant (2-year institutions) • Texas Resident • Enrolled in a 2-year public institution at least half-time • Register with Selective Service (males) • EFC less than or equal to 2,000 • No drug convictions • Cannot get a TEXAS Grant

9. State Aid – Grants continued • Tuition Equalization Grant (Private Texas institutions) • Texas resident • Enrolled in a private institution at least ¾ time • Cannot also receive an athletic scholarship • Are still required to pay more tuition than is required at a comparable public institution • Texas Public Education Grant • Public institutions • Designated Tuition Grants • Varies from school to school

10. State Aid - Loans • Loans • Texas B-On-Time Loans • 0% interest for the life of the loan • Cannot also have a TEXAS Grant • Provides loan forgiveness if graduate within a certain time frame, with a certain number of hours, and a certain GPA. • Must maintain a 75% completion and 2.5 GPA to keep • College Access Loans • Funded through the sale of state bonds • Must have favorable credit or provide co-signer with good credit • Low fixed rate • 5% • 3% if use co-signer

11. BEWARE!! • The state is in a huge financial crisis at the moment • Will not know for sure how much money will be allocated for state aid until late Summer 2011 • So…What is on your award letter may not be the truth • It is up to the institution to decide what they are going to put on your award letter • It has been recommended by the state that award letters be sent out without any state awarded money on it. If money is awarded, it will be added later • However, the school can, if they want, say that they will award you money but could later go back and say they didn’t get the money after all and you will therefore not the get the money • Therefore…. Don’t base decisions on schools on the amount of state money awarded or not awarded!

12. Other aid – Dual Credit/Early grad • Early High School Graduation/Dual Credit Scholarship • Graduate from a public high school • Complete the recommended or distinguished plan in no more than 36, 41, or 46 consecutive months • Have at least 30 hours of dual credit if graduate on time

13. Other aid – Top 10% Scholarship • Top 10% Scholarship • Qualifications: • Be in the top 10% of class as of 6th semester • Demonstrate financial need • Must have a valid EFC by March 1st • Complete recommended or distinguished plan • Graduate from accredited high school in Texas • Enroll full-time in 2- or 4-year college or university the following fall • Can renew if: • Complete 30 semester hours • Maintain 3.25 GPA • Complete at least 75% of hours attempted

14. Other Aid – The Hazelwood Act • If a parent/guardian of a student is a veteran who did not use their GI Bill, it can be passed down to their children • If it is a grandchild, the grandparent must be the child’s legal guardian and claim them as a dependent for tax purposes • There are several qualifications for this • Check www.collegeforalltexans.com • Look at left side: Military and their Families • Then click Exemptions for Texas Veterans • Can also visit www.gibill.va.gov • Or Call 1-888-442-4551 • Contact the financial aid office of the college/university student will be attending

15. Exemptions • Highest Ranking Graduates • Children of Deceased/Disabled Texas Veterans • Children of Deceased/Disabled Fireman, Peace Officers, Game Wardens, and Employees of Correctional Institutions • Blind/Deaf Students • Children of Services Members who are MIA or POWs • Students Under the Conservatorship of Texas Dept. of Family and Protective Services • Adopted/Formerly in Foster or other Residential Care Students • Students who play “TAPS” at Military Funerals • Children of Professional Nursing Program Faculty/Staff • Spouse and Children of Deceased Public Servants

16. When Does Your Student Apply? • The application for the new award year becomes available on January 1st of each new year. • Your student will apply typically between January 1st and March 1st of his/her Senior year. • Example • For this year’s Seniors, the 2012-2013 Financial Aid Award Year opens January 1, 2012 *YOU CANNOT APPLY UNTIL THE NEW APPLICATION IS RELEASED*

17. So what do you need to do? • Step 1 – Determine Dependency Status • Step 2 – Gather Documents • Step 3 – Complete the FAFSA on the Web Worksheet • Step 4 – Obtain a PIN Number • Step 5 – Complete the FAFSA • Step 6 – Have results made available to school • Step 7 – Complete paperwork prior to Priority Deadline • Step 8 – Receive award letter • Step 9 – Accept or reject the aid offer • Step 10 – Notify college of acceptance or rejection of offer • Step 11 – Student receives funds or funds are applied to his/her account at the college.

18. What does the school do? • Calculates need • Receives allocations (money) • Compares students to program requirements • Identifies available programs and amounts • Sends award letter • Holds funds for the student • Acquires loan guarantee (if applicable)

19. Step 1: Dependency status • When applying for the FASFA, there is a series of questions that determines dependency status • Contrary to popular belief, just because you do not claim a child on your tax return does not make them independent – this is BAD advice. • Main reasons a child is classified as independent: • Marriage • Is a ward of the state • Is homeless • Is in active military service • Is an emancipated minor with legal (court) documentation of independence • Have dependants that receive more than half of their support from child’s financial contribution

20. Unusual Family Circumstances • Contact school’s financial aid office • They can provide information and waivers if applicable • They can also help you determine whose financial information is needed to apply correctly • You must be able to provide documentation • The decision is based on the financial aid administrator’s judgment and the facts of you situation and is FINAL.

21. Divorce • Report information about the parent you lived with for the greater amount of time during the 12 months preceding the fate you file your FAFSA • If you didn’t live with either parent, or if you lived with each parent an equal amount of time, then use the information about the parent who provided the greater amount of financial support • If custody is split evenly in half, your parents must decide whose information you will use • If you did not receive any parental financial support during that time, you must report information about the parent who most recently provided the greater amount of support.

22. Stepparents • Stepparent’s financial information is needed if: • The parent you received financial support from was a single parent who is now married • The parent you received financial support from was divorced or widowed but has remarried • This does not mean that the stepparent is obligated to provide financial assistance to you, but his/her income and assets represent significant information about the family’s financial resources. If the parent you are living with most is remarried and that stepparent lives with you or you live with them, you must provide that stepparent’s information.

23. Dependency Status Exceptions • If you have an exceptional case, please contact the school you are planning on attending for assistance • They may be able to change your dependency status with appropriate documentation • Example: • Live with a relative who is not your biological parent and/or legal guardian because of: • Incarceration of parent • History of abuse • CPS placement • Any other situation where it would cause harm to get information from a parent or you do not know where the parent is

24. Dependency Status • Parents simply refusing to give information is not a dependency issue. • Can fill out the FAFSA without their information but still are dependent • Then need to contact school you are going to let them know what is happening. This will probably keep from all aid except Un-Subsidized Loans. • If living with a relative who is not your legal guardian and it will not cause harm for you to contact your legal guardian ,and you are able to contact them, you need to try to get their information.

25. Step 2: Gather Documents The hardest part of the FAFSA is gathering required documents • What you need: • Your Social Security Number. Be sure it is correct! • Your driver's license (if any) • Your 2011 W-2 Forms and other records of money earned • Your (and your spouse´s, if you are married) 2011 Federal Income Tax Return. • IRS 1040, 1040A, 1040 EZ • Foreign Tax Return, or Tax Return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau • Your 2011 untaxed income records • Your Parents´ 2011 Federal Income Tax Return (if you are a dependent student) • Veterans non-education benefit records • Child support received • Worker's compensation • Your current bank statements • Your current business and investment mortgage information, business and farm records, stock, bond and other investment records • Your alien registration or permanent resident card (if you are not a U.S. citizen)

26. Income tax return • It is VERY IMPORTANT that your student waits until all 2011 Tax Returns are in before submitting the FAFSA • If you use the previous year’s tax info, the FAFSA will be rejected • If the student earned money, they will need their tax return also • It is also highly recommended that tax returns be completed before filling out the FAFSA • It makes the process much easier

27. Once you have your info… • Need to go to www.fafsa.ed.gov • DO NOT go to fafsa.com – IT IS A SCAM!! • Can complete a paper FAFSA if necessary, but is not recommended • FAFSA website has tons of helpful information

28. Step 3: FAFSA Worksheet • Complete the FAFSA on the Web Worksheet • Is optional, but helpful • Gives you an idea of what questions will be asked • Also gives you the option of practicing filling out the worksheet before starting the real application • Is available on the FAFSA website and updated on January 1st also • 20111-2012 Worksheet Link • http://www.fafsa.ed.gov/fafsaws01bw.pdf

29. STEP 4: Get a PIN Number • Get a PIN Number • What is a PIN Number? • A PIN is a 4-digit number that is used in combination with your Social Security Number, name, and date of birth to identify you as someone who has the right to access your own personal information on Federal Student Aid Web sites, such as FAFSA on the Web. • What is it used for? • Electronically sign Federal Student Aid documents • Access your personal records • Make binding legal obligations. • You and your parents (if you are a dependent student) will need to sign your FAFSA. Your FAFSAS cannot be processed until signature(s) are recieved. Using a PIN to sign your FAFSA electronically is by far the fastest and most reliable way. However, you can print, sign and mail in a signature page, or provide signature(s) on your paper Student Aid Report (SAR). • How do you get one? • Go to www.pin.ed.gov to apply for a PIN • BE SURE YOU WRITE IT DOWN!!!

30. Step 5: Complete the application • Deadlines: Vary by school – you will need to check with each school • FAFSA cannot be submitted after June 30th. • General good deadline = March 1st • HOWEVER…. • Financial Aid money is first-come, first-serve • The sooner the FAFSA can be completed and submitted after January 1st, the better • Colleges will give out money until they run out, which happens quickly • So… even if you have significant financial need, if you submit the FAFSA too late, you may not get any money because the school has awarded all that they had

31. STEP 6: Decide which schools to send to • How do the schools I’m interested in get my FAFSA information? • When filling out the FAFSA online, you will list up to 10 schools to send your information to. • What if I want to change schools later? • Using your PIN, go to www.fafsa.ed.gov and select “Add or Delete a School Code” to make changes online. You can also call 1-800-433-3243, but will need the Data Release Number (DRN) on your SAR or confirmation page.

32. Steps 7-10 • Once you have submitted your FAFSA, you will receive a Student Aid Report (SAR) by e-mail within 3-5 days after your FAFSA has been processed. This will contain a secure link where you can view your SAR. • You will receive a paper SAR 7-10 after your FAFSA is processed if you do not supply an e-mail address. • Your data will be electronically sent to the schools you requested it be sent to. • Review your SAR carefully to make sure it is correct and complete • If you are eligible for financial aid, the school will send you an award letter to tell you which type of financial aid you are eligible to receive. • Review each school’s award to determine which is the best fit for you • Once you have decided, you will accept that school’s award letter, sign it, and return it to the school for processing.

33. Scams and Identity Theft • SCAMS • Scholarship Search Services • Check with the Better Business Bureau or with the Texas State Attorney General’s office • If they ask you to pay, it is probably a scam • If you have been “selected” or are a “finalist” in something you never entered • Identity Theft • Never give personal information over the phone or internet unless you initiated the contact • Be sure to log off of public computers • Keep your PIN in a safe place and never share it • If you stay on www.fafsa.ed.gov or www.FederalStudentAid.ed.gov, you should be okay because these are official government websites that are safe and protected.

34. Other Questions • Do I have to fill out a FAFSA every year? • Yes • What if I need help filling out my FAFSA? • Call 1-800-433-3242 for assistance from the Federal Student Aid Information Center • Call South Plains College Office of Financial Aid at (806) 716-3800, even if you are not planning on attending SPC. They are very helpful. • Call the financial aid office of the school you plan on attending