Paying for College

Paying for College
Elizabeth Desi Sr. Associate Director of Financial Aid University of New Haven

Applying for Financial Aid File the Free Application for Federal Student Aid (FAFSA) FAFSA is FREE FAFSA determines eligibility for: Federal grants and loans State grants

Applying for Financial Aid Institutions use the FAFSA to determine eligibility for their need-based scholarships Schools may require additional forms to determine eligibility for financial aid CSS Profile Institutional Application University of New Haven uses the CSS Profile to provide earlier award information UNH School Code is 3663

Completing the FAFSA FAFSA on the Web www.fafsa.gov File 2013-2014 FAFSA if entering college Fall 2013 (Forms for 2 years on website – use correct year) Have to complete FAFSA EACH YEAR Available January 1 Two ways to sign PIN – Sign Electronically www.pin.ed.gov Real Time (“Display Now”) Both Student and Parent need a PIN Paper Signature Page

Completing the FAFSA Can add up to 10 schools on the web application Should complete and submit the FAFSA when you are applying for Admissions providing you are applying for Admissions after January 1. Have to be offered Admissions before Financial Aid is determined

Completing the FAFSA Be Aware of Priority Filing Dates Submit FAFSA by School & State Priority Filing Date – CT has had filing date as early as Feb 15 School & State funding is limited so file ON TIME Can enter estimated income information to meet priority date, then make corrections after you file tax returns

Completing the FAFSA IRS Data Retrieval Tool Populates your income information directly from the Internal Revenue Service (IRS) Complete & file your tax return File Electronically – Wait 2 weeks to correct FAFSA File Paper – Wait approximately 8 weeks to correct Students selected for Verification If don’t use IRS Data Retrieval, Tax Return Transcript is Required Verification form & Other documentation Required Note: Schools may have their own Verification process to which they may request tax return transcripts and other documentation beyond the federal requirements

Completing the FAFSA Parent and Student Information on FAFSA Student’s Application If 2 students in family, each complete an application Parent signs each Divorced or Separated – Who completes? Parent with whom student lived with most during the past 12 months If lived with equally, the parent who provided more financial support If Parent Remarried Step-parent information must also be included

Completing the FAFSA Legal Guardians don’t complete FAFSA Student completes FAFSA on own Must provide court documentation to school If no court documentation, parent must complete FAFSA with student

Processed FAFSA Student Aid Report (SAR) Indicates your FAFSA has been processed Indicates how family answered every question on the FAFSA Review your SAR Indicates the next steps If there are issues that need to be resolved Data Base matches – Social Security Number, Citizenship, Selective Service Will indicate if a student is selected for Verification Can use to add schools or make corrections

EFC & the School Results of the FAFSA is the Expected Family Contribution (EFC) Amount you as a family can contribute toward the student’s education Schools use the EFC to determine what types of financial aid and how much they can offer to a student

Types of Financial Aid Scholarships Free money – don’t have to repay Grants Free money – don’t have to repay Loans Have to repay Student Employment Have to work to earn the money

Sources of Financial Aid Federal Money from the federal government State Money from the State in which you live Institutional Money from the College/University (merit, need-based, athletic) Private Money from private agencies, organizations, civic groups, high schools, churches, etc.

Cost of Education School determines the Cost of Education (budget) different at each school Cost of Education includes not only tuition, fees, room, meals (Direct costs) – ALSO Allowances for books, supplies, personal expense, travel expense, misc expense

EFC & the School School takes Cost of Education and subtracts your EFC (results of your FAFSA) to determine a students “financial need” Cost of Education - Expected Family Contribution (EFC) ___________________________________________ Financial Need

EFC & the School If the EFC is less than the Cost of Education, the student can be eligible for subsidized financial aid such as grants, scholarships, subsidized student loans

EFC & the School If the EFC is greater than the Cost of Education, the student is eligible for unsubsidized financial aid such as unsubsidized student loans and parent loans Merit scholarships are based on a student’s academic performance and can be awarded regardless of the EFC

Financial Aid Award Letters The school communicates with the student via a Financial Aid Award Awards may be electronic or paper If electronic, student would receive notice or email to view their award information on line Awards offered are reported on the Award Letter – Awards make up a “Financial Aid Package”

Financial Aid Award Letters Families should determine Direct costs of the school Tuition, Fees, Room, Meals and any other expenses charged on the bill May also want to factor in an amount for books – An average amount per semester for student enrolled full-time is $500 however the sciences, engineering and some other classes may be more expensive.

Financial Aid Award Letters Families should understand each award listed Is the award a LOAN? = Money you will have to repay Is the award a scholarship or grant? = Money you won’t have to repay Are the scholarships offered by the school renewable?

Financial Aid Award Letters Families should subtract the awards you want to accept from the amount you will be billed by the school to determine how much, if anything, you will need to pay for the student to attend that school Some options for paying that balance: Federal Parent Loan Private Loan Tuition Payment Plan

Special Circumstances FAFSA is based on “prior year income” Use 2012 income information for 2013-2014 FAFSA Notify the Financial Aid Office of financial changes for 2013 if decreased from 2012 Loss of Job – reduction in income Extra Medical Expenses Divorce or Separation

Loan Programs Schools process federal student and parent loans through Direct Lending Direct Loan program = The federal government is the lender. The school communicates with the government to process the educational loans Students will see the federal Direct Student Loan offered on the Financial Aid Award May see federal Direct Parent PLUS Loan on Award

Loan Programs The Direct Loan program offers the Federal Student Loan for students and the Federal PLUS Loan for Parents School will provide information regarding their process and application procedure to apply for the loans - You may also review school’s website for the process

Loan Programs Students and Parents must sign Promissory Notes for the loans Students must also complete Entrance Loan Counseling before borrowing the student loan The loan counseling lets the student know their rights and responsibilities as a student loan borrower

Student Loans Direct Student Loans Low Interest rates Interest rate set July 1 each year - not to exceed 8.25% - Fixed rate Student is the borrower Students are eligible regardless of family income No penalty for early repayment of loan

Student Loans The Subsidized Loan will be offered to students who demonstrate “financial need” based on the results of the FAFSA (EFC) and other financial aid the student is receiving Up to $3,500 for a first year student depending on financial need July 1, 2013 Expected to be fixed interest rate of 6.8% for undergraduates Government pays interest on Subsidized loans, & principal is deferred while student is enrolled at least half-time

Student Loans Unsubsidized Student Loan Fixed interest rate is 6.80% for undergraduates Principal is deferred while student is enrolled at least half-time Interest accrues while student is enrolled. If not paid, it will capitalize causing the balance of the loan to become larger Interest is charged quarterly (every three months) Example: $2,000 loan will accrue approximately $140 of interest for a year therefore loan balance will increase to $2,140 in one year

Parent Loan The PLUS is a Federal Loan for parents to borrow, to assist with paying educational costs Interest rate is a fixed rate at 7.9% Credit based loan – Government reviews for any negative credit history Repayment begins 30-60 days after loan is fully disbursed. Parents normally borrow for the full year therefore the loan will not be fully disbursed until spring semester loan disburses, so repayment begins in February or March (option to defer payment until after student is no longer enrolled full-time) Repayment period up to 10 years (depending on loan amount borrowed) No penalty for early repayment of loan

Parent Loan Parent may borrow up to Cost of Education minus other financial aid the student is receiving (loans are considered financial aid) Borrowing up to the Cost of Education will allow the parent to receive a refund (Remember: Cost of Education is more than the actual bill). The refund will act as a reimbursement for educational expenses the parent may have paid to get the student to school and settled in their dorm room Parent has option of how much to borrow. Parent may want to borrow only what they need to pay the bill

Loans Parent Loans and Student Loans have Fees Actual disbursement of loan that is deducted from the student’s bill is lower than amount borrowed (by a small percent) Student loans approximately 1% in fees Parent loans approximately 4% in fees Example: Parent Loan for $5,000 with 4% in fees will disburse to the school in the amount of $4,800 ($2,400 per semester) Student Loan for $3,500 with 1% in fees will disburse to the school in the amount of $3,465 ($1,732.50 per semester)

Parent Loan Denial Some parents may not meet the credit criteria for the parent loan therefore the loan will be denied Options for Parents: Appeal the decision and request another review of Credit History if something has changed (if cleared up incorrect/negative issue on credit report) Obtain an Endorser (someone to co-sign the loan) Allow the loan to be denied and student borrow LIMITED AMOUNT of additional federal student loan

Parent Loan Denial When a parent loan is denied, the government allows the student to borrow additional Unsubsidized Student Loan, however the amount is limited (up to $4,000/year for Freshman and Sophomores, and up to $5,000/year for Juniors and Seniors) Student must accept the additional Unsubsidized loan award, before a school can process the additional amount

Private Alternative Loans Sometimes students will need additional funding beyond the financial aid that is offered, therefore there are Private Alternative loans available through lenders Be sure to review terms & conditions of Private Alternative Loans. May have variable interest rate, require student to make monthly payments immediately, etc. These loans are not as lenient in repayment as federal loans. They do not have repayment options like federal loans. Students may borrow up to the Cost of Education minus any other financial aid they are receiving (loans are considered financial aid)

Private Alternative Loans The student is the borrower of the loan Loans are based on credit-worthiness – will likely look at income to debt ratio Co-signer is usually required These loans may have VARIABLE interest rates Some now offering Fixed interest rates May REQUIRE interest to be paid immediately Could have fees Cannot consolidate with federal loans

Private Alternative Loans Student applies with the lender and if loan is approved, the school will have to process the loan Check for loan programs within the state Connecticut Higher Education Supplemental Loan Authority www.chesla.org Currently has 5.95% Fixed Annual Rate Must make interest payments Check for loan programs with your credit union for competitive rates/terms Some lenders/agencies offer loans for parents

Payment Plans Most schools offer a tuition payment plan Many contract with outside vendors May offer a 10 Month interest free plan to pay off the balance due Payments begin in June and end in March Normally there is a fee to join (about $80 per year) Monthly payments are withdrawn from your bank account for 10 months

Payment Plans Because these plans allow a shorter time to pay the balance, you usually have to make a higher monthly payment than you would in repaying a parent loan Make sure you can afford the monthly payments for the payment plan before signing up

Scholarship Searching Merit Scholarships Often offered through Admissions Office rather than through Financial Aid Office Be sure to meet Admission Application dates & submit appropriate paperwork to be considered

Scholarship Searching Make sure student completes ALL forms Some Financial Aid offices have a separate form for students to complete for scholarships Some departments within the college or university may have their own scholarships to offer and their own process beyond the Financial Aid Office A student should contact the department in which they are majoring or review their website to determine scholarship opportunities and the process Some departments may offer scholarships to Freshmen, others may not consider a student for scholarships until the student “declares his or her major”

Scholarship Searching Community Service Organizations & Churches Company where your Parent is Employed

Scholarship Searching Search on your Own on the Internet Watch for Scholarship Scams Should not have to pay money to get FREE money Don’t give bank account or credit card information www.zinch.com www.fastweb.com www.collegeboard.com/paying www.freschinfo.com www.eCampusTours.com www.collegeanswer.com www.finaid.org Finaid.org has scholarship listings categorized by unusual scholarships, average student scholarships, community service scholarships, prestigious scholarships

Scholarship Searching Watch for scholarship scams! You should not have to pay money to get FREE money 6 things to look for in detecting a scholarship scam: “a scholarship guarantee” – No service can guarantee it will get you money. “the service will do all the work” – No service can provide all of the personal information required, fill out essays, or supply the references a scholarship may require. “a scholarship costs money” – Though some legitimate scholarships charge fees, be wary of charges. Applying for scholarships should NOT cost you money. “you can only find this information here” – Scholarships, grants and awards for school are available in directories and all over the web. No one organization has a monopoly on the information “being a finalist in a contest you never entered or randomly being selected by a national foundation to receive an award” – Most organizations only contact you after you have made an inquiry “a service needs your credit card or checking account information” – NEVER!

Other Resources U.S. Department of Education, Student Aid on the Web www.studentaid.ed.gov Select “Types of Aid” Select “Learn More” in the “Scholarship Search” box State of Connecticut Dept. of Higher Education www.ctdhe.org and select “Financial Aid” at top of screen on right

Net Price Calculator Go to www.newhaven.edu Select “Quick Links” Select “Net Price Calculator” Provides an ESTIMATE of the financial aid you could receive – This is NOT an award Some funds are limited – may see in NPC results but not on your Financial Aid Award Try to provide accurate estimated information Results will not be an accurate estimate if incorrect information is provided

Paying for College Questions?

Paying for College