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Please Silence Your Cell Phones! Thank you for being considerate to the people around you.

Financial Aid 101 Paying for Postsecondary Education

Presenter Jayeann Harr Higher Education412-904-8545 Access Partner [email protected] [email protected] Southwest Region (Fayette, Greene, Washington & Westmoreland)

Is College Worth the Money? Student Loan Burden Continues to Grow U.S. Student-Loan Balances Increase 55% Since 2005 Paying For College - Are You and Your Student on the Road to Going Broke Or Into a Lot of Debt? More Kids are Moving Back Home! Do these Headlines keep you up at Night??

Education pays in Higher Earnings and Lower Unemployment Source: Bureau of Labor Statistics 2011

The field of bachelors degree (major) makes a considerable difference in a college graduates annual earnings, according to 2011 American Community Survey (ACS) data released by the U.S. Census Bureau. These differences add up over the span of ones work-life. www.census.gov/newsroom What was the highest paying college major for 2011-12? College Majors

College Expenses

Do your Research Approach it as though you are buying an education, not a school What is the Net Price that you will pay? Use the Net Price Calculator available on each schools website. What is the graduation rate? What is the average debt of graduates? What is the repayment rate and default rate of the schools borrowers? What was the employment outcome for recent graduates? The Consumer Approach Making College Affordable

o Graduate on Time o Research and find the right school and major Minimize transfer and change of major o Earn college credits while in high school AP courses, Vo-Tech, and dual enrollment o Consider options for cutting costs Commute, take summer classes, rent or buy used books, make smart meal plan choices o 2 + 2 Strategy (2 years at a Community College then transfer credits to a 4 year school) Reduce the Need for Financial Aid

Review the colleges website Meet with an advisor at both schools Know what is expected of you Transferring Colleges

*Be Informed Consumers ask questions! *File the FAFSA on time *Stay Organized & Follow Up 3 Things to Take Away

Financial Aid - Money provided to students and families to help pay for postsecondary educational expenses What is Financial Aid?

Gift Aid FREE MONEY Grants and Scholarships Self Help Aid Loans and Work Programs Merit-Based Aid: academic ability, special talent or achievement, program of study, family or ethnic background Need-Based Aid: grants, loans, and employment usually based on - income, assets, other factors Types of Financial Aid

Basic Principles 1. Joint responsibility of the student and parent(s) to pay, to the extent possible. 2. Need based financial aid is subject to a federal formula to determine need. 3. Not all families qualify for need based aid. There is no guarantee that you will get FREE money.

Federal Government State Government School/Colleges Private Scholarship Sources: HS Counselors Clubs and organizations Employers Internet scholarship searches Where does the money come from?

Scholarships for Average Students Video contests Creativity Unusual scholarships Based on Last Name Van Valkenburg? Grandparents Gone Wired Scholarship Patrick Kerr Skateboard Scholarship Common Knowledge Scholarship Scholarship Opportunities for Everyone

Start Searching Early Use FREE Scholarship Search sites Dont ignore scholarships with smaller award amounts Dont miss deadlines Search for Scholarships every year Never pay a fee for a scholarship! Avoid unsolicited scholarships Avoid scholarships that use the word Guarantee If it sounds too good to be true, it probably is. Scholarship Search Tips!

www.fastweb.com www.bigfuture.collegeboard.org www.studentscholarships.org www.scholarshipexperts.com www.zinch.com/scholarships www.collegeprowler.com/scholarships www.google.com Online Sources

The FAFSA (Free Application for Federal Student Aid) is a federal form used to determine student eligibility for the following: Federal programs, such as Pell Grants, work-study, and student loans State programs, such as Pennsylvania State Grant, and other special programs School programs, such as need-based grants and scholarships The Free Application for Federal Student Aid (FAFSA)

www.fafsa.gov NOT FAFSA.com

24 or older on Jan 1st of award year (January 1, 1990) Veteran (includes active duty personnel) Working on graduate level degree Emancipated minor in legal guardianship Orphan, in foster care, or ward of the court at anytime when student was age 13 or older Have legal dependents other than spouse Student deemed homeless by proper authority Who is independent for Federal Programs?

Parents & Student Information Divorced or separated parents Parent that the child lived with most in the last 12 months. If parental custody is equal, then the parent that provides more than 50% of students support. Stepparents - yes Adoptive parents - yes Foster parents - no Legal guardians - no Anyone else the student is living with - no Whose information goes on the FAFSA

Recent death or disability Reduced income Recent Separation or Divorce Contact the school and ask for a special consideration AND Contact State Grant Division at PHEAA in writing. Special Circumstances

FAFSA Completion Tips 1.Can use estimated income to complete, but must update after taxes are completed. 2. Answer all the questions that are presented to you. If the answer is zero, put zero. Dont leave it blank. 3. You do not have to complete the online application all at once. 4. Carefully review untaxed income questions. 5. All 529 plans must be reported as parental assets 6. Assets do not include primary home, qualified retirement plans or the value of life insurance 7. Some people can skip asset questions. If not, assets are the value at the time of application. 8. Do not report the value of the farm if you live on that farm. 9. Do not report a family owned business if it employs less than 100 people. 10. There is online help available for the form.

FAFSA - Assets

Allows students and parents to access IRS tax return information needed to complete the FAFSA. Students and parents may transfer the data directly into their FAFSA. IRS Data is available: After 2 weeks of electronically filing federal tax return After 8 weeks of filing a paper federal tax return If use estimated income to complete FAFSA, can go back once taxes are filed and use IRS Data Retrieval Tool. IRS DATA Retrieval Tool

IRS Data Retrieval Married, Filing Separately Filing Head of Household Filing an amended return Filing a Puerto Rican or foreign tax return Recently filed taxes None of the above

Signing FAFSA Online Student and parent sign electronically with a PIN. Apply for a PIN at www.pin.ed.gov or while completing the online FAFSAwww.pin.ed.gov PIN (Personal Identification Number) Select your number Parents can use for other children & PLUS Students will need for many uses Can request a duplicate PIN, if necessary. If you write it down, store it in a safe place

Apply for PA State Grant from FAFSA Confirmation Page

Additional questions needed to determine State Grant eligibility which includes items such as enrollment status, value of PA 529 College Savings Program, program of study, and employment status. Printing, signing, and mailing in the State Grant confirmation page is the last step in the process. PHEAA is working on an electronic signature capability but that is not available at this time. Students will be able to view their status on Account Access available at pheaa.org about three days after completing the FOTW. On-Line State Grant Application

Know what financial aid forms are required: FAFSA (Free Application for Federal Student Aid) federal aid, PA State Grant, college aid, and private scholarships State Grant Form (SGF) required for first year students (and may be requested for subsequent years) CSS Profile required by some postsecondary schools and scholarship organizations Institutional financial aid forms Other Applications?

Federal Deadline - end of the award year - for 2013-2014, this would be June 30, 2014 PA State Grant deadlines May 1, 2013 - First Time and Renewal Applicants that plan to enroll in a degree program or a college transferable program at a junior college or other college or university August 1, 2013 - First Time applicants that plan to enroll in a community college; a business, trade, or technical school; a hospital school of nursing; or a 2-year program that is not transferable to another institution Know School Deadlines & meet the earliest one! Know Your Deadlines!!!!!

FAFSA Completion Sessions Laurel Highlands High School FAFSA Completion Sessions February 28, 2013 6:00 PM Rsvp by February 26, 2013 March 21, 2013 6:00 PM Rsvp by March 19, 2013 Rsvp to Mrs. Barchetti

Social Security Numbers Drivers license (student only; this information is optional) Federal income tax returns (1040, 1040A or 1040EZ) W-2 forms from all employers Current bank statements (checking and savings) Current business and farm records Records of any stocks, bonds and other investments, including 529 accounts Additional untaxed income tax records may be needed such as: Veterans non educational benefits, child support paid/received and workers compensation. Alien registration or permanent resident card (if not a US citizen) Documents Needed

Student Aid Report or Acknowledgment sent to student (review and make necessary corrections) Information is sent to PHEAA. Student must complete State Grant Form (SGF). Can link to this directly from the FAFSA. Account Access (PHEAA) - create an account at www.pheaa.org to view PA State Grant Information is sent to schools/colleges. Send to all schools being considered. What happens next?

Family undergoes need analysis Expected Family Contribution (EFC) is determined Determining need-based eligibility

The EFC is a number derived from a federal formula which considers certain factors. - Parent income and (possibly) assets - Student income and assets - Family size - Number of children in college - Age of the older parent It is an index number used to determine how much financial aid you will receive In reality, it is not necessarily the amount a family is required to pay. Expected Family Contribution (EFC)

How is the EFC calculated? Bulk of EFC comes from income. Allowances against income (State and Social Security tax, Income protection allowance and Employment expense allowance) Parental asset protection allowance (based on age of older parent, if 2 parent household) roughly $920 per year Parent asset contribution is roughly 6% Student income contribution 50% of amount over $6,150 Student asset contribution 20% of student assets Parent contribution divided by number of children enrolled in college at the same time. Parent Contribution + Student Contribution = EFC

Financial Aid Office (FAO) packages student based on financial need and available funding (varies from school to school). Financial aid award letter sent to student. Calculating Financial Need

Is official notification from school about financial aid, terms, and conditions. Lists the type and amount of each award to be received Describes what must be done to accept or reject any award. Discloses students rights, responsibilities, and academic requirements. Financial Aid Award Letter

1.How much of the financial aid is free money? 2.Which awards are based on need and which are based on merit? 3.Are there any academic requirements to maintain to keep their award? 4.Will awards change from year to year? 5.Will institutional awards increase as tuition increases? 6.How are institutional awards affected by scholarships 7.Will loans be needed? Reviewing the Financial Aid Package After reviewing their packages, students should be sure they know and understand the following:

Financial Aid 101 Federal, State and College Financial Aid Programs

Pell Grant (2012-13 award $5550) *.must have high need Campus-based aid amounts determined by FAO FSEOG up to $4000 Perkins loan... up to $5500 Federal work-study FAO determines For most programs, student must be enrolled at least half-time. * Goes to most financially needy students Federal Programs

PA State Grant* Full-time, in PA....up to $4,348 Part time, in PAup to $2,174 Out of state.. Up to $600 in CT, DE, MA, ME, OH, RI, VT, WV, and DC All other states.up to $400 (NJ, NY, and MD = $0) Amount determined in part by the cost of the school * Must be at least half-time to be eligible PA State Grant Program

State Grant Formula Cost of School (Tuition + Allowable Fees provided by the school) Add Educational Expense Allowance ($4,000) and Book Allowance ($1,000) Subtract 100% Pell Grant and EFC = Unmet Need Multiply Unmet Need by a percentage based on the EFC and by an Award Adjustment Factor (based on funding)

Cost Tiers Minimum Award Maximum Award Cap college costs at $32,000 State Grant School CostState Grant Awards $0 - $11,000$500 to $2,313 $11,001 to $21,000$500 to $3,700 $21,001 to $30,000$500 to $3,978 $30,001 to $32,000$500 to $4,348

State Work-Study - job related to major Educational Assistance Grant (EAP) National Guard Chafee Education and Training Grant Foster care or discharged or adopted out after age of 16 Blind or Deaf Beneficiary Grant (PA and other states) Postsecondary Educational Gratuity Program (PEGP) Children of parents who died in the line of duty Partnerships for Access to Higher Education (PATH) Pennsylvania Targeted Industry Program (PA TIP) For details, see the PA Guide to Student Aid, or visit www.pheaa.org Other State Programs

All federal student loans are now made directly through the U.S. Department of Education. Students and parents may apply for Direct Stafford and Direct PLUS loans through their post-secondary schools website or at www.studentloans.gov www.studentloans.gov Federal Student Loans

Always consider federal loans first. Borrow in the following order: 1.Perkins Loan (5% fixed) student 2.Stafford Loan (max of 6.8% fixed) student 3.PLUS Loan (7.9% fixed) parent and graduate student 4.Alternative Loan (variable rates) last resort Borrowing for Higher Education

Stafford student loan: Subsidized = no interest in school July 1, 2012 June 30, 2014 If the loan is first disbursed during this period, interest will be charged during the grace period, 3.4% fixed rate beginning 7/1/12 Unsubsidized = interest accrues in school and grace Interest rate = 6.8% Any interest unpaid during grace will be capitalized at repayment Federal Direct Loan Program

Federal Direct Stafford Loan Program Borrowing Limits

Determining Financial Need for Subsidized Student Loans Cost of School$25,000 Grants or Scholarships - $0 EFC- $23,500 Need$1,500 Subsidized Student Loan $4,000 Unsubsidized Student Loan Cost of School$25,000 Grants or Scholarships - $5,000 EFC- $7,000 Need$5,500 Subsidized Student Loan Student AStudent B

Additional eligibility

For parents of dependent students or graduate level students There is no borrowing limit on the PLUS Loan May borrow up to full cost of education minus financial aid Credit check is required on this loan, but no debt-to- income test 4% origination fee will be deducted from disbursements Interest Rate is 7.9% Repayment can be deferred Federal Direct PLUS Loan

Student borrows in his or her own name Based on credit scoring and debt-to-income ratio Repayment may be deferred until education completed Fees, interest rates, loan amounts, and repayment provisions vary by lender and are generally higher than federal student loans Co-signers usually required. Some loan products have a co-signer release option Compare loans before making choice and read the fine print! This should be a last resort! Alternative/Private Education Loans

Calculators and Resources Figuring out what works best Enter the Numbers Explore Related Websites

Packaging Example for Year #1 Cost of School 20,000 Grants or Scholarships (Free Money) - 5,500 (State Grant & Private Scholarship) Amount Due School 14,500 Out of Pocket Costs: Student Loan 5,500 College Savings 3,500 Other: Parent PLUS Loan, Private Loan, etc. 5,500 Total Out of Pocket Costs14,500

In most cases, you WILL have to pay for educational expenses. This is your ACTUAL family contribution, or AFC or out-of-pocket costs. Yesterdays money SAVINGS - 529 Plan Todays money INCOME - Tuition Payment Plans Tomorrows money LOANS Federal, Private, Institutional, Home Equity How will you cover the cost??

Financial Aid 101 Final Thoughts

1.Finish on time. 2.Borrow only what you need 3.Research your earning potential 4.Keep borrowing in line with future earning power (estimate loan payments at pheaa.org or youcandealwithit.com) Final Thoughts

Clearly determine who will pay for what How much debt can the family take on? Are there options for cutting costs? Give yourself a low-cost alternative How much will the student work? How many years will college take? Things to Talk About

Student and parent apply for a PIN at www.pin.ed.govwww.pin.ed.gov Visit websites with free information about college, financial aid and careers Explore scholarship opportunities locally, regionally and nationally Use the FAFSA4caster to estimate EFC and eligibility for federal financial aid - Free online tool, available at www.fafsa4caster.ed.gov www.fafsa4caster.ed.gov What you can be doing now prior to completing the FAFSA

o pheaa.org o EducationPlanner.org o Youcandealwithit.com o Myfedloan.org o PHEAA toll free: 1-800-692-7392 o Federal Student Aid Info Center 1-800-433-3243 o www.fafsa.gov o www.studentaid.gov general financial aid info o www.studentloans.gov information on federal loans Resources

Provides information on: Free scholarship search sites Loans Savings Military Aid Other Types of Aid Financial Aid Forms Financial Aid FAQs Calculators www.finaid.org

Questions?