What You Need to Know about Financial Aid

This presentation was developed and provided for free by MASFAA.

OverviewCollege Bound! •Know Your Deadlines, Applications, Requirements, and Timelines

•About the FAFSA

•Types of Financial Aid

•Resources

January next yearBack to the Future, new FAFSA is due

June, July, August

Billing Statements, Payment Plan, Student Loans

May

Deposits due, accept admission and financial aid awards

March - April

Admissions response, financial aid verification and award lettersJanuary - February

Get the FAFSA filed, submit all admissions requests

Financial Aid Timelines

Getting Started• Application for admission may be required before aid can be awarded.

•Be aware of the school’s SAP (Satisfactory Academic Progress) policies

•Pay attention to deadlines:Priority deadline for filing FAFSA – check with school!Admissions application deadlineScholarship application deadlineAward acceptance deadline

Sources

Federal

State

School

Private

Types of Financial Aid

Need Based Non-Need Based Merit

Scholarships Loans Scholarships

Grants Some scholarships

Most work study

Some work study

Loans

Applying for Different Types of Aid

•USE THE FAFSA FOR : •Grants – Free or “gift” aid•Work Study – Self- help – must be earned•Loans – Self-help – must be repaid

•USE SEPARATE APPLICATION FOR:•Scholarships•Waivers•Follow the process at your school

What is the FAFSA?

FAFSA =FreeApplicationForFederalStudentAid

Emphasis on the “FREE” Part

Components of the FAFSA

•The Philosophy•The Form

•FAFSA on the Web Worksheet and•Online FAFSA Application

•The Formulas•COA, EFC, NEED

The Philosophy(Why Is All This Information

Needed?)

•Parents and students are primarily responsible for paying for higher education.•Families are evaluated in their present financial condition.•A family’s ability to pay is evaluated in an equitable and consistent manner.

Special situations can be considered

The ProcessFill out and submit

FAFSAFill out and submit

FAFSA

Federal processor will determine Expected

Family Contribution

School receives FAFSA info

School determinesneed

School createsFinancial Aid

Award Package

Student receivesAward Letter

Student responds to Award Letter

(Verification)

IRS Data Retrieval System•Retrieve federal tax data directly from IRS•Results sent to school show tax data was imported and if it was updated•Voluntary, but if you don’t use IRS data retrieval to provide your tax info, you must explain why •Not using or making changes after using may trigger selection for verification of all information on FAFSA•IRS Data tool will be available February 3, 2013

FAFSA Application

•Available on-line at www.fafsa.gov. Use this site ONLY!

•May complete the FOTW worksheet first to use as “cheat sheet” when completing the on-line application.

•Students may call 1-800-433-3243 to request up to three paper applications or print the pdf at www.fafsa.gov.

PIN Registration• PIN numbers can be obtained at the

end of the FAFSA on-line process and is real time

• Web site: www.pin.ed.gov• Both student and parent need a PIN• PIN is used for FAFSA, MPN,

NSLDS access• NOTE: Case sensitivity has been removed on

challenge questions – easier to retrieve PIN if forgotten

Completing the FAFSA•Tax information

•Use 2012 federal tax information•W-2s •Untaxed income – i.e. child support received, untaxed portions of IRAs, worker’s compensation

•Student and Parent Information•Use correct SSNs•Use LEGAL NAME from Social Security Card•Accurate date of birth

Completing the FAFSA•School information

•On-line requires listing at least one school•Ten schools can be listed to receive FAFSA information when using the on-line application

•Assets & Business Information•If required, the net worth they hold the day you complete the form should be reported.•Stocks, bonds, money market accounts, rental or recreational (second home) property, etc. •Do you include value of your family home, family farm or family business?

Dependent or Independent?

•Criteria to be independent:•Born before Jan. 1, 1990 (age 24)•Working on a graduate degree•Married•Veteran of the U.S. Armed Forces•Have dependents other than a spouse that you support more than 50%

Dependent or Independent?• At any time since student turned age 13, both of student’s parents were deceased,(orphan), student was in foster care, or the student was a dependent of/ward of the court.

• As determined by student’s state of legal residence, the student is now or was upon reaching the age of majority, an emancipated minor (released from control by his or her parent or guardian).

• As determined by the student’s state of legal residence, the student is now or was upon reaching the age of majority, in legal guardianship.

•Exceptions to dependency criteria:•Abandonment•Abuse•Neglect•Where safety of student would be compromised by contacting parentsContact your financial aid officer for help in

these situations. Documentation is required.

Special Circumstancesfor Dependency Issues

What if I have other special situations?A special conditions appeal may be filed when your income has changed due to:

•Loss of job•Death of wage earner•Divorce•Unusually high medical bills

Special conditions are considered only afterinitial awards have been determined.

Divorced/Separated ParentsWhose information goes on the FAFSA?

1. Who did student live with most in last 12 months?2. If #1 is not clear, who provided the most financial support in the last 12 months?3. If neither #1 or #2 clarifies it, choose the parent from whom the student most recently received the most support.

Stepparent’s information is ALWAYS included!

The Formula

Cost of Attendance (COA)

-Expected Family Contribution (EFC)

Need

COST OF ATTENDANCE

Main Components Other Possible Components

Tuition and fees Loan fees

Room and board Study abroad costs

Books and supplies Dependent or elder care expenses

Transportation Expenses associated with a disability

Miscellaneous personal expenses Expenses for co-op education program

What is “EFC?”

•“Expected Family Contribution” – calculated using FAFSA data and a federal formula•Amount the family can reasonably be expected to contribute, but not what the family will pay the college•The same regardless of what college the student attends•Two components

-Parent contribution-Student contribution

What is “Need?”

Cost of Attendance (COA)-Expected Family Contribution (EFC)

“Need”

•The amount of student’s COA that can be covered with “need-based” aid•NOTE: Non-need based aid can be used to help cover EFC

Need Varies Based on Cost

AB C

A BC

EFC EFC

Cost of Attendance (Variable)

Expected Family Contribution (Constant)

Need (Variable)- =

Timelines for FAFSA

•Submit as early as possible after January 1st

•Estimated tax return or completed tax return?

•Processing Times •1 – 3 days if submitted electronically•4 – 6 weeks if paper FAFSA is mailed•School processing times vary

Print and keep your confirmation page showing your FAFSA was electronically

submitted.

Student Aid Report•A formatted report of the information supplied when completing the FAFSA

•If e-mail is provided, SAR is sent electronically to student•Otherwise, a paper SAR is sent

If you haven’t received any information within 4 weeks, contact the financial aid office or Federal Processor at 1.800.4.FEDAID (1.800.433.3243) or check your application on-line at www.fafsa.gov

.

Grants

Available Grants•Federal Pell Grant

•Federal Supplemental Educational Opportunity Grant (FSEOG)

•Montana Higher Education Grant (MHEG) (State grant)

•Baker Grant (State Grant)

•Acce$$ Grant (Private Grant)

No payback required!

Free money!

Employment

Federal & State Work Study

•Can be need or non-need based

•On or off campus

•Earnings do not count as income on next year’s FAFSA

•Amount awarded is not guaranteed to be earned – why? If you did not receive a work-study

award, most schools have a waiting list.

Student Loans

Types of Educational Loans

•Federal Loans•Direct Subsidized and Unsubsidized•Perkins•Graduate Plus•Parent Plus

•Private Loans

Federal Loan Eligibility

•Loans are a type of financial aid

•Need and non-need based

•Enrolled at least half time

•Need based

•Interest rate: 5% fixed

•Nine-month grace period

•Deferment & cancellation provisions

•Limited funding – apply early

Federal Perkins Loan

Federal Direct Loans

•Direct Subsidized Loan•Need based

•Direct Unsubsidized Loan•Non-need based

•Parent Plus

•Graduate Plus

Direct Loan Annual Limits

Grade LevelSubsidized may not

exceed Unsubsidized Annual Limit

1st year $3500 $2000 $5500

2nd year $4500 $2000 $6500

3rd year and beyond $5500 $2000 $7500

AGGREGATE LIMIT $23,000 $31,000

Dependent Undergraduate Students

• Base loan = may be Subsidized if eligible, Unsubsidized, or a combination

• Students may qualify for lesser amounts of loan if other aid meets their cost of attendance

Direct Loan Annual LimitsIndependent Undergraduate Students

Grade LevelSubsidized may not

exceed Unsubsidized Annual Limit

1st year $3500 $6000 $9500

2nd year $4500 $6000 $10500

3rd year and beyond $5500 $6000 $12500

AGGREGATE LIMIT $23,000 $57500

• If the Federal PLUS loan for a dependent student is denied, then the dependent student is eligible for the independent loan limits.

Direct LoansInterest Rates•Subsidized and Unsubsidized Loans: 6.8%, effective July 1, 2013

Fees• 1.0% of loan amount deducted prior to disbursement• Fee determined and retained by Department of Ed, not the school

Federal Direct Loans

Benefits•No credit check performed/no creditworthiness needed for students•No Payments due while student is enrolled at least half-time•Six-month grace period after student leaves school before payments begin•10-year repayment term – longer for higher loan balances•Deferment/cancellation provisions

Direct Parent Plus Loan•Interest Rate: 7.9% fixed•Borrowers are parents of dependent undergraduate students – credit check is performed•Fees: 4% - deducted prior to loan disbursement•Fee is determined and retained by Department of Ed, not the school.•Loan limits:

•Cost of attendance less other aid received•Can cover EFC for student•No aggregate limit

Direct Parent Plus Loan

•Repayment begins 60 days after fully disbursed •Ten year repayment term•Four repayment options available to parent borrowers:

•Level repayment•Interest Only•Monthly payment based on percentage of income•Delayed repayment

•Parents can request an In-school deferment and six month grace period

Graduate Plus & Private Student Loans

Graduate Plus (Federal)•Interest Rate 7.9% fixed•For graduate/professional students only

Private Student Loans•Also called “Alternative” loans•Interest and terms vary; often require co-signer•Cannot be combined with federal student loans in a federal consolidation – always a separate payment•Use as a “Last Resort” – exhaust all federal eligibility first

Scholarships

•Merit (Honors)

•Institutional

•Activities

•Community

Scholarship Types

Governor’s Best and BrightestDivided into three scholarships - all

administered in different ways1. Merit

• Application available online• One award per high school• High School official selects recipient

2. Merit-at-Large• Application available online• Includes heavily weighted essay section

– encourage your student to submit written essayeven if not the “top student”

Both Merit and Merit-at-Large use same application as MUS Honors scholarship - available at www.scholarship.mt.govVisit http://www.mgslp.state.mt.us for details

Governor’s Best and Brightest - Continued

Divided into three scholarships - all administered in different ways

3. Need-Based• No application needed• Financial aid office selects recipient• Based solely on need

Visit http://www.mgslp.state.mt.us for details

Scholarship Searches•Colleges – 92% of scholarships awarded will come from the college your student attends

•High School guidance counselors

•Internet searches •SmartAboutCollege.org - follow “MCIS” link•Studentaid.ed.gov•Collegeboard.org•Finaid.org

•Avoid scams - Free, Free, Free!

Other Resources•Health & Human Services

•Veteran’s benefits

•Military Service Scholarship (ROTC)

•Bureau of Indian Affairs (BIA) Grants

•Tribal assistance

•American Indian Tuition Waiver

•Vocational rehabilitation

Taxpayer Relief Act

•American Opportunity/Lifetime Learning Tax Credits

•Student Loan Interest Deduction

•Education IRA

•College Savings Plans

Financial Aid Mistakes to Avoid

Four Most Common Mistakes:

•Not submitting the FAFSA

•Procrastination

•Paying for scholarship searches, FAFSA filing

•Assuming that financial aid is for someone else

Questions??

Contact:

Kalie Porter, GM Campus Outreach Eastern MTStudent Assistance Foudationkporter@safmt.org406.657.1639

Thank you for your time and attention!

Your Montana Financial Aid Officers

Student Assistance Foundaiton