WHAT YOU NEED TO KNOW ABOUT
FINANCIAL AID FOR 2013-14
A Presentation by Dorothy Gilliard
TOPICS WE WILL DISCUSS TONIGHT
• Financial aid Definition
• Cost of attendance (COA)
• Expected Family Contribution (EFC)
• Financial need Definition
• Categories, types, and sources of financial aid
• Free Application for Federal Student Aid (FAFSA)
• Special circumstances
FINANCIAL AID DEFINITION
Financial aid consists of funds provided to students and families to help
pay for postsecondary educational expenses
COST OF ATTENDANCE -DEFINITION


Includes

Tuition & Fees

Room & Board

Books, supplies, transportation, and misc. personal expenses

Sometimes can include

Loan fees

Study abroad costs

Dependent care expenses
Varies widely from college to college
EXPECTED FAMILY CONTRIBUTION
(EFC)
• Amount family can reasonably be expected to contribute
• Stays the same regardless of college
• Two components
• Parent contribution
• Student contribution
• Calculated using data from a federal application form and a federal
formula
FINANCIAL NEED VS. FINANCIAL AID
Cost of Attendance
–
Expected Family Contribution
=
Financial Need
Need will vary based on the cost of the school.
FOUR TYPES OF FINANCIAL AID
• Scholarships
• Grants
• Loans
• Employment
SCHOLARSHIPS AND GRANTS
• Money that does not have to be paid back
• Awarded on the basis of merit, skill, or unique characteristic
• Usually awarded on the basis of financial need
LOANS
• Money students and parents borrow to help pay college expenses
• Repayment usually begins after education is finished
• Only borrow what is really needed
• Look at loans as an investment in the future
EMPLOYMENT
Allows student to earn money to help pay
educational costs
• A paycheck; or
• Non-monetary compensation, such as room and
board
SOURCES OF FINANCIAL AID
• Federal government
• States
• Private sources
• Civic organizations and churches
• Employers
FEDERAL GOVERNMENT
• Largest source of financial aid
• Aid awarded primarily on the basis of financial need
• Must apply every year using the Free Application for Federal Student
Aid (FAFSA)
STATES
• Residency requirements
• Award aid on the basis of both merit and need
• Use information from the FAFSA
• Deadlines vary by state; check paper FAFSA or FAFSA on the Web site
COMMON FEDERAL AID PROGRAMS
• Federal Perkins Loan
• Federal Work-Study
• varies
• Subsidized and Unsubsidized
Loans
• PLUS Loans
• Federal Pell Grant
• $5,550
• Teacher Education Assistance
for College and Higher
Education Grant
• $4000
• Federal Supplemental
Educational Opportunity Grant
• $100 - $4000
FSEOG (FEDERAL SUPPLEMENTAL EDUCATIONAL
OPPORTUNITY GRANT)
• Students with the lowest EFC’s are awarded first
• Priority goes to Federal Pell Grant recipients
FEDERAL WORK STUDY (FWS)
• Provides part-time employment while you are enrolled in school
• Employment may be on or off campus
• Inquire about jobs at your college’s Student Employment Office
FEDERAL PERKINS LOAN
•
•
•
•
Priority to students who show exceptional need
Interest rate: 5% fixed
Nine month grace period, repayment may be up to 10 years
Deferment and cancellation provisions available for qualifying
employment
• Maximum annual award
– $4,000 for undergraduate students
– $6,000 for graduate students
FEDERAL DIRECT LOANS
• Subsidized
• must demonstrate need
• U.S. Department of Education will pay (subsidize) the interest that accrues
while in school
• Unsubsidized
• not based on need
• most everyone can qualify
Direct Loans – Annual Loan Limits
• Annual Loan Limits (combined subsidized and unsubsidized)
•
•
•
•
•
Classification
Freshman
Sophomore
Each remaining year
Graduate/Professional
Dependent
$5,500
$6,500
$7,500
N/A
Independent
$9,500
$10,500
$12,500
$20,500
DIRECT LOANS
• The interest rate on Direct loans first disbursed on or after July 1, 2013
will be 3.4%:
• Repayment begins after 6 month grace period
• Maximum repayment period between 10 and 30 years
PLUS LOANS
•
•
•
•
•
Parents of dependent undergraduate students
Graduate/Professional students
Repayment begins immediately but can be deferred upon request
Direct interest rate: 7.9%
If a parent is unable to borrow (denied) a parent PLUS loan, a student
may be eligible for additional unsubsidized loan
THE FAFSA –FEDERAL AID-STATE AID – COLLEGE CONNECTION
NEW JERSEY STATE FINANCIAL AID
• NJ State Aid
• Governor’s Urban Scholarship UP TO $1000
• NJ World Trade Center Sch
UP TO $5000
• Law Enforcement Officer’s Mem Sch
COA – OTHER AID
• NJ BEST Scholarship (freshman only)
UP TO $1500
• TAG –Tuition Aid Grant- Maximum Awards for 2012-13
• $3, 092 - $11,550
• PART-TIME TAG (AT COUNTY COLLEGES)
• $546-$1900
• NJ Stars
•
New Jersey residents who graduate in the top 15.0 percent of their high school class, complete a rigorous high school
course of study and achieve the required score on a college placement test to determine college readiness
may be eligible for free tuition to attend one of NJ Community Colleges,. Funded for up to 18 credits per
academic year.
• NJ Stars II
•
For students that have graduated from a community college to transfer into a public or private NJ
institution to complete their education. Funded up to $7000.
• Educational Opportunity Fund (EOF)
• UP TO $2500
New Jersey Financial Aid, cont’d
NJ Class Loan
• A state supplemental loan program that provides eligible students with an additional source of affordable funds
• Low interest rate not based on creditworthiness
• The option for students or parents to borrow
 Loan Interest Rates & Features
 10 YR REPAYMENT AT 6.15%
 Immediate repayment of princ and interest
 15 YEAR REPAYMENT AT 7.05%
 Immediate repayment of princ and interest
 Immediate repayment of interest only
 20 YEAR REPAYMENT AT 8.05%
 Full deferment until out of school
 3% Administrative Fee for all loans
NJHESAA AID APPLICATION
REQUIREMENTS
• NJ requires addtl data elements other than what is
reported on the FAFSA to determine eligibility for TAG
and NJ STARS I and II
•
•
•
•
Driver’s License Info
Veterans Education Benefits (independent students)
Untaxed Social Security Benefits
Earned Income Credit
• Once you get to the confirmation page of the FAFSA you should
select the second option to report this information to HESAA.
NJHESAA AID APPLICATION
REQUIREMENTS
HOW TO APPLY FOR FINANCIAL AID?
 Free Application for Federal Student Aid (FAFSA)
 Required for all types of federal aid
 May be filed electronically (preferred) or via paper form

 File online at www.fafsa.ed.gov after January 1, 2013
 Sign the electronic form with a PIN.
 Later this year you will be able to download a paper
form or you can have one mailed to you by calling 8004-FED-AID (1-800-433-3243)
 Results sent electronically to you (if you give your email
address) and to the institutions you list on the FAFSA
FAFSA ON THE WEB
• Website: www.fafsa.gov
• FAFSA on the Web Worksheet:
• Used as “pre-application” worksheet
• Questions follow order of FAFSA on the Web
• PDF FAFSA will also be available if you want to complete
the FAFSA online; then download the form and mail it in.
FEDERAL STUDENT AID PERSONAL
IDENTIFICATION NUMBER (FSA PIN)
• Website: www.pin.ed.gov
• Sign FAFSA electronically
• Not required, but speeds
processing
• May be used by students and
parents throughout aid process,
including subsequent school
years
FAFSA ON THE WEB
Good reasons to file electronically:
• Built-in edits to prevent costly errors
• Skip logic allows student and/or parent to skip unnecessary questions
• Option to use Internal Revenue Service (IRS) data retrieval
• More timely submission of original application and any necessary
corrections
• More detailed instructions and “help” for common questions
• Ability to check application status on-line
• Simplified application process in the future
WWW.FAFSA.GOV
Click Here >
Login:
(Student’s
Info)
First Name
Last Name
SSN
Date of Birth
STUDENT
Demographic
Information
Student’s Demographic Information
•
•
•
•
•
•
•
SSN (data match)
Name
DL
DOB
Address
Citizenship Status (data match)
Selective Service Registration (data match)
• Male students ages 18-25
Student’s Income and Asset Information
• Tax Return Status
• Income (50%)
• IPA – income protection allowance – allows a certain percentage of income/assets to
not be included in the formula
• It varies according to the number in the parents’ household and the number in
college
• Assets (20%)
• Cash, Savings, Checking
• Other Investments****
DEPENDENT VS. INDEPENDENT
Does the
student have
to use their
parents
information?
DEPENDENCY QUESTIONS
How do you determine if a student is “independent”?
•
•
•
•
•
•
•
•
Born before January 1, 1989
Married
Pursuing an advanced degree
Veteran of the Armed Forces
Legal Dependents (do not provide information on the FAFSA)
Parents deceased or student was or is in Foster Care
Ward of the Court
Unaccompanied Youth who was Homeless
IF A STUDENT IS DEPENDENT PARENTS
MUST PARTICIPATE IN THE FAFSA
PROCESS!!!!!
What
if the
parents
refuse?
If parent’s refuse the student will not
be able to get any financial aid.
INFORMATION PARENTS ARE
REQUIRED TO PROVIDE
PARENT
Demographic
Information
PARENTAL INFORMATION
PARENTAL INFORMATION
SECTION OF THE FAFSA
 Parent Information
 Marital Status




Married or Remarried
Single
Divorced or Separated
Widowed
 SSNs/DOBs/Last Names
and First Initial (IRS Match)
 Email Address
 # in Household (72)
 # in College
Parent’s Income Information
 Type of Tax Return you filed (or will file)
 Dislocated Worker Status
 Receiving unemployment benefits due to being laid off or losing a job
 Was self-employed but is now unemployed due to economic conditions
 Is a displaced homemaker: a person who previously provided unpaid services to the
family, e.g. a stay-at-home mom or dad, is no longer supported by the spouse and is
having trouble finding meaningful work




Adjusted Gross Income from your Income Tax Return
Taxes Paid from your Income Tax Return
Breakdown of Income from work for both parents
Allowances:




Living Expense Allowance
Employment Tax Offset (based on the highest salary)
Income Protection Allowance
State Tax Allowance
Once the allowances are applied to your income the resulting amount is used in the
calculation of the EFC.
SIMPLIFIED NEEDS TEST
• Anyone included in the parents’ household size (as defined on the FAFSA)
received benefits during 2011 or 2012 from any of the designated meanstested Federal benefit programs: (SSI) the Food Stamp Program, the Free and
Reduced Price School Lunch Program, TANF) Program, OR
• the student’s parents:
• • filed or were eligible to file a 2011 IRS Form 1040A or 1040EZ,
• • filed a 2011 IRS Form 1040 but were not required to do so, or
• • were not required to file any income tax return; the student’s parent is a
dislocated worker.
• AND
• (2) The 2011 income of the student’s parents is $49,999 or less.
• • For tax filers, use the parents’ adjusted gross income from the tax return to
determine if income is $49,999 or less.
• • For non-tax filers, use the income shown on the 2011 W-2 forms of both
parents (plus any other earnings from work not included on the W-2s) to
determine if income is $49,999 or less.
• Assets are not considered in the simplified EFC formulas.
WHO QUALIFIES FOR AN AUTOMATIC ZERO
EFC?
• Anyone included in the parents’ household size (as defined on the FAFSA)
received benefits during 2011 or 2012 from any of the designated meanstested Federal benefit programs: SSI, Food Stamps, the Free and Reduced
Price School Lunch Program, TANF, and WIC; OR
• The student’s parents:
• • filed or were eligible to file a 2012 IRS Form 1040A or 1040EZ,
• • filed a 2012 IRS Form 1040 but were not required to do so, or
• • were not required to file any income tax return; OR
• the student’s parent is a dislocated worker.
• AND
• (2) The 2012 income of the student’s parents is $23,000 or less.
• • For tax filers, use the parents’ adjusted gross income from the tax return
to determine if income is $23,000 or less.
• • For non-tax filers, use the income shown on the 2012 W-2 forms of both
parents (plus any other earnings from work not included on the W-2s) to
determine if income is $23,000 or less.
PARENTS INCOME INFORMATION
Taxable Income Sources:
Parent’s asset information
 Assets you DO INCLUDE:
 Cash, Savings, Checking
 Real Estate (other than your primary residence)
The Federal need analysis methodology ignores the net market
value of the family's primary residence. Sometimes, however,
the family's primary residence is a multi-family dwelling. For
example, the family might own a duplex, living in one half and
renting out the other.
For multi-family homes and apartment buildings where the owner
occupies a unit, the portion not occupied by the owner is
treated as an investment asset
 Non-Retirement Investments
 Business Value (if you are self-employed and employ more than
100 people)
 529 College Savings Plans ******
529 PLANS
• A 529 account owned by a parent for a dependent
student is reported on the federal financial aid
application (FAFSA) as a parental asset.
• A student--owned 529 account is to be reported as
parental assets, if the student files the FAFSA as a
dependent and has to include parent assets and
income. This treatment confers a financial aid
benefit as the parental rate of inclusion is
considerably less l than the 20% rate on non-529
assets owned by the student.
Parent’s asset information
 Assets you DO NOT INCLUDE







The value of Life Insurance
Retirement plans (401K)
Pension Funds
Annuities
Non-Education IRAs,
Keogh Plans, etc.
UGMA and UTMA accounts for which you are the custodian,
but not the owner.
A percentage of your asset value is used in the calculation
along with the Education Savings and Asset Protection
Allowance. That percentage usually does not exceed
around 5.64%
EDUCATION SAVINGS AND ASSET
PROTECTION ALLOWANCE
FAFSA PROCESSING RESULTS
Central Processing System (CPS) notifies student of FAFSA
processing results by:
•Paper Student Aid Report (SAR) if paper FAFSA was
filed and student’s e-mail address was not provided
•SAR Acknowledgement if filed FAFSA on the Web and
student’s e-mail address was not provided
•Student with PIN may view SAR on-line at www.fafsa.gov
7 WAYS TO BLOW YOUR FAFSA
• Playing the Waiting Game
• FAFSA requires all sorts of tax-related information, so a lot of
parents wait till they've filed their taxes by April to start working on
the form. That's a big no-no, especially as many states have their
own deadlines for submission of their own info.
• Fudging your Tax Information
• If your household earns enough to file taxes, you won't have a
hope of getting financial aid until you've filed. The Dept. of
Education and IRS are working together to crack down on families
who under-report their taxable income on FAFSA forms, Kantrowitz
says, in the hopes of lowering the existing 4-5% fraud rate.
• Other tax errors: Reporting your total income tax as equal to your
Adjusted Gross Income (AGI) Reporting taxes withheld or tax due
instead of total income tax. "Be sure you are reporting the total
total income tax (the total tax liability) and not just the
withholdings or the additional taxes due
7 WAYS TO BLOW YOUR FAFSA
• Marital Status Mix-Ups
• Divorced parents: Whichever parent the student has lived with the
most over the last 12 months should be responsible for the FAFSA. If
the filing parent has re-married, his or her new spouse must report
their income on the form as well
• Miscalculating Assets
• If you're filing as a dependent student, remember that you don't
have to include certain assets on your FAFSA: Custodial 529
college savings plans, custodial prepaid tuition plans, custodial
Coverdell Education Savings Accounts.
• Also, parents and independent students shouldn't include their
401(k), IRA, pensions, or life insurance policies as assets.
7 WAYS TO BLOW YOUR FAFSA
• Forgetting Who The Forms About
• The FAFSA form is about the student, not the parent, although both
are usually involved in the process. Pay close attention to whose
identification information the form is seeking. It's almost always
referring to the student, and if someone slips up and throws a
parent's SSN in somewhere, it could throw a wrench in the
application process. If the parent has no SSN, use the code "00000-0000" rather than making up one or using a taxpayer ID.
• Silly Errors
• Both parents and students are guilty of these mistakes: misspelled
names, missing question fields and incorrectly written dollar values.
For example, FAFSA forms don't read cents, so you need to type
$500 rather than $500.00. Otherwise, it'll be read as $50,000
• Not Applying At All
• You can't get any money if you don't apply and it's important
everybody apply for FAFSA, even if you don't expect to qualify
FAFSA PROCESSING RESULTS
• Institutional Student Information Record (ISIR) sent to colleges listed
on FAFSA approximately 10 to 14 days after FAFSA submitted
• College reviews ISIR
• May request additional documentation, such as proof that a sibling is enrolled in
college
• Will use the results of the FAFSA to determine eligibility and awarding of aid
STUDENT AID REPORT
• This report is what is sent to the student after FAFSA information is
processed.
• Student should review data for accuracy; make any necessary
changes; re-submit
• Update estimated information when actual figures are available
using the IRS Data Retrieval Process.
Here’s what the student will see.
STUDENT AID REPORT
MAKING CORRECTIONS
If necessary, corrections to FAFSA data may be made by:
• Using FAFSA on the Web (www.fafsa.gov) if
student has a PIN;
• Updating paper SAR (SAR Information Acknowledgement
cannot be used to make corrections); or
• Submitting documentation to college’s financial aid office
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
• Student cannot obtain parent information
WHERE DO YOU GO FROM HERE?
Obtain and review admissions and financial aid Web
sites and materials for each school to which you are
applying.
Meet all application deadlines.
Complete FAFSA and other application materials.
Submit all requested follow-up documents.
Investigate other sources of aid.
Questions?
MY CONTACT INFORMATION