Financial Aid
101
Paying for Higher
Education
What is Financial Aid?
Financial aid consists of funds provided to students and
families to help pay for postsecondary educational
expenses.
Includes: Grants, Scholarships, Loans, Work Study
• Not all families qualify for financial aid.
• There is no guarantee that you will get any free
money to pay for higher education
Where does the money come
from?
• Federal Government
• State Government
• School/Colleges
• Private Scholarship Sources:
•
•
•
•
HS Counselors
Clubs and organizations
Employers
Internet scholarship searches
Basis for awarding aid…
• Merit – scholarships usually based on:
• Academic or athletic ability
• Special talent or achievement
• Program of study
• Need-based grants, loans, and employment
usually based on:
• Income
• Assets
• Other factors
The Free Application for
Federal Student Aid (FAFSA)
Online at www.fafsa.gov safe, secure, fast, skip logic,
built in edits
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.
Paper FAFSA – call 1-800-433-3243
When to Apply
Seniors
• The FAFSA may be filed beginning on
January 1 of the upcoming award year.
For the 2014-15 award year this would
be January 1, 2014.
• Every year in college
Information you Need to Complete
the FAFSA
•
•
•
•
•
•
Social security numbers
Federal income tax return (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: Veteran’s non educational benefits, child
support paid/received and workers compensation.
• Alien registration or permanent resident card (if not a
US citizen)
Things Not Counted on FAFSA
•
•
•
•
•
•
Primary home/residence
Qualified Insurance Policies
Retirement
Social Security
Credit Card Debt
Any Debt
www.FAFSA.gov
Whose information goes on the
FAFSA??
• Mom and Dad unless…..
• Divorced, separated parents or parents that were never
married - (where the student has lived the most for the
past 12 consecutive months or if 50% between both
parents - the parent that provides more than 50% of
students support is whose info goes on the FAFSA)
• Stepparents - yes
• Adoptive parents – yes
• Foster parents - no
• Legal guardians - no
• Anyone else the student is living with - no
IRS Data Retrieval Tool
• While completing the FAFSA, applicant may
submit request to IRS for tax data
• IRS will authenticate taxpayer’s identity
• If match found, IRS sends results to applicant
in new window
• Applicant chooses whether or not to transfer
data to FAFSA
• Usually not available until Mid February
PIN
Personal Identification Number
•Website: www.pin.ed.gov
•Sign FAFSA electronically
•Student and one parent signs electronically with PIN
•Do NOT lose it. Write it down and store in a safe place
•Do NOT share it with anyone
Personal Identification Number
(PIN) www.pin.ed.gov
Know Your Deadlines
Know all of your state and school/college
deadlines and file the FAFSA by the earliest
deadline.
• School Deadlines – vary by school
• PA State Grant deadlines –
• May 1, 2014 - 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
Know what financial aid forms
your school may require:
• Free Application for Federal
Student Aid (FAFSA)
• PA State Grant Form (SGF)
• CSS PROFILE Form (Private
schools)
• Institutional Application
Online State Grant Application
• Additional questions needed to determine PA State
Grant eligibility
–
–
–
–
enrollment status
value of PA 529 College Savings Program
program of study for students in vocational programs
employment status
• Link off the FAFSA Application CONFIRMATION Page!
• Link in an email sent to student/parent from PHEAA
• Help screens are available for all questions
FAFSA Tips
• Get Federal taxes done as soon as possible
• Don’t mix answers for student and parent information
• Use the Correct SSN
• Gender question is optional – answer it!
• Have federal income tax, W2 forms and other related
information as references
• It’s OK to ESTIMATE if taxes aren’t filed yet
Financial Aid
101
Forms Are Filed...
What’s Next?
What is the Expected Family
Contribution (EFC)?
• Amount family can reasonably be expected to
contribute towards the students education
• Stays the same regardless of college
• Two components
– Parent contribution
– Student contribution
• Calculated using data from the federal form – the
FAFSA
• This is NOT the amount you will pay
How is the EFC calculated?
• Parent contribution + student contribution = EFC
• Bulk of EFC comes from income
• Home, personal property, qualified retirement funds, and
value of life insurance excluded from assets
• Asset protection allowance (based on age of older parent,
or the parent if single parent household)
• Parent asset contribution usually = roughly 6%
• Student income contribution = 50% of amount over $6,000
• Student asset contribution = 20% of assets
• Parent contribution divided by number of children in
college at the same time
What school costs are considered by
the financial aid office at the school?
School costs include:
– Tuition and fees
– Room and board
– Books and supplies
– Transportation
– Miscellaneous living expenses
• Varies widely from college to college
Calculating Financial Need
Schools/colleges receive financial aid information and
calculate financial need by the following:
School cost……………………. $26,000
EFC………………………minus… - 3,000
Financial need………………… $23,000
Financial Aid Offices “awards” student based on financial
need and available funding (varies from school to school).
Financial aid award letter sent to student.
Financial Aid Award Letter
• 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
Reviewing the Financial Aid Package
• After reviewing financial aid packages, students
should be sure they know and understand the
following:
– How much is gift aid, and how much is not?
– Which awards are based on need, and which are
based on merit?
– Are there any conditions on the gift aid; in particular,
is there a GPA requirement?
– Will their awards change from year to year?
– Will institutional awards increase as tuition increases?
Special Circumstances
Contact the school and ask for a special consideration
AND Contact State Grant Division at PHEAA if:
• Recent death or disability
• Change in employment status – reduced income
• Change in parent marital status – separation or
divorce
• Student cannot obtain parent information
Financial Aid
101
Federal, State, and College
Financial Aid Programs
Federal Programs
Pell Grant …………..... up to $5645 (2013-14)
Campus-based aid – amounts determined by FAO
• FSEOG…………………… up to $4000
• Perkins Loan ……….. up to $5500 (fixed 5% interest
rate)
• Federal Work Study …… FAO determines
Federal Loans
• Student Loans
• Parent Loans
Pennsylvania State Grant (PHEAA)
PA State Grant
Full-time, in PA…...….up to $4,363
Part time, in PA………up to $2,182
Out of state….. Up to $600 in DE, MA, OH, RI, VT, WV, and
DC
All other states….up to $500 (NJ, NY, and MD = $0)
For additional details, see the PA Student Aid Guide page 16, or visit
www.pheaa.org
Pennsylvania State Grant (PHEAA)
• A Pennsylvania State Grant is based on financial need
and by the cost of attendance:
• The maximum amount of the grant is determined, in
part, by the cost of attendance at the school:
Community College $2,313
State University
$3,713
State Related
$3,991
Private Institution $4,363
Federal Student Loans
• Effective July 1, 2013, Federal Direct Loans
now carry variable/fixed rates
• “variable/fixed” means that the interest rate
for new loans will be set annually, but the rate
at the time of disbursement will remain fixed
for the life of the loan
• Rates on new loans reset on July 1st of each
year
Federal Direct Loan Program
(for students) Stafford Loans
Subsidized = no interest charged to student while enrolled
• Based on Financial Need
• Interest will be charged during the grace period, if the loan is first
disbursed July 1, 2012 through June 30, 2014.
Unsubsidized = interest accrues in school and grace
• Any interest not paid during grace will be capitalized at repayment
There is a 1.051% fee deducted from loan amount at disbursement.
Interest Rates
• 3.86% for 2013-14
• Capped at 8.25%
Stafford Borrowing Limits
Parent Loan for Undergraduate
Students (PLUS)
• May borrow up to full cost of education minus
financial aid
• Credit check is required on this loan
PLUS Loans – Parent & Graduate
• 6.41% for 2013-14
• Capped at 10.50 %
• Up-front fee of 4.204% deducted at
disbursement
Federal Direct PLUS Loan
Repayment begins immediately - can defer repayment
until 6 months after student graduates or drops below
half-time enrollment.
• If defer payment – encouraged to make interest
payments
• All loans must be repaid within 10 years
Additional Eligibility
Alternative/Private Education Loans
• Nonfederal loans, made by a lender such as a bank, credit
union, state agency, or a school.
• 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 cosigner release option
• Compare loans before making choice and read the fine print!
Financial Aid
101
Smart Borrowing
Page 28 PA Student Aid Guide
MySmartBorrowing.org
This interactive
tool gives you
information you
can use to make
smart decisions
about career
choices and
paying for
college.
MySmartBorrowing.org
Page 28 PA Student Aid Guide
Smart Borrowing Tips
Research job availability in your chosen
field, before selecting your major.
 You won’t be able to repay your student
loan if you aren’t employed.
 Research employment rates in your
potential career field before making a
final decision on your major.
Page 28 PA Student Aid Guide
Smart Borrowing Tips
Research your expected salary in your
future career, find an affordable
school, and borrow realistically.
 There are many paths to the same
degree.
 Research every option, including
community colleges and commuting.
 Only attend a school you can
reasonably afford.
Page 28 PA Student Aid Guide
Smart Borrowing Tips
Consider all types of financial aid carefully.
 Grants and scholarships do not need to
be repaid.
 Work-study provides part-time jobs for
students.
 Loans must be repaid with interest.
Financial Aid
101
Final Thoughts
Scholarships
• Scholarships are FREE MONEY
• Scholarships are awarded by foundations, philanthropists,
non-profit organizations, businesses and colleges to help
students pay for college
• Check with your School Counselor for Local Scholarships!
• Fastweb.com is the largest, most accurate and most
frequently updated scholarship database.
www.fastweb.com
Resources
•
•
•
•
•
•
•
•
•
•
www.PHEAA.org
www.mysmartborrowing.org
www.EducationPlanner.org
www.Youcandealwithit.com
www.Myfedloan.org
PHEAA State Grant toll free: 1-800-692-7392
Federal Student Aid Info Center – 1-800-433-3243
www.fafsa.gov
http://studentaid.ed.gov
www.studentloans.gov – information on federal loans
Thank you!
Marla Kane
mkane@pheaa.org