National Association of Student Financial Aid Administrators

© NASFAA 2012

What You What You Need to Know Need to Know

about Financial Aidabout Financial Aid

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Topics We Will Discuss Tonight

• What is financial aid?• Categories, types, and sources of financial aid• Expected Family Contribution (EFC)• Cost of Attendance (COA)• Free Application for Federal Student Aid

(FAFSA)• IRS Data Retrieval• Special circumstances

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What is Financial Aid?

Financial aid consists of funds provided to students and families to help pay for postsecondary educational expenses.

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Sources and Types of Financial Aid

• Scholarships– Private sources– Civic organizations and churches

• State– Scholarships

• Federal government– Grants– Employment– Loans

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Scholarships

• Money that does not have to be paid back

• Awarded on the basis of merit, skill, or unique characteristic

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Private Sources

• Foundations, businesses, charitable and religious organizations

• Companies may have scholarships available to the educational benefits for employees and/or the children of employees

• Free Scholarship Search at www.fastweb.org

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State

• Residency requirements

• Award aid on the basis of both merit and need

• Deadlines vary by state; check FAFSA on the Web

• Tuition Incentive Program (TIP)

• Michigan uses the first school listed on the FAFSA for purposes of

– Michigan Tuition Grant– Michigan Competitive Scholarship– March 1, 2013 deadline

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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)

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Common Federal Aid Programs

• Federal Pell Grant

• Teacher Education Assistance for College and Higher Education Grant

• Federal Supplemental Educational Opportunity Grant

• Federal Work-Study

• Federal Perkins Loan

• Subsidized and Unsubsidized Loans

• PLUS Loans

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Grants

• Money that does not have to be paid back

• Usually awarded on the basis of financial need

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Employment

Allows student to earn money to help pay educational costs

•A paycheck; or

•Non-monetary compensation, such as room and board

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Loans

• Money that 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

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Federal Direct Stafford Loans

Year in CollegeInitial Loan

AmountAdditional Unsubsidized Loan for

Dependent Undergraduates

First Year $3,500 $2,000 ($5,500 total)

Second Year $4,500 $2,000 ($6,500 total)

Third Year & Fourth Year $5,500 $2,000 ($7,500 total)

Undergraduate Loan Maximum Debit Limit:

 $31,000 (only $23,000 can be

Subsidized Loan)

This table shows the maximum yearly amount that a dependent student can be offered in Federal Direct Stafford Subsidized and Unsubsidized Loans. It also states the maximum aggregate limit a dependent student is allowed to have for their entire undergraduate career.

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Gaps in Educational Costs

•Payment Agreements

•Federal Direct PLUS Loan

•Alternative Loans

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Free Application for Federal Student Aid (FAFSA)

• FREE – do not pay

• A standard form that collects demographic and financial information about the student and family to apply for federal aid

• May be filed electronically or using paper form beginning January 1st each year

• Available in English and Spanish

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FAFSA

• Colleges may set their own FAFSA filing deadlines for awarding of their institutional funds (UM-Flint March 1)

• Most Colleges and Universities begin awarding in late March to mid-April

• Information used to calculate the Expected Family Contribution or EFC

• Colleges use EFC to award financial aid

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What is the Expected Family Contribution (EFC)• Amount family can reasonably be expected

to contribute towards the cost of the student’s education for an academic year

• Stays the same regardless of college

• Two components

– Parent contribution

– Student contribution

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What is Cost of Attendance (COA)

• The cost of attendance (COA), also known as the budget, is an estimation of what it cost to go to school for a specific period of enrollment.

1. tuition & fees

2. room & board

3. books & supplies

4. personal/miscellaneous expenses

5. transportation

• Varies widely from college to college

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What is Financial Need

Cost of Attendance

– Expected Family Contribution

= Financial Need

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Need Varies Based on Cost of Attendance

X

Y

Z

Cost of Expected Family NeedAttendance Contribution (Variable) (Variable) (Constant)

1

2

3

EFC EFC

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Satisfactory Academic Progress (SAP)

• To be eligible to receive federal student aid, you must meet and maintain your college’s standards of satisfactory academic progress toward a degree or certificate.

• Each college has a policy – students be aware of the policy if you get any for financial aid.

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Getting Started Electronically

• Apply for Personal Identification Number(PIN) – both parent and student

• File FAFSA

• Need Parent and Student– Federal Tax Return (if completed)– W-2’s

• 6 digit school codes may be found on school’s web site

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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

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FAFSA on the Web

Good reasons to file electronically:• Detailed instructions and “help” for common questions

• 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

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FAFSA on the Web

• Website: www.fafsa.gov• 2013–14 FAFSA on the

Web available on January 1, 2013

• FAFSA on the Web Worksheet:– Used as “pre-

application” worksheet

– Questions follow order of FAFSA on the Web

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FAFSA on the Web

Look to the hints for help

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FAFSA on the Web

Use this the first year

Use 2nd year and forward

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FAFSA on the Web – Demographics

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FAFSA on the Web – Eligibility

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FAFSA on the Web – Eligibility

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FAFSA on the Web – School Selection

UM Flint002327

List your school of choice first

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FAFSA on the Web – Dependency Status

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FAFSA on the Web – Dependency Status

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FAFSA on the Web – Parent Demographics (Single)

Select the answer that describes your parents' marital status as of the day you submit your Free Application for Federal Student Aid (FAFSA).“Married / Remarried” does not mean living together unless your parents' state of legal residence recognizes their relationship as a common law marriage.

If one of your parents is widowed or divorced and has remarried, answer the questions about that parent and your stepparent.

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FAFSA on the Web – Parent Demographics (Married)

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FAFSA on the Web – Financial Info

2012For 2012 have your parents completed their IRS income tax return or another tax return?

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IRS Data Retrieval

• Available February 2013 for 2013–14 processing cycle

• Participation is voluntary

• Reduces documents requested by financial aid office

• DON’T Change the IRS Data once it is received• Department of Education plans to send several

email reminders to request IRS retrieval

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FAFSA on the Web – Financial Info

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FAFSA on the Web – Financial Info

If answer no, will not see asset questions

$XXXXXX.00

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FAFSA on the Web – Signatures

• Required

– Student

– One parent (dependent students)

• Format

– Electronic using PIN

– Signature page

– Paper FAFSA

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FASFA on the Web – Confirmation

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FASFA on the Web – Confirmation

5965$5500.00

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Frequent FAFSA Errors

• Social Security Numbers

• Divorced/remarried parental information

• U.S. income taxes paid

• Real estate and investment net worth

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FAFSA Processing Results – How you know it’s completed

• Central Processing Service notifies student of FAFSA processing results by email if provided

• At www.fafsa.gov student with PIN may

– View SAR on-line

– Make corrections

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Special Circumstances

• Send written explanation to financial aid office at each college; do not report on FAFSA– Change in employment status

– Medical expenses not covered by insurance

– Change in parent marital status

– Unusual dependent care expenses

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Helpful Links and Phone Numbers

• Order an IRS Tax Transcript on-line– http://www.irs.gov/individuals/article/0,,id=2321

68,00.html

• Order an IRS Tax Transcript by phone

– (800)908-9946

• General financial aid information on-line

– www.finaid.org

UM-Flint Office of Financial Aid 810-762-3444