National Association of Student Financial Aid Administrators

© NASFAA 2011

What You Need to Know

about Financial Aid

Ruth PusichElmhurst College

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Topics We Will Discuss Tonight

• What is financial aid• How to Apply for financial aid• What is the FAFSA, EFC, COA, Need• Types, Categories and Sources of financial aid• What will it cost• Special circumstances• Student/Family Responsibilities

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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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How to Apply

• Apply for admission to a college• Complete the FAFSA

– Free Application for Federal Student Aid• Complete any other forms required by the

institution– Internal Financial Aid/Scholarship Application– CSS Profile

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FAFSA – www.fafsa.gov

• A web-based form that collects demographic and financial information about the student and family

• Available in English and Spanish

• May be filed at any time during the school year, beginning January 1st

• Apply for a PIN number at www.pin.ed.gov – real time!

• Colleges may set FAFSA filing deadlines

• Colleges use the calculation results to award financial aid

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CSS/Financial Aid PROFILE

• www.collegeboard.com– Colleges/universities and scholarship programs use to determine

eligibility for non-federal student aid funds– Available October 1, 2011 for 2012-2013 year– $25.00 initial application fee for one college or program plus

additional • $16 per additional college or program

– Review priority filing dates for all schools– More questions regarding home equity and personal assets– Data is analyzed and sent to the colleges or scholarship programs– Institutional Methodology (IM) is used to determine eligibility

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Federal Student Aid Personal Identification Number (FSA PIN)• Website: www.pin.ed.gov

• Sign FAFSA electronically

• Speeds processing

• May be used by students and parents throughout aid process, including subsequent school years

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FAFSA on the Web – Step 1

• www.fafsa.gov– available on January 1, 2012– Print off FAFSA on the Web Worksheet

• Actual form may ask for additional information• Need

– SSN# and birth date of student and one parent– Selective Service registration for males– 2011 tax information and W2s for student and parent(s)– Assets for student and parent(s)

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FAFSA

• Frequently Asked Questions– Who is a dependent student? (13 questions)

– Who is a parent?– Who lives in the student’s home?– Who counts as a college student?– What if my taxes are not completed?– What is additional financial data?– What is untaxed income?– What assets must be included?

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FAFSA• Untaxed Income:

– Annual contributions to retirement accounts – Child support received

• Assets to include:– Cash, savings, money market accounts, savings bonds– College savings plans

• Assets NOT to include:– Personal residence– Full value of any retirement fund (IRA, 401K, etc)– Life insurance

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FAFSA - IRS Data Retrieval • While completing FAFSA, applicant may submit real-time

request to IRS for tax data• IRS will authenticate taxpayer’s identity• If match found, IRS sends real-time results to applicant in

new window• Applicant chooses whether or not to transfer data to

FAFSA• Available early February 2012 for 2012–13 processing

cycle• Reduces documents requested by financial aid office

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FAFSA – Step 2• Watch for your Student Aid Report (SAR)

– Review for errors– Make corrections and/or update estimated information

Do NOTHING if correct

• Institutions receive FAFSA results– Can be sent to up to 10 different colleges– College reviews data

Wait for Colleges to send award letters

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FAFSA – Step 3

– Verification• 35% random selection

– Higher percent if IRS data retrieval is not used• Typical data requested:

– Verification of number in household and college– IRS transcripts to verify income if data retrieval wasn’t

used– W2s– Verification of untaxed income– Amount of food stamps received (2010 and/or 2011)– Documentation of child support paid

• Schools may request additional documentation

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FAFSA – Step 4

• Wait to hear from your colleges– Once accepted to the college and the FAFSA has been

received, the financial aid department gets busy– Schools determine a student’s eligibility for all types of

financial aid – including loans• FAFSA and/or PROFILE are data analysis tools only• Schools have different processing methods

– Watch for your financial aid package• Sent either through the mail to the home or via the student’s

email

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What is the EFC (Expected Family Contribution)?

• The EFC is a number used by schools to calculate the amount of financial aid a student may be eligible to receive

– It is NOT the amount of money your family will have to pay for college NOR is it the amount of federal student aid you will receive

– Calculated using data from a FAFSA and a federal formula

– Stays the same regardless of college

– Two components• Parent contribution• Student contribution

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What is COA (Cost of Attendance)?

• Direct and indirect costs combined into cost of attendance

– Direct costs

• Tuition, fees, room, board

– Indirect costs

• Books, travel expenses, other expenses

• 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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Financial Need

X

Y

Z

Cost of Expected Family NeedAttendance Contribution (Va ria b le ) (Va ria b le ) (Co ns ta n t)

1

2

3

EFC EFC

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Types of Financial Aid

• Gift– Money that generally does not need to be paid back

• Scholarships• Grants

• Self Help– Student Employment

• Allows student to earn money to help pay direct and indirect educational expenses

– A paycheck– Non-monetary compensation, such as room and board

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Types of Financial Aid

• Self-Help– Loans

• Money students and parents borrow to help pay college expenses

– Look at loans as an investment in the future

– Repayment usually begins after education is finished

– Only borrow what is really needed

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Loan Types

• Student– Perkins – 5%– Stafford

• Subsidized – 6.8%• Unsubsidized – 6.8%

• Parent– PLUS – 7.9%

• Student/Parent– Private alternative

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Categories of Financial Aid

• Need-based– Grants – usually awarded on the basis of financial need– Federal Work Study– Loans (Perkins, Subsidized)

• Non-need-based– Scholarships – awarded on the basis of merit, skill, or

unique characteristics– Student employment– Loans (Unsubsidized, PLUS, Private Alternative)

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Sources of Financial Aid

• Federal government

• States

• Institutions

• Civic organizations and churches

• Employers

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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 (FAFSA)

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Common Federal Aid Programs

• Federal Pell Grant

– Federal Supplemental Educational Opportunity Grant

• TEACH - Teacher Education Assistance for College and Higher Education Grant

• Federal Work-Study

• Federal Perkins Loan

• Subsidized and Unsubsidized Loans

• PLUS Loans

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States

• Residency requirements

• Awards based on both merit and need

• Use information from the FAFSA

• Illinois recommends early filing – by March 1

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Institutions

• College and Universities– Athletic scholarships

– Academic scholarships

– Private Institutions

• Need-based grants

• Endowed scholarships

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Private Sources

• Foundations, businesses, charitable organizations

• Deadlines and application procedures vary widely

• Begin researching private aid sources early

– Usually late fall/early spring of senior year

• Employers

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Suggested Websites

• www.collegeillinois.org– State of Illinois Student Financial Assistance

• www.fastweb.com– FinAid on the web

• www.collegeboard.org– College Board

• www.gocollege.com– The Collegiate Websource

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What Will It Cost?

Direct Cost -Gift AidUnmet Cost

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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

– Private school expenses

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Annual Renewal

• Each school will have guidelines for renewing institutional aid

• FAFSA must be filed each year of enrollment for need-based aid and loan consideration

• Student loan eligibility is determined by FAFSA results and student’s year in school

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Financial Aid Scams

Be skeptical if:

• A fee is charged

• You are told to attend an information session

• You are promised or guaranteed an amount of money…

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What Can I Do Now?

• Net-Price Calculator

• Apply for a PIN number www.pin.ed.gov

• Follow deadline recommendations

• Apply early to maximize eligibility

• Compare award packages

• Ask questions when in doubt

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Conclusion

• Keep up good grades

• Research and visit schools of interest

• Check out local scholarship opportunities

• READ EVERYTHING – ASK QUESTIONS

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