Financial Aid Essentials

FINANCIAL AID: The Essentials and then some….

Financial Aid
Financial Aid = Assistance for students to fund their education in the form of:
Grants – money that does not have to be repaid
Scholarships – money that does not have to be repaid
Loans – money that does need to be repaid
Employment – on or off campus job

Goals of Financial Aid
Primary goal is to assist students in paying for college & is achieved by:
Evaluating family’s ability to pay educational costs
Distributing limited resources in an equitable manner

Before you begin….
Don’t assume that more expensive schools will necessarily cost you more! Financial aid may allow you to afford a school you previously did not consider.
Involve your child in the process
Discuss your ability to pay for college with your child before the admission deposit deadline
Look at this as a long term investment and not just a one year application

Merit-Based Aid vs. Need-Based Aid
Merit-Based Aid = aid given to students strictly on the basis of merit. Does not have to be repaid, usually renewable from year to year. May be based on:
Academic record
Special characteristics
Skills or talents
Involvement in school or community
Need-Based Aid = aid awarded to students on the basis of financial need. Re-evaluated each year as financial situations of a family may change.

Filing for Aid
Some forms you may be asked to complete:
Free Application For Federal Student Aid (FAFSA)
Institutional Application for Aid
U.S. or Puerto Rico Tax Return
W-2 forms
College Board Profile*
Non-custodial parent information
Business or Farm Supplement
Other forms as required by the school
(For certain Profile schools you may be requested to submit tax or other institutional forms through IDOC)

What Is The FAFSA?
FAFSA = Free Application For Federal Student Aid
Application for federal and state aid
(may be application for college aid as well, depending upon the school)
File one FAFSA per year per student ( not one per college)
List up to six colleges (four if filing on paper)--Title IV Code or school name; schools receive info. Electronically
Need to file a FAFSA each year you want to receive aid

Whose Information is on the FAFSA?
Dependent:
parental & student financial data required
Independent:
student & spouse financial data required

Conditions to determine independency
Student must meet one of following criteria to be considered independent:
24 years of age
Veteran of the U.S. Armed Forces
Enrolled in a graduate or professional program
Married
Orphan or ward of the court until age 18
Have legal dependents that student provides at least 50% support for
At age 13 or older were both parents deceased, was the student in foster care or a dependent/ward of the court
Emancipated Minor as determined by a court
Determination that student was homeless by a recognized authority

Whose Information is on the FAFSA?
If the parents are divorced or separated….
When filing FAFSA, financial information of parent that student resides with for more than half of the year (if equal time, information of the parent that provides the most financial support) should be provided
If the custodial parent is remarried…
The financial data of new spouse must be included on the FAFSA

How/When to File the FAFSA?
How To Complete the FAFSA:
On-line at www.fafsa.ed.gov
Complete as soon as possible after January 1 , or file electronically at www.fafsa.ed.gov beginning January 1 prior to the fall for which student seeks aid
USE THE “FAFSA ON THE WEB WORKSHEET” to assist in the completion of the on-line FAFSA
FAFSA is free – do not use any site that charges a fee to complete the FAFSA

FAFSA On The Web
If filing over the Internet, 2 choices:
Parent and student mail signature page in or
The Parent and Student both need to apply for PIN # at www.pin.ed.gov
PIN serves as e-signature
PIN will be mailed or e-mailed to person who requested the PIN
Use PIN to submit information and make corrections over Internet at www.pin.ed.gov
Can request a PIN at any time – SUGGEST YOU DO SO NOW!
If you have a PIN from before you may use that PIN

Filing The FAFSA
Do not wait to be accepted to the school to complete the FAFSA
Based on prior calendar year tax information
May use estimated income and taxes
PA residents will use the FAFSA for state grant consideration; state will follow up with an additional form once FAFSA is complete
MAKE COPIES OR PRINT OUTS OF EVERY FORM!

Financial Need
Cost of Attendance
- Expected Family Contribution (EFC)
Financial Need

Financial Need
Cost of Attendance includes:
Tuition & Fees
Room & board
Books & supplies
Personal expenses
Transportation allowance

What Is The EFC?
Basis of financial aid package
EFC is determined by a federal formula that calculates need via the FAFSA
EFC & Financial Need are guidelines used by schools to determine aid package
EFC not necessarily = to out-of-pocket cost of family

How Is The EFC Calculated?
Primary Factors Looked At:
Taxable Income: AGI (wages earned+interest dividends+other taxable income)
Untaxed income & benefits
Number in family
Number of dependent children in college
Assets
(FAFSA does not ask for home value or value of retirement funds but school or Profile may ask for this information)

Learn more about how the EFC is calculated
Utilize a Financial Aid Calculator to familiarize yourself with more details and to get an early estimate of your EFC
Go to www.collegeboard. com and click on tab “For Parents” and select Financial Aid Calculator from the options on the left, then select EFC Calculator and insert your personal information
or
Go to www.finaid.org and click on Calculators and select Needs Analysis

Institutional Methodology
Some schools may require CSS Profile Form
Primarily private schools
Collects supplemental data (i.e.-home equity, financial data of non-custodial parent, value of retirement plans, etc.)
Calculates IM (Institutional Methodology)
Basis for awarding institutional need-based aid only
Register to complete form at www.collegeboard. com
Fee $25 for application and 1 st school report; $16 for each additional school

Help! Sources of Aid
Federal
State
The College/University
Outside Organizations
Civic organizations (ex.-local Rotary Club), parent’s employer, high school

Federal Aid
Must:
Be a U.S. citizen or eligible non-citizen
Have HS diploma or equivalent
Be matriculating in a degree/certificate program at accredited Title IV school
Be registered with Selective Service if a male between ages of 18 and 25
Free of drug possession or sale conviction

Federal Aid
Pell Grant (need-based):
$4,731 max/year for 2008-2009 year
Pell Grant recipients might also be eligible for:
Academic Competitiveness Grant (ACG)
$750 1 st year; $1,300 2 nd year for students who took rigorous HS curriculum
National Science and Mathematics Access to Retain Talent Grant (SMART)
$4,000 for 3 rd and 4 th year students in physical, life or computer sciences, math, technology, engineering or critical foreign languages

Federal Campus-Based Aid
SEOG Grant-exceptional need - $100 - $4,000/year (typically have to receive Pell)
Perkins Loan-exceptional need - $100 - 5,500/year; 5% interest rate
Federal Work Study
Colleges have set allocations for campus based funds (student may receive award from one school & not another!)

Federal Stafford Loan
In student’s name/no credit check
Available to all students, regardless of need
Repayment begins 6 months following graduation or withdrawal
Competitive interest rate
6.0% for subsidized; 6.8% for unsubsidized
Interest rate reset each July 1 st
Amount varies by class
$3,500 for freshman
$4,500 for second year students
$5,500 for third year and beyond (undergrads)
Additional $2,000 unsubsidized in addition to the above amount is effective May, 2008

Federal
PLUS Loan
Loan in parent’s name
8.5% Interest Rate
Repayment begins 60 days after 2 nd disbursement; deferments are now available
Credit check involved
Borrow up to cost of attendance minus other financial aid student is receiving
Add’l. unsub available to students whose parent(s) are denied on PLUS Loan due to poor credit

State
Pennsylvania State Grant (for PA Residents): $4,700 max/year for 2008-09 for students attending a PA school; however funding did not allow a max grant of $4,700
Eligibility based on need and family’s unique circumstances
Max PHEAA Grant that can transfer out-of-state, $600, to: CT, DE, MA, ME, OH, RI, VT, DC, WV
$400 maximum transfers to other states, except NJ, MD and NY--$0 transfers there (some exceptions)
Student must file FAFSA by May 1 for upcoming fall term
PHEAA sends student status notice beginning mid-May; student must complete and return to PHEAA
Check www.pheaa.org for other grant programs

College/University
Colleges may offer significant amount of funds to assist students
Factors that may influence institutional aid, particularly merit-based aid:
Academics Athletic Ability* SAT’s Geographic Diversity
AP Courses Legacy (child of alumni
Activities Academic Track
Talent H.S. Attended
Class Rank
*Athletic awards only offered by NCAA Division I and Division II schools only.

College/University
Investigate Sources of Aid
Determine deadlines and criteria for eligibility for each school
College may be the largest funding source
Complete college/university application for aid
Private schools may require CSS Profile (fee charged-$25 to register & provide data to first school; $16 for each additional college or program); register at www.collegeboard.com

Outside Sources
Private sources of scholarship funds include:
Service/Fraternal Organizations
Employers/Business
Churches/Religious Groups
Sources of Information
Internet: www.pasfaa.org, www.Nasfaa.org, www.finaid.org
Books: Peterson’s Guide, Barron’s Guide to Colleges, “Don’t Miss Out” (Octameron Assoc.)
Guidance Office Computer Programs

Comparing Aid Offers $4700 $4700 $4000 $1900 PA State Grant $3940 $440 $3140 $0 Unmet Cost (Cost – aid) $3940 $440 $3140 $0 Unmet Need (excluding Unsub Stafford) $20000 $4500 $0 $0 Institutional Grant $2000 $2000 $2000 $0 Stafford Loan - Unsubsidized $3500 $3500 $3500 $2240 Stafford Loan - Subsidized $2500 $1500 $1000 $0 Work Study $3000 $2000 $2000 $0 Perkins Loan $3000 $2000 $0 $0 SEOG Grant $2360 $2360 $2360 $2360 PELL Grant $43000 $21000 $16000 $6500 NEED $2000 $2000 $2000 $2000 EFC $45000 $23000 $18000 $8500 COST School D School C School B School A

Comparing Aid Offers $1400 $1100 $600 $0 PA State Grant $12600 $10000 $10000 $6500 Unmet Cost (Cost – aid) $2600 $900 $0 $0 Unmet Need (excluding Unsub Stafford) $21000 $2000 $1900 $0 Institutional Grant $2000 $2000 $2000 $2000 Stafford Loan - Unsubsidized $3500 $3500 $3500 $0 Stafford Loan - Subsidized $2500 $1500 $0 $0 Work Study $2000 $2000 $0 $0 Perkins Loan $0 $0 $0 $0 SEOG Grant $0 $0 $0 $0 PELL Grant $33000 $11000 $6000 $0 NEED $12000 $12000 $12000 $12000 EFC $45000 $23000 $18000 $8500 COST School D School C School B School A

Comparing Aid Offers
Will package change if outside scholarships are received?
What factors can cause changes to my eligibility in the future? (i.e.- how will my package change if there is a change in the number in college, what if my income increases)
Is there room for movement in my financial aid award?
Look at the Bottom line for each school carefully comparing grants, loans and work opportunities as well as merit versus need based programs
Consider possible changes in your family situation over the next four years & consider how that can affect your ability to pay not only in the next four years but over the years all your children are in college

Don’t Forget!
Research Outside Scholarships
(see www.pasfaa.org or finaid.org for websites)
Complete the FAFSA form as soon as possible after January 1 of senior year
Remember to keep copies of every financial aid form that you complete!
Check with each college/university to see what additional forms they require
Don’t be afraid to call the financial aid office at the school(s) you are interested in!
GOOD LUCK!

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Financial Aid Essentials

by Dianne Krause

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