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F41 Nuts and Bolts of Financial Aid

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This session will introduce you to the basics of financial aid, an introduction to key terms and concepts of financial aid and the Free Application for Federal Student Aid (FAFSA). …

This session will introduce you to the basics of financial aid, an introduction to key terms and concepts of financial aid and the Free Application for Federal Student Aid (FAFSA).
In addition, participants will be provided with tools and resources to reach out to students and families as they navigate through the process of finding ways to pay for college.

Published in: Business, Economy & Finance

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  • 1. Financial Aid Certification The Nuts and Bolts of Financial Aid Training for Counselors and Mentors
  • 2. The Nuts and Bolts of Financial AidOBJECTIVESBy the end of this session, participants will be able to:• introduce students to financial aid terms and concepts;• outline the process of (1) establishing eligibility for state and federal aid programs; (2) packaging of awards; (3) disbursing aid; and (4) handling student enrollment withdrawals; and• identify trusted sources of information.ACTIVITIES Illinois Trends Terms and The Financial Resourcesin College Cost Concepts Aid Process 2
  • 3. Anticipate QuestionsThere are lots of things to • How much will it cost?think about and manyquestions to ask. • Can I afford college? • What is financial aid? • What is the FAFSA? • When and how do I apply? • Where can I get help? Know the answers…
  • 4. TRENDS IN COLLEGE COST 4
  • 5. Tuition and Fees in IllinoisFour-Year Public Colleges and Universities Academic Average Annual Year Tuition and Increase Fees 2009-2010 $10,442 10.5% 2008-2009 $9,452 10.5% 2007-2008 $8,553 8.6% 2006-2007 $7,875 10.1% 2005-2006 $7,151 8.9% 2004-2005 $6,565 13.5% 2003-2004 $5,785 9.2% 2002-2003 $5,298 10.7% 2001-2002 $4,786 8.6% 2000-2001 $4,406 5.9% Average Annual Increase Past 10 years 9.7% Past 20 years 7.8%Source: Illinois Student Assistance Commission. College Illinois! (2010). 5
  • 6. AffordabilityThe share of family income, even after financial aid, needed to payfor college has risen substantially. In Illinois, today’s newborn will pay close to $180,000 to attend a state school.* Refer to the “College Cost Calculator“ on www.collegeillinois.org. Illinois U.S. Best Performing States Source: Measuring Up 2008. The National Report Card on Higher Education. The National Center for Public Policy and Higher Education. 6 * http://www.529prepaidtuition.org/documents/pdf/2010-2011Enrollment_kit_Final.pdf
  • 7. Education and Unemployment Unemployment Rate, Age 25+, December 2010 15.0% National Average 9.4% 10.0% 5.0% 0.0% Less than a high High school Some College, Associates Bachelor s school diploma gr aduates No Degr ee Degr ee Degr ee and HigherNote: Data are averages for persons 25 and over.Source: Bureau of Labor Statistics, Current Population Survey (December 2010) 7
  • 8. Education Pays Median Weekly Earnings, Age 25+, December 2010 $1,400 National $1,050 Average $788 $700 $350 $- Less than a high High school Some College or Bachelor s Advanced school diploma gr aduates* Associates Degr ee Degr ee Degr eeNote: Data are averages for persons 25 and over.Source: Bureau of Labor Statistics, Current Population Survey (December 2010) 8
  • 9. WAYS TO PAY A COLLEGEEDUCATION 9
  • 10. Know the OptionsA number of options are available to families who areconcerned about their ability to meet the family share ofcollege costs.Financial Aid Programs 529 Savings & Prepaid Tuition Programs Employer Tuition Benefits Tuition Payment Plans 10 Know the options…
  • 11. TERMS AND CONCEPTS 11
  • 12. Types of Financial AidThere are many types of financial aid, including: Grants gift aid Scholarships self-help Work-Study aid Loans Grants are typically based on financial need while scholarships are generally rewards for grades, athletics, a unique skill or even an specific career interest. Work-study allows students to earn money through a campus- based employment program. Loans can be subsidized or unsubsidized but must be repaid after graduation or dropping below half-time enrollment status. 12
  • 13. Sources of Financial AidFinancial aid comes from a variety of sources. federal state government government outside/ college private (institutional aid) sources The federal government is the largest source of financial aid for students, with colleges and universities providing the second largest source of financial aid for students. 13
  • 14. State and Federal Sources Illinois Student U.S. Department ofAssistance Commission Education (ISAC) (ED)• www.collegeillinois.org • www.FederalStudentAid.ed.gov• The agency in the State of Illinois that • The federal agency that provides the administers state and federal grant, largest amount of college funding in scholarship and prepaid tuition the form of grant, scholarship, work- programs. study and educational loan programs. 14
  • 15. Financial Aid Funding Entitlement Appropriation Waiver Program • Public funds set aside • Gift assistance that in for a specific program. most cases is awarded • Program which is based on a student’s • Ex. MAP Grant funded sufficiently to field of study and/or ensure that all eligible employment status. applicants will receive awards. • Ex. Illinois Special • Ex. Illinois Veterans Education Teacher Grant Tuition Waiver 15
  • 16. Illinois Student Assistance CommissionGrant and Scholarship ProgramsProgram Acronym Type of Aid 2011-2012 BenefitMonetary Award Program MAP Grant; Need-based; Appropriation up to $4,720Silas Purnell Illinois Incentive for Access IIA Grant; Need-based; Appropriation $500 (Freshman only, not funded)Illinois Veteran Grant IVG Grant; Entitlement maximum 12 units per term, up to 120 units cumulativeIllinois National Guard Grant ING Grant; Entitlement maximum 12 units per term, up to 120 units cumulativeGrants for Dependents of Police, Fire & Grant; Appropriation up to 8 semesters orCorrectional Officers 12 quartersBonus Incentive Grant (BIG) Program BIG Grant; Appropriation $40 to $440Illinois State Scholars Program ISSP Certificate of Achievement N/AMerit Recognition Scholarship MRS Grant; Merit-Based; Appropriation $1,000 (Not funded)Teacher ProgramsProgram Acronym Type of Aid 2011-2012 BenefitIllinois Future Teacher Corps Program IFTC Scholarship; Appropriation up to $5,000 or $10,000Minority Teachers of Illinois Scholarship MTI Scholarship; Appropriation up to $5,000Illinois Special Education Teacher Tuition SETTW Waiver up to 4 calendar yearsWaiver 16
  • 17. U. S. Department of Education Federal Grant ProgramsProgram Acronym Type of Aid 2011-2012 BenefitFederal Pell Grant Grant; Need-based up to $5,550Iraq and Afghanistan Service Grant Grant maximum is same as Pell maximum; payment adjusted for less-than-full time studyFederal TEACH Grant Program TEACH Grant up to $4,000 per year Campus-Based ProgramsProgram Acronym Type of Aid 2011-2012 BenefitFederal Supplemental Education FSEOG Grant $100-$4,000Opportunity Grant Exceptional NeedFederal Work-Study FWS Need-based Employment no annual minimum or maximum amounts; at least minimum wagePerkins Loans Need-based Loan up to $5,500 for undergraduate; up to $8,000 for graduate 17
  • 18. The Big ThreeMaximum Award Amounts for 2011-2012* State of Illinois Monetary Up to $4,720 Award Program (MAP) Up to $5,550 Federal Pell Grant Up to Federal Supplemental $4,000 Education OpportunityTotal = $14,270 Grant (FSEOG)* NOTE: 2011-2012 amounts best estimate as of printing. 18
  • 19. Loan ProgramsWhen evaluating loan options, consider the following: Repayment Interest Source Subsidized Options Rate of vs. & + Loan Unsubsidized Grace Fees Period Start by knowing a student’s rights and responsibilities. 19
  • 20. Subsidized vs. UnsubsidizedThe big difference between the two is when interest begins toaccrue. Type Need or Interest No NeedSubsidized Stafford Loan A need-based loan Interest is paid by the federal government while a student is in school at least ½ time, during grace period, and during authorized periods of defermentUnsubsidized Stafford Loan NOT a need-based A student is always responsible for loan paying interest 20
  • 21. U. S. Department of EducationFederal Loan Programs, 2011-2012 Type Rate GracePerkins Subsidized 5% 9 fixed monthsStafford Subsidized 3.4% 6 fixed months Unsubsidized 6.8% 6 fixed monthsPLUS Credit-based 7.9% Within firstGraduate PLUS fixed 60 daysNote: Stafford Loans (both subsidized and unsubsidized) for Graduate students have afixed interest rate of 6.8% through 2013. 21
  • 22. Direct Stafford Loan ProgramsLimits for 2011-12 Year DEPENDENT INDEPENDENT Undergraduate Students Undergraduate Students (and DEPENDENT whose parents are unable to obtain a PLUS Loan)1st Year $5,500 $9,500 Max. $3,500 subsidized Max. $3,500 subsidized2nd Year $6,500 $10,500 subsidized Max. $4,500 subsidized Max. $4,500 subsidized3rd Year $7,500 $12,500 Max. $5,500 subsidized Max. $5,500 subsidized4th Year $7,500 $12,500 Max. $5,500 subsidized Max. $5,500 subsidizedAggregate Loan Limits $31,000 $57,500 (max. $23,000 subsidized) (max. $23,000 subsidized)Federal Student Aid, (2011) “Direct Stafford Loans”http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp
  • 23. Federal Perkins LoanLimits for 2011-12Year Undergraduate Graduate1st Year $5,500 $8,0002nd Year $5,500 $8,0003rd Year $5,500 $8,0004th Year $5,500 $8,000Aggregate Loan Limits $27,500 $60,000 (this aggregate limit includes undergraduate Perkins loans)About Perkins Loans• Not all colleges participate in the Perkins Loan Program, as of May 6, 2010 only 1,624 schools had fund resources• The amount that can be borrowed may be less than the federal maximum
  • 24. How to ApplyTo be considered for student aid, a student must complete allforms required by a college. Free Application Institutional Other for Federal Forms Student Aid (FAFSA) Note: Communicate with each college to inquire about steps to a complete application. 24
  • 25. Free Application for Federal Student AidWhat is a FAFSA?It is the first step in the financial aid process. A FAFSA is used to apply for Illinois scholarships andgrants and for federal student financial aid such as grants, loans and work-study (e.g. Pell Grant,MAP Grant). In addition, postsecondary schools use it to award non-federal financial aid. Theapplication is available to students at no fee.Three Ways to Access a FAFSA Paper FAFSA FAFSA on the Web .pdf FAFSA 1-800-4-FED-AID www.FAFSA.gov www.FAFSA.gov
  • 26. Personal Identification NumberA PIN, along with other identifiers, gives students Internetaccess to their information on the Federal Student Aid systems.• Serves as an electronic signature and PIN Checklist provides access to personal records oSocial Security Number• Go to www.pin.ed.gov oLast Name Option 1: Create a four-digit PIN oFirst Name Option 2: Have the site create a PIN oMiddle Initial• PIN is conditional until relevant information oDate of Birth is verified with the Social Security oStreet Address Administration (1-3 days) oe-Mail address (optional)• PIN will not expire at the end of the year 26
  • 27. When to ApplyImportant Dates, 2012-2013 FAFSA • January 1, 2012 (First date to submit FAFSA) College • Dates vary by college (Check with each college) MAP • As soon as possible after January 1, 2012. Awards made Grant until funds are depleted.* Federal • June 30, 2013 (at the end of the academic year) Pell Grant * Note: Suspension dates are subject to the number of eligible applicants and funding made available by the Illinois General Assembly and approved by the Governor
  • 28. General Eligibility RequirementsWho can get federal and state student aid?Eligibility for most federal and state aid programs is based on financial needrather than academic achievement.In addition to a completed FAFSA, a student must: have a high school diploma or its equivalent enroll as a regular student in an eligible degree or certificate program have a valid Social Security Number make satisfactory academic progress register for selective service, if male 18-25 years old sign certifying statements on the FAFSA 28
  • 29. Dependency StatusWhose information is required on a FAFSA?For financial aid purposes, questions on the FAFSA will determine the statusof the student. Status based on FAFSA Report income and assets Dependent Parents Student Independent Student Spouse 29
  • 30. Output DocumentsThe SAR and ISIR After FAFSA processing is complete, a students will receive an output document or record that shows: SAR ISIR • information originally provided by a student; Student Aid Institutional Report Student • the Expected Family Contribution; Information • results of the eligibility matches; and Record • information about inconsistenciesNotes:• The body of the SAR has been reduced to enable students to determine the status of their FAFSA, their eligibility for a Federal Pell Grant and the next steps in the application process• Students who submit a Spanish FAFSA or a correction in Spanish will receive all communication in Spanish 30
  • 31. Expected Family Contribution A need analysis formula established by Congress determines a student’s Expected EFC Family Contribution; using information Expected Family Contribution reported on the FAFSA.What? Why? Where?A comparative Used to determine a Shown on the Studentmeasure of how much student’s eligibility for Aid Report (SAR)a family can be most federal and stateexpected to contribute assistanceover the course of anacademic year 31
  • 32. What are the costs?Each college determines the Cost of Attendance at their institution. Some academicmajors/programs may have a different Cost of Attendance at the same university. Tuition & Fees Room & Board Transportation Books & Supplies Miscellaneous Living Expenses+ Cost of Attendance (COA) 32
  • 33. Financial Need Expected Cost of Family Financial Attendance - Contribution = Need (COA) (EFC) 33
  • 34. To Determine Financial NeedExamples Financial COA EFC Need College - = A College $10,000 $3,000 $7,000 - = B $20,000 $3,000 $17,000 College - = C $35,000 34 $3,000 $32,000
  • 35. Financial Aid AwardsThe financial aid administrator at the college will package allavailable aid and send an award offer for consideration. • What is the total cost of • What is the Expected Family attendance? Contribution? • What is a student’s financial • What types of financial aid aid eligibility? are included? • What is the out-of-pocket • Was financial need met? cost?Goal: To meet a student’s need.• New information creates changes.• When packaging need based-aid, students must have need and all sources of aid must be considered.• The total of all sources of aid may not exceed cost of attendance (COA).
  • 36. Other things to know about applying for financial aid:• Apply early!• Information reported on a FAFSA is confidential and is used ONLY to determine financial aid eligibility.• A student may be asked to submit documentation to the financial aid office for verification purposes.• Supplemental applications or forms may be required.• Keep track of application DEADLINES!• It helps to keep a record of everything that is submitted.• A student must reapply every year. 36
  • 37. DisbursementA student needs Accept the awardsto meet thefollowing  Submit all paperwork and informationrequirements in requiredorder for an  Enroll in classes and meet Satisfactory Academicaward to be Progress (SAP) standardsdisbursed:  Complete pre-loan counseling (entrance counseling) if the student is a new loan borrower  Pay past due charges on a student account  Make arrangements to clear holds set on a student account  The method and time of disbursement varies depending on the type of financial aid 37
  • 38. WithdrawalsA process and consequences apply when a student ceases to beenrolled through the end of a period of enrollment.Types: Official Unofficial Leave of Withdrawal Withdrawal AbsenceCommon Consequences: Charges remain the same but financial aid is greatly reduced or eliminated Asked to pay back money received in a financial aid paymentNot eligible to receive aid payment because of too many withdrawals in past Pay school expenses out-of-pocket 38
  • 39. THE FINANCIAL AID PROCESS 39
  • 40. Guiding PrinciplesFinancial aid funds are available to make it possible forstudents to continue their education beyond high school. • Students and parents have the primary responsibility of funding educational costs. • Financial aid is available only to assist in filling the gap between a family’s contribution and a student’s yearly academic expenses. • Eligibility is based on multiple factors. • Schools are required to meet certain standards and have written agreements with the U.S. Department of Education and ISAC in order to offer student aid programs. Federal financial aid can be used at approved colleges, universities, trade schools and technical schools. • The school, as a whole, is responsible for proper administration of financial aid programs. 40
  • 41. The ProcessFrom a financial aid administrator’s point of view… Step 1: Determine Step 2: Student Package Aid Eligibility Step 4: Deal with Step 3: Student Disburse Aid Departures and Withdrawals 41
  • 42. Determine Student EligibilityStep 1 Central Processing If necessary System School school (CPS) reviews If student is corrects processes ISIR; selected, Complete ISIR data FAFSA data, determines the school FAFSA and sends it calculates student’s performs to CPS for EFC, and eligibility verification an accurate creates an and need ISIR ISIR and SAR 42
  • 43. PackagingStep 2 If new information If appropriate, about a student school exercises becomes available School packages professional which results in an and awards aid judgment and overaward, student is repackaging may be repackaged necessary 43
  • 44. Disburse AidStep 3 If a student Steps 1-3 are A school credits a received an repeated each student’s account overpayment, a award year until a with financial aid school adjusts a student graduates funds student’s aid or withdraws 44
  • 45. Student DeparturesStep 4 Prorate the Must earned and determine aDetermine the Comply with unearned student’sdate a student refund policies portions of aid eligibility for a ceased and based on time post- attendance procedures spent in withdrawal attendance disbursement 45
  • 46. Get your hands on up-to-date, accurate and trusted sources ofinformation to learn what you need to know.RESOURCES 46
  • 47. Trusted Web sites CollegeIllinois.org WhatsNextIllinois.org FederalStudentAid.ed.gov FAFSA.gov PIN.ed.gov CollegeNavigator.ed.gov 47
  • 48. Manuals & HandbooksHandbook of Illinois Postsecondary InstitutionsUp-to-date financial aid and admission information for institutionsapproved to participate in ISACs scholarship and grant programs.Source: www.collegeillinois.orgFAFSA Expert GuideA compilations of all documents that are referenced in the FAFSA,including IRS tax forms, a description of the McKinney-Vento Act, andthe EFC formula. Source: Only distributed at ISAC’s Financial AidCertification Trainings.Counselors and Mentors Handbook on Federal Student AidA guide for those advising students about financial aid forpostsecondary education. Source: www.FSAPubs.orgState Universities in Illinois - At a GlanceA summary of minimum high school course requirements for admissionof freshman to Illinois public universities. Source: www.IACAC.org12 Reasons to Stay in IllinoisAn admissions guide for counselors on state universities in Illinois.Source: www.IACAC.org 48
  • 49. Stay ConnectedISAC’s e-Messaging Service• Notifies you when new information and/or announcements are added to College Illinois• Summaries of new information, along with links, will be sent to your e-mailGet Printed Materials• ISAC Printed Materials – www.collegeillinois.org• FSA Publications Ordering System (FSAPubs) – www.FSAPubs.org 49
  • 50. Making college accessible and affordable for Illinois students. - ISAC’s Mission StatementDeerfield1755 Lake Cook Road ISACs Big Goal:Deerfield, IL 60015-5209Springfield Increase the proportion of Illinois500 W. Monroe, 3rd FloorSpringfield, IL 62701-1876 adults with a postsecondaryChicago credential to 60 percent by 2025James R. Thompson Center100 W. Randolph, Suite 3-200Chicago, IL 60601-3219800.899.ISAC (4722)www.collegeillinois.org .................................................. College Illinois The official Web site of the Illinois Student Assistance Commission (ISAC)