funding your college education: financial aid 101

Funding Your College Education:

Financial Aid 101Presenter: Andrea Tracy and

Stephanie KubecLEAF Advisor

Agenda

• What is Financial Aid?

• What are the types and sources of Financial Aid?

• How do colleges award Financial Aid?

• What is the Financial Aid process?

• What if my family’s financial situation has changed?

• How do you find scholarships?

What is Financial Aid?

• Any funds provided to students and families to help pay for college expenses.

• May be awarded from: Federal Government State Government College Private Sources

LOANS ARE CONSIDERED FINANCIAL AID!!!

Two Types of Financial Aid…

Gift Aid

• Funds which do not need to be repaid

Example:

• Grants

• Scholarships

Self-Help Aid

• Funds which must be repaid or earned

Example:

• Loans

• Work Study

Colleges Award Aid Based on…

• MeritBased on GPA and/or ACT/SAT test scores,

special talents, athletic abilities, Leadership/service

Usually notified after accepted for admission

• Financial Need

Cost of Attendance - EFC = Financial NeedTuition and Fees

Room and Board

Books and Supplies

Transportation

Miscellaneous Expenses

Financial Need Varies Based on the College’s Cost of Attendance

X

Y

Z

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

1

2

3

EFC EFC

Expected Family Contribution (EFC)

• Parental Income

• Parental Assets (excluding retirement accounts and primary residence)

• Age of Older Parent

• Family Size

• Number in College

• Student Income

• Student Assets

EFC is calculated when the Free Application for Federal Student Aid (FAFSA) is

submitted by the student.

EFC Factors:

EFC Tells the College’s Financial Aid Office…

…It does not indicate what the student will owe.

Federal

Sta

te

Institutional

EFC

EFC tells a Financial Aid Office what a student is eligible for in Federal, State and institutional monies…

Free Application for Federal Student Aid (FAFSA) www.fafsa.gov

• Collects information from the family and is used to calculate the student’s Expected Family Contribution (EFC)

• Cannot be completed until 1/01/12

• Uses tax information from 2011 Estimate taxes if deadlines need to be met!

• Must be filed every year

• Some processed FAFSA’s may be selected for a process called Verification

• Beware of sites and companies that charge to file the FAFSA!

Application Tips• Be aware of DEADLINES!!! Check college’s

Financial Aid Website for more information

• Get a PIN for the student and one parent whose information will be on the FAFSA www.pin.ed.gov

• File the FAFSA on-line: www.fafsa.gov

• Submit supplemental applications (like the CSS Profile) if necessary

• Think before you spend money on financial aid consultants, scholarship search companies!

• GET THE STUDENT INVOLVED!!!

Paperwork Needed to Complete the FAFSA

Paperwork/information needed from parent(s) and student:

2011 W2 Forms 2011 1040s’ Social Security Numbers Asset information

• Examples:– Stocks– Bonds– Mutual Funds– Rental Property– Savings Account– Checking Account– 529 Plans

Untaxed Income• Disability• Unemployment• Contributions to a

retirement plan

Not included: Social Security Income Social Security Disability Business Value if under

100 employees Retirement Fund Values

($ paid into an account is considered untaxed income)

Download a FAFSA on the Web worksheet from www.fafsa.gov

IRS Data Retrieval

• Recommended way to provide tax information on the FAFSA

• Parent and student must have a PIN

• Taxes will be available for download from the IRS 2 weeks after filing electronically or 5-8 weeks if filing by paper.

• Meet deadlines! Estimate taxes if necessary and do corrections with data retrieval.

• Parents/students who do data retrieval will not have tax information selected for verification. (Other information may be selected.)

After Filing the FAFSA…

• Watch for the Student Aid Report (SAR) If the student’s e-mail is on the FAFSA the SAR will be e-

mailed to the student.

• Is the student selected for Verification? Notified on the SAR or institution may select If eligible for the Pell Grant, student will be selected To verify tax information, the school will require an IRS Tax

Transcript.• Request transcript on-line: www.irs.gov

• Did you receive a Financial Aid Award Letter from the college(s)? Check on-line!!!!

• Accept/apply for the awards On-line!!! Check the Financial Aid Website or award letter

for instructions

• Watch for the first quarter/semester bill in mid-July

Common FAFSA Concerns

• Why is my information on the FAFSA? The FAFSA is an application. Federal regulations

dictate that parental information needs to be included until a student meets certain criteria or turns 24.

• Does putting my information make me liable for college costs? No. The FAFSA is just an application. It does not

make you liable for your student’s educational costs.

• I’m remarried. Why should my spouse’s info be on the FAFSA? Because your spouse is in the student’s household.

FAFSA asks about a student’s household in which he/she resides.

My Financial Situation Has Changed…

• If your financial situation is not reflected accurately on the 2012-2013 FAFSA you can petition the Financial Aid Office to review your situation. The college’s Financial Aid Office has final say on what situation is “Reviewable”.

Example of Reviewable Situations

• Loss of job

• Reduction of overtime

• Medical Bills

• Divorce/Separation

• Private Elementary or Secondary School Tuition

Example of Non-Reviewable Situations

• Credit Card Bills

• Mortgage Payments

• Co-pays for Medical Check-ups

• Parent Student Loan Payments

Financial Aid TimelineJa

n 20

12 Feb

Mar

ch

April

May

1st

June

July

Aug

Sept

File the FAFSA

Check Deadlines!

Receive Award Letter

Send in Deposit

Bills Sent

Payment Due

•Bills are sent by semester/quarter

•Financial aid must be accepted and processed by August

•If you don’t receive a financial aid award letter by late March your student may be selected for Verification!

•Colleges are going GREEN! Check for the award letter on-line!

Loans in the Student’s Name

Direct Stafford Loan Perkins Loan Alternative/Private Loan

Federal Loans

•Can be:

•Subsidized (need based, interest subsidized)

•Unsubsidized (non-need based, interest accumulates)

•Fixed Interest Rate 6.8%

•First year maximum: $5500

•Principal repayment starts 6 months after the student graduates or the last date of attendance

•Awarded to neediest students on first-come first-serve basis

•Interest is subsidized

•Fixed Interest Rate 5%

•First year maximum up to: $5500

•Colleges can award different amounts up to the first year maximum (Campus based aid)

•Principal repayment starts 9 months after the student graduates or the last date of attendance

•Non-need based

•Student:

•Must pass a credit check

•Needs a co-signer

•Variable interest rate (Can be up to 23%)

•Student can be approved one year and not the next

•Principal payment can be required while the student is in college

Loan in The Parent’s Name

PLUS Loan

• The FAFSA must be filed in order to apply!

• Parent must pass a credit check Does not take debt to income ratio into

consideration

• Fixed interest rate 7.9%

• Payments can be deferred until after the student graduates

• If the parent is denied the student is granted additional unsubsidized Stafford eligibility

Federal Grants

• Pell Grant 2011-2012 Maximum $5550 Award based on student’s EFC and enrollment EFC threshold 5273 For undergraduate students

• FSEOG Campus Based Aid (First-come-first-serve) College awards to the neediest students Can be up to $4000

• TEACH Grant For education majors who agree to teach a specific topic

(Example: Math, Science, certain foreign languages…) College must participate in the program Students must agree to teach at least 4 years in a low-

income school.

State Grants

• Ohio College Opportunity Grant (OCOG) Award based on EFC and Enrollment

• EFC must be 2190 or less Must be enrolled in a 4-year Public or Private

college• Private College award 2012-2013: $1872• Public College award 2012-2013: $672

• Other grants include (www.ohiohighered.org) Ohio War Orphans Scholarship Ohio Safety Officers College Memorial Fund Robert C. Byrd Honors Scholarship

Institutional/Outside Scholarships

• Institutional Monies Differs by institution Check undergraduate catalogue for more information

• Outside Scholarships Local Scholarships

• Check the Guidance Office• www.leaf-ohio.org

National Scholarships• Check with the Reference Desk at libraries• www.fastweb.com• www.collegeboard.com• www.collegegold.com

Beware of scholarship scams! Check them out! www.bbb.org

Questions???

Mrs. Stephanie Kubec

LEAF Advisor

Day/Time: Tuesdays/7:30am-2:00pm

@leaf-ohio.org

Phone number @ school

440-392-5143

LEAF Office: 440-358-8045

www.leaf-ohio.org