financial aid information 2006-07 academic year presented by: (name) (organization) (title or unit)
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FINANCIAL AID INFORMATION2006-07 Academic Year
Presented by:
(Name)
(Organization)
(Title or Unit)
Application Overview
• Completing the application
• Special Circumstances
• Application steps
Free Application for Federal Student Aid (FAFSA)
• Collects family’s personal and financial information
• Only form approved for awarding federal aid – no fee
• Confirms student eligibility criteria through database matches with federal agencies
• Can be submitted to six schools
FAFSA cont.• Complete soon after January 1, 2006
– State Deadline: Due at processor by March 1, 2006
• Reapply every year
• Methods of applying– Electronic – FAFSA on the Web www.fafsa.ed.gov– Paper
• Versions of FAFSA– Initial– Renewal
PIN Web Site• Serves as electronic signature on ED documents,
including electronic promissory notes
• Used to gain access to ED systems, including:– Corrections on the Web– NSLDS– Loan Consolidation
• Receive PIN – E-Mail 1– 3 days– Mail 7 – 10 days
PIN Web Site• Electronic Signature
– YES -- If both the dependent student and parent(s) have a federal PIN.
– NO – If dependent student has a PIN but the parent(s) does not.• The student can use electronic signature • The parent(s) will need to sign and mail a
signature page to FAFSA.
Completing the FAFSA• Gather 2005 income and
asset documents
• Use black ink, fill in ovals completely, CAPITAL letters
• If the answer to a numeric question is zero, enter 0
• Report yearly dollar amounts
Completing the FAFSA
• Blue areas for student information• Purple areas for parent information• Overview
– Step One: General Student Information– Step Two: Student Income and Assets– Step Three: Student Dependency Status– Step Four: Parent Information– Step Five: Independent Student Household– Step Six: Release to Schools– Step Seven: Certification and Signatures
Questions 1-17• Collects student’s demographic information• Used in data matches
– INS - Social Security – IRS - Selective Service– NSLDS - Veteran’s Administration
• Be careful on:– Spelling of name (record as it appears on Social
Security card)– Social Security Number– Date of Birth– E-mail address: All correspondence sent to this
address
Questions 18-31
• Collects information about the student’s:– Residency– Selective Service– Education Goals– Interest in Work-Study and Loans– Illegal drug offense
• Males can register with Selective Service
• Answering “Yes” to work-study and loans does not obligate the student.
Question 32-42• Collects information about the student’s
2005 income– Tax filing status– Type(s) of income– Amounts of income
• Use 1040 or W-2s depending on whether a tax return is filed
• Worksheets A & B collect amounts of untaxed income and benefits
• Worksheet C collects information that can be excluded from income
Questions 43-47• Collects information about the student’s
assets and veterans education benefits
• Net Worth: Current value minus debt
• Report the worth as of the date you file FAFSA
• Question 43 – Current value of cash, checking, and savings accounts
• Question 44 – Investment assets– Include: Trust funds, UGMA accounts, etc.– Do not include: MET (Michigan Education Trust)
• Question 45 – Business and farm assets
Questions 48-54• Collects information used to determine
student’s dependency status
• An independent student is one who:– Was born before January 1, 1983– Is working on a master’s degree or higher– Is married– Has a legal dependent who receives more
than half their support from the student– Is an orphan or ward of the court (or was a
ward until age 18)– Is a veteran of the U. S. Armed Forces
• All other students are dependent
Professional Judgment
• If extenuating circumstances prevent a dependent student from reporting parental information, student may request a dependency override.
• Each college is responsible for approval
• Results may differ between colleges
• Emancipation does not make a student independent
Parental Status• Parents are married
• Parents are separated or divorced – not remarried
• Parents are divorced – one or both are remarried
• Which parent to use?– The one you lived with more– The one who provided more financial support
• Grandparents, legal guardians, and foster parents are not parents
Questions 55-69
• Collects information about parent’s demographics
• Report marital status on the day you file FAFSA
• Report parents’ social security numbers and last names
• Exclude parents from number in college
Questions 70-77• Collects information about the parent’s
2005 income
• Use 1040 or W-2s depending on whether a tax return is filed
• Other common taxable income types are pensions, unemployment, disability benefits, alimony received, etc.
Questions 78-80• Worksheets A & B – Collect information
about the parent’s untaxed income and benefits– Retirement contributions - Welfare benefits– Child support received - Disability benefits– Workmen’s comp - Tax exempt benefits– Untaxed portion of social security benefits and
pensions
• Worksheet C – Collects information that can be excluded from parental income– Education tax credits– Child support paid
Questions 81-83• Collects information about the parent’s assets
• Net Worth: Current value minus debt
• Report the worth as of the date you file the FAFSA
• Question 81 – Current value of cash, checking, and savings accounts
• Question 82 – investment assets– Include: Trust funds, Education IRAs, mutual funds,
real estate, investments, second, vacation, or rental homes
– Do not include: Primary residence, Retirement funds (IRAs, 401k, 403b, Keogh, SEP, etc.)
• Question 83 – Business and farm assets– Do not include: Farm that you live on and operate
Questions 84-85
• Collects information on an independent student’s household
Questions 86-97• List the Federal School Code of the
colleges the student is considering– Obtain code from the Internet or the
college, or fill in the name and address of the college
– List Michigan college of choice first
• Indicate the type of housing associated with each school
• All colleges listed will have access to the student’s FAFSA records electronically
Question 98• Collects information on the
student’s enrollment plans for the 2006-07 academic year
• Give the best estimate of student’s expected enrollment for the academic year
Questions 99-103• Collects certifications, releases, and
signatures
• Certifications– Will submit documentation to verify the
information given on the form, if requested– Understands the Secretary of Education has the
authority to verify income reported with IRS
• Required signatures– Student and at least one parent
• Report outside preparer information
Special Circumstances• Always report 2005 income on FAFSA• If financial circumstances change in 2006 –
Contact each college to request a reevaluation– Each college is responsible for approving changes
in circumstances– Result may differ between colleges
• Common special circumstances include:– Death or divorce of a parent after filing FAFSA– High medical expenses paid and not covered by
insurance– Loss of income through layoff, retirement, or
disability
After Completing the FAFSA
• Make sure all questions have been answered
• Don’t include notes or income documentation when mailing FAFSA
• Transmit FAFSA electronically with appropriate signatures (or in envelope provided)
• Keep copy of FAFSA with tax returns and income documents and asset information
Application Overview• Apply for admission to the college(s)
• Complete and submit FAFSA
• Check with college for other required forms and documents– Supplemental forms to award institutional funds– Submit all requested documents
• FAFSA information is received, processed and results are sent to student and college– Electronic file to college(s) listed on FAFSA– Electronic or paper Student Aid Report (SAR to
student
Application Overview cont.
• Review your SAR for accuracy. If corrections are needed, correct on-line or contact college.
• FAFSA information may be selected for verification. Verification requires submission of income documents and a verification worksheet.
• Aid cannot be processed until all required documents have been submitted to the Financial Aid Office.
• The Financial Aid Office will review your documents and determine your aid eligibility.
Application Overview cont.
• Everyone who applies will receive notification from the college regarding their eligibility.
• Read all correspondence and promptly follow instructions.
• You do not have to accept all award types but the school may not replace it with something else.
• Contact the Financial Aid Office if you have questions about your award.
General Financial Aid Overview• General information
• Costs and financial need
• Eligibility criteria
• Types of aid
• Searching for other resources
Purpose of Financial Aid
• Promote accessibility
• Produce educated workers
• Help retain good students
• Provide incentives
• Reward academic achievements
• Influence choice
Financial Aid Principles• Paying for the student’s educational costs
is the primary responsibility of the student and the parent(s).
• Aid is distributed based on ability to pay – not willingness.
• Families are reviewed and assessed in their present financial condition.
• Families are evaluated in an equitable and consistent manner, recognizing that special circumstances may affect the families ability to pay.
Financial Aid Eligibility Equation
Cost of Attendance- Expected Family Contribution
(EFC)
= Financial Aid Eligibility (Need)
Cost of Attendance• Tuition and fees
• Room and board
• Books, supplies, equipment, transportation, and miscellaneous personal expenses
• Loan fees
• Study abroad costs
• Expenses associated with a disability
• Dependent or elder care expenses
• Cooperative education program costs
Expected Family Contribution
Parent’s contribution from income and assets
+ Student’s contribution from income and
assets
= Expected Family Contribution (EFC)
Comparing Need
X
Y
Z
Cost of Expected Family NeedAttendance Contribution (Variable) (Variable
) (Constant)
1
2
3
EFC EFC
What is Financial Aid?• Money for education expenses
• Need-based vs. Non-need based
• Campus Based vs. Student Based
• Gift Aid – Not repaid– Grants and Scholarships – 38% of all aid
• Self Help Aid– Work Study employment – work for a
paycheck – 1% of all aid– Loans – repay with interest – 56% of all aid– Tax Credits and Deductions – 5% of all aid
General Eligibility Requirements• U.S. citizen, permanent resident, or other
eligible non-citizen
• High school graduate, pass the GED test, or have the ability to benefit (as determined by a standardized test)
• Enroll in a degree or certificate program (may not be a regular high school student at the same time)
• Register with selective service, if required
• May not have eligibility suspended or terminated due to drug-related conviction
• Maintain satisfactory academic progress
Primary Sources of Aid (in billions)
Federal Aid - $81.5 Billion
67%
State Aid - $6.0 Billion
5%
Institutional and Private
Aid - $34.5 Billion
28%
Federal Programs• Need based
– Pell Grant– Supplemental Educational
Opportunity Grant– Work Study– Perkins Loan– Subsidized Stafford Loan
• Non-need based– Unsubsidized Stafford Loan– Parent Loan– Robert C. Byrd Honors Scholarship
Types of Federal Aid
• Pell Grant– Undergraduates pursuing first bachelor’s degree– Amount determined by the EFC– Award prorated base on enrollment status– Portable– Maximum in 2005-06 was $4,050
• Federal Supplemental Opportunity Grant– Undergraduates pursuing first bachelor’s degree– Priority to Pell recipients– Maximum is $4,000
Types of Federal Aid
• Federal Work Study– Employment may be on or off campus– Wages vary depending on type of work
• Federal Perkins Loan– Maximum is $4,000 a year– Interest rate fixed at 5%– Nine (9) month grace period– Deferment and cancellation provisions
available
Federal Aid – Stafford Loans• Providers
– Federal Family Education Loan (FFEL) Program • funds provided by lenders (e.g., banks or
credit unions)
– Federal Direct Student Loan (Direct Loan) Program • funds provided directly by federal
government via participating schools
• School determines loan eligibility and delivers loan proceeds to student
Federal Aid – Stafford Loans• Subsidized – Must demonstrate “need”
• Unsubsidized – Need is not considered
• Annual loan limits– $2,625 for 1st year undergraduates– $3,500 for 2nd year undergraduates– $5,500 for each remaining undergraduate
year– $8,500 for each year of
graduate/professional study
Federal Aid – Stafford Loans
• Variable interest rate, capped at 8.25%– Interest rate for 7/1/2005 – 6/30/2006 is:
• 4.7% in school, grace, and deferment periods• 5.3% during repayment
• Six (6) month grace period
• Deferment and cancellation provisions available
Federal Aid – PLUS Loans• Parent loan program for parents of
dependent undergraduate students
• Annual loan limit – cost of attendance (COA) minus other aid
• Variable interest rate, not to exceed 9%– Interest rate for 7/1/2005—6/30/2006 is 6.1%
• Repayment begins 60 days after loan is fully disbursed
• Only principal may be deferred under certain conditions; interest may be capitalized
Robert C. Byrd Honors Scholarship• Eligibility Criteria
– Nominated by High School Principal– Maintain Satisfactory Academic Policy
(SAP)– Full-Time Enrollment – School verifies
each semester / term– U.S. Citizen, Permanent Resident, or
Refugee– Selective Service Registration
• Maximum Award – $1,500– Portable and Renewable for Four Years
State of Michigan Programs
• Need based– Michigan Competitive Scholarship– Michigan Tuition Grant– Michigan Educational Opportunity Grant
(MEOG)– Michigan Adult Part-time Grant– Michigan Work Study
• Non-need based– Michigan Merit Award– Nursing Scholarship– Tuition Incentive Program (TIP)– MI-LOANⓇ
– Michigan Indian Tuition Waiver
Michigan Competitive Scholarship
• Eligibility Criteria– Both Merit-Based and Need-Based
– Qualifying ACT Score – Recommend test be taken by December of senior year. Will accept any test score prior to college enrollment.
– Summary Score of 90 or Composite Score of 23
– Student May Retake ACT
– Highest Score Used
Michigan Competitive Scholarship• Maximum Award
– $1,300 at Public Institutions– $2,000 at Private Institutions
• Length of Eligibility– Undergraduate– 10 Semesters or 15 Terms– Use within 10 Years of High School
Graduation
Michigan Tuition Grant• Eligibility Criteria
– Need-Based– Available Only at Private Institutions– No ACT Score Required
• Maximum Award – $2,000
• Length of Eligibility– Undergraduate – 10 Semesters or 15 Terms– Graduate – 6 Semesters or 9 Terms– Graduate Dental – 8 Semesters or 12 Terms
Campus-Based Programs• Programs
– Adult Part-Time Grant (APTG) ( )– Michigan Educational Opportunity
Grant (MEOG) ( )– Michigan Work Study Undergraduate
Program (MWSU) (Wages)– Michigan Work Study Graduate
Program (MWSG) (Wages)
• Students Do Not Apply
• Colleges Award Eligible Students
Michigan Merit Award• Maximum Award – $2,500 over two
years– Used for tuition & fees, room & board, books
& supplies, transportation, and day care)• Additional Award for 7th and 8th Grade
– Take all four MEAP tests while in 7th and 8th grade
– Achieve qualifying score on two, three, or four tests• Two Tests – Additional $250• Three Tests – Additional $375• Four Tests – Additional $500
Michigan Merit Award
• Eligibility Criteria:– Take the Michigan Educational Assessment
Program (MEAP) High School Test in mathematics, reading, science, and writing
– Score a Level 1 or Level 2 on all four tests– Graduate from high school or pass the GED
test– Enroll in an approved postsecondary education
institution– Must not have been convicted of a felony
involving an assault, physical injury, or death
Michigan Merit Award• Eligibility Criteria (continued):
– Alternate A: 1 or 2 in Two MEAP Areas Combined with Qualifying ACT or SAT Score• ACT – 24 • SAT – 1170 Or
– Alternate B: 1 or 2 in Two MEAP Areas Combined with Qualifying Scores in Four WorkKeys Job Skills Assessment Tests
• Deadline for Class of 2006 to Certify Awards is November 15, 2006
Michigan Nursing Scholarship (MNS)
• Eligibility Criteria– Established by Each College– Enrolled at Least Half-time in LPN, ADN, or BSN– Michigan Resident for One Year Prior to
Nursing Program Enrollment– U. S. Citizen or Permanent Resident– Meeting College’s SAP Requirements– Work in a Michigan Direct Care Nurse Facility
for One Year for Every $4,000 Scholarship Received
• Maximum Award – $4,000 Per Year
Tuition Incentive Program (TIP)• No Student Application
• Must have been Medicaid Eligible for 24 Months out of 36 Consecutive Months
• Qualified Students Sent Letter
• Return Form Prior to:– High School Graduation– GED Completion– 20th Birthday
MI-LOANⓇ
• Students or Parents Can Borrow• Creditworthy vs Credit Ready
– Creditworthy – Requires a debt-to-income ratio and two years of continuous employment
• Interest Rates – Effective 7/1/2005– Fixed – 5.95%– Variable – 4.53%
• Cumulative Program Maximum - $125,000
– Credit Ready – No debt-to-income ratio or employment history required
• Interest Rates – Effective 7/1/2005– Fixed – 8.50%– Variable – Not Available
• Cumulative Program Maximum - $75,000
MI-LOANⓇ
• Annual Loan Limit – Cost of Attendance (COA) minus Other Aid
• Minimum Loan Amount – $500
• Forbearance Option – Available for Up to 5 Years
• Repayment Period – Maximum of 25 years with first monthly payment scheduled within 60 days of the first disbursement
• Minimum Monthly Payment – $50
Alternative Loans
• Loan of Last Resort
• Various Lending Institutions
• Consumer Tips• Researching Alternative Loans: Begin at College
Financial Aid Office• Credit-Based Loans: Interest Rates from 4% -15%• Co-signer: May be Required (Lower Interest Rate) • Major/Area of Study: May Influence Repayment Terms• Watch for Fees: Disbursement, Repayment, Cosigner• Watch for Marketing Gimmicks
Examples of Institutional Resources
• Trustee Scholarships
• Foundation Endowment Scholarships
• Faculty Academic Scholarships
• Short Term Loans
Private Resources• Professional Associations• Foundations• Corporations• Community Organizations
– Civic– Religious– Social– Alumni
• Commercial Lending Institutions• Place of Employment• Research Institutes
Searching for Resources the “Traditional Way”
• Ask your Guidance Counselor
• Check you high school bulletin board(s)
• Review Library Reference Books
• Inquire with Employer
• Pay a Firm to do the Research
Searching Free On-Line Scholarships and Other Resources• FinAid.org – www.finaid.org
• The College Board – www.collegeboard.com
• FastWeb.com – www.fastweb.com
• Scholarship Resource Network Express – www.srnexpress.com
• GoCollege.com The Collegiate Websource – www.gocollege.com
Scholarship Scams• Victims of scholarship scams lose more
than $100 million annually
• Paying money to get money is a scam
• Duplicates what you can find out for free
• Watch for:– Scholarships with application fee– Scholarship services who guarantee success– Sales pitches disguised as financial aid
“seminars”
• Website: www.finaid.org/finaid/scams.html
Information on the Internet
• Lots of good financial aid info
• MI Department of Treasury
• MI Department of Education
• FAFSA on the Web
• Student Gateway to the Federal Government
• More good financial aid info
• finaid.org
• michigan.gov/mistudentaid
• michigan.gov/mde
• fafsa.ed.gov
• students.gov
• nasfaa.org
Tax Credits and Deductions• Hope Tax Credit – Maximum credit of
$1,500– 100% of the first $1,000 of qualifying tuition– 50% of the next $1,000 of qualifying tuition
• Lifetime Learning Tax Credit – Maximum credit of $2,000– 20% of the first $10,000 of qualifying tuition
• Student Loan Interest– Deduct up to $2,500 of paid interest
• Questions regarding tax issues should be directed to the IRS or your tax preparer.
College Savings Plans
• Current IRAs
• Education IRAs
• 529 College Savings Plans
• Coverdell Education Savings Account
• UGMA/UTMA Accounts
• Parents’ Investment Account
Michigan College Savings Plans
• MET – MI Education Trust– Guaranteed Prepaid Tuition Program– Tuition & Mandatory Fees– Three Contract Options
• MESP – MI Education Savings Program– College Savings/Investment Program– Qualified Higher Education Expenses– Three Investment Options
• Both Programs Offer:– State Tax Deduction on contributions– Federal & State Tax Exemption on distributions (until
2010)– Portability to Out-of-State Colleges
Summary• Student must:
– Apply for admission to the college(s)– Complete and submit the FAFSA– Check with college for other required forms
and documents– Review SAR for accuracy– Submit required documentation to the
Financial Aid Office
• Financial Aid Office will:– Determine eligibility– Package aid– Send award letter or denial letter
Questions
Contacts • Office of Scholarships and Grants
– 1-888-4-GRANTS or [email protected]
• Michigan Education Trust (MET)– 1-800-MET-4-KID or MET4kid.com
• Michigan Education Savings Program– 1-877-861-MESP or [email protected]
• MI-Loan® Program– 1-888-MHESLA1 or [email protected]
• General Information– 1-800-642-5626, Ext. 37054 or