+What you Need to Know About Financial Aid For 2015-16

A Presentation by Dorothy Gilliard

Topics We Will Discuss Tonight

Financial Aid Definition

Cost of attendance (COA)

Expected Family Contribution (EFC)

Financial Need Definition

Categories, Types, and Sources of financial aid

Aid from New Jersey

Free Application for Federal Student Aid (FAFSA)

Special Circumstances

Financial Aid Definition

Financial aid consists of funds provided to students and families to help pay for postsecondary educational expenses. These funds may be both self-help and “free” money.

+Cost of Attendance -Definition

Includes

Tuition & Fees

Room & Board

Books, supplies, transportation, and misc. personal expenses

Sometimes can include

Loan fees

Study abroad costs

Dependent care expenses

Varies widely from college to college

Expected Family Contribution (EFC)

Amount family can reasonably be expected to contribute

Stays the same regardless of college

Two components Parent contribution Student contribution

Calculated using data from a federal application form (FAFSA) and a federal formula called Federal Methodology

Financial Need vs. Financial Aid

Cost of Attendance

– Expected Family Contribution

= Financial Need

Need will vary based on the cost of the school.

Four Types of Financial Aid

Scholarships

Grants

Loans

Employment

Scholarships and Grants

Money that does not have to be paid back

Awarded on the basis of merit, skill, or unique characteristic

Usually awarded on the basis of financial need

Loans

Money students and parents borrow to help pay college expenses

Repayment usually begins after education is finished

Only borrow what is really needed

Look at loans as an investment in the future

Employment

Allows student to earn money to help pay educational costs

A paycheck; or

Non-monetary compensation, such as room and board

Sources of Financial Aid

Federal government

States

Private sources

Civic organizations and churches

Employers

Federal Government

Largest source of financial aid

Aid awarded primarily on the basis of financial need

Must apply every year using the Free Application for Federal Student Aid (FAFSA)

States

Residency requirements

Award aid on the basis of both merit and need

Use information from the FAFSA

Deadlines vary by state; check paper FAFSA or FAFSA on the Web site

Common Federal Aid Programs

Federal Perkins Loan

◦ Interest Rate: 5%

Federal Work-Study

◦ varies

Subsidized and Unsubsidized Loans

◦ Interest Rate: 4.66%

PLUS Loans

◦ Interest Rate: 7.21%

Federal Pell Grant

◦ $5,730

Teacher Education Assistance for College and Higher Education Grant

◦ $4000

Federal Supplemental Educational Opportunity Grant

◦ $100 - $4000

+Direct Loans – Annual Loan Limits

Annual Loan Limits (combined subsidized and unsubsidized) Classification Dependent Independent Freshman $5,500 $9,500 Sophomore $6,500 $10,500 Each remaining year $7,500 $12,500 Graduate/Professional N/A $20,500

THE FAFSA –FEDERAL AID-STATE AID – COLLEGE CONNECTION

17Secondary School Counselor Training Institute 2014

New Jersey State Grants 2014-2015 Academic Year

(2015-2016 Award amounts available after Governor signs FY 2016 Budget

and is approved by board of trustees)

Award Type Award Amounts

Full-Time TAG $576 - $12,016

Part-Time $568 -$1942

EOF Up to $2,500

NJ STARS Tuition Only

NJ STARS II Up to $2,500

Governor’s Urban Scholarship

Up to $1,000

NJ-GIVS Up to $2,000

New Jersey Financial Aid, cont’dNJ Class Loan

The NJCLASS loan features:

Low interest rate Interest rate is not based upon the borrower's creditworthiness Up to 3% administration fee The option for students or parents to borrow Flexible repayment options Your choice of repayment: 10, 15 or 20 years

Loan Interest Rates & Features 10 YR REPAYMENT AT 6.15%

Immediate repayment of princ and interest 15 YEAR REPAYMENT AT 7.05%

Immediate repayment of princ and interest Immediate repayment of interest only

20 YEAR REPAYMENT AT 8.05% Full deferment until out of school

3% Administrative Fee for all loans

+HESAA AID Application Requirements

NJ requires addtl data elements other than what is reported on the FAFSA to determine eligibility for TAG and NJ STARS I and II Driver’s License Info Veterans Education Benefits (independent students) Untaxed Social Security Benefits Earned Income Credit

Once you get to the confirmation page of the FAFSA you should select the second option to report this information to HESAA.

+NJHESAA aid application REQUIREMENTS

HOW TO APPLY FOR FINANCIAL AID?

Free Application for Federal Student Aid (FAFSA)

Required for all types of federal aid

May be filed electronically (preferred) or via paper form

File online at www.fafsa.ed.gov after January 1, 2015

Sign the electronic form with a PIN.

Later this year you will be able have one mailed to you by calling 800-4-FED-AID (1-800-433-3243)

Results sent electronically to you (if you give your email address) and to the institutions you list on the FAFSA

FAFSA on the Web

Website: www.fafsa.govFAFSA on the Web Worksheet:

Used as “pre-application” worksheet Questions follow order of FAFSA on the Web

PDF FAFSA will also be available if you want to complete the FAFSA online; then download the form and mail it in.

Federal Student Aid Personal Identification Number (FSA PIN)

Website: www.pin.ed.gov

Sign FAFSA electronically

Not required, but speeds processing

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

FAFSA on the Web

Good reasons to file electronically: Built-in edits to prevent costly errors Skip logic allows student and/or parent to skip

unnecessary questions Option to use Internal Revenue Service (IRS) data

retrieval More timely submission of original application and

any necessary corrections More detailed instructions and “help” for common

questions Ability to check application status on-line Simplified application process in the future

+FAFSA On The Web

www.fafsa.gov

Click Here >

+Caution: Do Not Visit This Site in Error!!!!!!!!!

+

Login:

(Student’s Info)

First NameLast NameSSNDate of Birth

+

STUDENT

Demographic Information

Student’s Demographic Information

SSN (data match) Name DL DOB Address Citizenship Status (data match) Selective Service Registration (data match)

Male students ages 18-25

Student’s Income and Asset Information

Tax Return Status Income (50%)

IPA – income protection allowance – allows a certain percentage of income/assets to not be included in the formula

It varies according to the number in the parents’ household and the number in college

Assets (20%) Cash, Savings, Checking Other Investments****

+Dependent vs. independent

Does the student have to use their

parents information?

Dependency questions

How do you determine if a student is “independent”? Born before January 1, 1992 Married Pursuing an advanced degree Veteran of the Armed Forces Legal Dependents (do not provide information on the

FAFSA) Parents deceased or student was or is in Foster Care Ward of the Court Unaccompanied Youth who was Homeless

+If a student is dependent parents must participate in the fafsa process!!!!!

What if the

parents refuse?

If parent’s refuse the student will not be able to get any financial aid.

+Information parents are required to provide

PARENT

DemographicInformation

Marital Status Married or Remarried Single Divorced or Separated Widowed

SSNs/DOBs/Last Names and First Initial (IRS Match)

Email Address# in Household # in College

PARENTDemographicInformation

Parent’s Income Information

Type of Tax Return you filed (or will file) Dislocated Worker Status

Receiving unemployment benefits due to being laid off or losing a job Was self-employed but is now unemployed due to economic conditions Is a displaced homemaker: a person who previously provided unpaid services to the family, e.g.

a stay-at-home mom or dad, is no longer supported by the spouse and is having trouble finding meaningful work

Adjusted Gross Income from your Income Tax Return Taxes Paid from your Income Tax Return Breakdown of Income from work for both parents Allowances:

Living Expense Allowance Employment Tax Offset (based on the highest salary) Income Protection Allowance State Tax Allowance

Once the allowances are applied to your income the resulting amount is used in the calculation of the EFC.

Simplified Needs Test

Anyone included in the parents’ household size (as defined on the FAFSA) received benefits during 2014 or 2015 from any of the designated means-tested Federal benefit programs: (SSI) the Food Stamp Program, the Free and Reduced Price School Lunch Program, TANF) Program, OR

the student’s parents:

• filed or were eligible to file a 2014 IRS Form 1040A or 1040EZ,

• filed a 2014 IRS Form 1040 but were not required to do so, or

• were not required to file any income tax return; the student’s parent is a dislocated worker.

AND

(2) The 2014 income of the student’s parents is $49,999 or less.

• For tax filers, use the parents’ adjusted gross income from the tax return to determine if income is $49,999 or less.

• For non-tax filers, use the income shown on the 2011 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $49,999 or less.

Assets are not considered in the simplified EFC formulas.

Who Qualifies for An Automatic Zero EFC? 

Anyone included in the parents’ household size (as defined on the FAFSA) received benefits during 2011 or 2012 from any of the designated means-tested Federal benefit programs: SSI, Food Stamps, the Free and Reduced Price School Lunch Program, TANF, and WIC; OR

The student’s parents:

• filed or were eligible to file a 2014 IRS Form 1040A or 1040EZ,

• filed a 2014 IRS Form 1040 but were not required to do so, or

• were not required to file any income tax return; OR

the student’s parent is a dislocated worker.

AND

(2) The 2014 income of the student’s parents is $23,000 or less.

• For tax filers, use the parents’ adjusted gross income from the tax return to determine if income is $23,000 or less.

• For non-tax filers, use the income shown on the 2014 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) to determine if income is $23,000 or less.

Parent’s asset information

Assets you DO INCLUDE: Cash, Savings, Checking Real Estate (other than your primary residence)The Federal need analysis methodology ignores the net

market value of the family's primary residence. Sometimes, however, the family's primary residence is a multi-family dwelling. For example, the family might own a duplex, living in one half and renting out the other.

For multi-family homes and apartment buildings where the owner occupies a unit, the portion not occupied by the owner is treated as an investment asset

Non-Retirement Investments Business Value (if you are self-employed and employ

more than 100 people) 529 College Savings Plans ******

+529 PLANS

A 529 account owned by a parent for a dependent student is reported on the federal financial aid application (FAFSA) as a parental asset.

A student--owned 529 account is to be reported as parental assets, if the student files the FAFSA as a dependent and has to include parent assets and income. This treatment confers a financial aid benefit as the parental rate of inclusion is considerably less l than the 20% rate on non-529 assets owned by the student.

Parent’s asset information

Assets you DO NOT INCLUDE The value of Life Insurance Retirement plans (401K) Pension Funds Annuities Non-Education IRAs, Keogh Plans, etc. UGMA and UTMA accounts for which you are the custodian,

but not the owner.

A percentage of your asset value is used in the calculation along with the Education Savings and Asset Protection Allowance. That percentage usually does not exceed around 5.64%

Education Savings and Asset Protection Allowance

FAFSA Processing Results

Central Processing System (CPS) notifies student of FAFSA processing results by:

Paper Student Aid Report (SAR) if paper FAFSA was filed and student’s e-mail address was not provided

SAR Acknowledgement if filed FAFSA on the Web and student’s e-mail address was not provided

Student with PIN may view SAR on-line at www.fafsa.gov

7 Ways to Blow Your FAFSA

Playing the Waiting Game FAFSA requires all sorts of tax-related information, so a lot of parents

wait till they've filed their taxes by April to start working on the form. That's a big no-no, especially as many states have their own deadlines for submission of their own info.

Fudging your Tax Information If your household earns enough to file taxes, you won't have a hope

of getting financial aid until you've filed. The Dept. of Education and IRS are working together to crack down on families who under-report their taxable income on FAFSA forms, Kantrowitz says, in the hopes of lowering the existing 4-5% fraud rate. 

Other tax errors: Reporting your total income tax as equal to your Adjusted Gross Income (AGI) Reporting taxes withheld or tax due instead of total income tax. "Be sure you are reporting the total total income tax (the total tax liability) and not just the withholdings or the additional taxes due

7 Ways to Blow Your FAFSA

Marital Status Mix-Ups Divorced parents: Whichever parent the student has lived with

the most over the last 12 months should be responsible for the FAFSA. If the filing parent has re-married, his or her new spouse must report their income on the form as well

Miscalculating Assets If you're filing as a dependent student, remember that you don't

have to include certain assets on your FAFSA: Custodial 529 college savings plans, custodial prepaid tuition plans, custodial Coverdell Education Savings Accounts.

Also, parents and independent students shouldn't include their 401(k), IRA, pensions, or life insurance policies as assets. 

7 Ways to Blow Your FAFSA

Forgetting Who The Forms About The FAFSA form is about the student, not the parent, although both are

usually involved in the process. Pay close attention to whose identification information the form is seeking. It's almost always referring to the student, and if someone slips up and throws a parent's SSN in somewhere, it could throw a wrench in the application process. If the parent has no SSN, use the code "000-00-0000" rather than making up one or using a taxpayer ID. 

Silly Errors Both parents and students are guilty of these mistakes: misspelled

names, missing question fields and incorrectly written dollar values. For example, FAFSA forms don't read cents, so you need to type $500 rather than $500.00. Otherwise, it'll be read as $50,000

Not Applying At All You can't get any money if you don't apply and it's important

everybody apply for FAFSA, even if you don't expect to qualify

FAFSA Processing Results

Institutional Student Information Record (ISIR) sent to colleges listed on FAFSA approximately 10 to 14 days after FAFSA submitted

College reviews ISIR May request additional documentation, such as proof that a

sibling is enrolled in college Will use the results of the FAFSA to determine eligibility and

awarding of aid

Student Aid Report

This report is what is sent to the student after FAFSA information is processed.

Student should review data for accuracy; make any necessary changes; re-submit

Update estimated information when actual figures are available using the IRS Data Retrieval Process.

Making Corrections

If necessary, corrections to FAFSA data may be made by:

Using FAFSA on the Web (www.fafsa.gov) if

student has a PIN; Updating paper SAR (SAR Information Acknowledgement cannot be used to make corrections); or Submitting documentation to college’s financial aid office

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

Student cannot obtain parent information

Where do YOU go from here?

Obtain and review admissions and financial aid Web sites and materials for each school to which you are applying.

Meet all application deadlines.

Complete FAFSA and other application materials. Submit all requested follow-up documents.

Investigate other sources of aid.

Questions?