1

Presented byPresented by

U.S. Department of EducationU.S. Department of Education

RICHARD BLASEN

“Financing a College Education”

2

Financing Your Education

• What is financial aid?

• What aid is available?

• Who is eligible?

• How & when do I apply?

3

Why should I go to College?

$0

$20,000

$40,000

$60,000

$80,000

Salary

Without HighSchool DiplomaHigh SchoolDiploma Bachelor'sDegreeAdvancedDegree

Census Statistics: News Release : MARCH 28, 2005

$18,734

$74,602

Average Annual Earnings

$27,915

$51,206

4

Average Salaries

RetailSalesperson

ElementarySchool Teacher

Accountant

ComputerProgrammer

Source U.S. Department of Labor website & the 2006-2007 Occupational Outlook Handbook

5

Myths About Financial Aid

“…my parents make too much money, so I won’t qualify for aid.”

Reality: There is no income cutoff to qualify for federal student aid.

6

Myths About Financial Aid

“…only students with good grades get financial aid.”

Reality: Maintain “C” average and complete enough courses in a timely manner.

7

Myths About Financial Aid

“...the form is too hard to fill out.”

Reality: The FAFSA is easier than ever, especially if you fill it out online at WWW.FAFSA.GOV

8

8

9

9

10

Where does the Aid come from?

• Federal Government

• State Government

• School

• Private

11

Types of Financial Aid

• Gift Aid Gift Aid = Need-based or Merit-based= Need-based or Merit-based::– Grants and ScholarshipsGrants and Scholarships

• Self Help Aid:Self Help Aid:– FWS - Employment opportunitiesFWS - Employment opportunities– LoansLoans

12

Gift Aid - Federal Grant Programs

• Federal Pell Grant Program - $5550

• Academic Competitiveness Grant (ACG) – $750/$1300

• National Science and Mathematics to Retain Talent (SMART) Grant - $4000

• Teacher Education Assistance for College and Higher Education (TEACH) Grant - $4000

• Federal Supplemental Educational Opportunity Grant, or FSEOG - $4000

13

ISAC - Illinois Student Assistance Commission website

www.collegezone.com

•Outreach

•Applications

•Career Center

•Scholarship Search Scholarship Search

14

Federal Student Aid on the Web

www.studentaid.ed.gov• FAFSA/FAFSA4CASTERFAFSA/FAFSA4CASTER

• Scholarship Search Scholarship Search

• FSA ProgramsFSA Programs

15

New site – What’s next Illinois

www.whatsnextillinois.org

16

Self-Help Aid• Employment:Employment:

– Federal Work StudyFederal Work Study

• Loans:Loans:– Federal Perkins LoanFederal Perkins Loan– Federal Stafford Student Loans (Sub/Unsub)Federal Stafford Student Loans (Sub/Unsub)– Federal PLUS LoansFederal PLUS Loans– Private/Alternative Loans – Private/Alternative Loans – BE CAREFUL!!!BE CAREFUL!!!

5

17

Federal Loan Programs

Consider:Consider:– Subsidized vs. Unsubsidized

– Interest rate

– Grace period

Know:Know:– Borrowers Rights & Responsibilities

– Loan Repayment

– Deferment & Forbearance

– Entrance & Exit Counseling

18

Federal Loan Programs  Interest Rate Repayment Additional Info

Federal Perkins Loan

5% Fixed 9 months after school

Federal Stafford/ Direct Loan

Subsidized 4.5% Fixed

Unsubsidized 6.8% Fixed

6 months after school

Subsidized: no interest charged while in school Unsubsidized: interest accrues while in school

Federal Parent PLUS Loan

8.5% Fixed FFEL Schools; 7.9% Fixed Direct Lending Schools

May be deferred until 6 months student drop ½ time or 60 days after loan is fully disbursed

Interest accrues while student is in school

19

Beware of Alternative or Private Loans

• Be informed before signing

• Not federal loans

• May require co-signer

• May have higher interest rates

• Repayment may start immediately

20

COST OF ATTENDANCE (COA)

• COA includes:• Tuition and feesTuition and fees

• Room and board (Meals)Room and board (Meals)

• Books and supplies, equipment, transportation & Books and supplies, equipment, transportation & personal expensespersonal expenses

• Dependent or elder care expensesDependent or elder care expenses

• Expenses associated with a disabilityExpenses associated with a disability

5

21

Estimated Cost of Attendance2008/2009

Public 4Yr$6,892 6,870 1,496 900 1,000 1,224

$18,382

Tuition & Fees

Room

Board (meals)

Books & Supplies

Transportation

Personal Expenses

TOTAL

Private 4Yr$17,398 6,770 1,496

900 1,000

1,160 $28,724

22

Expected Family Contribution (EFC)

• Indicates the family’s financial strengthIndicates the family’s financial strength

• Calculation that uses a federal form and formula

• EFC the same regardless of college the student attends

5

23

Expected Family Contribution (EFC)

5

•Factors: •# of family members going to college# of family members going to college•Household sizeHousehold size•Current earnings and family savingsCurrent earnings and family savings•Information provided on FAFSAInformation provided on FAFSA•Age of your oldest parentAge of your oldest parent

•The lower your EFC, more financial aid eligible to receive

24

How Much Aid Will I Receive?

Cost of Attendance (COA) = $20,000

– Expected Family Contribution (EFC) = $5,000

= Financial Need = $15,000

25

How Much Aid will I Receive?

Financial Need = $15,000

Scholarships $1,500Institutional Grant $2,500Federal Grants $3,000State Grants $2,000Loans $2,500 – Unmet needPLUS Loans $3,500 – Unmet need

TOTAL = $15,000

26

Who’s Eligible for Federal Student Aid?

• U.S. Citizen or Eligible Non-Citizen

• Registered with Selective Service

• Social Security Number

• No Drug Related Convictions

• Matriculated

27

How Do I Apply for Aid?

• Free Application for Federal Student Aid www.FAFSA.ed.gov

• Must file every year.

• Check with college to determine if additional applications need to be completed.

28

FAFSA: http://www.fafsa.ed.gov/

Can file Jan. 1st Senior Year!Don’t go to: FAFSA.COM

29

• Name & SSN should be exactly the same as appears on your social security card

• Each question details which line on the federal income tax return to obtain information for proper line references

• If entry is zero or none, enter 0--don’t leave blank

• Both student and one parent have their own PINs to sign FAFSA

• FAFSA Password is not the same as PIN Password!

6

FAFSA – Be careful…

30

Advantages to Filing the FAFSA Online

• Data reaches the school within 3 to 5 days• Paper application takes 3 to 6 weeks to reach

schools

• Edits built into online system• More accurate - Less data is missed so there are

fewer rejects

• Skip Logic• Saves time and effort

31

32

33

Which Parent(s) Fill Out FAFSA? • If biological/adoptive parents married, report

information for both parents

• If biological/adoptive parents are divorced or separated, provide information for parent:

• Student lived with the most in last year

• Or, if lived equal periods with each parent, parent who provided the most financial support in last year or most recent year support provided

• If that parent remarried, include stepparent’s information, even if stepparent did not adopt student.

33

34

•Professional Judgment – Divorce, Separation, Death– Job Loss– High Medical Expenses– Elementary and Secondary Expenses– Case-by-Case basis– Document

Special CircumstancesSpecial Circumstances

35

Am I Independent?Am I Independent?

1. At least 24 years old by December 31st of the award year covered by the FAFSA

2. Graduate or professional student

3. Married

4. Has legal dependents other than a spouse who receive more than one half of their support from the student

5. Is an orphan, in foster care, or ward of the court

6. On active duty or veteran of the U.S. Armed Forces

7. Emancipated minor or in legal guardianship as determined by a court

8. Has been determined to be homeless by an authorized official

36

• If corrections needed:• Make them online

• Mail SAR back to FAFSA processor

• Have Financial Aid Office send it in

Student Aid Report (SAR)Student Aid Report (SAR)

37

Award Letter (How much do I get?)

Award Letter (How much do I get?)

• Sent to you from schools you selected to attend on FAFSA

• Displays the type and amount of financial aid school willing to provide if you attend

• Amount varies from school to school• Compare and decide• Look at quality and affordability

38

Verification

• Certain applications are selected for verification

• Family must complete verification worksheet sent by financial aid office– Must attach tax returns, W2 statements

and other supporting documentation– Don’t make corrections after verification

without consulting financial aid administrator!!

38

39

QUESTION?

“Do I have to fill out a FAFSA in order to get an estimate regarding Financial Aid?”

NO! Go to: www.FAFSA4caster.ed.gov

40

Financial Aid Estimator Tool: FAFSA4caster

• Informed decisions for planning for Informed decisions for planning for college.college.

• Calculates an Calculates an estimateestimate for Federal for Federal Student AidStudent Aid

• Helps reduce the time it will take to Helps reduce the time it will take to complete the FAFSAcomplete the FAFSA

41

http://www.fafsa4caster.ed.gov/

42

Save for College

• Prepaid Tuition Plans • Lock in today’s tuition rate• Protect from future tuition inflation and the uncertainty of

the stock market

• 529 College Savings Plans• Earn money over time through interest. • Earnings may fluctuate with the performance of the market.

• www.CollegeIllinois.com

43

529 – Benefits:

• 100% exempt from federal & Illinois state income tax

• Individuals can deduct up to $10,000 per year

• Married couples filing jointly can deduct up to $20,000 per year.

44

Federal Higher EducationTax Advantages

• American Opportunity Tax Credit (formerly Hope Tax Credit)

• Lifetime Learning Tax Credit• Tuition and Fees Deduction• Penalty Free IRA Withdrawals• Coverdell Education Savings Account• Student Loan Interest Deduction• See Publication 970 at: www.irs.gov for details

45

American Opportunity Tax Credit (formerly Hope Tax Credit)

• Available for tax years 2009 and 2010• Covers up to $2,500 in tuition and fees not

covered by gift aid• Available for incomes up to:

– $90,000 single filer– $180,000 joint filers

45

46

Things you should know…

• Begin early:– (FAFSA4caster/Documents/Scholarships)

• Find scholarships that match academic interests, hobbies

• Don’t pay for scholarship searches

• Be wary of promised results

47

Things you should know…Things you should know…

• Sit down and speak with your children:• Know what your parents are paying for and what you

are expected to cover.

• Understand your financial aid.• Know what grants, work study & scholarships are

available.

• Buy used textbooks.

48

Things you should know…Things you should know…

• College & Scholarship FairCollege & Scholarship Fair

• Beware Credit Cards.Beware Credit Cards.

• Don't forget student discounts. Don't forget student discounts.

• Internships increase your hiring power.Internships increase your hiring power.

• Professional emailProfessional email

49

What if I have Questions? What if I have Questions?

• Contact:Contact:• High School Counselor

• College Counselor

• ISAC - 800-899-4722

• 1-800-4FED-AID