Financial Aid 101EVERYTHING YOU NEED TO KNOW ABOUT FINANCIAL AID

Financial Aid 101 Objectives What is financial aid? Types of financial aid How financial aid is awarded The financial aid process

What Is Financial Aid?

What Is Financial Aid? Money to help you pay for college From the federal government, state

government, colleges, and private organizations

What Is Financial AidWho Is Eligible? You must:

Be a citizen or eligible non-citizen of the U.S.

Have a high school diploma or GED Be enrolled at least half-time at an

eligible institution Register with the Selective Service (men

only) Maintain satisfactory academic progress

as determined by your college

Types of Financial Aid

Types of Financial AidThree Types of Aid Gift money Earned money Borrowed money

Types of Financial Aid Gift Money - Grants

Based on financial need Available from:

– Colleges– State governments– Federal government

Types of Financial Aid Gift Money - Grants

Five federal grants:– Pell Grants– Supplemental Educational Opportunity

Grant (SEOG)– Academic Competitiveness Grants (ACG)– National Science and Mathematics Access to

Retain Talent Grants (National SMART Grants)

– Teacher Education Assistance for College and Higher Education Grant (TEACH Grant)

Types of Financial Aid Gift Money – Scholarships

Based on various criteria From colleges and other organizations Fill out the FAFSA even if you receive

scholarships Begin searching early Look out for scams

Types of Financial Aid Earned Money - Federal Work-Study

Program Students work part time, usually on

campus Money earned helps pay for college

Types of Financial AidBorrowed Money

Two types of loans– Federal– Private

Must be paid back

Types of Financial AidFederal Loans – Perkins

Borrower: Student Based on Need? Yes Interest Rate: 5% Repayment Begins: 9 months after

graduating or dropping below half-time status

Maximum Amount Per Year: $5,500

Types of Financial AidFederal Loans – Subsidized Stafford

Borrower: Student Based on Need? Yes Interest Rate:

Loans disbursed 7/01/08–6/30/09 = 6.0%Loans disbursed 7/01/09–6/30/10 = 5.6%Loans disbursed 7/01/10–6/30/11 = 4.5%Loans disbursed 7/01/11–6/30/12 = 3.4%

Repayment Begins: 6 months after graduating or dropping below half-time status

Maximum Amount Per Year (for freshman): $3,500

Types of Financial AidFederal Loans – Unsubsidized Stafford

Borrower: Student Based on Need? No Interest Rate: 6.8% Repayment Begins: 6 months after

graduating or dropping below half-time status

Maximum Amount Per Year (for freshman): $2,000

Types of Financial AidFederal Loans – PLUS

Borrower: Parent Based on Need? No Interest Rate: 8.5% Repayment Begins: Within 6o days of

loan being fully disbursed, but deferment options that will delay repayment are available*

Maximum Amount Per Year: Difference between the cost of attendance and financial aid offered to the student

Types of Financial AidPrivate Loans

Offered by private lenders Terms and conditions vary Should be considered last

Types of Financial AidEducation Tax Benefits - Hope Credit

Federal tax credit of up to $1,800 Student must be in their first two years

of college Based on qualifying educational

expenses paid during the year Claim a separate Hope credit for each

student who qualifies

A family with two dependent students in their first or second year of college can claim up to $3,600 in Hope credits.

Types of Financial AidEducation Tax Benefits - Lifetime Learning Credit

Federal tax credit of up to $2,000 for each year you pay for college

Based on qualifying educational expenses paid during the year

Can be claimed only once per tax return

Note: You can’t claim the Hope and lifetime learning credit for the same student in the same year.

Types of Financial AidEducation Tax Benefits – Tuition and Fees Federal Tax Deduction

Up to $4,000 deduction for eligible tuition and fees

Complete Form 8917 and submit it with Form 1040 or 1040A

Learn more about the tuition and fees tax deduction from IRS Publication 970 or a tax professional.

Types of Financial AidEducation Tax Benefits - Federal Tax Deductions

Up to $4,000 deduction of student loan interest from federal taxable income

Form 1098-E estimates how much interest you have paid for the previous tax year

Learn more about tax deductions from IRSPublication 970 or a tax professional.

How Is Financial Aid Awarded

How Financial Aid Is AwardedFinancial Need

Many (but not all) types of aid are based on financial need

– Grants– Perkins loans– Subsidized Stafford loans– Federal Work-Study Program

How much aid do you need to pay for college?

How Financial Aid Is AwardedCost of Attendance

Tuition Room and board Books Transportation Personal expenses

How Financial Aid Is AwardedExpected Family Contribution (EFC)

The EFC is the amount you may be expected to contribute

You don’t pay it up front Used to determine how much aid

you’re eligible for Calculated from information you

provide

The Financial Aid Process

The Financial Aid Process Applying for Financial Aid

To get aid, you have to apply– The Free Application for Federal Student Aid

(FAFSA)– Additional forms– Scholarships

Apply regardless of family income– You and your family don’t make too much or

too little to apply

The Financial Aid ProcessThe FAFSA

It’s free! Complete as soon as possible after

January 1 Complete the FAFSA4caster

(fafsa4caster.ed.gov) for an early estimate of your financial aid eligibility

The Financial Aid ProcessThe FAFSA

Online (fafsa.ed.gov) or on paper Online benefits

– Instant access to help– Built-in error checking– Skip questions that aren’t required– Faster processing time– Easier to check status– Easier renewal process

The Financial Aid ProcessPreparing for the FAFSA

Apply for a Department of Education PIN (pin.ed.gov)

– Can be used each year applying for aid– You and your parents need separate PINs

Complete the FAFSA on the Web Pre-Application Worksheet

– Available before January 1– Organized like the FAFSA on the Web– Collect information and prepare answers

The Financial Aid ProcessInformation for the FAFSA

Have financial information and records available for both you and your parents

– Bank statements– Income amounts (Forms W-2 or tax returns)– Investment records– Other

The Financial Aid ProcessFAFSA Tips

Don’t pay! Remember it’s free at fafsa.ed.gov

Use the FAFSA4caster Interested in student loans? Interested in work-study? College possibilities Apply for the FAFSA every year

The Financial Aid ProcessGet help with the FAFSA!

College Goal Sunday– Free program to help

families complete the FAFSA– Held nationwide

For more information, visit

collegegoalsundayusa.org

The Financial Aid ProcessAdditional Forms and Scholarships

Are additional forms needed?– Check with individual colleges

Apply for scholarships!– Find lists of scholarships on the Internet

collegeboard.comfastweb.comfinaid.org

The Financial Aid ProcessStudent Aid Report (SAR)

Sent to you after FAFSA is processed– If you provided an email address, you get a

notification containing a link to it online– Paper version via mail

Contains your Expected Family Contribution (EFC)

Info sent automatically to colleges you listed

Verify information is correct and make necessary corrections

The Financial Aid ProcessAward Letters and Offers

Received from the financial aid office Compare offers

– Amount of aid vs. cost of attendance– Gift money vs. borrowed money– Types of loans

Accept an offer from the college you will attend

Select lenders and sign Master Promissory Notes (MPNs) for accepted loans

Funds directed to college

The Financial Aid ProcessComparing Award Offers

Package B has advantages despite being $1,000 less

Type of Aid Package A Package B

Grants $1,500 $3,500

Perkins $2,500 $2,500

Sub. Stafford $1,000 $2,625

Unsub. Stafford $1,625 $0

Work-Study $3,000 $0

Total Aid $9,625 $8,625

The Financial Aid ProcessPLUS Loans and Private Loans

Options if you need additional funds after seeing how much aid you are offered by the college

Applications and information available from colleges or lenders

The Financial Aid ProcessReview

Apply for a Department of Education PIN Submit the FAFSA Ask colleges if other forms are required Apply for scholarships Review your SAR Compare award packages Accept an award package Select a lender and sign MPNs Look into PLUS or private loans if

necessary

Questions?

Thanks for attending Financial Aid 101!

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