An Introduction to Financial Aid

Financing Education Beyond High School

Tonight’s Agenda

College Costs Financial Need Financial Aid Types of Aid How to Apply Questions

College Costs (MN)

Financing Strategies

Savings & Investments Current Income Monetary Gifts Financial Aid Scholarships Future Earnings

Education is an investment in the future!

Primary goal is to assist students and families in paying for their educational investment and is achieved by:

Evaluating family’s ability to pay educational costs Distributing limited resources in an equitable

manner Providing a balance of gift aid and self-help aid

Goal of Financial Aid

To the extent they are able, parents have primary responsibility to pay for their dependent children’s education

Students also have a responsibility to contribute to their educational costs

Families should be evaluated in their present financial condition

A family’s ability to pay for educational costs must be evaluated in an equitable and consistent manner, recognizing that special circumstances can and do affect ability to pay

Principles of Need Analysis

How is “need” determined?

Cost of Attendance (COA)- Expected Family

Contribution (EFC)= Eligibility for need-based

financial aid

The COA is different at each school, but a student’s EFC stays the same. A student’s need will be different from school to school.

Cost of Attendance Tuition and fees Room and board Books and supplies Transportation Miscellaneous personal

expenses

Student and parent contributions are determined by the federal formula (FAFSA application)

Colleges use your EFC to determine your family’s aid eligibility at their school

How much a family can reasonably contribute to educational expenses; a measure of a family’s financial strength! It is not the exact amount that you will end up paying for college.

Expected Family Contribution (EFC)

Based on FAFSA data elements:

Parent IncomeStudent IncomeUntaxed IncomeAssetsFamily SizeNumber Attending College

Expected Family Contribution (EFC)

X

Y

Z

Cost of Expected Family NeedAttendance Contribution (Va ria b le ) (Va ria b le ) (Co ns ta n t)

1

2

3

EFC EFC

Need Varies Based on Cost

Types of Financial Aid Grants Scholarships Loans Student Employment

Where does it come from?

Federal and state government, schools, employers, and other public and private sources like clubs and organizations.

Federal Pell Grant Exceptional financial need Annual awards up to max of $5,845/year (16-17) Lifetime eligibility is equivalent of 12 full time semesters

Federal SEOG Grant Limited funding Priority given to students with exceptional need; Pell-eligible Each school determines how much to award (max. $4,000)

Federal TEACH Grant Non-need based Minimum gpa of 3.25 or qualifying score on admission test Teach in a high-need subject area for a minimum of four academic

years and within eight years of graduation Up to $4,000* per year. If fail to meet teaching requirements, grant

becomes a loan which student will have to pay back with interest.

Federal Grants

Minnesota State Grant Must be a Minnesota resident enrolled at an eligible Minnesota

school Must have need; awarded to students from low and moderate

income families Can receive up to the equivalent of four years full-time study Annual awards up to $11,334 (15-16) for private 4-year school Pell Grant offset

Institutional Grant College or university funds awarded to students with financial need Institution determines its own policy for awarding grant aid

All of these federal and state grant programs will require you to complete a FAFSA!!

State & Institutional Grant Programs

Search for Scholarships

Typically awarded based on merit, not need.Where to look:

your college(s) of choice HS counselor; Guidance

Office or Career Center Online scholarship search

engines in the community: church,

civic, charitable & businessorganizations

parent employer

Small scholarships add up!

For information and tips to avoid scholarship scams check:

Minnesota Attorney General’s Office: http://www.ag.state.mn.us/Consumer/Publications/ScholarAid.asp

Federal Trade Commission: http://www.consumer.ftc.gov/

U. S. Department of Education: www.studentaid.ed.gov

Avoid Scholarship Scams

Federal Perkins Loan: 2 year extension of the loan program; expires Sept. 2017Awarded only to students who have need after other direct loans5% fixed interest; no fees; interest and repayment begins after school

Federal Direct (Stafford) Loan: Repayment of principal begins after school. Subsidized: no interest charged while in school; fixed interest rate

of 4.29% (15-16) Unsubsidized: interest accrues while in school; fixed interest rate

of 4.29% (15-16)

Federal Direct PLUS Loan: Parent borrows loan; fixed interest rate of 6.84% (15-16); repayment begins after disbursement (i.e., while student is in school). Cannot have “adverse” credit. Deferment available upon request.

Alternative/Private Student Loans: Variable interest rates and fees; generally requires credit-worthyco-signer

Loan Programs

Retention Flexible hours Spending money or

replace some loan borrowing On-Campus or Non-Profit Organizations Federal and state employment is not used

in determining Student Contribution on next year’s FAFSA

Student Employment

Sample Financial Aid AwardA “package” is a combination of grants & scholarships, student employment, and/or low-interest student loans.

Example:Total COA $25,352

Outside Scholarship: $1,000*Pell Grant: $3,225MN State Grant: $5,613 Family Share/Gap =Institutional Grant: $3,500* $4,514- $11,014Federal Work Study: $2,000* Based on $2,600

EFCFederal Direct Loan: $5,500Total Aid $14,338 - $20,838

How do I apply for financial aid? Complete the Free Application

for Federal Student Aid (FAFSA)

Complete school financial aid application (if required)

Meet application deadlines

Apply for scholarships

Contact your financial aid administrator if you have special circumstances

Free Application for Federal Student Aid (FAFSA)

Standard form that collects your personal data

Information on it is used to calculate your EFC

Schools will use the EFC to calculate your eligibility for aid

Apply online Available as of

January 1, 2016 Can fill out anytime until

July 1, 2017, but… Schools and states may

set their own deadlines for certain types of aid

FAFSA on the Web www.fafsa.ed.gov

Faster processing Built in edits and

skip logic Detailed

instructions and “help” functions

Ability to check processing online

Secure connection

FSA IDhttps://fsaid.ed.gov/npas/index.htm

Electronic Signature Student and parent

must have one Parent can use same

ID for multiple children

Can request before or while completing FAFSA

Documents you’ll need: w-2 form(s), social security card, drivers license, asset/investment information, tax return (if completed)

FAFSA on the Web worksheet; available at http://studentaid.ed.gov/fafsa/filling-out under “Resources” on right hand side of page

Submit online FAFSA asap

Make sure to meet state deadline for state grant program (MN- 30 days after start of term)

Completing the FAFSA

The IRS Data Retrieval Tool takes you to the IRS website, where you’ll need to log in by providing your name and other information exactly as you provided it on your tax return.

Easy way to provide required data and ensures accuracy Won’t need to provide copies of an IRS tax transcript to

your schools Decreases the likelihood of being chosen for the

Verification process

IRS Data Retrieval

Will be available starting February 2016. Generally:

Filed taxes electronically: ~ 2-3 weeks Filed taxes via paper: ~ 8-10 weeks

Additional caveats to being able to use Data Retrieval:Filing status, type of return filed; required questions on FAFSA will take you through eligibility screening

At the IRS site, you can preview your information to make sure it looks correct before agreeing to have it transferred to your FAFSA

When you return to the FAFSA, you’ll see that questions that are populated with tax information will be marked with “Transferred from the IRS.” Don’t make any changes to those answers (except where Individual Retirement Account or pension rollovers are involved), or you’ll invalidate the information you retrieved.

The IRS DRT does not populate your individual wages, so make sure to answer that question once you return to the FAFSA

If using estimated data, can make correction to FAFSA to update income information using Data Retrieval later

Put your name and SSN on FAFSA exactly how it appears on your social security card.

Make sure to correctly report parent marital status – stepparents must be included in the household and their income is counted!

Read instructions for household size and family members in college carefully! Note that parents cannot be included as # in college.

Read instructions for reporting assets. Refer to completed federal income tax return and consult

instructions for proper line references. If entry is zero or none, enter 0. Don’t leave blank.

Enter school code(s).

Avoid Errors!

Report:Current balance of: cash, savings, checking, stocks, bonds, money market funds, CDs, trust funds, UGMA and UTMA accounts. Current net worth of real estate (rental property, land, second home, cabin, etc.), investment farm, certain businesses, etc.Also: educational benefits or savings accounts, such as Coverdell, 529 savings plans, or the refund value of 529 pre-paid plans

Important Asset InformationDo not report: Family’s primary residence, small business of < 100 FT employees if family owns and controls, the family farm (if lived on), retirement accounts such as non-education IRAs, 401K, 403B, Keogh, pension, etc.

There is an automatic asset protection built into the federal formula – the average amount assessed from parent assets is ~ 6%.

How long will it take to complete a FAFSA? What if my parents are divorced? What are special circumstances? I don’t think we’ll qualify for aid. Do I have to

fill out the FAFSA? My parents don’t claim me on their taxes.

Shouldn’t I be considered independent for aid?

Do I need to apply every year?

Frequently Asked Questions

Apply for admission to your school(s) of choice. Apply for your FSA ID. Complete the FAFSA (each year) as soon as

possible after January 1. Review your Student Aid Report (SAR). Respond if your school requests more

information. You may be selected for verification and asked to submit tax transcripts or other documents.

Respond to financial aid award notice and complete any loan paperwork.

What do I do….and when?

Use of Prior Prior Year data on FAFSA rather than Base Year (e.g., for 2017-18 FAFSA, 2015 income information is used instead of 2016)

Allows more accurate data to be reflected on FAFSA, increase use of DRT or completed tax return, reduction in additional paperwork, and earlier awards

Starts on the 2017-18 FAFSA, not the 2016-17 FAFSA 2017-18 FAFSA would become available beginning

October 2016 Schools are not required to begin completing financial

aid awards starting in October; each school will determine their own timeline for completing a financial aid award

Prior Prior Year …

Wisconsin North Dakota South Dakota Manitoba

Reciprocity

Reciprocity information and online applications available at http://www.ohe.state.mn.us/

*Midwest Student Exchange Program

Private scholarships Vocational Rehabilitation Services MN Post-Secondary Child Care Fund MN Indian Scholarship Bureau of Indian Affairs Grants Armed Forces – MN GI Bill, fed vet benefits

Alternative Funding

Check out Aid for Students with Special Circumstances at http://www.ohe.state.mn.us/

Where can I get more information?

Minnesota Office of Higher Education Student website: www.ohe.state.mn.us

U.S. Department of Ed:http://studentaid.ed.gov

The College Board: www.collegeboard.org

FastWEB scholarship search: www.fastweb.com

FinAid-The Financial Aid Information Page: www.finaid.org

Good Luck!

Questions?Karla Glasser

Associate Director of Financial AidSt. Catherine University

kpglasser@stkate.edu