financial aid 101 everything you need to know about financial aid
TRANSCRIPT
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!
©2009 Great Lakes Higher Education Guaranty Corporation. All Rights Reserved.(01/2009)