Understanding Financial Aid

1
Understanding Financial Aid

• Presented by the
• Minnesota State University, Mankato
• Office of Financial Aid

2
What is Financial Aid?

• Grants
• Scholarships
• Employment Opportunities
• Loans

3
Goal of Financial Aid

• Primary goal is to assist students in paying for
  their educational investment and is achieved by
• Evaluating familys ability to pay for
  educational costs
• Distributing limited resources in an equitable
  manner
• Providing a balance of gift aid and self-help aid

4
Application Process

• Submit the Free Application for Federal Student
  Aid (FAFSA) prior to your schools deadline
• To ensure maximum consideration for federal,
  state, and institutional aid, check information
  from each school to determine
• Required application materials
• Application deadlines

5
Definition of Financial Need

• Cost of Attendance (COA for one year)
• - Expected Family Contribution (EFC)
• Financial Need

6
Cost of Attendance

• Tuition and fees
• Room and board
• Books and supplies, equipment, transportation,
  and miscellaneous personal expenses
• Loan fees
• Study abroad costs
• Dependent care expenses
• Expenses related to a disability
• Expenses for cooperative education program

7
EXPECTED FAMILY CONTRIBUTION FOR DEPENDENT STUDENT

• Parent Income
• Student Income
• Untaxed Income
• Exclusions
• Assets
• Family Size
• Number Attending College

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Need Varies Based on Cost
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Principles of Need Analysis

• To the extent they are able, parents have primary
  responsibility to pay for their dependent
  childrens education
• Students also have a responsibility to contribute
  to their educational costs
• Families should be evaluated in their present
  financial condition
• A familys ability to pay for educational costs
  must be evaluated in an equitable and consistent
  manner, recognizing that special circumstances
  can and do affect its ability to pay

10
Types of Financial Aid

• Gift Aid
• Grants Scholarships
• Federal Pell Grant
• Federal SEOG
• State Grants
• Institutional Grants Scholarships
• Private Grants Scholarships

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Types of Financial Aid

• Self Help Aid
• Loans Employment
• Work-Study
• Stafford Loans
• Direct Loan
• Perkins Loans
• PLUS Loans
• SELF Loans
• Alternative Loans

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Cost of Borrowing Federal Stafford Loans

• Variable Interest Rate capped at 8.25
• Interest Rate for 7/1/2004-6/30/2005 is 2.82
  (Unsubsidized Stafford, in-school rate)

13
Reciprocity

• Receive tuition close to or same as resident
  tuition rate.
• Remember to apply through your home state!
• Get the application from your high school
  counselor in the spring.

• Wisconsin
• North Dakota
• South Dakota
• Manitoba
• (contact your college)

14
Midwest Student Exchange Program (MSEP)

• Limited agreement
• 150 of resident tuition
• Undergraduates Only
• Contact your college

• Kansas
• Michigan
• Missouri
• Nebraska

15
Scholarship Resources

• School need-based and non-need based programs
• Academic, athletic, and other talent-based
  scholarships and grants
• Private business scholarships
• Civic organization scholarships
• Local library resources
• Local businesses and civic organizations
• Parents places of employment

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Federal Tax Benefits for Higher Education

• Hope Scholarship Tax Credit
• Lifetime Learning Credit
• Student Loan Interest Deduction
• Employer Paid Tuition Assistance
• Deduction for Qualified Higher Education Expenses
• For further information, go to
• www.heso.mn.state.us

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Example Zack filed the FAFSA on February 10th.
His EFC is 1000. This is what his Financial Ai
award will look like

• COA 13, 182 (MN, Undergrad)
• EFC 1,000
• AWARD
• SEOG 750
• Pell Grant 3100
• State Grant 1252
• Work Study 3600
• Perkins Loan 2400
• Subsidized Stafford Loan 1080
• Unsubsidized Stafford 1000
• Total Award 13, 182

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Example Amanda also filed her FAFSA on February
10th her EFC is 15,000. Her award will look
like this

• Since Amanda has no financial need, she is only
  eligible for non need-based forms of Financial
  Aid.
• Stafford Loan Limits
• Freshman 2625
• Sophomore 3500
• Junior/Senior 5500

• COA 13, 182 (MN,Undergrad)
• EFC 15,000
• Need 0
• AWARD
• 2625 Unsubsidized
• Stafford Loan

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How to Apply for Financial Aid

• Complete Free Application for Federal Student
  Aid--available beginning January 1st of the year
  for which you are applying.
• Apply for a PIN
• Go to www.pin.ed.gov
• Both parent and student need it to sign
  application online
• Complete FAFSA online at www.fafsa.ed.gov
• At FAFSA website, print out pre-application
  worksheet to assist in completing online
  application
• Can also complete paper FAFSAif choose not to do
  it online

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CAUTION!

• Avoid being charged a fee to file the FAFSA
• Processes of completing and processing the FAFSA
  are FREE
• If filing FAFSA on the Web, make sure you go
  directly to www.fafsa.ed.gov
• Contact the financial aid office if you need help
  in completing the FAFSA

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FAFSA on the Web www.fafsa.ed.gov
22
To Register for a PIN www.pin.ed.gov
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FAFSA InstructionsStep One You (the student)

• IMPORTANT Correct name, DOB and SSN
• Student marital status as of day completing FAFSA
• Males must register with Selective Service
• Degree, certificate working towards
• Grade level
• Drug Conviction

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Parents Divorced or Separated

• Complete Step Four for the parent with whom the
  student has lived, or from whom the student has
  received the most support, for the past 12 months
• If your parent is remarried, step-parent
  information must be included, whether or not that
  person is actually supporting the student
• Any child support received must be included in
  Worksheet B (question 79)

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Steps Two and Four Income, Earnings, and
Assets(Student and Parents)

• Refer to completed 2004 Federal income tax return
  and consult instructions for proper line
  references.
• If entry is zero or none, enter 0.
• Do not leave blank.
• Carefully read Worksheets A, B, and C to answer
• questions 40-42 (student) and 78-80 (parents)
• HELPFUL HINT Round off your amounts. Do not
  use cents.

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Income, Earnings, and Assets, continued

• Net worth current value of assets minus debt
• Separate net worth among investments,
  business, and farm to answer the three
  questions
• Do not include the value of your home.
• See FAFSA instructions for further detail on what
  to count as an investment

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Investment Farm Question

• Refers to an investment farm
• Do not include the value of a family farm that
  you live on and operate. Only include one that
  is owned solely for investment purposes
• A farm that has been incorporated is not a family
  farm if non-family members own shares in the
  corporation

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Step Three Student Status

• If all answers are no, proceed to Step Four,
  where your parents will furnish income
  information (purple areas)
• If you answer yes to any question, you are
  independent skip Step Four and proceed to Step
  Five

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Independent Student Definition

• At least 24 years old by December 31st of the
  award year covered by the FAFSA
• Graduate or professional student
• Married
• Have legal dependents other than a spouse
• Orphan or ward of the court
• Veteran of the U.S. Armed Forces or
• Determined to be independent by the financial aid
  administrator

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Step Four-Parental Information

• Income asset questions same as in Step Two
  (though now asking about parents)
• Parents marital status at the time FAFSA is
  completed
• Family size, including student
• Number in college, excluding parent
• IMPORTANT Parents Name, SSN, DOB
• Parents Residency

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Step Six Who Should Receive Your Information?

• Enter only the school code to speed up processing
• Name, address, and state of college may be
  entered if you do not know the code
• Check appropriate housing plans for each school

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Step Seven Signatures

• Web filers can sign electronically by getting a
  PIN at www.pin.ed.gov
• Paper filers Student and parent must sign the
  FAFSA in question 100

33
Most Common Mistakes

• Read the instructions One in seven forms is
  rejected due to errors
• Incorrect Social Security Number
• Incorrect parents income or portion of income
  from tax form
• Incorrect amounts given for untaxed income and
  taxes paid
• Missing signatures
• Incomplete form

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FAFSA Processing Results

• FAFSA processed results electronically sent to
  all listed schools
• You will be notified of the FAFSAs processing
  results by
• E-mail acknowledgement if students e-mail
  address was provided (either paper or web
  filers). Generally, this will be received within
  72 hours if you filed on the web.
• Paper Student Aid Report /SAR Acknowledgement if
  students e-mail address was not provided (either
  paper or web filers). This can take 3-6 weeks
  from when the federal processor received your
  application if you filed a paper application.

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Whats Next?

• After you have received your SAR (either via the
  web, or on paper),
• The schools you listed on the FAFSA may send you
  a request for further documentation (tax forms,
  citizenship verification, etc.)
• You will then receive an award packet from your
  college indicating the type of aid you are being
  offered.

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Helpful Web Sites

• Scholarship Searches
• www.theoldschool.org
• www.fastweb.com
• www.collegenet.com
• www.finaid.org
• www.collegeboard.com/paying
• General financial aid information and EFC
  estimator
• www.studentaid.ed.gov
• www.mheso.state.mn.us
• Education and Career Choice Information
• www.petersons.com
• www.mapping-your-future.org
• www.Iseek.org
• www.mncareers.org