What every parent needs to know about financial aid

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What every parent needs to know about financial
aid

• But who knows what to ask?
• December 2004

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Agenda for the evening

• Overview of the Financial Aid Process
• Trends and Terms
• Financial Aid Flow
• Completing the FAFSA Online
• Lets talk aboutGrants, Student Loans and other
  types of aid
• Questions

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The Handouts

• Review materials in folder
• SAF Student Loan Record Keeper
• Tonights PowerPoint Presentation
• Montana Career Information Systems (MCIS)
  workbook and how-to guide
• The Basics of Funding Your Education booklet
• Student Loan brochure

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Trends in Financial Aid

• Trends
• Rising cost of tuition
• Greater need for preparation and understanding of
  financial aid process
• The ease and accuracy of completing the FAFSA
  online

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The Main Point of the evening

• Go to the source!

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Goal of Financial Aid

• Primary goal is to assist students in paying for
  college 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

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Admissions

• Before aid can be awarded, you may be required to
  apply to the college(s) of your choice
• Pay close attention to institution deadlines

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What is Financial Aid?

• Scholarships
• Grants
• Loans
• Employment opportunities

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Terms You Should Know

• Terms
• Cost of Attendance
• Expected Family Contribution
• FAFSA-Free Application for Federal Student Aid
• www.fafsa.gov
• PIN-Personal Identification Number
• www.pin.ed.gov

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Important Deadlines
General scholarship deadline for most
post-secondary schools Priority deadline for
processing of the FAFSA form for post-secondary
schools They do vary-be careful!
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General Eligibility Requirements

• Must be enrolled or accepted for enrollment in an
  eligible program of study
• Must be pursuing a degree, certificate, or other
  recognized credential
• Must be a U.S. citizen or eligible noncitizen
• Must be registered with Selective Service (if
  male and required to be)
• May not have eligibility suspended or terminated
  due to a drug-related conviction

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General Eligibility Requirements

• Must have a valid Social Security Number
• May not be in default on a federal student loan
• May not owe repayment of a federal grant
• Must be making satisfactory academic progress as
  defined by the school

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It all starts with the FAFSA!

• Free Application for Federal Student Aid
• Regardless of incomefill it out!!
• Most schools require it for consideration of
  institutional scholarships
• Necessary for gaining access to federal aid like
  student loans
• 68 of average financial aid package

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Free Application for Federal Student Aid

• Collects familys personal and financial
  information used to calculate the students EFC
• May file the FAFSA in one of two ways
• Paper FAFSA
• FAFSA on the Web

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Paper FAFSA

• 2005-06 FAFSA is an 8-page booklet containing
• General instructions for completing the form
• 103 questions,
• including certifications
• and signature spaces
• 3 worksheets and
• Pre-addressed envelope to mail the completed form
  and postcard

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FAFSA on the Web www.fafsa.ed.gov
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To Register for a PIN www.pin.ed.gov
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Ready to go Online!

• You have your PIN
• Completed your FAFSA Online worksheet
• File your FAFSA after January 1, 2005
• Use estimated tax information
• Use your last pay stub from 2004
• You can verify this information later after you
  file
• Then what happens next

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The Process

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Why Is All This Information Needed?

• To the extent that 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

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Filling Out the FAFSA

• Use 2004 tax information
• Make sure SSNs are correct
• Make sure the school(s) are identified
• Contact the college Financial Aid Office for
  assistance
• If using paper, then mail the paper form in the
  provided envelope
• Do not send any other forms with the FAFSA
  (including tax forms)
• Respond to requests for additional information
  promptly

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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

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Timelines

• Submit as early as possible after January 1
• Use estimates to submit by schools priority
  date.
• After tax return is completed is still best
• Takes 2 - 4 weeks if completed electronically, 4
  - 6 weeks if mailed
• If you havent received any information by the
  4th week contact your financial aid office
  immediately

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What Does the Financial Aid Office Do?

• Verify Files
• Determine Final Eligibility for Financial Aid
• Packages Financial Aid
• Sends out an Award Notification which details
• The students cost of attendance
• How the students need was determined
• Amount of the students financial need
• The types and amounts of financial aid offered
• How and when the money will be disbursed
• Terms and conditions of the award offer

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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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Common FAFSA Mistake 1
In a hurry? It could cost you MORE time in the
end. Financial aid offices must put the brakes
on processing your students aid package when
things like Social Security numbers are incorrect.
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Avoid ERRORS!

• Errors made in completing the FAFSA and/or
  supplemental forms may delay application
  processing and result in the loss of financial
  aid funds.
• Please complete all forms carefully!

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Common FAFSA Mistake 2
Watch out for misinformation either to enhance or
downgrade your financial position.
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Common FAFSA Mistake 3 Divorced/Separated
Parents

• Whose information goes on the FAFSA??
• 1. Who did student live with most in last 12
  months?
• 2. If number 1 is not clear, who provided the
  most financial support in the last 12 months?
• 3. If neither 1 or 2 clarifies it, pick a
  parent.
• Stepparents information is ALWAYS
  included!

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Common FAFSA Mistake 4
Dependent status on your taxes has nothing to
do with being considered Dependent or Independent
on the FAFSA.
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Dependent or Independent

• Criteria to be Independent
• 24 Years of age or older
• Working on a graduate degree
• Married
• Have dependents other than a spouse that they
  support more than 50
• Orphan or ward of the court until age 18
• Veteran of the US Armed forces

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Common FAFSA Mistake 5

• Its a numbers game! Dont forget these
  important numbers.
• U.S. Income tax paid (Not Adjusted Gross Income)
• Household size
• Number in post-secondary education (not a parent)

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College Goal Sunday

• Extra Yardage
• for Montana
• Students!

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What is College Goal Sunday?

• College Goal Sunday (CGS) is a volunteer effort
  to assist families and those who have no
  college-going tradition complete the Free
  Application for Federal Student Assistance
• People need to bring
• tax returns
• W-2s
• Tribal income
• Aid-TANF, child support, other benefits
• Last years tax return
• Year ending pay stub
• Bottom line use estimated income information
• Make sure you have correct SSN numbers and income
  data

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Mark your calendar
When February 13, 2005 Time 100-500
pm Where FVCC campus in Kalispell and Libby
Register early! Get a FREE gift!
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Expected Family Contribution (EFC)

• What is it?
• The amount that the department of education
  determines your family can contribute to the
  students education

• How is it determined?
• It is determined by the information that is
  submitted on the FAFSA application

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Need Varies Based on Cost
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Definition of Need

• Cost of Attendance (COA)
• Expected Family Contribution (EFC)
• Financial Need

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A simple example
Cost of Attendance 14,000 Expected Family
Contribution 4,400 Need
9,600 Financial Aid Package Pell Grant
500 Workstudy 1,200 Scholarships 1,500 Student
Loans 2,625 Total financial aid package
5,825 Unmet Need 3,775
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What is Financial Aid?

• Scholarships
• Grants
• Employment opportunities
• Loans

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Available Grants

• Federal Pell Grant
• Federal Supplemental Educational Opportunity
  Grant (FSEOG)
• Montana Higher Education Grant (MHEG)
• Baker Grant (fka MTAP)
• Acce Grant

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Federal State Work Study

• Eligible students
• Undergraduate or Graduate students
• Eligible employers can be on or off campus
• If it is not on the original award notification,
  most schools have a waiting list to award
  subsequent awards

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A simple example
Cost of Attendance 14,000 Expected Family
Contribution 4,400 Need
9,600 Financial Aid Package Pell
Grant 500 Workstudy 1,200 Scholarships 1,500
Student Loans 2,625 Total financial aid
package 5,825 Unmet Need 3,775
PLUS borrower can borrow EFC amount
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Student Loans

• There are three types of FFELP loans
• Subsidized Stafford Loan
• Unsubsidized Stafford Loan
• Parent Loan for Undergraduate Students (PLUS)

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Loan Eligibility

• Loans are one type of student aid awarded
• Students must be enrolled at least half time
• Students must maintain satisfactory academic
  progress
• Most students are eligible for some type of
• student loan

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Loan Limits
Sub and Unsub Maximum Eligibility
Subsidized Government pays interest while in
school Unsubsidized Borrower pays
interest while in school

• Freshman - 2,625
• Sophomore - 3,500
• Junior/Senior - 5,500
• Graduate and Professional - 8,500

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Subsidized Unsubsidized

• Fees 3 origination up to 1 insurance
• Variable interest rate
• (changes July 1st)
• 8.25 cap
• Current rate is 2.77
• Delayed repayment/deferment provisions
• 10 year repayment plan
• 6 month grace period

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Repayment of Stafford Loans

• Six-month grace period
• Maximum repayment period between 10 and 20 years
  depending on repayment plan chosen
• Deferment and cancellation provisions available

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Federal Plus (Parent) Loan

• Borrowers are parents of dependent undergraduate
  students
• 3 origination fee 1 insurance fee
• Variable interest rate
• Changes every July 1
• 9 cap
• Current rate is 4.17
• Loan limits
• Cost of attendance less other aid
• No aggregate limit
• Repayment begins 60 days after fully disbursed

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Where Do I Go From Here?

• Obtain and review admission and financial aid
  materials from each school to which you are
  applying
• Meet all application deadlines
• -Complete FAFSA and any other application
  materials required by the school or your state
  agency
• Investigate other sources of aid

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Private Scholarship Search

• www.safmt.org
• Click on start planning your futureMCIS
• Create a username and password
• Search for scholarships
• Click on Financial Aid or Financial Aid Sort

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Make a plan- where are you going and why? Its
really about knowledge and tools.
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www.safmt.org

• Creating a username and password
• Unique to each person
• Bring parents into the process
• Expand the time spent exploring

Available 24/7!
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Taxpayer Relief Act

• Hope Scholarship Tax Credit
• Lifetime Learning Tax Credit
• Student Loan Interest Deduction
• Education IRA
• Montana College Savings Trust

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Financial Aid Checklist

• Apply for admission
• Submit FAFSA as soon after January 2nd as
  possible
• Apply for outside source scholarships
• Sign and return award letter (Your receipt of the
  award letter will depend on the receipt of your
  FAFSA results.)

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Contact information

• Garth W. Ferro
• Community Outreach Manager
• 406.495.7522 (office)
• 406.459.8549 (cell)
• gferro_at_safmt.org