4What is Financial Aid / Sources Grants, Scholarships, Self Help/LoansFederal / State GovernmentSchool / CollegePrivate SourcesMerit / Need Based AidGrants/Scholarships (free money) -Money that does not have to be paid backAwarded on the basis of merit, skill, or unique characteristicSelf-Help (work, savings, etc.)- Allows student to earn money to help pay educational costsA paycheck; orNon-monetary compensation, such as room and boardLoans - Money students and parents borrow to help pay college expensesRepayment usually begins after education is finished
5The Free Application for Federal Student Aid (FAFSA) Used to determine student eligibility for:Federal programsState programsSchool programsA standard form that collects demographic and financial information about the student and family.Federal programs, such as Pell Grants, work-study, and student loansState programs, such as Pennsylvania State Grant, state work-study, and other special programsSchool programs, such as need-based grants and scholarships.May be filed at any time during an academic year, but no earlier than the January 1st prior to the academic year for which the student requests aid
6FAFSAThe FAFSA may be filed beginning on January 1 of the senior year of high schoolFor the academic year, the FAFSA may be filed beginning January 1, 2014Complete the FAFSA as soon as possible after January 1Be aware of school “recommended filing deadlines”The FAFSA must be completed every year!
7Ways to Apply Online at www.fafsa.gov Safe, secure, fast, skip logic, built in editsPrint the Confirmation Page when completeComplete PA State Grant application – Link on Confirmation PagePaper FAFSA – callreasons to file electronically:Built-in edits to prevent costly errorsSkip logic allows student and/or parent to skip unnecessary questionsOption to use Internal Revenue Service (IRS) Data Retrieval ToolMore timely submission of original application and any necessary correctionsMore detailed instructions and “help” for common questionsAbility to check application status onlineSimplified application process in the future
9Student Dependency Status Dependent Students = Parent Information on FAFSAFAFSA asks questions to determine statusIndependent Student CriteriaUnique SituationsPA State Grant status can be different24 or older on Jan 1st of award year (January 1, 1991)Veteran (includes active duty personnel)Working on graduate level degreeEmancipated minor in legal guardianshipOrphan, in foster care, or ward of the court atanytime when student was age 13 or olderHave legal dependents other than spouseStudent deemed homeless by proper authority(PA State Grant status can be different)
10Whose Information Goes on the FAFSA? Divorced or separated parents - yesStepparents - yesAdoptive parents - yesFoster parents - noLegal guardians - noAnyone else the student is living with - no(The parent the student lived with the most over the past 12 months. If equal, then the parent who provided more than 50% of student’s support)
11Information You May Need to Complete the FAFSA Social security numbersFederal income tax return (1040, 1040A or 1040EZ)W-2 forms from all employersCurrent bank statements (checking and savings)Current business and farm recordsRecords of any stocks, bonds and other investments, including 529 accountsAdditional untaxed income tax records may be needed such as: Veteran’s non educational benefits, child support paid/received and workers compensation.Alien registration or permanent resident card (if not a US citizen)The FAFSA does not ask about personal debt – credit card debt, car loans, etc.Information concerning income and assets is needed in order to complete a FAFSA. Please note if an applicant uses the FAFSA-IRS Data Retrieval Process, they may not need to have an actual copy of a tax return with them to complete the FAFSA.
12IRS Data Retrieval Tool While completing the FAFSA, applicant may submit request to IRS for tax dataIRS will authenticate taxpayer’s identityIf match found, IRS sends results to applicant in new windowApplicant chooses whether or not to transfer data to FAFSAThe IRS Date Retrieval Tool allows students and parents to access IRS tax return information needed to complete the FAFSA. Students and parents may transfer the data directly into their FAFSA.IRS Data is available:After 2 weeks of electronically filing federal tax returnAfter 8 weeks of filing a paper federal tax returnIf use estimated income to complete FAFSA, can go back once taxes are filed and use IRS Data Retrieval Tool.
14IRS Data Retrieval Tool Some will be unable to use IRS DRTExamples include:Filed an amended tax returnNo SSN was enteredStudent or parent married but filed separately
15Personal Identification Number (PIN) Student and parent sign electronically with a Personal Identification Number (PIN)Apply for PIN at prior to January 1, or apply for a PIN when completing the FAFSACreate your own PIN or have one assignedDo not lose it. Write it down and store in a safe placeCan use for future FAFSA filing and parent can use for other children FAFSAsUse to sign Stafford Loan application and Parent PLUS loan applicationCan request a duplicate PIN, if necessarySign FAFSA electronicallyNot required, but speeds processingMay be used by students and parents throughout aid process, including subsequent school years
16FAFSA Confirmation Page Apply for your State GrantFrom the FAFSACompletion/ConfirmationPageStart your state application to apply for Pennsylvania state based financial aidStudents who click on the link will be automatically moved to the PA State Grant Form and will be presented with the additional questions needed to determine State Grant eligibility which includes such items as enrollment status, value of PA 529 College Savings Program, program of study, and employment status.Printing , signing, and mailing in the State Grant confirmation page is the last step in the process. PHEAA is working on an electronic signature capability but that is not available at this time.Students will be able to view their status on Account Access available at pheaa.org about three days after completing the FOTW.
17Expected Family Contribution (EFC) An EFC will be provided to you on your confirmation page of the FAFSAThis is the result of completing the FAFSAThe information on your FAFSA and your resulting EFC are sent to the schools/colleges that you listed on the FAFSA and to PHEAAYou will also receive notification that it has been processedExpected Family Contribution (EFC) is determined based on your FAFSA information including:- Parent income and assets- Student income and assets- Family size- Number of children in college- Age of the older parentThis is NOT the amount you will pay each year!
18FAFSA Tips Use the Correct SSN Don’t mix answers for student and parent informationUse the Correct SSNGender question is optional – answer it!Have federal income tax and other related informationas referencesIt’s OK to ESTIMATE if taxes aren’t filed yetDon’t Delay, Don’t Miss DeadlinesIt’s OK TO ESTIMATE if Taxes aren’t filed yetUpdates/Corrections can be done later using theIRS Data Retrieval Tool
19What is the Expected Family Contribution (EFC)? Amount family can reasonably be expected to contribute towards the students educationStays the same regardless of collegeTwo componentsParent contributionStudent contributionCalculated using data from the federal form – the FAFSA
20Expected Family Contribution (EFC) Expected Family Contribution (EFC) is determined based on your FAFSA information including:- Parent income and assets- Student income and assets- Family size- Number of children in college- Age of the older parentSchool use this number to determine eligibility for financial aid.This is NOT the amount you will pay each year!
21Additional Forms Required? Free Application for Federal Student Aid (FAFSA)PA State Grant Form (SGF)CSS PROFILE Form?Institutional Application?FAFSA (Free Application for Federal Student Aid)REQUIRED FOR: Federal Aid, PA State Grant, College Aidand some Private ScholarshipsPA STATE GRANT FORM (SGF) Required for First Time Applicants and may be requested for subsequent years.CSS PROFILE Form Required for some postsecondary schools and scholarship organizationsINSTITUTIONAL AID Forms Internal forms at the school
22Know Your Deadlines School Deadlines – vary by school PA State Grant deadlines –May 1, First Time and Renewal Applicants who plan to enroll in a degree program or a college transferable program at a junior college or other college or universityAugust 1, First Time applicants that plan to enroll in a community college; a business, trade, or technical school; a hospital school of nursing; or a 2-year program that is not transferable to another institutionMust have a FAFSA on file to be considered for a PA Grant but you also must complete the Grant form… so consider May1 your deadlineFederal Deadlines - Apply anytime after January 1st of the upcoming Academic Year to the end of the Academic Year (July 1st through June 30th)Seniors: after Jan 1st Juniors: after Jan 1st 2015
24What school costs are considered by the financial aid office at the school? School costs include:Tuition and feesRoom and boardBooks and suppliesTransportationMiscellaneous living expensesVaries widely from college to collegeDirect Costs:TuitionfeesRoom and boardBooks and suppliesIndirect costsMiscellaneous living expensesDependent carePersonal ExpensesAt each school that you apply to, your EFC will remain the same but your cost of education will be different. Schools may consider both direct costs, charged by the school and indirect costs, that the student pays outside of school.Costs vary greatly from school to school. In evaluating college costs, students must be sure to compare similar expenses. They should not consider tuition and fees only at one school and all costs at another school.In preparing to meet the cost of attendance, families should distinguish between direct costs to be paid to the institution (tuition and fees, room and board, books and supplies) and those indirect costs over which they may have more control (transportation costs and personal expenses).You can receive financial aid up to the Total of the school regardless of your EFC!
25Calculating Financial Need Schools/colleges receive financial aid information and calculate financial need School cost……………………. $26,000 EFC………………………minus… - 3,000 Financial need………………… $23,000 FAO “awards” student based on financial need and available funding (varies from school to school) Financial aid award letter sent to studentApproach this as though you are not buying a school, you are buying an EDUCATION.Look at sticker price!! Tuition costs in PA range from $2,500 to more than $40,000….PLUS room and board.Understand that in higher education there is no direct correlation between cost and quality.Be open minded and diverse in college searches.Determine how much you can afford to borrow.Set some parameters right up front.
26Financial Aid Award Letter Is official notification from school about financial aid, terms, and conditionsLists the type and amount of each award to be receivedDescribes what must be done to accept or reject any awardDiscloses students rights, responsibilities, and academic requirements
27Packaging Example Free Money $ 6,000 $ 8,000 $18,000 Cost $15, $25,000 $45,000EFC $ 3, $ 3,000 $ 3,000Need $12, $22,000 $42,000Free Money $ 6, $ 8,000 $18,000Loans $ 5, $ 7,000 $ 8,000Work $ $ 2,000 $ 3,000Total Aid $11, $17,000 $29,000Remaining costs $ 3, $ 8,000 $16,000Actual Contribution(Cost – Free Money) $ 9, $ 17,000 $27,000How to cover Actual ContributionSavings – Family529 Plans – FamilyScholarships – Various SourcesGrants – Federal and StateTuition Payment Plans – SchoolFederal Student Loans – Department of EducationInstitutional Loans – SchoolPrivate Education Loans – BankHome Equity Loans – Bank
28Reviewing the Financial Aid Package After reviewing financial aid packages, students should be sure they know and understand the following:How much is gift aid, and how much is not?Which awards are based on need, and which are based on merit?Are there any conditions on the gift aid; in particular, is there a GPA requirement?Will their awards change from year to year?Will institutional awards increase as tuition increases?Do your Research…What is the Net Price that you will pay? Use the Net Price Calculator at schools student is interested in attending to get an estimate of your “net price” to attend. Net Price calculator available on each school’s website.What is the graduation rate?What is the average debt of graduates?What is the repayment rate and default rate of the school’s borrowers?What is the employment outcome for recent graduates?
29Special Circumstances Recent death or disabilityChange in employment status – reduced incomeChange in parent marital status – separation or divorceStudent cannot obtain parent informationContact the school and ask for a special consideration AND Contact State Grant Division at PHEAA
30Federal, State, and College Financial Aid Programs 101Federal, State, and CollegeFinancial Aid Programs
31Federal Programs Pell Grant …………..... up to $5645 (2013-14) Campus-based aid – amounts determined by FAOFSEOG…………………… up to $4000Perkins Loan ……….. up to $5500 (fixed 5% interest rate)Federal Work Study …… FAO determinesFederal LoansStudent LoansParent LoansPell Grant – to $5645 ( )Goes to most financially needy studentsThe confirmation page of your FAFSA will indicate if you are eligible for Pell GrantLimited to 12 FT semestersFSEOGAnnual awards range from $100 to $4,000 for undergraduate students.Priority is given to students who receive Federal Pell Grants.Student's award depends on the amount of funding available at each school and the school's policies for awarding aid.Perkins Loan-Borrowers with financial need can be awarded up to $5,500 per yearThe award amount is determined by the school and available fundingInterest rate is 5%A nine month grace periodWorkstudyJob opportunities for financially needy students.Usually work between hours per week during the academic year and up to 40 hours per week during the summer.The hourly rate is at least the federal or state minimum wage, whichever is greater, and may be higher depending on the required job skills.Federal and PA minumum wage is $7.25
32Other Federal Programs TEACH (must meet teaching commitment)For more information, visit studentaid.ed.gov.Iraq and Afghanistan Service GrantAmericorpsfor details, go to
33Pennsylvania State Grant (PHEAA) PA State GrantFull-time, in PA…...….up to $4,363Part time, in PA………up to $2,182Out of state….. Up to $600 in DE, MA, OH, RI, VT, WV, and DCAll other states….up to $500 (NJ, NY, and MD = $0)For additional details, see the PA Student Aid Guide page 16, or visit
34Pennsylvania State Grant (PHEAA) A Pennsylvania State Grant is based on financial need and other requirementsThe maximum amount of the grant is determined, in part, by the cost of attendance at the school: Community College $2,313State University $3,713State Related $3,991Private Institution $4,363
35Other State Programs State Work-Study - job related to major Educational Assistance Grant (EAP) – National GuardChafee Education and Training Grant – administered by the Department of Public WelfareBlind or Deaf Beneficiary GrantPostsecondary Educational Gratuity Program (PEGP)Partnerships for Access to Higher Education (PATH)Pennsylvania Targeted Industry Program (PA –TIP)For details, see the PA Student Aid Guide page 19, or visitPHEAA Administers a number of financial aid programs, some in partnership with other state agencies, that can assist you with meeting college costs.
36Scholarships Scholarships are FREE MONEY Scholarships are awarded by foundations, philanthropists, non-profit organizations, businesses and colleges to help students pay for collegeCheck with your School Counselor for Local Scholarships!Fastweb.com is the largest, most accurate and most frequently updated scholarship database.Scholarships are awarded by foundations, philanthropists, non-profit organizations, businesses and colleges to help students pay for collegeFastweb.com is an excellent site to use for searching as it is a database that pulls specific scholarships for students based on their input. It also sends alerts when a scholarship matches the student.
37Increase your Scholarship Opportunities Create a Profile or ResumeLook at year after year.What makes you stand out? Tell Your Story!Document your informationAchievements; AwardsPersonal/Performance – sports, music, artExtra Curricular ActivitiesVolunteerism; Community ActivitiesRecommendationsOrganize important information that can increase the student’s chances of obtaining scholarships.Besides grades, class rank, test scores on school transcriptsRecommendationsFaculty, Coach, Employer, Community Leaders, Others..
38Scholarship Search Tips Start Searching EarlyUse FREE Scholarship Search sitesDon’t ignore scholarships with smaller award amountsDon’t miss deadlinesSearch for Scholarships every yearCheck corporate websites such as Target, Walmart, Kentucky Fried Chicken, as they all have scholarship programs and you don't have to work there to get them
39Scholarship Opportunities for Everyone Scholarships for Average StudentsCommunity Service ScholarshipsVideo contestsEthnicityUnusual scholarshipsBased on Last NameSeussvile: Oh, The Places You'll Go! College ScholarshipPatrick Kerr Skateboard ScholarshipTupperware Home Parties ScholarshipFor more visit:
41Loan Debt by the Numbers (according to the Consumer Financial Protection Bureau) • $1.1 trillion: Approximate amount of outstanding student loan debt—second only to mortgages.• 1-in-5: U.S. households that have student loans.• $26,682: Average outstanding balance for a borrower with student debt.• 1-in-8: Share of borrowers with more than $50,000 in student debt.• 40 percent: Share of American households headed by someone under 35 that have student loan debt.• 31 percent: Percentage increase in the number of student loan borrowers between 2007 and 2012.
42Reduce the Need for Financial Aid and Loans Graduate on Time4 year for Bachelors Degree / 2 year Associates DegreeResearch and find the right school and majorMinimize transfer and change of majorEarn college credits while in high school through AP courses, Vo-Tech, and dual enrollmentConsider options for cutting costs (commute, take summer classes, buy used books, make smart meal plan choices)2 + 2 Strategy (2 years at a Community College then transfer credits to a 4 year school)3 + 2 (Master’s Degree)Things like double majors, study abroad, internships, and athletics can enhance the educational experience and improve marketability. But it comes at a price:Beware of the 5-Year Plan!The fifth year likely costs 20% more than the 1st year did.Loss of institutional funds if they only allow for four years.Loss of PA State Grant if all four years have been received.Reduction in student borrowing capacity if maximum loans received in the first four years (only $4,000 left).Talk it over and plan ahead!
43Be A Smart BorrowerPage 28 PA Student Aid GuideStudent debt is an increasing concern as more students graduate with staggering loan amounts.Think about how you’ll repay your debt before you borrow.Consider every potential free financial aid option before borrowing.The federal government has made it very easy to borrow – this is good for access, but students need to be aware of the pitfalls of borrowing too much.If you must borrow, only borrow what you need.
44Smart Borrowing TipsPage 28 PA Student Aid GuideResearch job availability in your chosen field, before selecting your major.You won’t be able to repay your student loan if you aren’t gainfully employed.Research employment rates in your potential career field before making a final decision on your major.
45Smart Borrowing TipsPage 28 PA Student Aid GuideResearch your expected salary in your future career, find an affordable school, and borrow realistically.There are many paths to the same degree.Research every option, including community colleges and commuting.Only attend a school you can reasonably afford.Only borrow what you absolutely need to attend.
46Smart Borrowing Tips Consider all types of financial aid carefully. Page 28 PA Student Aid GuideConsider all types of financial aid carefully.Grants and scholarships do not need to be repaid.Work-study provides part-time jobs for students.Loans must be repaid with interest.
47Smart Borrowing TipsPage 28 PA Student Aid GuideEducate yourself on the many loan options available before borrowing.No one loan option is perfect for every family.Conduct your own research on the various loan options.Decide on the best choice for your situation.
48Smart Borrowing TipsPage 28 PA Student Aid GuideInconsistent or untimely loan repayment could affect your future.Unlike other forms of debt, student loans are difficult to discharge in bankruptcy.Your credit score could be affected by inconsistent/untimely payment.Deferment or forbearance is an option if you are having trouble making payments, but will increase the total owed.
49MySmartBorrowing.orgPage 28 PA Student Aid GuideThis interactive tool gives you information you can use to make smart decisions about career choices and paying for college.MySmartBorrowing.org
50Federal Student LoansEffective July 1, 2013, Federal Direct Loans now carry variable/fixed rates“Variable/fixed” means that the interest rate for new loans will be set annually, but the rate at the time of disbursement will remain fixed for the life of the loanRates on new loans reset on July 1 each yearThe interest rate each year will be based on the final auction of the 10-year U.S. Treasury Bills prior to June 1, plus a certain percentage. In addition, the interest rates are capped.
51Types of Federal Direct Loans Undergraduate StudentsSubsidizedUnsubsidizedGraduate studentsPLUS LoanParents
52Federal Direct Loan Program (for students) Subsidized = no interest charged to student while enrolledBased on Financial NeedInterest will be charged during the grace period, if the loan is first disbursed July 1, 2012 through June 30, 2014.Unsubsidized = interest accrues in school and graceAny interest not paid during grace will be capitalized at repaymentThere is a 1.051% fee deducted from loan amount at disbursement.No subsidized loans for grad studentsfederal student loans have loan fees that are deducted proportionately from each loan disbursement you receive. This means the money you receive will be less than the amount you actually borrow. You're responsible for repaying the entire amount you borrowed and not just the amount you received.
53Interest Rates – Student Loans Undergraduate – Subsidized and Unsubsidized:3.86% forCapped at 8.25%Graduate – Unsubsidized:5.41 forCapped 9.50%
56Parent Loan for Undergraduate Students (PLUS) PLUS Loans – Parent & Graduate6.41% forCapped at %Up-front fee of 4.204% deducted at disbursementMay borrow up to full cost of education minus financial aidCredit check is required on this loanbut no debt-to-income testRepayment begins immediately - can defer repayment until 6 months after student graduates or drops below half-time enrollment.If defer payment – encouraged to make interest paymentsAll loans must be repaid within 10 yearsCurrent interest rate = 6.41%..capped at 10.50%There is also origination fees association with these loans - Those fees will be deducted from the loan disbursements, but you are responsible for the entire loan balance. So, when figuring out your bill – you will be responsible for the balance caused by the fee deductions.For parents of dependent students or graduate level students
57Federal Direct PLUS Loan Repayment begins immediately - can defer repayment until 6 months after student graduates or drops below half-time enrollment.If defer payment – encouraged to make interest paymentsAll loans must be repaid within 10 years
58Benefits of Paying Interest Loans must be repaid with interest. Paying now will reduce what is capitalized!Interest accrues on your unsubsidized student loan and Federal PLUS Loan:Every day, from the day the loan is disbursed until you make the last payment.Even if your loan is not in repayment.Interest accrues on your subsidized student loan:Every day, from the day the repayment period starts until you make the last payment.During your grace period if your loan was disbursed on or after July 1, 2012 and before July 1, 2014It’s important for students and parents to understand all the terms of their loans and their repayment responsibilities before they borrow.
59Calculating Accrued Interest To calculate your daily interest accrual, use the following formula:Interest rate x current principal balance ÷ number of days in the year = daily interestExample:Sara Student has a $10, current principal balance and 3.86% interest rate this year. Using the formula:.0386 x $10, ÷ 365 = … (round to $1.06)
60Repayment ExamplesIt is estimated that you will need an annual salary of at least $34, to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $22,932.80, but you may experience some financial difficulty.*source:Loan Balance: $28,500.00Adjusted Loan Balance $28,500.00Loan Interest Rate %Loan Term: yearsTotal Years in College yearsAverage Debt per Year $7,125.00Monthly Loan Payment $286.66Number of PaymentsCumulative Payments $34,398.64Total Interest Paid $5,898.64
61Repayment ExamplesIt is estimated that you will need an annual salary of at least $19, to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $12,874.40, but you may experience some financial difficulty.*source:Loan Balance: $16,000.00Adjusted Loan Balance $16,000.00Loan Interest Rate %Loan Term: yearsTotal Years in College yearsAverage Debt per Year $6,400.00Monthly Loan Payment $160.93Number of PaymentsCumulative Payments $19,311.57Total Interest Paid $3,311.57
62Alternative/Private Education Loans Nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.Student borrows in his or her own nameBased on credit scoring and debt-to-income ratioRepayment may be deferred until education completedFees, interest rates, loan amounts, and repayment provisions vary by lender and are generally higher than federal student loansCo-signers usually required. Some loan products have a co-signer release optionCompare loans before making choice and read the fine print!These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.It’s important for students and parents to understand all the terms of their loans and their repayment responsibilities before they borrow.Student loans are nearly impossible to discharge in bankruptcy, so the student loan choices made today could impact borrowers for the rest of their lives.Always consider federal loans first. They have the best interest rates and repayment provisions.Borrow in the following order:Perkins Loan (5% fixed) – studentStafford Loan (3.86%) – studentPLUS Loan (6.41%) – parent and graduate studentAlternative Loan (variable rates) – last resort