What You Need to Know about Financial Aid This presentation was developed and provided for free by MASFAA.

Overview About the FAFSA Types of Financial Aid Resources

Getting Started Application for admission may be required before aid can be awarded Be aware of the school’s SAP (Satisfactory Academic Progress) policies Pay attention to deadlines: Priority deadline for filing FAFSA – check with school! Admissions application deadline Campus Housing application deadline Scholarship application deadline Award acceptance deadline

Federal Financial Aid Eligibility Requirements Be a U.S. citizen or eligible non-citizen Have a valid Social Security number If required, must register with Selective Service (see for more information) Can register for Selective Service at time on FAFSA

Eligibility Continued High school diploma or a General Education Development (GED) Certificate or pass an approved ability-to-benefit (ATB) test Be enrolled or accepted for enrollment as a regular student working toward a degree or certificate in an eligible program at a school that participates in the federal student aid programs

Eligibility Continued You must not owe a refund on a federal grant or be in default on a federal student loan You must have financial need (except for Federal Direct Unsubsidized Loans, Parent and Grad PLUS Loans, and TEACH Grants) You must not have certain drug convictionsdrug convictions

Types of Financial Aid Need Based Scholarships Grants Most work-study Loans Non-Need Based Loans Some scholarships Some work-study Merit Based Scholarships

Sources of Financial Aid Federal State Institutional (school) Private

Applying for Different Types of Aid USE THE FAFSA FOR : Grants – Free or “gift” aid Work Study – Self- help – must be earned Loans – Self-help – must be repaid USE SEPARATE APPLICATION FOR: Scholarships Waivers Follow the process at your school

What is the FAFSA? FAFSA = Free Application For Federal Student Aid Emphasis on the “FREE” Part

Components of the FAFSA The Philosophy The Form FAFSA on the Web Worksheet, for online Application The Formulas COA, EFC, NEED

The Philosophy (Why Is All This Information Needed?) Parents and students are primarily responsible for paying for higher education. Families are evaluated in their present financial condition. A family’s ability to pay is evaluated in an equitable and consistent manner. Special situations can be considered

The Process Fill out and submit FAFSA Fill out and submit FAFSA Federal processor will determine Expected Family Contribution School receives FAFSA info School determines need School creates Financial Aid Award Package Student receives Award Letter Student responds to Award Letter (Verification)

FAFSA Application Available on-line at Use this site ONLY! May complete the worksheet first to use as “cheat sheet” when completing the on-line application. Students may call to request a paper application or print the pdf at

PIN Registration PIN numbers can be obtained at the end of the FAFSA on-line process and is real time Web site: Both student and parent need a PIN PIN is used for FAFSA, MPN, NSLDS access

Completing the FAFSA Tax information Use 2011 federal tax information W-2s Untaxed income – i.e., child support received, untaxed portions of IRAs, worker’s compensation, untaxed unemployment income, BAS, untaxed portion of pensions Student and Parent Information Use correct SSNs Use LEGAL NAME from Social Security Card Accurate date of birth

Completing the FAFSA School information On-line requires listing at least one school Ten schools can be listed to receive FAFSA information when using the on-line application Assets & Business Information If required, the net worth they hold the day you complete the form should be reported. Stocks, bonds, money market accounts, rental or recreational (second home) property, etc. Do you include value of your family home, family farm or family business?

Dependent or Independent? Criteria to be independent: Born before Jan. 1, 1989 (age 24) Working on a graduate degree Married Have dependents other than a spouse that you support more than 50% Veteran of the U.S. Armed Forces Currently serving on Active Duty for purposes other than training

Dependent or Independent? Criteria to be Independent (cont.) Orphan, in foster care, or ward of the court at any time when the student was 13 years of age or older Is or was determined to be an emancipated minor prior to age 18 by a court in student’s state of legal residence Is or was in a legal guardianship as determined by the court when 13 years of age or older Unaccompanied youth who is homeless or who is at risk of homelessness and is self-supporting (must be documented)

Exceptions to dependency criteria: Abandonment Abuse Neglect Where safety of student would be compromised by contacting parents Contact your financial aid officer for help in these situations. Documentation is required. Special Circumstances for Dependency Issues

What if I have other special situations? A special conditions appeal may be filed when your income has changed due to: Loss of job Death of wage earner Divorce Unusually high medical bills Special conditions are considered only after initial awards have been determined.

Divorced/Separated Parents Whose information goes on the FAFSA? 1. Who did student live with most in last 12 months? 2. If #1 is not clear, who provided the most financial support in the last 12 months? 3. If neither #1 or #2 clarifies it, choose the parent from whom the student most recently received the most support. Stepparent’s information is ALWAYS included!

The Formula Cost of Attendance (COA) -Expected Family Contribution (EFC) Need

What is Cost of Attendance? Main components Tuition & fees Room & board Books & supplies Transportation Miscellaneous personal expenses Other possible components Loan Fees Study abroad costs Dependent or elder care expenses Expenses associated with a disability Expenses for co-op education programs

What is “EFC?” “Expected Family Contribution” – calculated using FAFSA data and a federal formula Amount the family can reasonably be expected to contribute, but not what the family will pay the college The same regardless of what college the student attends Two components -Parent contribution -Student contribution

EFC for Dependent Student Step One: Determine available parent income Total income (taxable & nontaxable), less exclusions (ex. child support paid, distributions from qualified education benefits that are not subject to Federal income tax) -Taxes (federal, state, local, social security) Income protection allowance for basic living expenses (food, shelter, etc.) -Employment allowance (if eligible) = Available Parent Income

Parent Income Protection Allowance Family size Number in college $ 16,390 $ 13,590***** 3 $ 20,410 $ 17,620 $ 14,820***** 4 $ 25,210 $ 22,400 $ 19,620 $ 16,810***** 5 $ 29,740 $ 26,940 $ 24,150 $ 21,340 $ 18,560 6 $ 34,790 $ 31,990 $ 29,200 $ 26,390 $ 23,600 For each additional family member add $3,930. For each additional college student subtract $2,790.

EFC for Dependent Student (cont.) Step Two: Determine available parental assets Cash, savings and checking accounts + Farm/business net worth (after adjustment) + Real estate/investments equity (excluding home) + Qualified Education Benefits - Education savings/Asset Protection Allowance (amount determined by age of older parent) x Asset conversion rate (12%) = Parents’ contribution from assets

EFC for Dependent Student (cont.) Step Three: Determine available portion of parental income & assets Available income + Contribution from assets (previous slide) = Adjusted available income (AAI) x Assessment rate = Total parent contribution Total parent contribution/ #attending college = Parental contribution

EFC for Dependent Student (cont.) Step Four: Dependent Student Contribution Total Income (taxable & nontaxable) less exclusions (ex. Work Study) - Taxes - Income protection allowance of $6,000 x 50% assessment rate = Income contribution from student + 20% of the student's assets = Student Contribution

Total EFC Parents’ contribution + Student’s contribution = Expected Family Contribution (EFC)

What is “Need?” Cost of Attendance (COA) -Expected Family Contribution (EFC) “Need” The amount of student’s COA that can be covered with “need-based” aid NOTE: Non-need based aid can be used to help cover EFC

Need Varies Based on Cost A B C A B C EFC Cost of Attendance (Variable) Expected Family Contribution (Constant) Need (Variable) -=

How will the financial aid office try to meet my NEED? ABC Cost $30,000 $17,000$10,000 EFC $0 Need $30,000 $17,000$10,000 Pell* $5,550 Other Grant $10,000 $1,000$500 Work Study $2,500 $2,000$1,500 Subsidized Loan $3,500 $2,450 Unmet Need $8,450 $4,950$0 Unsubsidized Loan $2,000 $0 PLUS $6,450* $2,950 $0

How will the financial aid office try to meet my NEED? ABC Cost $30,000 $17,000$10,000 EFC $6,000 Need $24,000 $11,000$4,000 Pell* $ -0- Other Grant $5,000 $ -0- Work Study $2,500 $1,500$1,200 Subsidized Loan $3,500 $2,800 Unmet Need $13,000 $6,000$0 Unsubsidized Loan $2,000 $2,700 Parent Plus $17,000* $10,000 $3,300

Timelines Submit as early as possible after January 1 st Estimated tax return or completed tax return? Processing Times 1 – 3 days if submitted electronically 4 – 6 weeks if paper FAFSA is mailed School processing times vary Print and keep your confirmation page for tracking!

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!

IRS Data Retrieval FAFSA will link to the IRS to retrieve federal tax information Student and parent information will be retrieved Prior year federal tax returned must have been filed approximately 2 weeks prior Married couples must have filed a joint return No change in marital status since January 1 Amended returns will not process Data retrieval may eliminate providing tax forms to the school (for verification)

Student Aid Report A formatted report of the information supplied when completing the FAFSA If is provided, SAR is sent electronically to student Otherwise, a paper SAR is sent If you haven’t received any information within 4 weeks, contact the financial aid office or Federal Processor at FEDAID ( ) or check your application on-line at

Federal Pell Grants Undergraduates pursuing their first baccalaureate or professional degree Portable “Foundation” of financial aid package Anticipated maximum $5550 award (2 semesters) Year-round eligibility Actual award based on enrollment status and EFC

Other Available Grants Federal Supplemental Educational Opportunity Grant (FSEOG) Montana Higher Education Grant (MHEG) ) (State grant) Baker Grant (State Grant) Acce$$ Grant (Private Grant)

Available Grants, Continued Teacher Education Assistance for College and Higher Education (TEACH) Grant Not all schools participate FAFSA must be filed but is a non-need based grant Enroll as an undergraduate, post-baccalaureate, or graduate student at an institution that has chosen to participate in the program Enroll in coursework that is necessary to begin a career in teaching or plan to complete such coursework

Available Grants, Continued Teacher Education Assistance for College and Higher Education (TEACH) Grant Meet certain academic achievement requirements, generally Sign an agreement to serve Grant becomes a Federal Direct Unsubsidized Loan if fail to complete the required teaching service with interest charged from the date of each disbursement.

Employment

Federal & State Work Study Can be need or non-need based On or off campus Earnings do not count as income on next year’s FAFSA Amount awarded is not guaranteed to be earned If you did not receive a work-study award, most schools have a waiting list.

Student Loans

Types of Educational Loans Federal Loans Direct Subsidized and Unsubsidized Perkins Graduate Plus Parent Plus Private Loans

Federal Loan Eligibility Loans are a type of financial aid Need and non-need based Enrolled at least half time

Need based Interest rate: 5% fixed Nine-month grace period Deferment & cancellation provisions Limited funding – apply early Federal Perkins Loan

Federal Direct Loans Direct Subsidized Loan Need based Direct Unsubsidized Loan Non-need based Parent Plus Graduate Plus

Direct Loan Annual Limits Dependent Undergraduate Students Base loan = may be Subsidized if eligible, Unsubsidized, or a combination Students may qualify for lesser amounts of loan if other aid meets their cost of attendance

Direct Loan Annual Limits Independent Undergraduate Students If the Federal PLUS loan for a dependent student is denied, then the dependent student is eligible for the independent loan limits.

Direct Loans Interest Rates Subsidized and Unsubsidized Loans: 6.8%, effective July 1, 2012 Fees 1.0% of loan amount deducted prior to disbursement Fee determined and retained by Department of Ed, not the school

Federal Direct Loans Benefits No credit check performed/no creditworthiness needed for students No payments due while student is enrolled at least half-time Six-month grace period after student leaves school before payments begin 10-year repayment term – longer for higher loan balances Deferment/cancellation provisions

Direct Parent Plus Loan Interest Rate: 7.9% fixed Borrowers are parents of dependent undergraduate students – credit check is performed Fees: 4% - deducted prior to loan disbursement Fee is determined and retained by Department of Ed, not the school. Loan limits: Cost of attendance less other aid received Can cover EFC for student No aggregate limit

Direct Parent Plus Loan Repayment begins 60 days after fully disbursed Ten year repayment term Four repayment options available to parent borrowers: Level repayment Interest Only Monthly payment based on percentage of income Delayed repayment Parents can request an In-school deferment and six month grace period

Graduate Plus & Private Student Loans Graduate Plus (Federal) Interest Rate 7.9% fixed For graduate/professional students only Private Student Loans Also called “Alternative” loans Interest and terms vary; often require co-signer Cannot be combined with federal student loans in a federal consolidation – always a separate payment Use as a “Last Resort” – exhaust all federal eligibility first

Scholarships

Merit (Honors) Institutional Activities Community Scholarship Types

MUS Honor Scholarship Four-year renewable scholarship Waives tuition at eligible campuses Average value at a four-year Montana campus is $4,000/year or $16,000/4 years Approximately 200 awarded state-wide

MUS Honor Scholarship MUS Honors, Governor’s Merit, Merit-at-Large – all use same application provided on the website MUS Honors Information: MUS Honors Information: High School Counselors receive eligibility requirements in early December High School Counselors receive eligibility requirements in early December High School counselor must verify student is on track to complete rigorous core High School counselor must verify student is on track to complete rigorous core Student must take ACT by December in order to qualify Student must take ACT by December in order to qualify Student (not high school counselor) responsible for submitting all information (change from previous years!) Student (not high school counselor) responsible for submitting all information (change from previous years!) Must be postmarked by March 15, 2012 Must be postmarked by March 15, Register, check all criteria, and access the application at

Governor’s Best and Brightest Divided into three scholarships - all administered in different ways 1.Merit Application available online One award per high school High School official selects recipient 2.Merit-at-Large Application available online Includes heavily weighted essay section – encourage your student to submit written essay even if not the “top student” Both Merit and Merit-at-Large use same application as MUS Honors scholarship - available at Visit for detailshttp://

Governor’s Best and Brightest - Continued Divided into three scholarships - all administered in different ways 3.Need-Based No application needed Financial aid office selects recipient Based solely on need Visit for detailshttp://

Scholarship Searches Colleges – 92% of scholarships awarded will come from the college your student attends High School guidance counselors Internet searches SmartAboutCollege.org - follow “MCIS” linkSmartAboutCollege.org Studentaid.ed.gov Collegeboard.org Finaid.org Avoid scams - Free, Free, Free!

Other Resources Health & Human Services Veteran’s benefits Military Service Scholarship (ROTC) Bureau of Indian Affairs (BIA) Grants Tribal assistance American Indian Tuition Waiver Vocational rehabilitation

Taxpayer Relief Act American Opportunity/Lifetime Learning Tax Credits Student Loan Interest Deduction Education IRA College Savings Plans

Financial Aid Mistakes to Avoid Four Most Common Mistakes: Not submitting the FAFSA Procrastination Paying for scholarship searches, FAFSA filing Assuming that financial aid is for someone else

COLLEGE GOAL MONTANA Come to College Goal Montana to get FREE assistance completing the FAFSA Financial aid experts on hand to answer questions, assist with application process February 8 (Wednesday) February 12 (Sunday) Check website for times, locations etc. SmartAboutCollege.org – click on “College Goal Montana” link under the “High School” tab

Questions??

Thank you for your time and attention! Your Montana Financial Aid Officers