1. Financial Aid 101
What You Need to Know About the College Financial Aid Process
Presented by Jack Zegeer
Northern Virginia Community College

2. Topics Why is college important?
What is Financial Aid? What is Financial Need?
Need Components
Types of Aid
Applying for Aid
Dependency Status and Parents
Change in Circumstances
Tax Credits – Making College Affordable One Debt Ceiling Debate At A Time
What Should You Do Next?

3. Why is College Important?

4. Why is College Important?
Compared to an individual High School Diploma
An associates degree recipient earns 20% more in each paycheck, and has a 40% greater chance of being employed
A bachelors degree recipient earns 70% more in each paycheck, and has a 90% greater chance of being employed
A masters degree recipient earns 105% more in each paycheck…

5. What is Financial Aid?
Financial aid consists of funds provided to students and their families to help pay for postsecondary education.
Financial aid helps to bridge the gap between the Cost of Attendance and the Expected Family Contribution.
Financial aid is used to help bridge the gap between the cost of the college and what the family can contribute. The wider the gap, meaning the more difference there is between the school’s COA and the EFC, the more aid is needed to fill that gap. Sometimes schools are not able to cover all of the gap and that is where funding such as outside scholarships and Federal Parent PLUS Loans come into the picture. We’ll discuss those in more detail shortly.

6. What is Cost of Attendance (COA)?
The cost of attendance includes tuition and fees for the college. That’s a direct cost, you know that you will need to pay that – that’s why you’re here. In addition to tuition and fees the cost includes room and board. If your student is living in a dorm and eating in the dining halls you expect to be billed for this. However for financial aid purposes we also use estimations of these costs for students living in apartments, off-campus, or living at home. Books is the next component. These three costs are all directly related to your student attending college – expenses that you knew you’d have. We go a step further. Financial aid acknowledges the student will have personal expenses while enrolled. Things like toiletries and clothes would fall into this category. Travel expenses from school to home and back. Commuters have this expense but so do students who are living away from home. You didn’t really expect to drop your student off and them not come home for four years, did you? And then we have ‘other’ which could be a variety of things. For someone going into nursing it may be uniforms or for a mechanic it may be tools – so that is a catch-all. All of this makes up the cost of attendance which is going to differ from school to school based on the institution’s tuition, if they are state or private etc., as well as economic factors like where the school is located.
Varies based on the school

7. What is Expected Family Contribution (EFC)?
Amount a family can reasonably be expected to contribute
Two Components
Parent Contribution + Student Contribution
Calculated using data from the FAFSA
Does not change based on the school
The EFC is a calculated sum that should reflect what is reasonable for the family to contribute and it has two components – a parent and a student contribution. These contribution amounts are calculated using a Congress approved formula through the FAFSA (Free Application for Federal Student Aid) application. The EFC will not change from school to school. So if your student is attending Yale, your EFC would be the same as if they were attending a local community college whose cost of attendance is much less than Yale.

8. Financial Need Calculation
Cost of Attendance –
Expected Family Contribution =
Financial Need
In order to understand financial aid, you have to know the very basic formula that is used. We take the cost of attendance for the school, then subtract the expected family contribution to determine how much financial need a student has. Sounds fairly simple doesn’t it? Now let’s see how we arrive at those components.

9. Financial Need Cont. $16,500 Cost of Attendance –
$ 5, Estimated Family Contribution =
$11,500 Financial Need

10. Where Does Aid Come From?
Federal government
State government
College/University
Private sources
Help is provided by a lot of different entities. The federal and state governments offer various programs. These programs make up a large portion of the aid programs. Colleges and universities may also have some money that they can offer. The amount of money the school can offer will vary. For instance, the private schools rely more on their own funds than a state supported school. Lastly, the private sector such as businesses or civic groups can offer scholarship, work, and grant programs.

11. Types of Financial Aid Scholarships Grants Work-study Loans
There are many types of financial aid as well. There are scholarships, grants, work study (which are student jobs), and student and/or parent loans.

12. Scholarships Money that does not have to be paid back
Usually based on merit, skill, a unique characteristic, and/or need
Think of scholarships as a competition – Self Yourself
Sources
Civic organizations, churches, employers, schools
Free online web searches
CAUTION – Beware of scams
Scholarships are free money and do not have to be paid back. They are typically based on merit, skill, or a unique characteristic – such as a student who excels academically, or in music, or art or any number of different things. Each scholarship has its own set of rules and some may indicate that ‘need’ is a component.

13. Grants
Money that does not have to be paid back, some may require an “agreement to serve” after graduation
Typically based on financial need
Federal Grants
Federal Pell Grant, Federal Supplemental Education Opportunity Grant (FSEOG), Teacher Education Assistance for College and Higher Education Grant (TEACH)
State Grants
Virginia Guaranteed Assistance Program, Commonwealth Award, Virginia Tuition Assistance Grant
Grants also generally do not have to be paid back. Usually a grant is funded by either the federal or state department of education and is usually based on financial need.

14. Work-Study Allows student to earn money to help pay for college costs
On and off-campus jobs available
Paid by:
Paycheck
Credit to student account
Non-monetary compensation
Example: Room and Board (resident assistants)
Not all colleges participate
Student employment or work study allows the student to earn money to help with their expenses. These jobs can be on campus in offices, labs, gyms, dining services, most anywhere. They can also be off-campus and are usually with non-profit organizations. The work study program also has a literacy piece that places some students in schools working with children or adults to help with reading and math. Work-study programs may be federally or institutionally funded.

15. Loans
Money that is borrowed to finance educational costs, which must be repaid
Borrower - Student and/or Parent
Repayment
Student - After graduating or dropping below half-time enrollment
Parent - Typically 60 days after the first disbursement or can request deferment while student is enrolled at least half-time (interest accrues while deferred)
Repayment terms and options vary for students and parents
A loan is exactly what it says – it’s money that is borrowed. For educational loans the borrower is most often the student however there are Parent PLUS loans that a parent can borrower for their dependent student’s education. The interest rates are relatively low. Repayment on the student’s loans begin whenever they drop below half time attendance – which we hope is after they complete their education. Students usually have a six month grace period before repayment begins. For parents, the repayment begins 60 days after the money is fully disbursed. However, the payments are extended over a number of years and parents can apply for in-school deferment of up to 48 months.

16. Loans Common Federal Loan Programs
Federal Perkins Loan – fixed 5% interest rate
Federal Direct Student Loan
Subsidized – fixed 4.66% interest rate, interest does not accrue while in school, based on need
Unsubsidized – fixed 4.66% interest rate, interest accrues while in school, but does not require in-school repayment on interest, not based on need
Federal Parent PLUS Loan – fixed 7.21% interest rate, one parent borrower, good credit history
The most common loan programs are:
The Federal Perkins Loan - campus based, not all schools offer Perkins loans.
The Federal Direct Student Loan which has two components. The subsidized portion does not accrue interest while the student is enrolled at least half time in school and is based on need. The unsubsidized portion will begin to accrue interest however no payments are required while the student is still in school. This portion is not based on ‘need’. Annual loan limits apply that increase with the grade level. A dependent freshman can borrow a maximum Stafford of $3,500 with a fixed interest rate. Additional unsubsidized Stafford of $2,000 per year at a fixed rate of 6.8% is also available.
The Federal PLUS is for the parent of a student. These loans currently have a fixed interest rate of 7.9%. They are not based on ‘need’ but require the borrower to meet credit requirements. This type of loan can be used to make up the difference or a portion of the difference between what the student needs to attend and what is being covered through other aid programs or out-of-pocket. If a parent is denied a PLUS loan, additional unsubsidized Stafford of up to $4,000 is available to the student.

17. Loan Debt
An average, college borrowers graduating from public institutions with a Bachelor’s Degrees had ~$24,000 in federal student loan debt.
An average, college borrowers graduating from private, non-profit institutions with a Bachelor’s Degrees had ~$29,900 in federal student loan debt.
~67% of college students graduate with debt!

18. Loan Debt cont.
While, these numbers may be striking, the fact still remains that a college education provides an incredible return on money invested.
Average lifetime earnings for a bachelor’s recipient are $800,000 to $1,000,000 greater than a high school diploma recipient
Approach borrowing and paying for college realistically!

19. Question Intermission

20. FAFSA Process
Complete the Free Application for Federal Student Aid (FAFSA) each year.
Available January 1 of each year at
Check with colleges for any priority deadlines
File electronically for faster processing and online tracking
Collects demographic and financial information
If “Will File”, you can provide estimated tax information, but will need to update once taxes have been filed
Information collected is used to determine EFC
Apply for PIN (Personal Identification Number)
Student and parent sign with their own PIN
The primary application for most aid programs is the Free Application for Federal Student Aid (FAFSA). This application is written to the student therefore whenever it says ‘you’ or ‘your’ it is referring to the student. It collects the students demographic information. Also, the financial information for both the student and the parent – remember the EFC is made up of a student and a parent contribution. This year the form is almost exclusively filed on-line – there can be exceptions to that but should be very few. It is available in both English and Spanish. And, as we stated earlier, is used to calculate the EFC. To complete the FAFSA on-line you’ll use the web site listed. It will be ‘live’ on January 1. We have given you a FAFSA on the Web Worksheet which we will use for the rest of the presentation. This worksheet follows the same order as the application on-line. I recommend reviewing and/or completing the worksheet first so that you have all the information down and have already looked up any information that you didn’t have in front of you.

21. PIN Process PIN PROCESS is being changed as of April 2015
New username and password to be used for all FAFSA applications after April 2015
Student and parent each apply for a personal identification number (PIN) at
Can be requested at any time, even real-time as the student completes the online FAFSA
Must have PIN to electronically sign the FAFSA
PIN can be used to sign loan master promissory note (MPN)
To apply for a PIN go to the web site listed. Not only does it allow you to sign the FAFSA but, if you take a student and/or parent loan, often it can be used to sign the master promissory note on-line.

22. General Student Criteria
U.S. citizen or eligible non-citizen (next slide)
Registered with Selective Service (males)
Valid Social Security Number (SSN)
High school diploma, GED, or homeschooling credential
Enrolled or accepted in an eligible degree or certificate program
Criminal convictions (including drug convictions) may limit eligibility, depends on the conviction type
These requirements are:
You must be a US citizen or an eligible non-citizen. If male and 18, you must be registered with the selective service. The student and the parent must have a valid social security number. A student’s financial aid eligibility can be suspended due to a drug conviction. And the student must be enrolled or accepted into an eligible degree or certificate program.

24. Dependency Status
FAFSA will ask a series of questions to determine if the student is dependent or independent, including:
24 years or older
Married
Master’s or doctorate degree program
Military service – Active or Veteran
Children and/or dependents, provide half of support
Foster care, deceased parents, dependent or ward of court, emancipated minor or legal guardianship, homeless
* If all “No” answers, student is dependent.
* If “Yes” to any question, student is independent.

25. Who is the ‘Parent’?
Biological parents information or adoptive parents should be provided on the FAFSA
Grandparents, legal guardians, foster parents, older brothers or sisters, and uncles or aunts are not considered parents on the FAFSA unless they have legally adopted you
Possible dependency override in certain circumstances – rare, but speak with your financial aid administrator
For the purposes of this workshop we are assuming that the student is dependent and lives with at least one biological parent. If that is not your situation you will want to meet with one of us after the presentation so we can give you better information for this section. Answer the dependency questions carefully as that will control whether or not parental information is required. There may be additional documentation you need to send to your schools to support your answers.

26. Which parent? In cases of divorce or separation:
Who did the student live with the most during the past 12 months?
If neither or both, who provided the most financial support?
Example: Who paid for health or car insurance?
In cases where the biological parents were never married, are separated or divorced then the information should be for the parent the student has lived with the longest in the last 12 months. If that is neither or both, then it falls to the parent who provided the most financial support. To determine this ask who paid for health or car insurance?

27. Household Size Student Parents Dependents
Others who live with you and you are providing more than half of their support and will continue to provide from July 1 – June 30
The household size should include yourself (the student), your parent(s), and the number of children (other than yourself) who will receive more than half of their support from your parents between July 1, 2013 and June 30, Also include the number of people who are not your parents children but who live with your parents and receive more than half of their support from your parents, and will continue to receive more than half their support from your parents between July 1, 2013 and June 30, 2014.
Do not include, for example, an older sibling that is in the household now but is getting married on August 1 and moving away then that sibling would not be considered in the household. But Grandma is living with you and you plan for her to be there next year. You may include her, but also include any dollar support she provides the household.

28. Errors can be costly!
Read instructions and complete carefully! Incorrect or missing information may delay the process and result in loss of financial aid
Most Common Errors
Incorrect Social Security Numbers
Divorced/remarried parental information
Income earned/paid and untaxed income
Household size and number of household members in college
Real estate and investment net worth
Please set aside time to complete the FAFSA and other forms completely. Not reading the instructions or skipping steps can cost time and money.

29. IRS Data Retrieval Tool (DRT)
Applicants have the option to transfer IRS tax data into their FAFSA using the DRT
DRT allows the applicant to file more quickly and accurately
File taxes electronically and early, then file your FAFSA using the IRS DRT after days
Not eligible for IRS DRT?
Complete based on 2014 tax return and order an IRS transcript of any 2014 tax returns filed at
Please set aside time to complete the FAFSA and other forms completely. Not reading the instructions or skipping steps can cost you in time and money.

30. Verification
At least one in three applications will be selected by a school, greater probability for new students
Did not use the IRS DRT and are selected for verification? You must submit an IRS Transcript
Contact your financial aid office about any other documentation needed for the verification process
Financial aid cannot be released to a student’s account until this step is completed
One in three applications are selected for verification by the federal processor. Some schools do 100% verifications. If selected, you will need to provide signed copies of your (and your parents’) 2012 federal tax transcript(s) and possibly other materials. Your award is not final until this process is completed.

31. Role of the College Financial Aid Office
Assists students and their families in understanding and utilizing financial aid resources
Determines federal and state aid eligibility
Verifies FAFSA information
Reviews special circumstances
Packages financial aid depending on fund availability
Sends award notification (electronic or paper) with award amounts, disbursement methods, timeframes, and any terms and conditions of each award
Once we get the information the Financial Aid Office will determine if additional information is needed, will determine the aid eligibility, package those funds and send a notification to the student – this can be a paper or an electronic notice. Each award package should provide you with the award amount, how the money will be disbursed and the terms/conditions of the award. If you have any unusual circumstances or questions, be sure to discuss these with your Financial Aid Office.

32. Change in Circumstances
Loss of income or benefit
Death of a parent
Parent divorced or separated after FAFSA is filed
Unusually high medical expenses paid but not reimbursed by insurance
You may be eligible for adjustment based on professional judgment - speak with your financial aid administrator
Remember way back on one of the first slides we stated the EFC was to reflect what the family could reasonably be expected to contribute? We do understand that a families situation can change from the time they complete the FAFSA to the time we package the aid and even after that - if you have a change in your circumstances such as a loss of income or a benefit. Example: social security or child support ends when the student completes high school or a parent loses their job or is downsized therefore not making the same income. It could also be one of the other circumstances listed here. If so, you will want to contact the school your student has applied to. A school is not required but has the option to collect documentation of the families current situation and calculate the EFC using that information instead of what had to be reported on the FAFSA. We can never guarantee that there will be additional funding but we can guarantee that unless you tell us we will not know to even try. You should inform all schools you are considering attending and provide each the documentation requested.

33. What’s Next?
After FAFSA processing, student will receive a Student Aid Report (SAR) via link in if student provided valid address or paper by mail if no valid address provided
Review SAR comments and check for accuracy
Remember to update any estimated information
Make sure you meet all admissions and financial aid deadlines. Check each school’s website for details
Submit any requested documents
Search and apply for other sources of aid, such as private scholarships and grants
What now? You should review the admission and financial aid web sites to be sure you know what materials need to be submitted.
Check for deadlines and meet them. Be sure to follow-up with any requested documents. Check that the FAFSA was processed and sent to the schools you selected.
Check out any scholarship opportunities – go on-line and complete a scholarship search. Stop by your guidance office – they are the best source of local scholarships. Check with your church, community organizations, your parents employer, your employer, all are good places to inquire about scholarships.

34. Summary Start the process early Know any and all deadlines
Know what information and forms you need
Provide accurate information
Make and save copies of everything
Follow up: typical processing times are 4-6 weeks
Check your regularly
If you have a question – ASK!
Start early – your being here is a good start
Again, knowing the forms and deadlines is critical
Make copies of everything you submit – start a file now.
Follow-up – if you submit something to the school and you do not have a reply of some type within 4-6 weeks give them a call or . Be sure they received your information and that it is complete.
Finally, if you do not know….ask. Contact the college’s financial aid office of any college to which you have applied. Contact your guidance counselor. Contact a public institution – if it is a general question about how to complete the FAFSA we can help.
With that said we will ……..
(open it up for general questions – turn it over to…. – conclude this afternoon’s workshop….)

35. Super Saturday Events
You can receive in-person help in completing the FAFSA at a “ 2015 Super FAFSA Week” event
Financial aid professionals will help you complete the FAFSA online
Find an event near you
February 1-8, 2014
Details at
NOVA Financial Aid will hold multiple FAFSA filing events at Loudoun County High Schools from Mid-January - March

36. Education Tax Credits 1098-T – Tax Form
American Opportunity Credit
$2,500 credit per student, $1,000 is refundable, 4 years of eligibility
Lifetime Learning Tax Credit
$2,000 per tax return, no portion refundable, unlimited number of years

37. Education Tax Credits cont.
Tuition and Fees Tax Deduction
Deduct taxable income by up to $4,000
Not a credit!
Deduction expired for 2013 – Up in the air for renewal for 2014
Student Loan Interest Deduction
Deduct yearly accrued interest from taxable income

38. Other Resources
– College-Cost Calculator, FAFSA estimator, Career Finder
– Detailed information on specific aid programs and aid eligibility. – Information on federal loans, repayment plays, and repayment calculators
– Financial aid information and helpful tips in navigating the application

39. Thank you for attending! Ask Away!
Questions?
Thank you for attending! Ask Away!