The document provides an overview of the financial aid process for high school seniors and their families. It discusses key terms like cost of attendance, expected family contribution, and financial need. It also summarizes the various types of financial aid including scholarships, grants, loans, work-study, and how to apply for federal aid through completing the Free Application for Federal Student Aid (FAFSA). Tips are provided on borrowing responsibly and meeting financial aid deadlines.
1. FINANCIAL AID 101
for High School Seniors
& Their Families
High School
1
Presentation Date
2. This presentation was developed by Stacey Musulin in concert
with other staff members at the University of Connecticut
Office of Student Financial Aid Services. This presentation uses
materials created by the National Association of Student
Financial Aid Administrators
The information in this presentation was based on rules and
regulations interpreted as of the date of its creation. Please
note that programs may change over time. Also, many forms of
aid are based on individual schools’ policies and available
funding. Examples used in this presentation should not be
considered guarantees of aid a student would receive. Contact
your school for details about application procedures and
eligibility questions.
2
3. 3 Topics to Discuss
Cost of attendance (COA)
Expected Family Contribution (EFC)
“Financial Need”
Types of financial aid
Free Application for Federal Student Aid
(FAFSA)
Post-Application processes
Special circumstances appeals
5. What is Cost of Attendance (COA)?
Combined direct and indirect costs related to
educational program
Direct: Billed by the college (e.g., tuition, room &
board)
Indirect: Usually estimates not on the fee bill, but
needed (e.g., books, computer expenses, dependent
care, mileage)
Varies according to:
School (tuition/fee rates differ)
Student status (in-state vs. out-of-state, full-time vs.
part-time)
Housing status (on-campus, off-campus, with parent)
5
6. What is the Expected Family
Contribution (EFC)?
9
Misnomer: EFC is NOT necessarily what a family
will actually pay!
Measurement of a family’s financial strength
Calculated using data from a federal application
(FAFSA) form and a federal formula
Stays the same regardless of college
Exception: Special Circumstance appeal
Two components for dependent students:
Parent contribution
Student contribution
Determines the types and amounts of aid that
students are eligible to receive
7. EFC for Dependent Student
(very basic Federal Methodology version)
Parental contribution from (adjusted if more than
one dependent in
income & assets college)
+ Student contribution from
available income & assets
= Expected Family Contribution
7
8. Financial “Need” - Federal Methodology
NB: The official “Need” figure is not necessarily what is
needed to pay the bill
(billed & miscellaneous non-
Cost of Attendance (COA) billed expenses)
- Expected Family Contribution
(EFC)
(schools will use this figure
= Financial Need to determine eligibility for
need-based aid)
8
9. “Need” Based on Cost
1 X
2 Y
3 Z
EFC EFC
Cost of Expected Family Need
Attendance Contribution (Variable)
(V ariable) (Constant)
9
10. Institutional Methodology
Some schools, through the CSS Profile
application or their own financial aid applications,
may require different information to calculate a
separate, Institutional EFC
The Institutional EFC and those schools’ policies
determine how institutional aid is distributed
10
11. Important Tips: Cost of Attendance
KNOW YOUR COST OF ATTENDANCE!
COA may be adjusted to meet individual students’
needs, if the school accepts an appeal
COA increase may result in more need-based aid
Must be able to document additional expenses
E.g., fee bill for more-expensive meal plan or
receipt for computer purchase
Contact your school for details!
11
13. Types of Financial Aid
Scholarships (not repaid)
Need or merit-based
Grants (not repaid)
Need-based
Loans (must be repaid)
Need and non-need types
Federal or private lenders
Student or parent as borrower
Employment ($ earned through work)
Need and non-need types
Work-Study (need-based)
13
14. Scholarship Searches
Local businesses and Internet - many sites, including:
civic organizations http://fastweb.com
State Dept. of Education http://fastap.org
School Counselors College or University
Places of employment Academic, athletic, and
other talent-based
Student or parent scholarships
Important Tip: There are scholarship scams! Do not
pay for scholarship searches/ applications.
Important Tip: Start Early! Application deadlines
and procedures vary depending on source of aid!
14
15. Federal Grant Programs
(FAFSA needed for all – Apply annually)
Federal Pell Grant
Federal Supplemental Educational Opportunity
Grant (SEOG)
Federal Teacher Education Assistance for
College and Higher Education (TEACH) Grant
15
16. Pell Grant
Awarded to high-need, eligible undergraduates
pursuing first Bachelor’s degree and certain
students enrolled in post-baccalaureate teacher
certification or licensing programs
Portable (not attached to a particular school)
Actual need-based award amount based on COA,
EFC, and enrollment status (more to come later)
Maximum authorized award for 2012-2013
academic year was $5,550
16
17. Federal Supplemental Educational
Opportunity Grant (FSEOG)
Need-based – High-need
students a priority
Maximum award $4,000,
but dependent on school
packaging policy and
available funds
17
18. TEACH Grant
Schools choose whether to participate and what
specific requirements are
U.S. citizen or eligible non-citizen
FAFSA completion required, but not need-based
Award amounts up to $4000 per year
Conditions
GPA 3.25 or qualifying score on admissions test
Sign “Agreement to Serve”: Teach in school serving
low-income students (Title I) for 4 years within 8 years
of leaving university for each agreement signed
Must teach in identified high-need field
If conditions not met, grant will turn into
Unsubsidized Stafford loan with accumulated interest
from time of initial disbursement 18
19. Federal “Self-Help” Aid
Federal Work-Study (FWS)
Federal Perkins Loan
Federal Stafford Loan
Subsidized Stafford Loan
Unsubsidized Stafford Loan
Federal Parent PLUS Loan
19
20. Federal Work Study (FWS)
Eligibility based on need, available funding, and school policies
Allows student to earn money to help pay educational costs
Paycheck or other compensation (e.g., payments off fee bill)
Determined by school policy
Employment may be on or off-campus (per school policies)
Eligible employers may be:
School that student attends
Federal, state, or local public agencies
Certain private nonprofit and for-profit organizations
Tip: FWS earnings, if indicated specially on the FAFSA, do not count in
the expected family contribution (EFC) calculation for the following
school year! 20
21. Federal Perkins Loan
School lends Federal funds
Student is borrower – no cosigner or credit check
No fees!
Amount dependent on funding and school policies but
there are maximums
Interest rate: 5%
Does not accrue while in school or in grace period
9-month grace period after graduation (or if student
drops below ½-time status)
Repayment period may be up to 10 years
Deferment and cancellation provisions available
21
22. Federal Direct Stafford Loans
Student is borrower – no cosigner or credit check
Amount undergraduate and graduate students can borrow
varies by academic year/ # of completed credits
1 % fee charged
i.e., if $100 borrowed, $99.00 will disburse
No repayment required while in school at least ½-time
6-month grace period after graduation or if drop below ½-
time status
Maximum repayment period between 10 and 30 years
depending on repayment plan chosen
Deferment and cancellation provisions available 22
23. Federal Direct Stafford Loans
Subsidized: Must demonstrate “need”
Unsubsidized: Not based on “need”
Annual loan limits (combined subsidized
and unsubsidized) for dependent students:
$5,500 for 1st year undergraduates
$3,500 maximum subsidized
$6,500 for 2nd year undergraduates
$4,500 maximum subsidized
$7,500 for each remaining undergraduate year
$5,500 maximum subsidized
Total/aggregate limit for dependent undergrads:
$31,000
$23,000 maximum subsidized 23
24. Federal Direct
Subsidized Stafford
Need-based, dependent on Cost of Attendance (COA),
Expected Family Contribution (EFC) figures, and other
aid sources
Annual maximum eligibility to borrow dependent on
student status
Expected interest rate fixed 6.8% for undergrads as of the
2013-2014 school year (currently 3.4%)
Interest does not accrue while in school at least ½-time
24
25. Federal Direct
Unsubsidized Stafford
Not need-based, but should fill out FAFSA to borrow
maximum possible subsidized loan
Interest Rate fixed 6.8% and accrues from time money is
disbursed
Can pay interest while in school!
Amount eligible to borrow dependent on student status
Students whose parents refuse to complete a FAFSA may be
able to borrow a limited amount of unsubsidized Stafford
loan in special circumstances
25
26. Parent Direct PLUS Loans
Loan program for parents (biological, adoptive, or step-parent in
household) of dependent undergraduate students
Applicants must be considered “credit–worthy”
Annual loan limit: COA minus other aid
Fixed interest rates
7.9% Direct PLUS Loans
4% fee charged
i.e., if $100 borrowed, $96.00 will disburse
Repayment begins 60 days after loan is fully disbursed for parent
borrowers
Parents may defer payment while student is in school at least ½-time
Must apply for deferment with Dept of Education – not automatic!
Other deferments, forbearances, cancellations possible in special circumstances
26
27. Financing Alternatives
Monthly Payment Plans
Allows payments to be spread over 10 months or less
Dependent on school
Contact school for information
Alternative/Private Loans
Applicants must be “credit–worthy”
Payments may be deferred while student is in school
Dependent on lender
Usually the loan of “last resort”
Interest rates, fees, and repayment policies determined by
individual lenders and subject to change
27
28. Tips for Borrowing
Additional unsubsidized loan eligibility available for
independent undergraduate and dependent students whose
parents are unable to borrow PLUS (credit denied):
$4,000 per year for 1st and 2nd year undergraduates
$5,000 per year for remaining years of undergraduate study
Parents and students who will be applying for PLUS or
private/alternative loans should:
Consider lower-cost/interest Federal loan options first
Consider the total cost of borrowing
Double-check credit scores (www.annualcreditreport.com) prior to
filling out applications
Consider co-signing options for better interest rates
28
30. The Forms
FAFSA (Free Application for Federal Student Aid)
Required for all types of Federal and some state and
institutional aid
www.fafsa.ed.gov
DO NOT go on the .com site – that’s a service for fee
CSS Financial Aid PROFILE
Used primarily by private colleges
Pay for each report sent to a school plus small registration
fee
https://profileonline.collegeboard.com
Institutional Applications
Check school publications and websites
30
31. What is the FAFSA?
A standard form that collect demographic and
financial information about the student and family
Information is used to calculate the EFC using the
federal formula
Electronic version is preferred & faster
English and Spanish versions
Information is sent to secure Dept. of Education
system called CPS
Did I mention it’s free?
31
32. General Federal Aid Criteria
Must be enrolled or accepted for enrollment in
eligible program of study
Must be pursuing degree, certificate, or other
recognized credential
Must be U.S. citizen or eligible noncitizen
Must be registered with Selective Service
(if male and required)
May not have eligibility suspended or terminated
due to drug-related conviction
32
33. General Federal Aid Criteria
(Continued)
Must have valid Social Security Number (SSN)
Including parent of dependent student
Must not be in default on a federal student loan
Applies to parent applying for PLUS loan
Must not owe an overpayment of federal grant or
loan funds
Must continue to make Satisfactory Academic
Progress (as defined by school)
GPA , % of completed credits, maximum credit limit
33
34. About Deadlines:
Each college may set its own deadline for filing the
FAFSA, the Profile, or an additional institutional
financial aid application
Know the deadline for each school to which you apply!
For the 2013-2014 academic year, the FAFSA is
available on January 1, 2013
The FAFSA may be filed at any time during the
academic year to be considered for Pell Grant and
Stafford and/or PLUS loans
Understand that if you file late, you may miss out on
forms of aid that are limited
34
35. First Step: Get Student & Parent Financial Aid
Personal Identification Numbers (PINs)
Web site: www.pin.ed.gov
Can request PIN now
Sign FAFSA electronically
May be used by students
and parents throughout
aid process, including
subsequent school years’
FAFSAs and signing
Federal Direct Loan MPNs
Tip: Get student AND
parent PINs (1 each)
now!
35
36. What information to collect
before starting the FAFSA:
Social Security Numbers (student and parents)
Alien Registration # (permanent residents only)
Student’s driver’s license number
State residency information
Marital information (dates)
2012 W-2 Forms (statement of earned wages)
May estimate for initial completion by deadlines
2012 Tax forms (student & parent, if applicable)
May use last year’s data to estimate for initial completion by deadlines
Email addresses
Other income info (contributions to tax-deferred pensions/savings, child
support paid/received, etc.)
Investment information (NOT IRAs)
School codes (also available on online FAFSA) 36
37. FAFSA on the Web Worksheet
4-page PDF booklet
Tips:
Cautions:
Using this
Worksheet does not include all FAFSA questions worksheet
might help to
Section #s on Worksheet don’t necessarily coincide organize
with section #s on FAFSA information
prior to going
Many families will be asked to provide additional online
information
Have this and
Child Support Paid supplemental
information
Untaxed Income (including untaxed interest, IRA
deductions, Child Support received) handy to make
data entry
Assets (NOT IRAs) Businesses/Investment Farm easier
value
37
38. Good reasons to file electronically
40
Built-in edits to prevent errors
Skip logic allows student and/or parent to skip
unnecessary questions
Option to use Internal Revenue Service (IRS) data retrieval
More timely submission of original application and any
necessary corrections
More detailed instructions and “help” for common
questions
Ability to check application status on-line
Simplified application process in the future
39. 39 FAFSA on the Web
Website:
www.fafsa.ed.gov
2013-14 FAFSA on the
Web available on
January 1, 2013
FAFSA on the Web
Worksheet:
Used as “pre-
application” worksheet
Questions follow order
of FAFSA on the Web
40. General Tips for completing the
FAFSA:
Read each question carefully
Some questions apply to students, others to parents – don’t
mix!
Some questions tell you what income/ asset data NOT to
include – be careful!
Double-check all data entry
If estimating income/ asset information, supply your best
HONEST guess
You may go back and make corrections (possibly IRS Data
Retrieval) if there are significant changes
When using tax forms, double-check the type of form you are
using (1040EZ, 1040A, 1040) to reference the correct specific
line numbers
40
41. General Info Section
Citizenship information TIPS for General
Information:
Drug conviction status
“Your” and
Parent’s educational background “Yourself” refer to
the Student!
Grade level for the 2013-2014 school year
Use full, legal
First year undergraduate names – no
nicknames!
Type of Program?
Certificate/ Diploma You are not a 1st
year Graduate
Associates degree student - yet
Bachelor’s degree
41
42. Dependency Status
(Whether or not parent information required on FAFSA)
Students may be only considered Independent if they are:
Born before January 1, 1990
Married at time of application
Have children/ dependents for whom student provides over ½ financial support
during upcoming year
In Graduate school (already earned a Bachelor’s degree) Tip: In extreme
circumstances,
On active duty stats in US Armed Forces
dependency status may
A veteran of the US Armed Forces be appealed. Contact your
An orphan, Ward of the Court, or in foster care school’s financial aid
anytime when age 13+ office for more details.
Considered “unaccompanied youth” and “homeless” / “at risk of being homeless”
As determined by director/ professional staff of shelter or program any time on/after 7/1/2012
Legally considered “emancipated minor” or in “legal guardianship”
NOTE: THIS IS DIFFERENT FROM A DIVORCED PARENT HAVING
CUSTODIAL STATUS!!!!
42
43. Who is a “Parent?”
“Parents” do not include grandparents or other relatives/ friends/
legal guardians with whom the student may live, but who have not
formally adopted the student
When parents are divorced, give information about the primary
custodial parent (with whom the student lived longer during the
past year)
To break a tie, give information about which parent provided more
financial support
When parents are remarried, given information about the primary
custodial parent AND that parent’s spouse (the stepparent in
whose household the student lives most)
43
44. Tips for Household Info
Include student and siblings if parent(s) will provide over half support from
7/1/2013- 6/30/2014 even if the student will not be living with the
parent during that time (i.e., in college)
Include other dependents if they live in the house and if parent(s) will
provide over half support from 7/1/2013- 6/30/2014
# in college figure must be children/ dependents counted in the household
who are enrolled at least ½-time
Do not include parents in # in college even if the parents are in college
Dislocated Worker Status for Parents:
Receiving unemployment benefits and unlikely to return to that field/job
Is “displaced homemaker,” laid-off, or lost own business due to economic
conditions
44
45. IRS Data Retrieval
41
Available early February 2013 for 2013-2014
processing cycle
Participation is voluntary
Makes updating FAFSA information easier
Reduces documents requested by financial aid office
Not available when filing status is Married-Separately
46. How IRS Data Retrieval Works
So long as the tax returns have already been processed:
While completing FAFSA, the student and/or parent
may submit real-time request to IRS for tax data
IRS will authenticate taxpayer’s identity
If match found, IRS sends real-time results to
applicant in new window
Student and parent choose whether or not to transfer
data to the online FAFSA
These are separate transfers, one for the student and
one for the parent
46
47. Tips for Student/Parent Income Info
OK to estimate and correct later!
Tax Filing Status and type of return (1040EZ, 1040A, 1040)
Eligible to file 1040 EZ or A if make less than $100,000, does not itemize, and
does not have income from self-employment, own farm, alimony, or capital gains
on a required Schedule D
Adjusted Gross Income for 2012 – not always the same as income from work on
W-2
May include income from other sources and certain deductions
Income earned from work – May be different than AGI – Include Self-
Employment!
Federal Income Tax for 2012 (What was tax liability on 1040 – NOT necessarily
paid on W-2)
47
48. Additional Tips for Income Info
Untaxed Income :
DO include specified IRA/pension savings, Workman’s
Compensation, untaxed disability, untaxed IRA
distributions/pension/interest, and child support RECEIVED
Do NOT include Unemployment Compensation, untaxed Social
Security benefits, SSI, IRA rollovers, and other such specified
income.
Do NOT include scholarship/ financial aid amounts as
income UNLESS you will pay taxes on it (i.e., if you must
include this as taxable income on 1040)
This usually occurs only if the scholarship exceeds the billed
educational expenses
48
49. Tips for Asset Info
Do NOT include these in assets questions:
Net worth of the home you live in
Retirement accounts (e.g., 410K, IRA, pensions)
Net worth of family-owned (greater than 50% ownership)
business employing less than 100 people
Net worth of family farm on which you live
49
50. Tips for Asset Info (continued)
Do include these in assets questions:
Cash, savings, checking account balances
Net worth (Value – Debt/Mortgage) of rental/investment
properties
If you live in your investment property, do NOT include the
percentage of the area in which you reside
Educational benefit/ savings accounts (e.g., 529, Coverdell)
Include as parent asset even if the student is the beneficiary
Net worth of family business if employ over 100 employees
Net worth of investment farm
50
51. Additional Info & Tips
Federal School Codes needed for each college
Up to 10 codes allowed – Feds will send data to schools
Available online if you don’t have them handy (follow prompts)
Housing plans for each college (used by schools to determine
Cost of Attendance)
On-campus (allows for billed room & board/meals)
Off-campus (allows for rent & meals)
With parent (allows for meals)
For Dependent Students: Both Parent and Student must sign
with separate PINs!
51
53. FAFSA Processing Results:
Central Processing System (CPS) calculates
and sends info including EFC: Tip: Review your
SAR carefully for
Student gets Student Aid Report (SAR) accuracy and
…by email with direct link to online SAR keep a hard
…by snail mail if no email address provided copy!
Students with PINs may view SARs online anytime at
www.fafsa.ed.gov
Schools get Institutional Student information
Record (ISIR)
Information sent electronically within 7-14 days
after FAFSA submitted to CPS
53
54. After the FAFSA is processed…
Students check SARs for accuracy of information
Students log in and make corrections online
Remember IRS Data Retrieval Option
Schools review ISIRs and then develop financial aid
packages
Schools may request additional information for verification
or to resolve database mismatches or conflicting information
Federal Verification
CPS/ Dept of Ed. determines which applicants must supply
documentation verifying FAFSA info
Give specific documentation to schools only if they request it
Remember IRS Data Retrieval option
If selected, provide requested documentation to schools ASAP!
54
55. Special Circumstances
Contact each financial aid office about unusual/
extreme circumstances such as: (not exhaustive list)
Change in employment status
Medical expenses not covered by insurance
Change in marital status or household size
Student inability to obtain parent information
Schools may request additional documentation to
review on case-by-case basis
Different schools may interpret cases differently per
their policies
School decisions are final and cannot be appealed to
US Dept. of Education
55
56. How it works - Summary
Student submits completed FAFSA
Federal processor determines Expected
Family Contribution (EFC)
Federal processor sends Student Aid
Report (SAR), which includes your EFC
Using your EFC, your prospective
college determines your financial
need
Prospective college develops a financial
aid package to try and meet need.
Sends student an award package
56
57. The Award Notification
May be sent by email, letter, or made available via a
online system
Continue to check email or online systems in case aid
office requests additional information
Meet all deadlines to respond to the award
notifications
Keep copies for your records!
57
58. Tips: Making Decisions @ Aid
Never decline aid you don’t understand!
Know whether or not aid is guaranteed throughout
program!
Need-based aid is reconsidered each year after annual renewal of
FAFSA
Are there GPA or Major requirements for renewal of institutional
aid?
Are there aggregate maximums for institutional aid?
Consider Federal loans before private ones, as these
offer fixed interest rates and guaranteed benefits:
Perkins
Subsidized Direct Stafford
Unsubsidized Direct Stafford
Direct Parent PLUS
58
59. Tips: Making Decisions @ Aid
(continued)
If applicable, shop around for private loan
lenders
Fees may vary by lender
Private loan interest rates, dependent on credit,
can vary significantly
Repayment terms/ benefits (e.g., auto-withdrawal
for reduced interest?)
Customer Service/ Reputation (e.g., selling loans)
Ask if school has “suggested” lender list and
review their selection criteria
59
60. Tips: Making Decisions @ Aid
(continued)
Consider the long-term costs of borrowing
Will student be borrowing the same amount for 4+
years?
Will student/parent pay the interest while in school?
(best)
Will interest not be paid while in school? (interest
accrues on interest, increasing total cost)
www.finaid.org – Great Resource!
See calculator section to see total cost of borrowing over
various terms, including monthly payment estimates and
amount of interest paid
60
61. Where Do I Go From Here?
Obtain aid application requirements from
each school
Forms
Deadlines
Research private scholarships
Applications
Deadlines
Apply for PIN for FAFSA
Assemble financial information
FAFSA Worksheet
61
63. Resources
Federal Student Aid
http://studentaid.ed.gov (US Dept of
Education) – links to FAFSA sites
http://studentaid.ed.gov/fafsa
1-800-4-FED-AID (1-800-433-3243)
TTY: 1-800-730-8913
FAFSA4caster online tool (early estimate – not
EFC guarantee:
http://studentaid.ed.gov/fafsa/estimate)
www.pin.ed.gov - to get PIN
www.fafsa.ed.gov – to fill out FAFSA
See in Help
“Getting Started/Before You Apply”
“General Questions” and “Completing Your FAFSA”
63
64. Resources (continued)
More from Federal Student Aid:
www. studentaid.ed.gov/pubs
Funding Your Education: The Guide to Federal
Student Aid
Federal Grant/ Federal Student Loan Programs
Videos/ PDFs/ calculators
College Goal Sunday:
www.collegegoalsundayct.org
January 27, 2013
Locations across the state
Get 1-1 assistance in filling out the FAFSA
64
65. Resources (continued)
FinAid! (independent and objective financial aid
information)
http://www.finaid.org
Mapping Your Future (tips on applying for
aid, saving for college, budgeting, etc)
http://www.mappingyourfuture.org
Individual School/ College Financial Aid Office
websites
Check each school’s website for information!
65