Financing Education Beyond

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					      Financing Education Beyond
              High School
                                   2007-08

Financing Your Education
•   What is financial aid?
•   Where does it come from?
•   What aid is available?
•   Who is eligible?
•   How do I apply?

Agenda
• Definition of financial aid
• Definition of financial need and how it is determined
• Descriptions of major federal financial aid programs
• How to apply for financial aid, including the Free Application for Federal
  Student Aid (FAFSA), and how to avoid errors
• Descriptions of other government resources
• Where to look for information about private sources of aid, including how to
  avoid being scammed

What is Financial Aid?
•   Scholarships
•   Grants
•   Loans
•   Employment opportunities

Types of Aid
• Gift aid: Grants and scholarships (need-based or merit-based)
• Self-help aid: Loans and employment (need-based or non-need-
  based)

Goals of Financial Aid
• Primary goal is to assist students in paying for college and
  is achieved by:
    – Evaluating families’ ability to pay educational costs
    – Distributing limited resources in an equitable manner
     – Providing balance of gift aid and self-help aid

Definition of Need
  Cost of attendance (COA)
– Expected family contribution (EFC)
= Need
Cost of Attendance
• Tuition and fees
• Room and board
• Books, supplies, transportation, and miscellaneous personal expenses,
  including documented costs for a personal computer
• Loan fees
• Study abroad costs
• Dependent care expenses
• Disability-related expenses
• Cooperative education program costs

Need Varies Based on Cost
Principles of Need Analysis
• To extent they are able, parents have primary responsibility to pay for
  dependent child’s education
• Students have a responsibility to contribute to educational costs
• Families should be evaluated in their present financial condition
• Family’s estimated ability to pay educational costs must be evaluated in
  equitable and consistent manner, recognizing that special circumstances
  may affect family’s ability to pay

Federal Methodology
    Federal Methodology is the formula created by Congress to
                      determine the EFC.

Independent Student Definition
•    At least 24 years old by December 31 of award year covered by the FAFSA;
•    Graduate or professional student;
•    Married;
•    Has children or dependents (other than a spouse) for whom the student provides more than
     half support;
•    Orphan or ward/dependent of the court;
•    Veteran of U.S. Armed Forces or currently serving on active duty (for other then training
     purposes) in the Armed Forces; or
•   Determined to be ―independent‖ by financial aid administrator based on unusual
    circumstances


EFC for a Dependent Student
Step 1: Determine available parental income
        Total income (taxed and untaxed)
– Excludable income (e.g., child support paid)
 –      Taxes paid (i.e., federal, state, local, Social Security)
 –      Income protection allowance for basic living                            expenses
 (e.g., food, shelter, etc.)
 –      Employment allowance (if eligible)
 =      Available income (may be negative)

EFC for a Dependent Student
Step 2: Determine available parental assets
      Value of cash, savings, and checking accounts
 + Adjusted business/farm net worth (total value
   minus debt against business/farm)
 + Investment/real estate net worth (excluding home)
 –    Education savings and asset protection
      allowance (determined by age of older parent)
 x    Asset conversion rate (12%)
 = Parental contribution from assets

EFC for a Dependent Student
Step 3: Determine portion of available parental income and assets
   available for education
            Available income
   + Contribution from assets
   = Adjusted available income (AAI)
   x Assessment rate (varies)
   = Total parental contribution
   ÷ Number attending college (excluding parents)
   = Parental contribution for student
EFC for a Dependent Student
Step 4: Determine student contribution
     Total income (i.e., taxed and untaxed)
– Excludable income
– Taxes paid (i.e., federal, state, local, and Social Security)
– Income protection allowance
– Parental adjusted available income if < $0
= Student’s available income
EFC for a Dependent Student
Step 4: Determine student contribution
   Student’s available income
x 50% assessment rate
= Income contribution from student
+ 20% of the student’s net asset worth
= Student contribution

EFC for a Dependent Student
  Parental contribution from
  income and assets
  (as adjusted, if more than one household member in
  college)
+ Student contribution from available income and assets
= EFC

EFC for an Independent Student
• No parental contribution
• Independent with dependents:
   – Student contribution similar to calculation for parent of
     dependent student
   – Variable percentage of available income
   – 7% of net assets after protection allowance
• Independent with no dependents:
   – 50% of available income
   – 20% of net assets after protection allowance

Federal Pell Grants
• Awarded to eligible undergraduates pursuing first baccalaureate
  degree and certain students enrolled in post-baccalaureate teacher
  certification or licensing programs
• Portable
• Actual award amount based on COA, EFC, and enrollment status
• Maximum award for 2007-08 = $4,050
Academic Competitiveness Grant (ACG)
• First and second year undergraduate students
• Federal Pell Grant recipient
•   U.S. citizen
•   Full time
•   Completed rigorous secondary school program
•   Award amounts:
    – $750 first year students
    – $1300 second year students
• Portable
National Science and Mathematics Access to Retain Talent
(SMART) Grant
•   Third and fourth year undergraduate students
•   Federal Pell Grant recipient
•   U.S. citizen
•   Full time
•   Eligible major
•   3.0 GPA
•   Award amount:
    – $4,000 for third and fourth year of study
• Portable

Federal Supplemental Educational Opportunity
Grants (FSEOG)
• Eligible students:
     – Undergraduates pursuing first baccalaureate or professional
       degree
     – Awarded first to students with the lowest EFCs who are Federal
       Pell Grant recipients
• Annual award amounts:
     – $100 minimum
     – $4,000 maximum

Federal Work-Study (FWS) Earnings
• Eligible students: Undergraduate, graduate, and professional
  students
• Employment may be on or off campus
• Eligible employers:
     – Schools
     – Federal, state, or local public agencies
     – Certain private nonprofit and for-profit organizations
• Schools must use portion of FWS funds for community service
  employment activities

Federal Perkins Loans
• Eligible students:
     – Undergraduate, graduate, and professional students
     – Priority to students who show ―exceptional need,‖ as defined by
       school
• Loan amount varies
• Maximum annual loan amounts:
     – $4,000—undergraduate students
     – $6,000—graduate and professional students

Federal Perkins Loans
•   Interest rate: 5%
•   9-month grace period
•   Repayment period may be up to 10 years
•   Deferment and cancellation provisions available

Stafford Loans
• Student loans available under:
     – Federal Family Education Loan (FFEL) Program with funds
       provided by lenders
       (e.g., banks and credit unions)
     – Federal Direct Student Loan (Direct Loan) Program with funds
       provided directly by federal government via participating schools
• School determines loan eligibility and delivers loan
  proceeds to students

Stafford Loans
• Subsidized: Must demonstrate ―need‖
• Unsubsidized: Not based on ―need‖
• Base annual loan limits (combined subsidized
  and unsubsidized):
     –   $3,500 for 1st year undergraduates
     –   $4,500 for 2nd year undergraduates
     –   $5,500 for each remaining undergraduate year
     –   $8,500 for each year of graduate/professional study
Stafford Loans
• Additional unsubsidized loan eligibility for independent
  undergraduate, graduate, and dependent students whose parents
  are unable to borrow PLUS:
   – $4,000 per year for 1st and 2nd year undergraduates
   – $5,000 per year for remaining years of undergraduate study
   – $12,000 per year for graduate/professional study

Stafford Loans
• Fixed interest rate of 6.8%
• Loan fees based on principal amount of each loan:
  – FFEL: Up to 1.5% origination fee and 1% default fee
  – Direct Loan: Up to 2.5% loan fee

Stafford Loans
• Repayment begins after 6-month grace period
• Maximum repayment period between 10 and 30 years
  depending on repayment plan chosen
• Deferment and cancellation provisions available
PLUS Loans
• Loan program for parents of dependent undergraduate
  students as well as graduate and professional students
• Annual loan limit: COA minus other aid
• Fixed interest rate
   – FFEL: 8.5%
   – Direct Loan: 7.9%

PLUS
• Loan fees based on principal amount of each loan:
  – FFEL: Up to 3% origination fee and 1% insurance premium
  – Direct Loan: Fixed 4% loan fee
• Repayment begins 60 days after loan is fully disbursed for
  parent borrowers
General Student Eligibility 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 being
  convicted of a drug-related offense

General Student Eligibility Criteria
•   Must have valid Social Security Number (SSN)
•   May not be in default on a federal student loan
•   Must not owe an overpayment of federal grant or loan funds
•   Must be making satisfactory academic progress (as defined by
    school)

Role of the Financial Aid Office
• Determines aid eligibility using federal formula
• Packages aid depending on availability of funds
• Sends award notification including:
     – Award amount for each program for which student is eligible
     – Disbursement methods and time frames
     – Terms and conditions of each award

Application Process
• Submit FAFSA prior to school’s deadline
• Most aid awarded on ―first-come, first-served‖ basis
• To ensure maximum consideration for federal, state, and
  institutional aid, check information from each school to
  determine:
    – Required application materials
    – Application deadlines
FAFSA
• Collects family’s personal and financial information used to
  calculate student’s EFC
• Available in English and Spanish
• May file FAFSA in one of two ways:
   – Electronically via FAFSA on the Web
   – Paper FAFSA


FAFSA on the Web
FAFSA on the Web
PIN Registration
FAFSA on the Web Worksheet
2007-08 FAFSA on the Web Worksheet—8-page booklet containing:
• Instructions
• 97 questions in 5 sections
• Worksheets A, B, and C



FOTW Worksheet: Section 1
• Name
• State of legal residence
• Social Security Number
• Driver’s license number

FOTW Worksheet: Section 1
• Citizenship
• Marital status
• Date of legal residence
• Selective Service status

FOTW Worksheet: Section 1
General student information:
• Degree type
• Grade level
• Enrollment status

FOTW Worksheet: Section 1
• Self-help preferences
• Receipt of first bachelor’s degree
• Parent(s) educational background(s)
• Drug conviction status

FOTW Worksheet: Section 2
Student’s dependency status
• If all ―No‖ responses, student is dependent
• If ―Yes‖ to any question, student is independent

FOTW Worksheet: Section 3
Data for parents of dependent students:
• Parents’ marital status
• Date of parents’ marital status

FOTW Worksheet: Section 3
Data for parents of dependent students:
• Did anyone in the parents’ household receive benefits from any of the
  federal programs listed?

FOTW Worksheet: Section 3
Financial data for parents of dependent students:
• Tax filing status and return type
• If parents filed or will file a 1040, were they eligible to file a 1040A
  or 1040EZ?

FOTW Worksheet: Section 3
Financial data for parents of dependent students:
• Adjusted Gross Income (AGI) for 2006
• Parents’ income earned from work

FOTW Worksheet: Section 3
Data for parents of dependent students:
• E-mail address (optional)
• Social Security Number
• Last name
• Date of birth

FOTW Worksheet: Section 3
Data for parents of dependent students:
• Parents’ state and date of legal residence
• Parents’ income tax paid for 2006

FOTW Worksheet: Section 3
Data for parents of dependent students:
• Parents’ exemptions for 2006
• Parents’ household size
• Parents’ number in college



FOTW Worksheet: Section 3
Financial data for parents of dependent students:
• Complete the worksheets on page 8 (right hand side)
   – Worksheets A and B-untaxed income
   – Worksheet C-income excluded from EFC calculation


FOTW Worksheet: Section 3
Asset data for parents of dependent students:
• Cash, savings, and checking
• Net worth of investments
• Net worth of business and investment farms


FOTW Worksheet: Section 4
Student’s (and spouse’s) financial data:
• Tax filing status and return type
• If student (and spouse) filed or will file a 1040, was he or she eligible to file a
  1040A or 1040EZ?

FOTW Worksheet: Section 4
Financial data about student (and spouse)
• Adjusted gross income (AGI) for 2006
• Income tax paid for 2006
FOTW Worksheet: Section 4
Financial data about student (and spouse) :
• Exemptions claimed for 2006
• Income earned from work

FOTW Worksheet: Section 4
Data about the independent student (and spouse):
• Household size
• Number in college
• Did a member of the student’s household receive benefits from any of the
  federal programs listed?

FOTW Worksheet: Section 4
Financial data for student (and spouse):
• Complete the worksheets on page 8 (left-hand side)
   – Worksheets A and B-untaxed income
   – Worksheet C-income excluded from EFC calculation




FOTW Worksheet: Section 4
Asset information for the student (and spouse):
• Cash, savings, and checking
• Net worth of investments
• Net worth of business and investment farms

FOTW Worksheet: Section 4
Information about student’s veteran’s benefits:
• Number of months benefits will be received during the 2007-08
  academic year
• Monthly benefit amount

FOTW Worksheet: Section 5
• Federal School Code for each school
• Housing plans for each school
CAUTION!
• Avoid being charged a fee to file the Free Application for
  Federal Student Aid
   – Completion and processing of the FAFSA are FREE
    – If filing via FAFSA on the Web, be sure to go directly to
      www.fafsa.ed.gov
    – Contact financial aid office for help completing the FAFSA

ERRORS can be COSTLY!
    Errors on the FAFSA or supplemental forms may DELAY
    application processing and result in the LOSS of financial aid
    funds.
    Read the instructions and complete all forms carefully!

Frequent FAFSA Errors
•   Parent and student Social Security Numbers
•   Divorced/remarried parental information
•   Income earned by parents/stepparents
•   Untaxed income
•   U.S. income taxes paid
•   Household size
•   Number of household members in college
•   Real estate and investment net worth

FAFSA Processing Results
• Central Processing System (CPS) notifies student of
  FAFSA processing results by:
    – Paper Student Aid Report (SAR) if paper FAFSA was filed and
      student’s e-mail address was not provided
    – SAR Acknowledgement if filed electronically via FAFSA on the
      Web and student’s e-mail address was not provided

FAFSA Processing Results
• CPS notifies student of FAFSA processing results by:
    – E-mail notification containing a direct link to student’s on-line
      SAR if student’s e-mail was provided on paper or electronic
      FAFSA
• Student with PIN can view SAR on-line at
  www.fafsa.ed.gov

Making Corrections
• If necessary, corrections to FAFSA data may be made by:
  – Using FAFSA on the Web (www.fafsa.ed.gov) if student has a
    PIN;
  – Updating paper SAR (SAR Information Acknowledgement
    cannot be used to make corrections); or
  – Submitting documentation to school’s financial aid office

Where Do I Go From Here?
• Obtain and review admissions and financial aid Web sites and
  materials for each school to which you are applying
• Meet all application deadlines
   – Complete FAFSA and other application materials, such as
     College Scholarship Service’s PROFILE application, if required
     by school or state agency
   – Submit all requested follow-up documents
• Investigate other sources of aid

Leveraging Educational Assistance Partnership
(LEAP) Grants
• Federal funds matched by state funds to establish or
  expand state scholarship, grant, and work programs
• States may use unique names for LEAP grants
• Students apply directly to state agency or through school
• Award amounts may vary by state

Robert C. Byrd
Honors Scholarship Program
• Federally-funded, merit-based aid program administered by
  states
• Recognizes and promotes student excellence and
  achievement
• States establish application requirements and selection criteria,
  and select recipients
• Recipients may receive up to $1,500 a year for up to 4 years of
  undergraduate study
Other Government Resources
• Corporation for National and Community Service (AmeriCorps) –
  www.americorps.gov
• Veteran’s benefits – www.gibill.va.gov
• ROTC scholarships or stipends
• Bureau of Indian Affairs (BIA) Grants
   – www.oiep.bia.edu/
• State Divisions of Vocational Rehabilitation
• U.S. Department of Health and Human Services (HHS) Bureau of
  Health Professions – www.bhpr.hrsa.gov/dsa

Other Sources of Funds
• State grants, scholarships, loans, and work programs
• School need-based and non-need-based programs (e.g.,
  academic, athletic, and other talent-based scholarships and grants)
• Private business scholarships (e.g., Wal-Mart, Gates Foundation,
  etc.)
• Civic organization scholarships (e.g., PTA, Elks Club, etc.)

Avoid Being Scammed
To check legitimacy of scholarship search services or individuals, for
  information about financial aid scams, and tips to avoid being
  scammed visit these Web sites:
• U.S. Department of Education:
  www.studentaid.ed.gov/students/publications/lsa/index.html
• Federal Trade Commission:
  www.ftc.gov/bcp/conline/publs/alerts/ouchart.htm
• Better Business Bureau: www.bbb.com

Private Scholarship Search
Free Internet scholarship search engines:
• FinAid on the Web: www.finaid.org
• College Board: www.collegeboard.com
• FastWeb: www.fastweb.monster.com
• Scholarship Resource Network Express:
  www.srnexpress.com
• GoCollege: The Collegiate Websource:
  www.gocollege.com
Private Scholarship Search
• Local library resources
• Local businesses and civic organizations
• Parents’ employers
Good Luck!

				
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