Paying for Postsecondary Education Your Presenter Amy Sloan - - PDF document

Paying for Postsecondary Education

Your Presenter

Amy Sloan Higher Education Access Partner Northwest Region PA Higher Ed Assistance Agency asloan@pheaa.org 724-977-3662

What will we discuss tonight?

What is financial Aid Free Application for Federal Student Aid (FAFSA) Cost of Attendance Expected Family Contribution Types of financial aid Smart Borrowing

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Estimate Costs

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Reduce Your Costs

Earn college credits while in high school through AP courses and dual enrollment Consider 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)

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Determining Affordability

Approach this as though you are not buying a school, you are buying an EDUCATION. Look at sticker price ¡(but ¡don’t ¡be ¡scared ¡away)!! ¡ ¡ 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.

What is Financial Aid?

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Where Does the $$ Come From?

Federal/ State Government School/Colleges Private Scholarship Sources:

• HS Counselors
• Clubs and organizations
• Employers
• Internet scholarship searches

The Free Application for Federal Student Aid (FAFSA)

Used to determine student eligibility for:

• Federal

programs

• State programs
• School

programs

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When do I complete the FAFSA?

Complete the FAFSA as soon as possible after January 1 of the year for which the student is seeking financial aid. Two ways to complete the FAFSA: Online at www.fafsa.gov (highly recommended)

safe, secure, fast, skip logic, built-in edits complete FAFSA on the Web Worksheet print the confirmation page when finished

Paper FAFSA – call 1-800-433-3243

**REMEMBER TO FILE THE FAFSA EVERY YEAR**

Know Your Deadlines!

Know all of your state and school/college deadlines and file the FAFSA by the earliest deadline.

Federal Deadline - end of the award year - for 2014-2015, this would be June

30, 2016

PA State Grant deadlines –

• May 1, 2015 - First Time and Renewal Applicants that plan to

enroll in a degree program or a college transferable program at a junior college or other college or university

• August 1, 2015 - 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 institution Know School Deadlines

Whose Information Goes

• n the FAFSA?

Divorced or separated parents (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) Adoptive parents - yes Foster parents - no Legal guardians - no Anyone else the student is living with - no

Information you Need to Complete the FAFSA

Social security numbers Federal income tax return (1040, 1040A or 1040EZ) W-2 forms from all employers Current bank statements (checking and savings) Current business and farm records Records of any stocks, bonds and other investments, including 529 accounts Additional untaxed income tax records may be needed such as: ¡Veteran’s ¡non ¡educational ¡benefits, ¡child ¡support ¡ paid/received and workers compensation.

The FAFSA does not ask about personal debt – credit card debt, car loans, etc.

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FAFSA - TIPS

Don’t ¡mix ¡answers ¡for ¡student ¡and ¡parent ¡ information

Use the Correct SSN Take advantage of the Helpful Hints Key

Have federal income tax and other related information as references

It’s ¡OK ¡to ¡ESTIMATE ¡if ¡taxes ¡aren’t ¡filed ¡yet ¡

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IRS Data Retrieval Tool (DRT)

The IRS Data 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 return » After 8 weeks of filing a paper federal tax return If use estimated income to complete FAFSA, can go back once taxes are filed and use IRS Data Retrieval Tool.

Email Address on FAFSA

Students and parents each have the option to list their individual email address on the FAFSA. If you list an email address on the FAFSA, make sure it is an email address that you actually use.

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Signing the FAFSA

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Sign with your PIN:

(www.pin.ed.gov)

Student and Parent

FSA ID to Replace PIN#

Coming in Spring 2015 a new FSA ID will be replacing the Federal Student Aid PIN FSA ID will be comprised of a user-selected username and password Stay tuned for forthcoming announcements about the implementation schedule.

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FAFSA Confirmation Page

Apply for your State Grant From the FAFSA Completion/Confirmation Page

Start your state application to apply for Pennsylvania state based financial aid

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Where does my FAFSA go?

The information on your FAFSA and your resulting EFC are sent to the schools/colleges that you listed

• n the FAFSA and to PHEAA.

You will also receive notification that it has been processed. REMEMBER TO WATCH AND TO RESPOND TO ANY E-MAILS YOU RECEIVE!

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Know what financial aid forms your school requires

Free Application for Federal Student Aid (FAFSA) PA State Grant Form (SGF) CSS PR CSS PROFIL OFILE E For

• rm

https://profileonline.collegeboard.org

Institutional Application

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Expected Family Contribution (EFC)

Expected Family Contribution (EFC) is determined based

• n your FAFSA information including:
• Parent income and assets
• Student income and assets
• Family size
• Number of children in college
• Age of the older parent

Schools use this number to determine eligibility for financial aid.

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How is the EFC calculated?

Parent contribution + student contribution = EFC Bulk of EFC comes from income Asset protection allowance (based on age of older parent, or the parent if single parent household) Parent asset contribution = roughly 6% Student income contribution = 50% of amount over $6,310 Student asset contribution = 20% of assets Parent contribution divided by number of children in college at the same time

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What School Costs Are Considered by the Financial Aid Office?

School costs include:

» Tuition and fees » Room and board » Books and supplies » Transportation » Miscellaneous living expenses » Child care, if necessary

Calculating Financial Need

Schools/colleges receive financial aid information and calculate financial need School ¡cost……………………. ¡$26,000 EFC…………………………….. ¡ ¡- 3,000 Financial ¡need………………… ¡$23,000 Financial ¡Aid ¡Office ¡(FAO) ¡“packages” ¡student ¡based ¡on ¡ financial need and available funding (varies from school to school). Financial aid award letter is sent to student.

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Financial Aid Award Letter

Official notification from school about financial aid, terms, and conditions. Lists the type and amount of each award to be received Describes what must be done to accept or reject any award. Discloses students rights, responsibilities, and academic requirements.

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Financial Aid at Three Schools

Cost $15,000 $25,000 $45,000 EFC $ 3,000 $ 3,000 $ 3,000 Need $12,000 $22,000 $42,000

Free Money $ 6,000

$ 8,000 $18,000 Loans $ 5,500 $ 7,000 $ 8,000 Work $ 0 $ 2,000 $ 3,000 Total Aid $11,500 $17,000 $29,000 Remaining costs $ 3,500 $ 8,000 $16,000 Actual Contribution

(Cost – Free Money) $ 9,000 $ 17,000

$27,000

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Financial Aid Programs

Federal, State, and School- based

Federal Programs

Pell Grant ¡………. ¡Up ¡to ¡$5,730 (2014-15) Campus-based aid – amounts determined by FAO

FSEOG………………… ¡up ¡to ¡$4000 Perkins ¡loan….……….. ¡up ¡to ¡$5500 ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ Federal work-study…… ¡FAO ¡determines

For most programs, student must be enrolled at least half-time.

PA State Grant

PA State Grant*

• Full-time, ¡in ¡PA…...….up ¡to ¡$4,011
• Part ¡time, ¡in ¡PA………1/2 ¡of ¡the ¡FT ¡award

Out of state: Up to $600 in DC, DE, MA, OH, RI, VT, WV Amount determined in part by the cost of the school

* Must be at least half-time to be eligible

Pennsylvania State Grant (PHEAA)

A Pennsylvania State Grant is based on financial need and other requirements The maximum amount of the grant is determined, in part, by the cost of attendance at the school: Community College $2,134 State University $3,414 State Related $3,670 Private Institution $4,011

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Ready To Succeed Scholarship

Provides scholarships to high achieving students whose annual family income does not exceed $110,000. Recipients must attend a participating school in Pennsylvania, have at least a 3.25 QPA, and have earned the equivalent of 24 credits. Maximum award is $2,000 and limited funds are available.

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Federal Loans

If you need to borrow… ¡Go ¡with ¡ federal loans first!

Types of Federal Direct Loans

Undergraduate Students Subsidized Unsubsidized Graduate students Unsubsidized PLUS Loan

Parents PLUS Loan

Interest Rates – Student Loans

Undergraduate – Subsidized and Unsubsidized:

4.66% for 2014-15 Capped at 8.25%

Graduate – Unsubsidized Only:

6.21% for 2014-15 Capped 9.50%

Direct Loan Borrowing Limits

Additional Eligibility

Parent Loan for Undergraduate Students (PLUS)

PLUS Loans – Parent & GradPLUS

• 7.21% for 2014-15
• Capped at 10.50 %
• Up-front fee of 4.204% deducted at disbursement

May borrow up to full cost of education minus financial aid Credit check is required on this loan Repayment begins immediately – can defer repayment but are encouraged to pay interest!

www.studentloans.gov

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Alternative/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 name Based on credit scoring and debt-to-income ratio Repayment may be deferred until education completed Fees, interest rates, loan amounts, and repayment provisions vary by lender and are generally higher than federal student loans Co-signers usually required. Some loan products have a co- signer release option Compare loans before making choice and read the fine print!

Repayment Example

Is this payment affordable to you based

• n your future salary?
• $20,000 @ 3.86% = $208.82
• $42,000 @ 4.66% = $438.53
• $50,000 @ 3.86% = $522.06
• $80,000 @ 3.86% = $835.29
• $100,000 @ 3.86% = $1044.11

Loan Balance: $28,500.00 Loan Interest Rate 4.66% Loan Term: 10 years Total Years in College 4 years Average Debt per Year $7,125.00 Monthly Loan Payment $297.57 Number of Payments 120 Cumulative Payments $35,708.70 Total Interest Paid $7,208.70

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Smart Borrowing

Make every dollar count!

MySmartBorrowing.org

This interactive tool gives you information you can use to make smart decisions about career choices and paying for college. MySmartBorrowing.org

Be A Smart Borrower

Student 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.

Smart Borrowing Tips

Research 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.

Smart Borrowing Tips

Research 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.

Smart Borrowing Tips

Educate yourself on the many loan

• ptions 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.

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Scholarships

Scholarships are FREE MONEY Scholarships are awarded by foundations, philanthropists, non-profit organizations, businesses and colleges to help students pay for college Check with your School Counselor for Local Scholarships! Fastweb.com is the largest, most accurate and most frequently updated scholarship database. www.fastweb.com

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Increase your Scholarship Opportunities

• Create a Profile or Resume

– Look at year after year.

• What makes you stand out? Tell Your Story!
• Document your information

– Achievements; Awards – Personal/Performance – sports, music, art – Extra Curricular Activities – Volunteerism; Community Activities

• Recommendations

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Final Thoughts

Before we call it a wrap!

What You Can Be Doing Now

Student and parent apply for a PIN at www.pin.ed.gov Use net price calculators on school/college web sites Visit www.mysmartborrowing.org Explore scholarship opportunities Use the FAFSA4caster – www.fafsa4caster.ed.gov

3 Key Reminders

File the FAFSA Meet Deadlines Follow up

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Resources

pheaa.org EducationPlanner.org & MySmartBorrowing.org Youcandealwithit.com Myfedloan.org PHEAA toll free: 1-800-692-7392 Federal Student Aid Info Center – 1-800-433-3243 www.fafsa.gov www.studentaid.gov – general financial aid info www.studentloans.gov – information on federal loans

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Questions?