PAYING ING FOR HIGHER ER EDUC UCATIO TION 2014-2015 Academic - - PDF document

1/2/2014 1

PAYING ING FOR HIGHER ER EDUC UCATIO TION

2014-2015 Academic Year

Karla Weber

Financial Aid Advisor Office of Student Financial Aid University of Wisconsin – Madison Karla.weber@finaid.wisc.edu

Tonight’s Discussion

• Financial Aid & College Cost Basics
• Types of Financial Aid Available
• The FAFSA & Application Process
• Questions

1/2/2014 2

Fin inancial ncial Aid id Reg egul ulati tion

• ns
• Federal and state statues and

legislation

• Establish unique eligibility

requirements

• Applicable to ALL schools that

receive funding

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FIN INANCIAL CIAL AID ID & COLLEGE EGE COST ST BASI SICS

Need Analysis Cost of Attendance Expected Family Contribution Financial Need

Gui uidin ing g Pr Prin inci cipals pals of Aid id

• Financial aid narrows the gap between what the family can pay and the cost
• f education
• To extent they are able, parents have the primary responsibility to pay for their

dependent children’s education.

• Students have a responsibility to contribute
• Evaluated in current financial situation
• Ability to pay evaluated in an equitable and consistent manner
• Recognize that special circumstances can have major financial implications.

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What are the costs? s?

Tuition and Fees + Room and Board + Transportation + Books and Supplies + Miscellaneous Living Expenses = Cost of Attendance (COA)

** Direct versus Indirect Costs**

2013/14 3/14 Estimate mated Costs ts of Attend endanc ance e

(app pprox

• x)

College/University Living @ Home On/Off Campus

UW-Madison $16,541 $24,221 UW-Milwaukee $16,454 $22,580 UW-Eau Claire $13,740 $18,980 Madison College $12,988 $17,812 UW Colleges $13,510 $18,590 Edgewood College $33,294 Marquette University $45,508 $48,178 UM-Twin Cities $25,124 Iowa State $31,470 Northwestern $63,228

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Expe pected cted Family ly Con

• ntri

tributio bution n (EFC FC)

• Determined by filing the FREE Application for Federal Student

Aid (FAFSA) at www.fafsa.gov (NOT .com!)

• Ways to think about the purpose of the EFC
• An index number used to calculate eligibility for aid
• NOT an estimate of “extra” cash available
• NOT what you will pay for school
• Stays the same regardless of college/university
• What WILL you be expected to contribute?
• Whatever costs the financial aid is unable to cover

EFC C Calculat lculatio ion

• A complicated formula established by

Congress – sometimes referred to as Federal Methodology

• Uses both parent AND student

information (for dependent students)

• Has income and asset protection

allowances

• EFC ranges from 0 to 999,999

Assets

FAFSA Expected Family Contribution (EFC)

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Fin inanc ncial ial Need

Cost of Attendance (COA)

• Expected Family Contribution (EFC)

= Financial Need

Nee eed Va Varie ies

School #1 School #2 School #3 Cost of Attendance

$39,028 $19,388 $14,285

Less EFC

$6,355 $6,355 $6,355

Need

$32,673 $13,033 $7,930

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TYP YPES ES OF FINAN ANCI CIAL AL AI AID

Sources of Aid Gift Aid Versus Self Help

Th Three ee Pr Prim imary ary So Sour urces ces

• US Department of Education
• State
• Higher Educational Aids Board (HEAB) manages aid for Wisconsin
• Colleges & Universities
• Availability eligibility varies WIDELY between schools

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Ty Types s of Fin inancial ncial Aid id

• Grants
• Federal – Pell Grant, Supplemental Educational

Opportunity Grant (SEOG)

• State – WI Higher Ed Grant, WI Tuition Grant
• Scholarships – Institutional, Community, Business,

Organizational

• Work Study/Other Employment
• Loans
• Subsidized/Unsubsidized Federal Direct Loans
• Perkins Loan
• Parent Loan for Undergraduate Students (PLUS)
• Private/Alternative Loans

Gift Aid - FREE Self-Help Aid

Fed eder eral al Pe Pell ll Grant nt

• Based on EFC range; this current year 0 – 5,081
• Award amount varies based on EFC and enrollment

status

• Maximum award for 2013/14 - $5,645
• Lifetime Pell Grant eligibility
• decreased from 18 semesters (900%) to 12 semesters (600%)

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State te of WI Fun unding ing - HEAB

• Wisconsin Higher Education Grant (WHEG) or Wisconsin Tuition Grant (WTG)
• UW System, Technical and Tribal Colleges
• Independent Colleges & Universities (does NOT include for-profit institutions)
• Academic Excellence Scholarship
• Questions/Issues? Nancy.wilkison@wisconsin.gov
• WI Covenant
• Questions/Issues? Garth.beyer@wisconsin.gov
• Minnesota-Wisconsin Reciprocity – MUST apply
• http://heab.state.wi.gov/reciprocity
• Other various programs – most require add’l application – see website
• http://heab.state.wi.us

Wis isco consin nsin Co Covenant enant

• Senior Checklist
• A confirmation form signed by student, a parent, and the Primary Contact

(School Counselor/Principal)

• A record of service form
• Two letters of recommendation, if necessary due to a suspension
• Make copies! Certify mail!
• Min award $250, Max award $2,500 for full-time enrollment
• Important Dates
• December 1st – Confirmation forms made available
• January 1st – Confirmation process begins
• April 1st – Confirmation/FAFSA deadline!

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Sc Schola larships hips

• Colleges/Universities
• Need-based & non-need based: Academic, athletic, music, or other talent
• Alumni Organizations
• Civic/Community Organizations
• Churches, PTA, Elks, Kiwanis, cultural leagues, etc
• Private businesses
• Wal-mart, Best Buy, Dell, Gates Foundation, etc
• Parents’ and/or students’ employers or labor unions

FREE E Sc Scholar larship ship Se Searches ches

• Department of Labor, Employment, and Training
• www.careerinfonet.org/scholarshipsearch
• College Scholarships:
• www.collegescholarships.org
• FastWeb:
• www.fastweb.com
• High School Counselors
• Local community or library resources

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Emplo loyme yment nt

• Federal Work Study (FWS)
• Must show a specified amount of need
• Part-time employment may be on or off campus (public/private non-

profit)

• Receive funds through a regular paycheck
• Earnings do not count against future aid eligibility
• Institutional Work Programs
• Off campus/summer employment

Loans ns

• Perkins Loan
• Priority given to “exceptional need” as defined by the school and the amount

received varies

• Subsidized – Gov’t. covers interest as long as student is at least ½ time.
• Fixed Interest Rate: 5%
• 9 month grace period/10 year standard repayment period
• State Loans
• Institutional Loans
• Vary in availability and eligibility depending on college/university
• Private/Alternative Loans

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Federal ral Dir irect t Loans ns

Regardless of income, EVERY student qualifies if they meet the basic eligibility requirements!

• William D Ford Federal Direct Loan Program (DL)
• Subsidized: MUST demonstrate financial need
• Unsubsidized: Not based on need (EVERY student is eligible – no

matter what!!)

• EFFECTIVE July 1,2013 for NEW BORROWERS

150% Rule for Subsidized Direct Loans

• If a borrower exceeds the total enrollment allowed for their program, they

become ineligible for any additional subsidized loans, AND

• They become responsible for the accruing interest on all previously borrowed

subsidized loans from that point forward.

Feder eral al Dire rect ct Loans s - Benef efits its

• No credit score or co-signer requirements
• Currently low and fixed interest rate
• In-School Deferment: student must maintain at least ½ time

enrollment

• 6 month grace period
• Repayment period between 10 & 30 years depending on

repayment plan

• Deferment and cancellation provisions available

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Direct ect Lo Loan n Am Amou

• unt

nts

• Annual Loan Limits
• Freshmen - $5,500 total ($3,500 max subsidized)
• Sophomore - $6,500 total ($4,500 max subsidized)
• Junior/Seniors - $7,500 ($5,500 max subsidized)
• Grad Student - $20,500 (as of 12/13 no longer have subsidized eligibility)
• Career Maximums
• Dependent Undergrads - $31,000 ($23,000 max subsidized)
• Independent Undergrads - $57,500 ($23,000 max subsidized)
• Grad & Law - $138,500
• Med, Vet Med, Pharm, Dentist - $224,000

Dire rect ct Loan n Inter erest est – NEW!

EFFECTIVE July 1, 2013 – Bipartisan Student Loan Certainty Act of 2013

• ALL federal loan interest rates will be tied to the 10-Year Treasury

note with a statutorily defined add-on

• Fixed/Variable Rate – interest rate will adjust each year, but will

remain fixed once applied to a specific loan.

• There are interest rate caps
• Undergrad Direct Loans

8.25%

• Graduate Direct Loans

9.50%

• PLUS Loans

10.50%

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Student t Grade Leve vel Loan Type 10 10-Year Treasur sury y Note te Index Add-On On 2013-2014 Fixe xed Inte terest st Rate te

Undergraduate

Direct Subsidized & Unsubsidized 1.81% 2.05% 3.86%

Graduate e & Profess ession

• nal

Studen ents

Direct Unsubsidized 1.81% 3.60% 5.41%

Parents s of Dependent Undergrads s AND Graduate/P e/Prof

• fess

ssion

• nal

Studen ents

Parent or Grad PLUS 1.81% 4.60% 6.41%

Dir irect ct Loan n Int nter erest est – NEW!

• All federal loans have an Origination Fee that is

charged at the time of disbursement

• Due to Sequestration – any loans disbursed after

December 1, 2013

• Federal Direct Loans (Subsidized & Unsubsidized)
• 1.072%
• Federal PLUS Loans (Parent & Grad)
• 4.288%

Dire rect ct Loan n Fees s – NEW!

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• National Student Loan Data System
• www.nslds.ed.gov
• Repayment Plans
• Standard (10 years, minimum $50/month)
• Graduated (10 years, low payments gradually increase)
• Extended (Up to 25 years, fixed or graduated payments)
• Income Based (Up to 25 years, 15% of discretionary income)
• Pay As You Earn (Up to 20 years, 10% of discretionary income)
• Forgiveness Programs
• Teacher
• Public Service
• Nursing

Repayment ayment Basic ics

Parent ent Loan for Undergrad ergrad Students nts (PLU LUS)

• Must pass a basic credit check
• Annual Loan Limit: COA minus other accepted aid
• 2013/14 fixed interest rate – 6.41%
• Origination Fee – 4.288%
• 60 day grace period – “opt-in” to in-school deferment
• Compare to Private/Alternative Loans
• Additional unsubsidized loan eligibility for undergrads whose parent was denied

PLUS:

• $4,000 per year for 1st and 2nd year students
• $5,000 per year for 3rd and 4th year students

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www.stud .studen entloans.go tloans.gov v Borro rrowing wing Ti Tips

• Consider ability to make monthly payments when you leave school
• Loan repayment calculators available online
• Shop around! Choose any participating lender.
• Compare the differences: Fixed/Variable, co-signer requirements,

min/max amounts, deferment and/or forbearance options, fees, repayment period, etc

• Borrow only what you need for direct educational expenses and avoid

borrowing for discretionary spending

• ALWAYS check with the Financial Aid Office BEFORE pursuing to

make sure all other options have been exhausted

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Other r Resourc urces es

• Other Government Related
• AmeriCorps www.americorps.gov
• Veteran’s benefits/tuition waivers
• ROTC scholarships and/or stipends
• Bureau of Indian Affairs Grants
• Dept of Vocational Rehab (DVR)
• School payment plans – may or may not be

available

• Home equity loans
• Life insurance policy loans
• Retirement Plan loans
• 529 Education Savings Plans (EdVest)

www.edvest.com

THE APPLIC LICATIO TION N PROCES CESS

FAFSA IRS Data Retrieval Common Questions/Confusion Special Circumstances Comparing Offers

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Col

• llege

ege Scho holars arship p Service/P ice/PROFIL ROFILE

• Used by SOME colleges/universities (mostly private)
• The school should notify if required
• Don’t trust the website’s list of participating schools (Ex. Edgewood)
• Collects data beyond what’s required on FAFSA
• Uses institutional methodology and targets their dollars ONLY
• Supports early estimates/admission - became available October 1st
• Application fee is $25, plus $16 for each additional school it needs to be

sent to

www.fafsa.GOV

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Ap Appl plication ication Pr Proc

• cess

ess Overvi rview ew

• Apply for a PIN – student and one parent
• www.pin.ed.gov – can request at any point either prior to or during FAFSA
• Submit:
• the FREE Application for Federal Student Aid (FAFSA) prior to your school’s deadline
• www.fafsa.GOV (not .com!!!!)
• Becomes available January 1st for the upcoming academic year
• Must reapply EVERY year!!!
• Any requested/required documents for Verification to the school(s)
• Any institutional application materials (if required/requested by your school)
• Finalize school admissions
• Make sure to meet ALL required deadlines!

What is the PIN?

• www.pin.ed.gov Personal Identification Number
• Electronically sign the FAFSA, but can also be used to:
• Make corrections to a completed FAFSA
• Sign-in to the National Student Loan Data System
• Sign promissory notes for student/parent loans (Perkins, Federal Direct,

PLUS)

• The student and at least one parent (if dependent) must get their
• wn
• The PIN should NEVER be shared

1/2/2014 20

PI PIN Main in Pa Page ge

FAFSA.g .gov

• v – Stude

udent t Sign-In In

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Doc

• cument

uments s to to Have e Rea eady

• Social Security number (Student and parents)
• Student’s driver’s license number (not required)
• Alien Registration Number if not a U.S. citizen
• Federal tax info or W-2 information, for student and parents
• IRS 1040, 1040A, 1040EZ
• Foreign tax return and/or
• Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands,

the Federal States of Micronesia, or Palau

• Records of untaxed income for student and parents, such as child support

received, interest income, and veterans non-education benefits

• Information on cash, savings and checking account balances, investments,

business/farm assets if required to include

FAFSA SA St Step eps

• Student Demographics
• School Selection
• Dependency Status
• Parent Demographics
• Financial Information
• Sign & Submit!
• Confirmation

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IR IRS Da S Data Retrieva ieval l To Tool

• Request and retrieve income and tax data directly from the IRS
• VOLUNTARY!
• “Should” be available beginning early February
• Can be used:
• After at least 2 – 3 weeks of electronic tax filing
• After at least 8 – 11 weeks of paper tax filing
• If tool not used or changes made, may request “Tax Return

Transcript”

IR IRS S Data ta Ret etrieval ieval To Tool

3 Possible Responses

• You are not eligible to

transfer information

• Too soon since taxes filed

– may not be available

• Recommend to try!

1/2/2014 23

Cit itiz izenship ship - Explaine lained

• Only the STUDENT is required to be a U.S. citizen, permanent

resident, or eligible non-citizen to receive aid

• Undocumented students are currently ineligible for federal and

state aid

• Students with Deferred Action Status are also not eligible for

financial aid

• What options do undocumented students have?
• Very few…

Parent ents s Explai lained ned – NEW!

Beginning with the 14/15 FAFSA - Who is considered a parent?

• Two biological or adoptive parents REGARDLESS of marital status

OR gender, if those parents live together

• Both parents information will be included on the FAFSA
• Divorced or Separated parents
• Will use information for whichever is determined to be the custodial parent
• Step-parents
• Widowed parent
• Impact of DOMA?

1/2/2014 24

Div ivorced/ rced/Separated Separated Explained lained

• Complete FAFSA using the parent with whom the student lived

with more in the past 12 months

• Believe it’s equal? Use the parent who provided MORE financial

support during the last 12 months or during the most recent year the student actually received support

• If the parent has remarried, the step-parent information MUST

be included on the FAFSA

• Step-parent income and assets represent significant info about the

family’s financial resources and help to form an accurate picture of the family’s financial strength

Assets ets - Explai laine ned

• Investments INCLUDE:
• Real estate (but not the home you live in), trust funds, UGMA/UTMA accounts,

money markets, mutual funds, stocks, bonds, other securities, installment and land sale contracts, etc

• Qualified educational benefits or education savings accounts – 529 Plans
• Investments DO NOT INCLUDE:
• The home you live in, the value of life insurance, retirement plans (401k’s), pension

funds, annuities, non-education IRAs, Keogh plans, etc.

• Business and/or investment farm assets are excluded IF:
• Related family members own 51% or more of the business

AND

• It has less than 100 full-time or equivalent employees

1/2/2014 25

Coll llege ge Goal l Wis iscons

• nsin

in!

• A statewide event (29 sites) that offers FREE help to families completing the

FAFSA

• 8 $1,000 & 4 $500 scholarships will be awarded
• In and around Madison
• Saturday, February 22nd
• Madison College – 1701 Wright Street
• Sunday, February 23rd
• Deforest High School, 815 Jefferson Street
• Edgewood College, 1000 Edgewood College Avenue

www.collegegoalwi.org

Once FAFSA’s filed…

• Results are sent electronically:
• To the selected school(s)
• To the student/parent – Student Aid Report (SAR)
• If corrections are necessary, log back in and proceed as instructed
• If FAFSA rejects, student/parent must correct before information will be

released

• Student may be required to verify their FAFSA data and will need to submit tax

forms, but school(s) will request documentation

• Once student has been admitted, a financial aid package will be prepared
• Contact the school with any special circumstances

1/2/2014 26

Ta Tax Return rn Tr Transcript script

• Request from the IRS
• Online www.irs.gov/transcript
• NEW!! Immediate display via .pdf file. Can view, print, or save!
• NEW!! IRS2Go App - Available for Android or iOS devices
• By phone 1-800-908-9946
• Complete and submit IRS Form 4056-T
• Taxes filed electronically will take about 3 – 4 weeks before

available, paper taxes take about 6 – 8 weeks

• Some schools may still choose to request even if data retrieval

used

• Can no longer accept copies of the 1040.

1/2/2014 27

Sp Specia ial l Cir ircumstanc umstances es

• Cannot report on FAFSA initially
• Limited to special and unique family circumstances that must be

documented

• Usually adjustments to income due to job loss, high medical/dental

expenses, recent divorce, one-time income, etc.

• Adjustments are made by each institution on a case by case basis
• School specific – not transferable
• CANNOT consider everything!

“The Shopping Sheet”

Free $$ Costs Net Cost

1/2/2014 28

The Award ard Letter Ho How to to Co Comp mpare are Aid id Offer ers

• Start with tuition, fees, room, and board – direct costs
• Subtract grant and scholarship offers ONLY
• The difference is your “net cost”
• Always compare the NET COST of each school
• Do not subtract work study as a lump sum – students

are paid based on number of hours worked

• Do not subtract loans – you’ll eventually be

responsible for paying for those

1/2/2014 29

Pr Proceed eed wit ith Caution! ion!

• NEVER pay a fee to file the FAFSA
• Go directly to www.fafsa.gov (NOT .com!!!!)
• Don’t hire someone, contact financial aid office if

you need assistance

• College Goal Wisconsin!
• NEVER pay to apply for scholarships
• Lots of FREE scholarship searches
• Contact your nearest financial aid office if you have

questions regarding the legitimacy of any questionable offer

www.st w.studentaid udentaid.ed.gov .ed.gov

1/2/2014 30

Vid ideo Resource urce Lin inks ks

• Overview of the Financial Aid Process
• http://youtu.be/kbJ55UWMEFE
• FAFSA: Apply for Aid
• http://youtu.be/c-23SMf5DyQ
• How to Fill Out the FAFSA
• http://youtu.be/VRyXfUStHO0
• Types of Aid
• http://youtu.be/Pn4OECMTh5w
• Repayment: What to Expect
• http://youtu.be/oJHySMdXjxE
• After the FAFSA: What Happens Next?
• http://youtu.be/JQxorQ9s_pY
• Myths about Financial Aid
• http://youtu.be/K8JuaYVJ_LE

Coll llegecos gecost.ed. t.ed.gov gov

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Net Pr Pric ice Calc lcula lators tors

• Federally mandated
• Based on income information and, sometimes, academic

information

• Will provide at least the following information:
• Estimated total cost of attendance: tuition and fees, room and

board, books and supplies, other expenses (including personal expenses and transportation)

• Total estimated merit- and need-based grant aid
• Estimated net price (cost of attendance minus grant aid)

Co Coll lleg ege e Navigator igator

1/2/2014 32

So So what t now?! ?!

• Involve your student!!!
• Be Proactive/Realistic
• Research costs at different schools
• Look for scholarships
• Make a schedule/timeline
• Pay attention
• And…ASK QUESTIONS!!!!

QUE UESTIONS? STIONS???