an introduction to financial aid...• several warning signs of a possible scam: guaranteed winnings...

An Introduction to Financial Aid

Understanding the Basics

Gregory Mitton

Associate Dean of Admission

Director of Financial Aid

Muhlenberg College

Agenda •  Resource information •  What is financial aid? ◦  Application process

◦  Determination of eligibility

◦  Types and sources of aid

•  How do admissions and financial aid offices interact?

•  Side notes ◦  College planning services

◦  Scholarship searches and scams

September 2019 1

Sources of General FA Information

•  The Student Guide (U.S. Department of Ed.) •  College Financial Aid Brochures

•  Websites ◦  Financial Aid Information page

•  www.finaid.org ◦  U.S. Department of Education

•  www.FAFSA.gov ◦  The College Board

•  www.collegeboard.com/paying

September 2019 2

The Financial Aid Information Page www.finaid.org

Accurate, Comprehensive, and Objective Information

•  Links to Free Scholarship Searches

•  Scholarship Scam Alerts

•  Financial Aid Consultant Guide •  Loan Calculators

•  Strategies- Maximizing Aid Eligibility

•  Answers to Frequently Asked Questions

September 2019 3

What is Financial Aid?

•  Money given, paid, or loaned to help finance college

•  This includes: ◦  Gift Aid

•  Grants and Scholarships (free money)

◦  Self-Help Aid

•  Work study (job opportunity to earn money) •  Loans (money borrowed that must be repaid)

September 2019 4

Goal of Financial Aid

•  The primary goal is to assist students in paying for their

educational investment and is achieved by: ◦  Evaluating family’s ability to pay for educational costs

◦  Distributing limited resources in an equitable manner ◦  Providing a balance of gift aid and self-help aid

September 2019 5

Philosophy of Financial Aid

•  Parents have the primary responsibility to pay for their

dependent children’s education. •  Students also have a responsibility to pay for a reasonable

portion of their educational expenses. •  Evaluation of family circumstances should be consistent and

equitable.

September 2019 6

Application Process – Most Schools

•  Free Application for Federal Student Aid (FAFSA) ◦  Required for federal and state aid

◦  Deadlines vary from school to school

◦  Tax year 2018 information used for 2020-21 Academic year ◦  Available October 1 at www.fafsa.ed.gov

September 2019 7

IRS Data Retrieval Tool

•  While completing FOTW, applicant 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 browser window

•  Applicant chooses whether or not to transfer data to FOTW

September 2019 © 2016 NASFAA Slide 28 8


•  Available October 2019 for 2020-21 processing cycle •  Participation is voluntary

•  Reduces documents requested by financial aid office



•  Some will be unable to use IRS DRT •  Examples include: ◦  Filed an amended tax return

◦  No Social Security Number (SSN) was entered

◦  Student or parent married, but filed separately


FSA ID

•  Sign FAFSA electronically •  Not required, but speeds up

processing

•  May be used by students and parents throughout aid process, including subsequent school year

•  Only the owner should create a FSA ID


https://fsaid.ed.gov/npas/indexhtm

General Student Information

•  Social Security Number (SSN) •  Citizenship status

•  Marital status

•  Drug convictions •  Selective Service registration

•  Level of parents’ school completion


Student Dependency Status

•  FAFSA asks questions to determine dependency status for federal student aid (not IRS) purposes: ◦  If all “No” responses, student is dependent ◦  If “Yes” to any question, student is independent


Information About Parents of Dependent Students

•  Tax, income, and other financial information •  Dislocated worker status

•  Receipt of means-tested federal benefits

•  Assets •  Untaxed income


Information About Students (and Spouse)

•  Tax, income, and other financial information •  Dislocated worker status

•  Receipt of means-tested federal benefits

•  Assets •  Untaxed income


Additional Information

•  College and housing information •  FAFSA preparer information

•  Certification of Statement of Educational Purpose


Signatures

•  Required ◦  Student

◦  One parent (dependent students)

•  Format for submitting signatures ◦  Electronic using FSA ID

◦  Signature page

◦  Paper FAFSA


Frequent FAFSA Errors

•  Social Security Numbers •  Divorced/widowed/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


Application Process – Some Schools

•  Institutional aid application •  CSS/financial aid profile- available in September ◦  Can be filed earlier than the FAFSA

◦  Not all schools

◦  Registration fee of $25 (collegeboard.com) ◦  Per school fee of $16

September 2019 19

Application Tips (Making Your Efforts Count!)

•  Find out application requirements and deadlines •  Fill out forms completely, accurately, and legibly

•  Make copies of all completed forms

•  Comply with all information requests •  Meet deadlines (obtain proof of mailing!)

September 2019 20

Definition of Need Analysis

•  Need analysis is simply defined as: ◦  A process of determining a student’s financial need by analyzing

information provided by the student and parent on a financial aid form. ◦  Need analysis forms include the FAFSA and CSS/ Financial Aid Profile

September 2019 21

Basic Equation of Need

Cost of Attendance (COA)

– Expected Family Contribution (EFC)

= Student’s Financial Need (eligibility)

September 2019 22

Cost of Attendance

•  Varies from school to school ◦  Tuition and fees

◦  Room and board

◦  Books and supplies

◦  Transportation

◦  Miscellaneous personal expenses

◦  Loan fees, study abroad costs, expenses associated with a disability, or expenses for cooperative education program

September 2019 23

Determining Expected Family Contribution (EFC) •  Income ◦  Taxed

◦  Untaxed

•  Asset Equity ◦  FAFSA excludes home equity

◦  Profile does not exclude home equity

•  Family size

•  Number of family members in college ◦  Excludes parents enrolled in college

•  Age of parents September 2019 24

Need Varies Based on Cost

September 2019 25

1

2

3

Need (variable)

EFC

CostofAttendance(variable)

1

2

3

EFC

ExpectedFamilyContribution(constant)- =

Sources of Financial Aid

September 2019 26

Federal & State Grants

•  Pell Grant •  FSEOG ◦  Awarded to students with exceptional financial need (priority given to Pell

Grant recipients)

•  State Grants ◦  Often do not travel out of state

September 2019 27

Student Employment

•  Federal work-study •  State work-study

•  Institutional work-study

September 2019 28

Federal Loans

•  Federal Direct Student Loan ◦  Subsidized (fixed rate of 4.53% for AY 2019-20)

◦  Unsubsidized (fixed rate of 4.53%)

September 2019 29

Institutional Aid

•  Merit Scholarships •  Athletic Scholarships

•  Talent Scholarships

•  Need-Based Grants

September 2019 30

Private / Other Government Aid

•  Private Business Scholarships •  Civic Organization Scholarships

September 2019 31

How does the college meet students’ needs?

September 2019 32

Preferential Packaging

•  Student’s standing in the applicant pool ◦  Class rank

◦  Grade point average

◦  Standardized test scores

◦  Extracurricular activities / special talents

◦  “Overall attractiveness of the student to the college”

September 2019 33

Example of Preferential Packaging •  Student A

◦  Need: $40,000 ◦  Rank: top 2% ◦  SAT’s: 700 Math, 700 R+W ◦  Class President ◦  Lead in School Musical ◦  Community Service

September 2019 34

•  Student B

◦  Need: $40,000

◦  Rank: top 40%

◦  SAT’s: 550 Math, 500 R+W

◦  Stage Crew

◦  Key Club

Example of Preferential Packaging

•  Student A Package:

$20,000 Merit $22,500 Grant $5,500 FDSL

$48,000 Total

September 2019 35

•  Student B Package:

$5,500 FDSL

$2,000 Work-Study

$31,500 Grant

$39,000 Total

Financial Aid Consultants

•  Several things you should know ◦  Caveat emptor

◦  Free assistance is available

◦  Be wary of any consultant who encourages you to use strategies that seem unethical to you

September 2019 36

Scholarship Searches

•  Once again, let the buyer beware! •  Several warning signs of a possible scam: ◦  Guaranteed winnings

◦  “Free seminars” on financial aid

◦  1-900 telephone numbers

•  Caution: As a general rule, if you must pay money to get money, it might be a scam.

September 2019 37

Free Scholarship Searches

•  FastWEB – fastweb.com •  College Board – collegeboard.com/paying

•  Sallie Mae – SallieMae.com

September 2019 38

Something to Think About…

“Education is one of the best financial investments you can make. A bachelor’s degree yields an increase in lifetime earning potential of over one million dollars according to Census Bureau data. This is equivalent to a 20% annual return on investment.”

- The Financial Aid Information Page (www.finaid.org)

September 2019 39

Questions? Contact me at

(484) 664-3175 or [email protected]

GOOD LUCK!

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September 2019 41

an introduction to financial aid...• several warning signs of a possible scam: guaranteed winnings...

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