Applying for Financial Aid 2015-2016 Academic Year Patricia Buono Senior Assistant Director of Financial Aid Services Telephone: 860-439-2058 E-Mail: [email protected] Where do I start? • Visit college web sites for: – application requirements and –deadlines • Net Price Calculator – on each college’s web site to help you determine your estimated family contribution – Each calculator is unique to that college’s awarding policies. NET PRICE CALCULATOR TIPS • Takes the guess work out of the EFC outcome. • Carefully read all instructions and pop ups. • All calculators are not alike. • Each college builds theirs based on their policies. • Try to guesstimate as close as possible. • Don’t forget untaxed income • Outcome is a ball park -- not an offer. More Advice: www.finaid.org www.studentaid.ed.gov Components of Funding an Education • Family’s ability to pay is determined • What funding is available from the federal and state governments and the college? • Outside scholarships awarded: i.e. from community organizations • Does the college offer merit or athletic scholarships? • Were the financial aid applications and supporting documentation submitted by the deadline date? Definition of Financial Need Cost of Attendance LESS Expected family contribution (EFC) LESS Other financial assistance EQUALS Financial need Cost of Attendance Tuition and Fees Room and Board Books and Supplies Transportation Disability Expenses Miscellaneous and Personal Expenses (i.e. purchase of a computer, sometimes health insurance fee) Comparison of Need by Cost (Assumes full-time enrollment) 4 Year Private 4 Year Public 2 Year Public Cost of Education $60,000 $25,000 $ 7,000 Expected Family Contribution (EFC) $10,000 $10,000 $10,000 Need $50,000 $15,000 0 Meeting the Full Need or Gapping College A B Cost of Education $60,000 $60,000 Expected Family Contribution (EFC) Need $ 10,000 $ 10,000 $50,000 $50,000 Aid Awarded $50,000 $35,000 Unmet Need 0 $15,000 Add this to EFC! Family Contribution Components Parent(s)’ 2014 income, taxed or untaxed Student’s 2014 income, taxed or untaxed Parent’s assets value at the time of the application Exclude value of retirement accounts or primary residence home equity Include trusts, equity value of investment properties, business net worth (IM) Include 529 plans set up by parents (not UGMA/UTMA accounts) Student’s assets value at the time of the application Include trusts, if student is beneficiary and UGMA/UTMA accounts 529 plans set up by parents DOES NOT GO HERE Number of household members: must provide at least 50% support Number of dependents attending college at least half-time Untaxed Income Where do I find these? FROM THE FEDERAL INCOME TAX RETURN, FORM 1040 • • • • • • • • • • Education Credits (1040, line 49) Health Savings Account deduction (1040, line 25) Tax Exempt Interest (1040, line 8b) Untaxed portions of Pension/Annuity withdrawals (1040, line 16a – 16b) Untaxed portions of Retirement account withdrawals (1040, line15a – 15b) Untaxed portion of Social Security benefits (1040, line 20a – 20b) IRA or SEP/SIMPLE/Qualified Plan contributions (1040, line 28 & 32) Earned Income Credit (1040, line 64a) Additional Child Tax Credit (1040, line 65) Maybe: depreciation from 1040, Schedule C, E or Business Income Tax Return Untaxed Income Where do I find these? ADDITIONAL ITEMS NOT FOUND ON THE FEDERAL INCOME TAX RETURN, FORM 1040 • • • • Child Support Received (not on 1040) Military/Clergy housing allowance benefit (no on 1040) Pension contributions (W2 box 12 D, E, F, G, H & S) Make sure you don’t put untaxed income in multiple places because it looks like extra income! (i.e. retirement funds in retirement balances and in investment balances) Federal Eligibility Assessed Using the FAFSA Federal Methodology (FM) Based on 2015-2016 FAFSA (Free Application for Federal Student Aid) information www.fafsa.ed.gov available 01/01/2015 A FAFSA be completed for each student applying for financial aid. Must be a U.S. Citizen or an Eligible Non-Citizen Formula determined by Congress EXCLUDED: Equity in your primary residence Information about the noncustodial parent Custodial parent and stepparent incomes are included Parent contribution is divided by the # in college parents in college are NOT included in this number Must be a dependent enrolled at least half time in undergraduate or graduate studies Common law/same sex marriages: Income from both partners is used. One parent & the student must create a user name and password for the FAFSA at www.pin.ed.gov www.fafsa.ed.gov CSS Profile and Institutional Grant Eligibility Institutional Methodology (IM) CSS Profile: used by schools to award their own funds Information from the non-custodial parent is required (Non Custodial Parent Statement) Items that may be included: Primary residence equity Losses on federal income tax return may be added back Depreciation associated with a business or investment property may be added back Parent contribution might not be divided equally for # in college: no allowance for dependents in graduate school reduced allowance for a lower cost institution (i.e. community college) Reduced or no allowance for siblings receiving substantial merit/athletic aid Minimum student contribution: anywhere from $1,000 to $2,200 http://student.collegeboard.org/css-financial-aid-profile Remember! Grants/Scholarships do not have to be repaid unless a student withdraws during a term. May be considered taxable income -- any amount of grants/scholarships over the cost of tuition and books. Student loans must be repaid. Additional online requirements must be completed. Federal Work Study provides income from a campus job This does not go toward the tuition bill. This is taxable income that the student will need to claim, if filing an income tax return. Sources of Need Based Aid Federal Grants Federal Pell Grant – up to $5,730 Federal SEOG Grant – up to $4,000 Federal TEACH Grant – up to $4,000 Funding for 2015-2016 has not yet been determined. www.studentaid.ed.gov for detailed information about these programs. Sources of Need Based Aid Federal Student Loans Federal Perkin Loans – up to $5,500 Interest rate is 5% fixed, no origination fees Program may change for next year Federal Direct Loan – dependent student levels 1st year = up to $5,500 ($3,500 maximum subsidized) 2nd year = up to $6,500 ($4,500 maximum subsidized) 3rd-5th year = up to $7,500 ($5,500 maximum subsidized) Current interest rates/fees 2015-2016 4.66% interest rate 1.073% origination fee For more information go to: www.studentloans.gov There are online requirements for both types of federal loans. Sources of Need Based Aid Student Employment Federal Work Study Depends on College’s funding level--average $1,200 to $2,000. Students work approximately 8 – 10 hours per week. Some colleges issue jobs and others have you apply for the jobs that interest you. Student must provide proof of identification and eligible citizenship status to the college BEFORE WORKING. Although, it is part of your financial aid award, it is actually earned income that must be claimed if the student files a federal income tax return. What is Regular or College work study? Sources of Need Based Aid State Grants For CT residents attending a college in CT www.ctdhe.org Ranges from $2,000 or $4,000 (approx.) FUNDING NOT DETERMINED FOR 2015-16 YET Governor’s Scholarship Program: FAFSA required – must file by February 15, 2015 Need based: EFC less than $11,000 Merit based: Class rank: top 20%, testing scores of at least 1800 or higher for SAT or 27 or higher for ACT Sources of Institutional Grants and Outside Resources Institutional Grants/Scholarships come from the college’s endowment funds. Outside Resources – such as: Employee Tuition Benefit Contributions from relatives National Merit, Rotary, Garden Club, etc. Scholarships Use High school guidance office as a resource Search: www.finaid.org Student Federal Aid Eligibility Requirements • U.S. Citizen or • Eligible non-citizen --a permanent U.S. resident with a Permanent Resident Card (I-551); – a conditional permanent resident (I-551C); – the holder of an Arrival-Departure Record (I-94) from the Department of Homeland Security showing any one of the following designations: “Refugee,” “Asylum Granted,” “Parolee” (I-94 confirms paroled for a minimum of one year and status has not expired) or “Cuban-Haitian Entrant.” Student Eligibility Requirements, con’t. • If a male and age 18 must register by law for Selective Service; • Have a valid social security number; • Must be enrolled as a regular student in an eligible degree or certificate program; • Must have a high school diploma or an equivalent (i.e. home schooled); • While enrolled in college, must make satisfactory academic progress (including # of credits and GPA). • Must have resolved any drug conviction issues. Helpful Tips When Completing the FAFSA Print out the FAFSA on the Web Worksheet Have your 2014 federal tax return and W2 statements in front of you or prepare a draft 2014 federal tax return. You can also use your 2013 federal tax return IF income will be similar to 2014. Be careful! It is okay to estimate in order to meet early deadline dates required by colleges. State of Connecticut deadline: 2/15/2015. Go to College Goal Sunday for help with the FAFSA— January 25, 2015, 1:30-4:30 www.collegegoalsundayct.org . Helpful Tips When Completing the FAFSA • Make sure you use your LEGAL NAME. • Parents and students must provide their SSNs – if a parent does not have a SSN, enter zeros. – The name and number MUST match the Social Security Administration records – or the FAFSA will reject. • When reporting assets, report the value as of the date the FAFSA – They will not be changed later. Investment property equity value (value minus mortgage) Stocks, bonds, money market funds, CDs, mutual funds, stock options and ownership in legal trusts Coverdell savings accounts, 529 college savings plans If 529 is in parent’s name, include in parent’s investment balances. Business/investment farm value (not if family owned and less than100 employees) Helpful Tips When Completing the FAFSA • Assets not to report: – Equity value of your home – Retirement plans (pension funds, annuities, noneducation IRAS, SEP/Keogh plans) • Must also report untaxed income as noted on a previous slide. • Make sure all date of birth data is accurate. What is the Federal Definition of a Parent? • If your parents are divorced or separated, – answer the FAFSA questions about the parent you lived with more during the past 12 months. – If you did not live with one parent more than the other, give answers about the parent who provided more financial support during the past 12 months. • Parents who are together but unmarried but in a common law marriage or same sex marriages: – If your state recognizes common law and same sex marriages, the incomes will need to be combined for FAFSA filing purposes. What is the Federal Definition of a Parent? • If your parent has remarried, you must include information about the stepparent on the FAFSA. • The following people are not your parents unless they have adopted you: – grandparents, – foster parents, legal guardians, – older brothers or sisters, or – uncles or aunts – Other unrelated persons that you may be living with. What if parent information is not available? – If (among a few other reasons) • the student has no contact with the parent(s) and does not know where they are and • the student has not been adopted by someone else or • the student has left home due to an abusive situation or • can be considered an unaccompanied youth / homeless, – then the College will ask you to provide: • third party documentation to verify your living situation from: i.e. an attorney, court officer, social worker. • Some colleges also require that you complete their own waiver form in addition to submitting the 3rd party docs. Changing the FAFSA • You can update the FAFSA for the following: – adding a college – updating income i.e. after income tax return is filed – correcting errors • It is recommended (and may be required) to use the IRS Data Retrieval tool on the FAFSA to update your income – if you filed a federal income tax return. CSS/Financial Aid Profile https://student.collegeboard.org/css-financial-aid-profile/ Not required by all schools $25 for the initial application and $16 for each additional college Non-Custodial Parent’s Form = $25 Forms used to determine eligibility for need-based institutional grants. CSS Profile Tips In addition to the assets reported on the FAFSA, you will also be required to report: – Primary Residence Equity (value – mortgage balance) – Value of your retirement accounts (although not used in formula) – Business value data (value – debt) Also, use the comment section to relay special circumstances like loss of income or unusual expenses. CSS Profile Tips • Once the Profile has been submitted, you will not be able to make corrections. – Contact your school for instructions. • Many colleges participate in the College Board’s IDOC document imaging service. – You send your federal income tax returns, W2 forms, income statements and other required documents to IDOC – Participating colleges listed on your profile can then access the docs electronically. – Saves you multiple copying /mailing time and expense. Sample Financial Aid Award – Full Need Met Tuition & Fees $45,000 Room & Board 13,000 Books & Supplies 1,000 Miscellaneous 500 Transportation 500 Total $60,000 Parent Contribution $ 2,250 Student Contribution $ 1,750 Family Contribution $ 4,000 Need $56,000 Financial Aid Award (Cost less Resources) Federal Pell Grant Federal Supplemental Educational Opp. Grant Connecticut Independent College Grant Federal Perkins Loan Federal Direct Subsidized Loan Federal Work Study College Grant Total Award Federal Direct Unsubsidized Loan $ 2,500 $ 2,500 $ 2,500 $ 1,000 $ 3,500 $ 1,400 $42,600 $56,000 2,000 Shopping Sheet (Helpful when trying to compare awards) Tuition & Fees Room & Board Books & Supplies Miscellaneous Transportation Total Cost $45,000 13,000 1,000 500 500 $60,000 Federal Pell Grant Federal Supplemental Educational Opp. Grant Connecticut Independent College Grant College Grant Total Grants Net Price (Cost less grants) Options to pay Net Price: $ 2,500 $ 2,500 $ 2,500 $42,600 $50,100 $ 9,900 Federal Direct Subsidized Student Loan Federal Perkins Loan Federal Direct Unsubsidized Student Loan $ 3,500 $ 1,000 $ 2,000 Remaining balance Other options: Federal Work Study $1,400 Parent Payment Plan Parent PLUS loan Private alternative loan $ 3,400 How Aid is Applied to the Bill Tuition & Fees = Room & Board = Total Charges = $45,000 13,000 $58,000 Less aid: Grants $50,100 Loans (subsidized) $ 4,500 Total Aid Applied to the Bill Balance Due Balance Due using unsubsidized loan $ 2,000 $54,600 $ 5,400 $ 3,400 Must be paid in two installments: One-half of balance to be posted on or about September 1 One half of balance to be posted on or about January 1 Federal Work Study is not applied to the bill. What if my family contribution seems unreasonable? Compare aid awards from similar colleges. If the family contribution is significantly different: • Ask how the contribution was determined Is there a contribution expected from the non-custodial parent? Were losses reported on the tax return added back? What is the minimum student contribution? How were number of family members in college treated? Was home equity included in the analysis? • Has there been a change in family dynamics since the FAFSA was filed re: # in college, income, expenses? • If you have special circumstances, request procedures for an “Appeal” or “Review” and ask what the deadline is. How do I pay the rest of the bill? Withdrawals from Savings / Investments / 529 Plans The College’s Installment Payment Plan (not a loan) Home Equity loans, 401K loans, Stock loans Alternative Student Loans through private lenders (i.e. banks, credit unions, state institutions and national student loan lenders) Federal PLUS program (Parent Loan for Undergraduate Student) Apply for other outside scholarships Check with your financial planner or CPA for other options open to you specifically. Federal PLUS Program PLUS = Parent loan to undergraduate student (student must be a dependent) offered by the Department of Education to custodial and non custodial parents Annual loan limit: cost of attendance minus other aid Fixed interest rate 7.21%, Loan origination fees 4.292% Repayment begins 60 days after the full loan is disbursed. Can defer payments (interest will still accrue) while student is enrolled at least half-time. Aid Award in Subsequent Years “The Four Year Plan” Most Colleges make you apply every year for financial aid. But ask: Is this award for just this year? Loan amounts increase as the student advances to the next grade level (causing grants to decrease). Increases/decreases in the family income and/or assets will cause the family contribution to increase/decrease. If the number of dependents enrolled in college changes, the family contribution will change. Remember that only for federal purpose is a sibling attending graduate school included in number in college If the number in family changes, the family contribution will change. Federal and state funding levels change from year to year Resources • • • • • • High School Guidance Office Financial Aid Offices College’s Websites www.studentaid.ed.gov www.finaid.org www.fafsa.ed.gov COLLEGE GOAL SUNDAY • • • • • Get FREE help filling out the FAFSA!! www.collegegoalsundayct.org Sunday, January 25, 2015 1:30 p.m. – 4:30 p.m. Local sites: – New London: Science and Technology Magnet HS – Willimantic: Eastern CT State University Thank you for your attention. What questions can I answer for you? Good Luck in your College journey!