Financial Aid Certification

The Nuts and Bolts of Financial Aid Training for Counselors and Mentors

OBJECTIVES

By the end of this session, participants will be able to:

• introduce students to financial aid terms and concepts; • outline the process of (1) establishing eligibility for state and federal aid programs; (2)

packaging of awards; (3) disbursing aid; and (4) handling student enrollment withdrawals; and • identify trusted sources of information.

ACTIVITIES

The Nuts and Bolts of Financial Aid

Illinois Trends in College Cost

Terms and Concepts

The Financial Aid Process Resources

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Anticipate Questions

There are lots of things to think about and many questions to ask.

• How much will it cost?

• Can I afford college?

• What is financial aid?

• What is the FAFSA?

• When and how do I apply?

• Where can I get help?

Know the answers…

TRENDS IN COLLEGE COST

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Four-Year Public Colleges and Universities Tuition and Fees in Illinois

Source: Illinois Student Assistance Commission. College Illinois! (2010).

Academic Year

Average Tuition and

Fees

Annual Increase

2009-2010 $10,442 10.5% 2008-2009 $9,452 10.5% 2007-2008 $8,553 8.6% 2006-2007 $7,875 10.1% 2005-2006 $7,151 8.9% 2004-2005 $6,565 13.5% 2003-2004 $5,785 9.2% 2002-2003 $5,298 10.7% 2001-2002 $4,786 8.6% 2000-2001 $4,406 5.9%

Average Annual Increase Past 10 years 9.7% Past 20 years 7.8%

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The share of family income, even after financial aid, needed to pay for college has risen substantially.

Affordability

In Illinois, today’s newborn will pay close to $180,000 to attend a state school.* Refer to the “College Cost Calculator“ on www.collegeillinois.org.

Illinois

Best Performing States

U.S.

Source: Measuring Up 2008. The National Report Card on Higher Education. The National Center for Public Policy and Higher Education.

6 * http://www.529prepaidtuition.org/documents/pdf/2010-2011Enrollment_kit_Final.pdf

Unemployment Rate, Age 25+, December 2010 Education and Unemployment

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0.0%

5.0%

10.0%

15.0%

Less than a highschool diploma

High schoolgraduates

Some College,No Degree

Associate'sDegree

Bachelor 'sDegree and

HigherNote: Data are averages for persons 25 and over. Source: Bureau of Labor Statistics, Current Population Survey (December 2010)

National Average

9.4%

Median Weekly Earnings, Age 25+, December 2010 Education Pays

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$-

$350

$700

$1,050

$1,400

Less than a highschool diploma

High schoolgraduates*

Some College orAssociate's

Degree

Bachelor 'sDegree

AdvancedDegree

National Average

$788

Note: Data are averages for persons 25 and over. Source: Bureau of Labor Statistics, Current Population Survey (December 2010)

WAYS TO PAY A COLLEGE EDUCATION

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Financial Aid Programs

529 Savings & Prepaid Tuition Programs

Employer Tuition Benefits

Tuition Payment Plans

A number of options are available to families who are concerned about their ability to meet the family share of college costs.

Know the Options

Know the options… 10

TERMS AND CONCEPTS

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Grants are typically based on financial need while scholarships are generally rewards for grades, athletics, a unique skill or even an specific career interest. Work-study allows students to earn money through a campus-based employment program. Loans can be subsidized or unsubsidized but must be repaid after graduation or dropping below half-time enrollment status.

There are many types of financial aid, including: Types of Financial Aid

gift aid

self-help aid

Grants

Scholarships

Work-Study

Loans

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Financial aid comes from a variety of sources. Sources of Financial Aid

college (institutional aid)

outside/ private sources

federal government

state government

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The federal government is the largest source of financial aid for students, with colleges and universities providing the second largest source of financial aid for students.

State and Federal Sources

Illinois Student Assistance Commission

(ISAC) • www.collegeillinois.org

• The agency in the State of Illinois that

administers state and federal grant, scholarship and prepaid tuition programs.

U.S. Department of Education

(ED) • www.FederalStudentAid.ed.gov

• The federal agency that provides the

largest amount of college funding in the form of grant, scholarship, work-study and educational loan programs.

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Entitlement Program

• Program which is funded sufficiently to ensure that all eligible applicants will receive awards.

• Ex. Illinois Veterans Grant

Appropriation • Public funds set aside

for a specific program. • Ex. MAP Grant

Waiver • Gift assistance that in

most cases is awarded based on a student’s field of study and/or employment status.

• Ex. Illinois Special Education Teacher Tuition Waiver

Financial Aid Funding

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Grant and Scholarship Programs Illinois Student Assistance Commission

Program Acronym Type of Aid 2011-2012 Benefit

Monetary Award Program MAP Grant; Need-based; Appropriation up to $4,720

Silas Purnell Illinois Incentive for Access IIA Grant; Need-based; Appropriation $500 (Freshman only, not funded)

Illinois Veteran Grant IVG Grant; Entitlement maximum 12 units per term, up to 120 units cumulative

Illinois National Guard Grant ING Grant; Entitlement maximum 12 units per term, up to 120 units cumulative

Grants for Dependents of Police, Fire & Correctional Officers

Grant; Appropriation up to 8 semesters or 12 quarters

Bonus Incentive Grant (BIG) Program BIG Grant; Appropriation $40 to $440

Illinois State Scholars Program ISSP Certificate of Achievement N/A

Merit Recognition Scholarship MRS Grant; Merit-Based; Appropriation $1,000 (Not funded)

Teacher Programs Program Acronym Type of Aid 2011-2012 Benefit

Illinois Future Teacher Corps Program IFTC Scholarship; Appropriation up to $5,000 or $10,000

Minority Teachers of Illinois Scholarship MTI Scholarship; Appropriation up to $5,000

Illinois Special Education Teacher Tuition Waiver

SETTW Waiver up to 4 calendar years

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Federal Grant Programs U. S. Department of Education

Program Acronym Type of Aid 2011-2012 Benefit

Federal Pell Grant Grant; Need-based up to $5,550

Iraq and Afghanistan Service Grant Grant maximum is same as Pell maximum; payment adjusted for less-than-full time study

Federal TEACH Grant Program TEACH Grant up to $4,000 per year

Campus-Based Programs Program Acronym Type of Aid 2011-2012 Benefit Federal Supplemental Education Opportunity Grant

FSEOG Grant Exceptional Need

$100-$4,000

Federal Work-Study FWS Need-based Employment no annual minimum or maximum amounts; at least minimum wage

Perkins Loans Need-based Loan up to $5,500 for undergraduate; up to $8,000 for graduate

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Maximum Award Amounts for 2011-2012* The Big Three

Up to $4,720

Up to $5,550

Up to $4,000

State of Illinois Monetary Award Program (MAP)

Federal Pell Grant Federal Supplemental Education Opportunity Grant (FSEOG) Total = $14,270

* NOTE: 2011-2012 amounts best estimate as of printing. 18

Source of

Loan

Repayment Options

& Grace Period

Interest Rate

+ Fees

When evaluating loan options, consider the following: Loan Programs

Start by knowing a student’s rights and responsibilities.

Subsidized vs.

Unsubsidized

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The big difference between the two is when interest begins to accrue.

Subsidized vs. Unsubsidized

Type Need or No Need

Interest

Subsidized Stafford Loan

A need-based loan

Interest is paid by the federal government while a student is in school at least ½ time, during grace period, and during authorized periods of deferment

Unsubsidized Stafford Loan

NOT a need-based loan

A student is always responsible for paying interest

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Federal Loan Programs, 2011-2012

U. S. Department of Education

Type Grace Rate

Perkins

Subsidized 5% fixed

9 months

Stafford Subsidized 3.4% fixed

6 months

Unsubsidized 6.8% fixed

6 months

PLUS Graduate PLUS

Credit-based 7.9% fixed

Within first 60 days

Note: Stafford Loans (both subsidized and unsubsidized) for Graduate students have a fixed interest rate of 6.8% through 2013.

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Year DEPENDENT Undergraduate Students

INDEPENDENT Undergraduate Students (and DEPENDENT whose

parents are unable to obtain a PLUS Loan)

1st Year $5,500 Max. $3,500 subsidized

$9,500 Max. $3,500 subsidized

2nd Year $6,500 Max. $4,500 subsidized

$10,500 subsidized Max. $4,500 subsidized

3rd Year $7,500 Max. $5,500 subsidized

$12,500 Max. $5,500 subsidized

4th Year $7,500 Max. $5,500 subsidized

$12,500 Max. $5,500 subsidized

Aggregate Loan Limits $31,000 (max. $23,000 subsidized)

$57,500 (max. $23,000 subsidized)

Limits for 2011-12 Direct Stafford Loan Programs

Federal Student Aid, (2011) “Direct Stafford Loans” http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp

Year Undergraduate Graduate

1st Year $5,500 $8,000 2nd Year $5,500 $8,000 3rd Year $5,500 $8,000 4th Year $5,500 $8,000 Aggregate Loan Limits $27,500 $60,000

(this aggregate limit includes undergraduate

Perkins loans)

Limits for 2011-12 Federal Perkins Loan

About Perkins Loans • Not all colleges participate in the Perkins Loan Program, as of May 6, 2010 only 1,624

schools had fund resources • The amount that can be borrowed may be less than the federal maximum

Note: Communicate with each college to inquire about steps to a complete application.

To be considered for student aid, a student must complete all forms required by a college.

How to Apply

Free Application for Federal Student Aid (FAFSA)

Institutional Forms

Other

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It is the first step in the financial aid process. A FAFSA is used to apply for Illinois scholarships and grants and for federal student financial aid such as grants, loans and work-study (e.g. Pell Grant, MAP Grant). In addition, postsecondary schools use it to award non-federal financial aid. The application is available to students at no fee.

Three Ways to Access a FAFSA

What is a FAFSA? Free Application for Federal Student Aid

Paper FAFSA FAFSA on the Web .pdf FAFSA

1-800-4-FED-AID www.FAFSA.gov www.FAFSA.gov

• Serves as an electronic signature and provides access to personal records

• Go to www.pin.ed.gov

Option 1: Create a four-digit PIN Option 2: Have the site create a PIN

• PIN is conditional until relevant information is verified with the Social Security Administration (1-3 days)

• PIN will not expire at the end of the year

A PIN, along with other identifiers, gives students Internet access to their information on the Federal Student Aid systems.

Personal Identification Number

PIN Checklist oSocial Security Number

oLast Name

oFirst Name

oMiddle Initial

oDate of Birth

oStreet Address

oe-Mail address (optional)

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Important Dates, 2012-2013 When to Apply

* Note: Suspension dates are subject to the number of eligible applicants and funding made available by the Illinois General Assembly and approved by the Governor

• January 1, 2012 (First date to submit FAFSA) FAFSA

• Dates vary by college (Check with each college) College

• As soon as possible after January 1, 2012. Awards made until funds are depleted.*

MAP Grant

• June 30, 2013 (at the end of the academic year) Federal Pell Grant

Eligibility for most federal and state aid programs is based on financial need rather than academic achievement.

In addition to a completed FAFSA, a student must:

Who can get federal and state student aid? General Eligibility Requirements

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sign certifying statements on the FAFSA

register for selective service, if male 18-25 years old

make satisfactory academic progress

have a valid Social Security Number

enroll as a regular student in an eligible degree or certificate program

have a high school diploma or its equivalent

For financial aid purposes, questions on the FAFSA will determine the status of the student.

Whose information is required on a FAFSA? Dependency Status

Status based on FAFSA Report income and assets Dependent Parents

Student

Independent Student Spouse

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After FAFSA processing is complete, a students will receive an output document or record that shows:

• information originally provided by a student;

• the Expected Family Contribution; • results of the eligibility matches; and • information about inconsistencies

The SAR and ISIR Output Documents

SAR Student Aid

Report

ISIR Institutional

Student Information

Record

Notes:

• The body of the SAR has been reduced to enable students to determine the status of their FAFSA, their eligibility for a Federal Pell Grant and the next steps in the application process

• Students who submit a Spanish FAFSA or a correction in Spanish will receive all communication in Spanish

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Expected Family Contribution

A need analysis formula established by Congress determines a student’s Expected Family Contribution; using information reported on the FAFSA.

What? Why? Where? A comparative measure of how much a family can be expected to contribute over the course of an academic year

Used to determine a student’s eligibility for most federal and state assistance

Shown on the Student Aid Report (SAR)

EFC Expected Family Contribution

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Tuition & Fees Room & Board

Transportation

Books & Supplies

Miscellaneous Living Expenses

Cost of Attendance (COA) +

Each college determines the Cost of Attendance at their institution. Some academic majors/programs may have a different Cost of Attendance at the same university.

What are the costs?

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Cost of Attendance

(COA)

Expected Family

Contribution

(EFC)

Financial Need - =

Financial Need

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Examples To Determine Financial Need

COA

EFC

Financial Need

$3,000 $10,000 $7,000

$3,000 $20,000 $17,000

-

-

=

=

$3,000 $35,000 $32,000 - =

College

A College

B College

C 34

The financial aid administrator at the college will package all

available aid and send an award offer for consideration.

Goal: To meet a student’s need. • New information creates changes. • When packaging need based-aid, students must have need and all

sources of aid must be considered. • The total of all sources of aid may not exceed cost of attendance (COA).

Financial Aid Awards

• What is the total cost of attendance?

• What is the Expected Family Contribution?

• What is a student’s financial aid eligibility?

• What types of financial aid are included?

• Was financial need met? • What is the out-of-pocket cost?

Other things to know about applying for financial aid: • Apply early! • Information reported on a FAFSA is confidential and is used

ONLY to determine financial aid eligibility. • A student may be asked to submit documentation to the

financial aid office for verification purposes.

• Supplemental applications or forms may be required.

• Keep track of application DEADLINES!

• It helps to keep a record of everything that is submitted.

• A student must reapply every year.

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A student needs to meet the following requirements in order for an award to be disbursed:

Disbursement

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Accept the awards

Submit all paperwork and information required

Enroll in classes and meet Satisfactory Academic Progress (SAP) standards

Complete pre-loan counseling (entrance counseling) if the student is a new loan borrower

Pay past due charges on a student account

Make arrangements to clear holds set on a student account

The method and time of disbursement varies depending on the type of financial aid

Official Withdrawal

Unofficial Withdrawal

Leave of Absence

A process and consequences apply when a student ceases to be enrolled through the end of a period of enrollment.

Types:

Withdrawals

Charges remain the same but financial aid is greatly reduced or eliminated

Asked to pay back money received in a financial aid payment

Not eligible to receive aid payment because of too many withdrawals in past

Pay school expenses out-of-pocket

Common Consequences:

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THE FINANCIAL AID PROCESS

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Financial aid funds are available to make it possible for students to continue their education beyond high school.

Guiding Principles

• Students and parents have the primary responsibility of funding educational costs.

• Financial aid is available only to assist in filling the gap between a family’s contribution and a student’s yearly academic expenses.

•Eligibility is based on multiple factors.

• Schools are required to meet certain standards and have written agreements with the U.S. Department of Education and ISAC in order to offer student aid programs. Federal financial aid can be used at approved colleges, universities, trade schools and technical schools.

•The school, as a whole, is responsible for proper administration of financial aid programs.

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From a financial aid administrator’s point of view… The Process

Step 1: Determine

Student Eligibility

Step 2: Package Aid

Step 3: Disburse Aid

Step 4: Deal with Student

Departures and Withdrawals

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Step 1 Determine Student Eligibility

Complete FAFSA

Central Processing

System (CPS)

processes FAFSA data, calculates EFC, and

creates an ISIR and

SAR

School reviews

ISIR; determines

student’s eligibility and need

If student is selected,

the school performs

verification

If necessary school

corrects ISIR data

and sends it to CPS for

an accurate ISIR

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Step 2 Packaging

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School packages and awards aid

If appropriate, school exercises

professional judgment and

student is repackaged

If new information about a student

becomes available which results in an

overaward, repackaging may be

necessary

Step 3 Disburse Aid

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A school credits a student’s account with financial aid

funds

If a student received an

overpayment, a school adjusts a

student’s aid

Steps 1-3 are repeated each

award year until a student graduates

or withdraws

Step 4 Student Departures

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Determine the date a student

ceased attendance

Prorate the earned and unearned

portions of aid based on time

spent in attendance

Must determine a

student’s eligibility for a

post-withdrawal

disbursement

Comply with refund policies

and procedures

RESOURCES

Get your hands on up-to-date, accurate and trusted sources of information to learn what you need to know.

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Trusted Web sites

WhatsNextIllinois.org

CollegeIllinois.org

FederalStudentAid.ed.gov

FAFSA.gov

PIN.ed.gov

CollegeNavigator.ed.gov 47

Handbook of Illinois Postsecondary Institutions Up-to-date financial aid and admission information for institutions approved to participate in ISAC's scholarship and grant programs. Source: www.collegeillinois.org

FAFSA Expert Guide A compilations of all documents that are referenced in the FAFSA, including IRS tax forms, a description of the McKinney-Vento Act, and the EFC formula. Source: Only distributed at ISAC’s Financial Aid Certification Trainings.

Counselors and Mentors Handbook on Federal Student Aid A guide for those advising students about financial aid for postsecondary education. Source: www.FSAPubs.org

State Universities in Illinois - At a Glance A summary of minimum high school course requirements for admission of freshman to Illinois public universities. Source: www.IACAC.org

12 Reasons to Stay in Illinois An admissions guide for counselors on state universities in Illinois. Source: www.IACAC.org

Manuals & Handbooks

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• Notifies you when new information and/or announcements are added to College Illinois

• Summaries of new information, along with links, will be sent to your e-mail

ISAC’s e-Messaging Service

Stay Connected

Get Printed Materials

• ISAC Printed Materials – www.collegeillinois.org

• FSA Publications Ordering System (FSAPubs) – www.FSAPubs.org

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Making college accessible and affordable for Illinois students.

- ISAC’s Mission Statement

Deerfield 1755 Lake Cook Road Deerfield, IL 60015-5209 Springfield 500 W. Monroe, 3rd Floor Springfield, IL 62701-1876 Chicago James R. Thompson Center 100 W. Randolph, Suite 3-200 Chicago, IL 60601-3219 800.899.ISAC (4722) www.collegeillinois.org .................................................. College Illinois The official Web site of the Illinois Student Assistance Commission (ISAC)

ISAC's Big Goal: Increase the proportion of Illinois adults with a postsecondary credential to 60 percent by 2025