1 Federal Student Aid Guide 1011 Charles Blvd Ste A Greenville, NC Phone: Toll Free: Fax: Published: 6/10/2015
2 2 INTRODUCTION Welcome! This guide has been created to help students and prospective students understand what types of aid are available at Alexander Paul Institute of Hair Design. The guide also explains how aid is packaged and processed at the school. Many students and prospective students find this guide helpful in understanding how aid works at the school and how the school s processes may differ from other schools where friends and family members may have had experiences with Federal Student Aid. CONTACTS Institutional Information For any information regarding the school, policies, procedures, and any other information a student may find necessary to make the decision to enroll in school, a student or prospective student may contact the school s Business Operations Manager: Alex Naoum 1011 Charles Blvd Ste A Greenville, NC Office: (252) ext. 2 Cell: (252) Fax: (252) Financial Aid Information For information and counseling relating to financial aid, students or prospective students may contact the school s Financial Aid Director (FAD): Reva Dunning 1011 Charles Blvd Ste A Greenville, NC Office: (252) ext. 2 Cell: (814) Fax: (252) FINANCIAL AID COUNSELING The school s Financial Aid Director is always available to answer any questions throughout the entire financial aid process. You can even schedule a time to sit with the Financial Aid Director while you fill out your FAFSA! SCHOOL CODES AND INFORMATION Federal School Code: OPE ID: WHAT IS FEDERAL STUDENT AID? Federal student aid comes from the federal government specifically, the U.S. Department of Education. It s money that helps a student pay for higher education expenses (i.e., college, career school, or graduate school expenses).
3 3 Federal student aid covers such expenses as tuition and fees, room and board, books and supplies, and transportation. Aid also can help pay for a computer and for dependent care. (US Department of Education) TYPES OF AID AVAILABLE AT ALEXANDER PAUL INSTITUTE Alexander Paul Institute participates in the following Title IV, HEA Federal Student Aid Programs: - Federal Pell Grant - Iraq and Afghanistan Service Grant - Direct Subsidized Loan - Direct Unsubsidized Loan - Direct PLUS Loan Alexander Paul Institute participates in the following programs for aid not administered by the US Department of Education: - Department of Veterans Affairs Educational Benefits Any scholarships received by an outside organization must be reported to the school s Financial Aid Director. ABOUT FEDERAL STUDENT AID AVAILABLE Program Type of Aid Program Details Annual Amount (subject to change) Federal Pell Grant Iraq and Afghanistan Service Grant Grant: does not have to be repaid Grant: does not have to be repaid For undergraduates with financial need who have not earned bachelor s or professional degrees A student can receive a Federal Pell Grant for no more than 12 semesters or the equivalent (roughly six years). For students who are not Pell-eligible due only to having less financial need than is required to receive Pell funds; whose parent or guardian died as a result of military service in Iraq or Afghanistan after the events of 9/11; and who, at the time of the parent's or guardian's death, were less than 24 years old or were enrolled at least part-time at an institution of higher education. Up to $5,775 for the award year Up to $5, for grants first disbursed on or after Oct. 1, 2014, and before Oct. 1, 2015 For details and updates, visit StudentAid.gov/IraqAfghanistan Direct Subsidized Loan Loan: must be repaid with interest A student can receive an Iraq and Afghanistan Service Grant for no more than 12 semesters or the equivalent (roughly six years). For undergraduate students who have financial need; U.S. Department of Education pays interest while borrower is in school and during grace and deferment periods; student must be at least half-time; 4.29% interest rate for loans first disbursed on or after July 1, 2015, and before July 1, 2016; visit StudentAid.gov/interest for latest information on interest rates. Up to $3,500 for your first 1,000 Hours Up to $2,250 for your last 500 Hours Direct Unsubsidized Loan Direct PLUS Loan Loan: must be repaid with interest Loan: must be repaid with interest First-time borrowers may not receive this type of loan for more than 150 percent of the length of their program of study; U.S. Department of Education may stop paying interest if student who received Direct Subsidized Loans for maximum period continues enrollment For undergraduate and graduate students; borrower is responsible for all interest; student must be at least half-time; financial need is not required; 4.29% (undergraduate) interest rates for loans first disbursed on or after July 1, 2015, and before July 1, 2016; visit StudentAid.gov/interest for latest information on interest rates. For parents of dependent undergraduate students and for graduate or professional students; borrower is responsible for all interest; student must be enrolled at least half-time; financial need is not required; 6.84% interest rate for loans first disbursed on or after July 1, 2015, and before July 1, See annual and aggregate loan limits at types/loans/subsidizedunsubsidized Maximum amount is cost of attendance minus any other financial aid student receives. For details and updates, visit StudentAid.gov/plus
4 4 Source: (US Department of Education) Note: The information in this chart was compiled in summer of For updates and additional information, visit WHO IS ELIGIBLE FOR AID? The most basic eligibility requirements are that you must: - Demonstrate financial need (for most programs to learn more, visit - Be a U.S. citizen or an eligible noncitizen - Have a valid Social Security number - Register (if you haven t already) with Selective Service, if you re a male between the ages of 18 and 25 - Maintain satisfactory academic progress in college or career school - Show you re qualified to obtain a college or career school education by having a high school diploma or General Educational Development (GED) certificate or completing a high school education in a home-school setting approved under state law. Find more details about eligibility criteria at (US Department of Education) HOW DO I APPLY FOR FEDERAL STUDENT AID? 1. Complete the Free Application for Federal Student Aid (FAFSA) at Filing your FAFSA is FREE. If you need a paper FAFSA, you can get one from where you can download a PDF. If you have already completed a FAFSA, you can retroactively add Alexander Paul Institute to your FAFSA, or provide the school with the DRN Number and your Social Security Number in order for the school to retrieve your FAFSA information. 2. Review your Student Aid Report. After you apply, you ll receive a Student Aid Report, or SAR. Your SAR contains the information reported on your FAFSA and usually includes your Expected Family Contribution (EFC). The EFC is an index number used to determine your eligibility for federal student aid. Review your SAR information and make any corrections or changes, if necessary. If you list Alexander Paul Institute on your FAFSA, the school will receive your data electronically. It usually takes a few days for the school to receive your information even if you receive an immediately. (US Department of Education) WHAT HAPPENS AFTER THE SCHOOL RECEIVES MY FAFSA INFORMATION? 1. The School Receives Your ISIR The information from your FAFSA comes to the school in an Institutional Student Information Report, or ISIR. The school will generally have you and a parent listed on the ISIR (if applicable) review the ISIR and sign that the information is accurate. 2. The School May Request More Information In many cases, a student s FAFSA information can trigger flags and errors. In this case, some information might need to be verified, corrected, or adjusted. The school s Financial Aid Director will provide you with information on any forms you may have to fill out or any other information you may have to bring in. 3. Receive an Official Award Letter
5 The FAD will present you with an official award letter showing your aid eligibility. Your eligibility is calculated from your Expected Family Contribution (EFC) found on your ISIR or SAR and the cost of attendance the school has calculated. Cost of attendance factors in tuition, fees, book & kit, room & board, transportation, and other personal expenses a student might expect to incur while in school Accept a Full or Partial Award or Deny an Award Once you are presented with your award letter, you may want to deny certain types aid you may be eligible for such as loans. While you are able to accept everything on the award letter, many students decide to deny a portion of the aid if they do not need it. Remember, loans have to be paid back, so you may opt to take out only what you need. 5. Sign an Official Award Letter Once the award letter is correct and has been adjusted in the case that you denied some aid (if applicable), you sign an official award letter and receive a copy of this letter from the FAD. Direct Loan Borrowers Only 6. Complete Entrance Counseling and Sign Your Master Promissory Note You must sign your Master Promissory Note (MPN) and complete the Department of Education s entrance counseling on in order for the school to order and disburse your loan funds. You will need to use your PIN that you used to electronically sign your FAFSA to sign the MPN. The school s FAD will be available by appointment or by any other means of correspondence to answer questions you may have about the loan counseling. If necessary, you can set up a time to do loan counseling in the presence of the FAD in case you have any questions. Direct PLUS Loan borrowers do not need to complete entrance counseling. 7. Complete Exit Counseling Before you graduate or withdraw from school, complete the Department of Education s exit counseling on The school may also hold special exit counseling sessions for loan borrowers. Exit counseling will explain repayment, who you pay, payment options, etc. The school s FAD will be available by appointment or by any other means of correspondence to answer questions you may have about the loan counseling. If necessary, you can set up a time to do loan counseling in the presence of the FAD in case you have any questions. Direct PLUS Loan borrowers do not need to complete exit counseling. 8. Pay Back Your Loans Regardless of whether you graduate, withdraw, or are terminated from school, YOU ARE RESPONSIBLE FOR PAYING BACK YOUR LOANS. You will have a 6 month grace period after you depart the school before you are required to begin repayment. See Loan Repayment below. 9. Contact the FAD or Your Loan Servicer If You Are Having Trouble Paying Your Loan Payments Defaulting on your loan can be catastrophic. However, many resources are available for students who are having trouble paying their loans back. DO NOT JUST STOP PAYING. The FAD is always available to speak with you about the different options and guide you towards other resources. Your Loan Servicer is a great resource in guiding you through the options you have and setting you up with any other repayment option. LOAN REPAYMENT Remember, federal student loans are real loans, just like car loans or mortgages. You must repay a student loan even if your financial circumstances become difficult (US Department of Education). If you default on a loan, consequences can be severe. See What If I Default on a Loan? below. 10-Year Standard Repayment Plan Example
6 Although several different repayment plans exist, we will use the most common 10-year standard plan for our example. Our example shows sample payments for various subsidized and unsubsidized loan amounts with an interest rate of 4.29%. Your loan payments can vary depending on your loan servicer, type of loan, interest rate, amount borrowed, etc. The table below can give you an idea of your possible payments. Source: Studentloans.gov Repayment Estimator 6
7 7 Total Loan Amount Monthly Payment Total Interest Paid Total Amount Paid $5,000 $51 $1,161 $6,161 $10,000 $103 $2,321 $12,321 $15,000 $154 $3,482 $18,482 WHAT IF I DEFAULT ON A LOAN? What is Default? To default means you failed to make your payments on your student loan as scheduled according to the terms of your promissory note, the binding legal document you signed at the time you took out your loan. If you don t make your loan payments, you risk going into default. Defaulting on your loan has serious consequences. Your school, the financial institution that made or owns your loan, your loan guarantor, and the federal government all can take action to recover the money you owe. What if I Miss a Payment? Your loan becomes delinquent the first day after you miss a payment. The delinquency will continue until all payments are made to bring your loan current. Loan servicers report all delinquencies of at least 90 days to the three major credit bureaus. A negative credit rating may make it difficult for you to borrow money to buy a car or a house (you will be charged much higher interest rates). You also may have trouble: - Signing up for utilities - Getting home owner's insurance - Getting a cellphone plan - Getting approval to rent an apartment (credit checks usually are required for renters) If I Don t Make My Loan Payments, When is My Loan Considered to be in Default? If you repay your loan monthly, default occurs when you fail to make a payment for 270 days. What are the Consequences of Default? The consequences of default can be severe: - The entire unpaid balance of your loan and any interest is immediately due and payable. - You lose eligibility for deferment, forbearance, and repayment plans. - You lose eligibility for additional federal student aid. - Your loan account is assigned to a collection agency. - The loan will be reported as delinquent to credit bureaus, damaging your credit rating. This will affect your ability to buy a car or house or to get a credit card. - Your federal and state taxes may be withheld through a tax offset. This means that the Internal Revenue Service can take your federal and state tax refund to collect any of your defaulted student loan debt. - Your student loan debt will increase because of the late fees, additional interest, court costs, collection fees, attorney s fees, and any other costs associated with the collection process. - Your employer (at the request of the federal government) can withhold money from your pay and send the money to the government. This process is called wage garnishment. - The loan holder can take legal action against you, and you may not be able to purchase or sell assets such as real estate. - Federal employees face the possibility of having 15% of their disposable pay offset by their employer toward repayment of their loan through Federal Salary Offset. - It will take years to reestablish your credit and recover from default. Source: (US Department of Education)
8 What if I Can t Make My Monthly Payment? If you are having trouble making your monthly payments, contact your loan servicer immediately. Your loan servicer can help you understand your options. You may be able to - Change your payment due date - Switch repayment plans to get a lower monthly payment - Get a deferment or forbearance - Consolidate your loans How Do I Avoid Default? Follow these steps: - Understand the type of aid you are receiving - Borrow only what you need to pay for your college expenses - Track your loans online - Keep good records - Keep in contact with your loan servicer - NEVER IGNORE DILENQUENCY OR DEFAULT NOTICES FROM YOUR LOAN SERVICER Source: (US Department of Education) 8 DOES MY FEDERAL FINANCIAL AID PAY FOR MY KIT AND BOOKS? During the awarding process, you may choose to authorize the school to credit your aid towards books and supplies by signing an authorization form provided by the FAD. The authorization is good for the entire period of enrollment, but you are able to cancel or change the authorization at any time. If you do not choose to authorize the school to use your aid for books and supplies, you will be billed for the supplies and book fees. Students may purchase student supplies and books from other sources, however, required items are checked on or before the first day of classes. All students, including Pell eligible students, receive kits and books purchased from Alexander Paul Institute within a week of the class start date. HOW DOES MY FINANCIAL AID MONEY ARRIVE? The school checks that you are still eligible for aid and have completed the required steps for receiving aid outlined above. The school then orders your funds from the Federal Government. The funds are sent to the school, and the school disburses the funds on behalf of the government. To understand aid amounts and disbursements to students, it is very important to understand the school s academic year. We will use the Cosmetology Program as an example. Although you enroll in the program for 1,500 hours, the program is actually broken down into academic years and payment periods. At Alexander Paul Institute, the academic year is 1,000 hours and 27 weeks. The year is broken into two 500 hour 13.5 week payment periods. This is significant because when you apply for aid initially before you begin classes, you are applying for aid for your first 1,000 hours. Generally, approximately half of your aid is sent to the school when you begin classes, and half is sent when you reach 500 hours and have met all other eligibility requirements, such as meeting Satisfactory Academic Progress. So for example, if you are awarded a Pell Grant of $4,000, the school will receive the $2,000 when you begin classes and $2,000 when you reach 500 actual hours. The school does not disburse funds to students before the first day of classes. Loan funds arrive in a similar way, however, loans are not disbursed until at least 30 days after
9 9 your first day of classes. When loans are credited to your student account, you will be notified in writing. The notice will also outline a procedure for you to follow if you decide to cancel any of the loans credited to your account. Although you see the total tuition for the entire program on your enrollment agreement, the school breaks down the charges into academic years. So for example, in your first 1,000 hours, you are charged the prorated tuition for those hours and the fee for your kit & books if you choose to purchase them from the school. Your aid is first credited towards your tuition and kit fees (if you authorize the school to credit it towards supplies & books). If you receive more aid than tuition, fees, and supplies charged in the academic year, a credit balance occurs. You can receive this balance as a student payment from the school. Alternatively, you can, at your option, authorize the school to hold these funds to assist you in managing your funds by signing an authorization provided by the FAD in the awarding process. While the authorization is good for the entire period of enrollment, you can cancel or amend this authorization at any time. In this situation, the school can hold the funds until the end of the academic year and issue you a check that you can use to pay expenses or your tuition for your last 500 hours. Since your last 500 hours is a new academic year, you can reapply for aid when you reach 1,000 hours. When you apply for aid before enrolling in school, the FAD can tell you what aid might be available at 1,000 hours, but the school does not project what you will receive at 1,000 hours. A lot can change on your FAFSA from when you start to when you reach 1,000 hours, so predicting can be problematic. The second academic year consists of only 1 payment period of 500 hours, so all aid awarded is paid out at the beginning of your last 500 hours. Since it is half of an academic year, if your EFC qualifies you for a $4,500 Direct Subsidized Loan, you can receive $2,250 (minus the origination fee) for your last 500 hours. You can think of this in terms of attending a traditional semester based college. Since the academic year may consist of 2 semesters (Fall and Spring), if you only attend the Fall semester, you will only be able to borrow half of the loan since it is half of an academic year. In many cases, students who qualify for a Pell Grant in their first 1,000 hours may not be able to receive a Pell Grant at 1,000 hours because of regulations limiting the release of Pell Grant funds more than once per award year (July 1 to June 30). Please consult with the FAD to discuss your possible eligibility. Credit balance payments to students are issued by the school in check form. The school does not issue a check to the student until a credit balance occurs. For most students, this does not occur until the school receives the second disbursement when the student reaches 500 actual hours in the first academic year and 1,250 actual hours in the second academic year. WHAT IF I WITHDRAW FROM SCHOOL? The return of Title IV funds as prescribed in Section 484B of the HEA Amendments determines the amount of the Title IV aid a student has earned at the time a student withdraws. The amount of the Title IV aid a student has not earned is then returned to the Title IV programs. It is a proportional calculation based on the date of withdrawal through sixty-percent (60%) of the payment period. The school defines it payment periods for the 1500 hour clock hour programs as Payment Period 1 is from scheduled hours, Payment Period 2 is from scheduled hours and Payment Period 3 is from scheduled hours. 1. The school will determine the date of withdrawal and then determine the percentage of the payment period scheduled for the student. 2. The school will determine the amount of Title IV aid for which the student was eligible by the percentage of the time scheduled. 3. The school will compare the amount earned to the amount disbursed. If the amount of aid disbursed exceeds the amount earned, this amount of Title IV aid must be returned. 4. The school allocates the responsibility for returned unearned aid between the school and the student according to the portion of disbursed aid that could have been used to cover institutional charges and the portion that could have been disbursed directly to the student once institutional charges were covered. 5. The school and/or the student must then distribute the unearned Title IV aid back to the Title IV programs.
10 10 The following Title IV refund distribution is used for all students due a Title IV refund: 1. Federal Unsubsidized Stafford Loan 2. Federal Subsidized Stafford Loan 3. Federal Plus Loan 4. Federal Pell Grant Example Financial Aid Award: Pell Grant $4,731 1st disbursement $2,366 Direct Loan $3,500 1st disbursement $1,724 Total $4090 Student withdraws on 12/01/2014; the student was scheduled to complete 212 hours of the 1500-hour Cosmetology program. 212 hours/500 hours (payment period 1) = 42.4% The student had completed 42.4% of the payment period (Payment Period 1) and therefore had earned 42.4% of the financial aid that had been disbursed. $4,090 aid disbursed X 42.4% = $1, earned financial aid The school must return the unearned aid to the Department of Education. $4,090 aid received - $1, earned aid = $2, unearned aid The school will return $1,724 to the Direct Loan program and $ to the Pell Grant program for a total of $2, Note: Even after returning Title IV funds to the Department of Education, the student may still owe a balance to the school based on the school s Withdrawal and Settlement Policy found in the course catalog and in your enrollment agreement.
11 11 Works Cited UD Department of Education. https://studentaid.ed.gov/sa/types/grants-scholarships/pell June US Department of Education. "Federal Student Aid at a Glance " Fall studentaid.ed.gov. <http://studentaid.ed.gov/sites/default/files/ do-you-need-money.pdf>.. https://studentaid.ed.gov/sa/sites/default/files/ do-you-need-money.pdf June https://studentaid.ed.gov/sa/types/grants-scholarships/iraq-afghanistan-service June https://studentaid.ed.gov/sa/types/loans/interest-rates June studentaid.gov March <http://studentaid.ed.gov/repay-loans>.. studentaid.gov March <http://studentaid.ed.gov/repay-loans/default>.. studentaid.gov Avoiding Default March <http://studentaid.ed.gov/repay-loans/default/avoid>.