College Financing Overview and Federal Regulatory Updates. Celebrating 30 years of Excellence Planning, Saving & Paying for College

Transcription

1 College Financing Overview and Federal Regulatory Updates Celebrating 30 years of Excellence Planning, Saving & Paying for College 1

2 MEFA.org/seniors Step-by-step tips to walk you through the process Tools & Resources Sign-up e-book Videos/ Social Media Ask an Expert 2

3 MEFA s MEFA s offer tips for planning and paying for college and are customized based upon the child s grade level. Topics include: Parents of 0 6 th graders: Smart Saving tips Parents of 7 th -10 th graders: Myths and facts about financial aid Parents of high school juniors: College fairs Parents of high school seniors: Outside scholarships 3

4 MEFA.org School Counselors Site Trainings ( earn PDP Points!): RSVP online Webinars in early 2013 Resources: ebooks, workbooks, handbooks, calculators, fact sheets Links: college & aid application sites, federal & state programs, college & career planning tools FAQs 4

5 College Navigator Online tool from the Department of Education to help students and families in the college search Provides general institutional statistics, admission requirements, academic program details, graduation rates, average net price, loan default rates 5

6 College Scorecard Online tool from the Department of Education To be released in the coming weeks Allows students and families to compare colleges by comparing information on average net price, graduation rate, loan default rate, and median loan borrowing No information specific to the student Plans to add alumni employment data in the future 6

7 Net Price Calculators An online tool that provides a student an estimated net price (cost minus gift aid) for attendance at an institution for one year Required for all institutions located on each school s web site Detailed questionnaire about family finances and, often, student academic credentials Calculates eligibility for federal and institutional need-based aid Merit-based aid may also be calculated where applicable 7

8 Applying for Aid: What Families Need to Know APPLY ON TIME! Most financial aid applications are due in Feb or March, before the admissions decisions are mailed Submit every financial aid application required Estimate information if necessary Early Action/Decision may have an earlier deadline Applications must be completed every year 8

9 Financial Aid Applications: FAFSA Free Application for Federal Student Aid (FAFSA) IRS Data Retrieval Tool No noncustodial parent info required Student and parent must sign electronically with a PIN Can send initially to 10 schools 9

10 FAFSA Day Massachusetts Free assistance in completing the FAFSA! Sunday, January 27, 2013 at 1:00 pm Over 25 locations across Massachusetts Visit fafsaday.org for additional dates and locations near you 10

11 Federally Independent Students No Parent Information Collected Criteria: 24 or older Married Graduate Student Active duty in U.S. Armed Forces Veteran of U.S. Armed Forces Provide more than half of support for children or dependents In foster care any time after age 13 or parents are deceased Emancipated minor In legal guardianship Homeless, risk of being homeless, or unaccompanied youth 11

12 Dependency Overrides Students who do not qualify: Parents refuse to financially contribute Parents refuse to provide information Parents do not claim the student as a tax dependent Student demonstrates total self-sufficiency Students who may qualify: an abusive household abandonment by parents incarceration or institutionalization of both parents parents lacking the physical or mental capacity to raise the child parents whereabouts unknown or parents cannot be located parents hospitalized for an extended period 12

13 Dependency Overrides Students should submit to each school: A letter of explanation All relevant documentation (court documents, medical records, police reports, financial statements) At least one third-party letter from an individual aware of the situation (member of clergy, lawyer, social worker) 13

14 Financial Aid Applications: PROFILE CSS/Financial Aid PROFILE Required by some (350) colleges for institutional aid More details required: Untaxed income (Social Security, Tax Credits) Assets (Home, Assets in Siblings Names) Expenses (Medical, Elementary/Secondary School Tuition) Household Details Special Circumstances Section Cost associated: $25 for first school, $16 for each additional Updates: must be submitted on paper often not necessary Customer Service:

15 PROFILE Fee Waivers & Fee Payment Codes Fee waivers Automatically granted based on family financial information applies the USDA reduced price lunch income guidelines to total parent income (taxable and untaxable) Asset cutoff: $33,820 Available to first-time, dependent, undergraduate applicants Parents must live in the U.S. and not be self-employed Automatic for orphans & wards of the court Students are notified of fee waiver at time of submission Will cover up to 6 institutions Fee Payment Codes Purchased by colleges and organizations for use by students Each code pays for one college Students may use up to 6 per year 15

16 The Noncustodial PROFILE (NCP) Only required by certain schools (list on College Board site indicates schools that require the NCP: Link to the online form is sent to the student upon completion of the PROFILE registration Charge of $25, regardless of number of schools Same payment options and fee waiver rules as the PROFILE Waiver Requests: Contact each college and university Official request form may be required Submit a letter of explanation, as well as relevant documentation 16

17 Financial Aid Applications: College App College Financial Aid Application Required by some colleges Usually part of the admissions packet 17

18 Verification Process of collecting additional documentation to verify accuracy and completeness of FAFSA information Goal is to target the most error-prone data items specific to an applicant Items verified: income information, household size, number in college, SNAP (food stamp) benefits, child support paid New items for : High school completion status: diploma, GED, final transcript, or state certificate required Identity/statement of educational purpose: valid government-issued photo ID and signed statement of educational purpose (notarized if not in person) required 18

19 Verification Acceptable Documentation Tax return items: IRS Tax Account Transcript (Form 4506-T) requested by online, paper, or phone ( ) IRS Data Retrieval Tool (unchanged data) Copies of IRS tax returns are no longer accepted (except for amended and foreign tax returns) All other items: Verification Worksheet provided by the institution Institution may request SNAP or child support paid documentation For filers of tax extensions: Documentation of IRS extension and Form W-2s or statement from self-employed individual May require a copy of the completed and signed tax return when filed 19

20 IRS Data Retrieval Tool The Tool cannot be used in these circumstances: Married individuals who file married filing separately or head of household tax returns Change in the marital status after the end of tax year Amended Tax Returns Foreign Tax Returns (even if U.S. return is also filed) Filers with Tax ID Number (TIN) FAFSA and tax return address do not match Families in circumstances above will need to plan time to request a tax transcript 20

21 Transcript Difficulties If the tax transcript is unavailable, students may submit (for the remainder of the award year; award year guidance forthcoming): A signed copy of the tax return and For tax filers who requested via IRS paper Form 4506T- EZ or Form 4506-T, a copy of the mailed IRS response informing the tax filer that the IRS could not provide the requested transcript. The tax filer must sign this letter. For tax filers who requested online, a signed copy of a screen print from the official IRS Web page that displays a message indicating that the transcript request was unsuccessful. 21

22 Needs Analysis/EFC Needs Analysis: Institutions use data from the financial aid applications and a standard formula to calculate the Expected Family Contribution (EFC) EFC: Calculation of how much a family has the ability to contribute toward the student s education for one year Not necessarily what the family will pay for college Includes income and asset protection allowances Auto Zero Income Threshold: Increased from $23,000 to $24,000 for Separate, different institutional formula (No Simplified Needs Test or Auto Zero EFC) 22

23 Financial Aid Formula Cost of Attendance (COA) Expected Family Contribution (EFC) = Financial Aid Eligibility/Need Colleges fill in Financial Aid Eligibility/Need with Financial Aid 23

24 Financial Aid Shopping Sheet Provides institution cost of attendance and specific student financial aid intended to provide students the net price Not required, but strongly recommended May supplement or replace the financial aid award letter School data: graduation rate, loan default rate, median borrower debt Downsides: recommended loan amounts, strict template 24

25 Cost of Attendance (COA) Financial Aid Awarding COA $30,000 EFC $5,000 = Financial Eligibility $25,000 Scholarships/Grants $15,000 Student Loan $5,500 Federal Work-Study $1,500 = Unmet Need $3,000 Unmet Need $3,000 Federal $1,500 Work-Study Student $5,500 Loan Grant $7,500 Scholarship $7,500 EFC $5,000 This example is an estimate only. 25

26 PLUS Loans in Financial Aid Award Letters College A College B College C Grants/Scholarships $15,000 $5,000 $0 Student Loans $5,500 $5,500 $5,500 Parent Loan $0 $10,000 $16,500 Work-Study $1,500 $1,500 $0 Total $22,000 $22,000 $22,000 26

27 Pell Grant Beginning in the academic year, lifetime limit of 12 semesters or equivalent (aka Lifetime Eligibility Used (LEU): 600%) Maximum amount for the academic year: $5,635 Number of Pell Grant recipients has increased by 50% since : 6 million recipients 2012: 9.5 million recipients Source: Federal Student Aid 27

28 Federal Student Loan Updates : Eliminated interest subsidy during grace period on Direct Subsidized Stafford Loans Beginning for new borrowers, students are limited to Subsidized Loans for 150% of time of the academic program Subsidized Stafford Loan interest rate: : 3.4% :??? New Pay-As-You-Earn Income-Based Repayment Option: Monthly loan repayment capped at 10% of discretionary income Remaining loan debt forgiven after 20 years Starting in 2014 Public Service Loan Forgiveness After 120 full, on-time payments Must be employed by a qualified organization 28

29 Special Circumstances/Appeals Changes in circumstance, special situations not already reported, and requests for additional funds (appeals) should be submitted to the Financial Aid Office to include: Letter of explanation Documentation (bills, financial statements, medical records, layoff notices, final paystubs) Summary of current financial plan 29

30 Studentaid.gov Full of information on all federal financial aid programs 30

31 After The Acceptance Regional Seminars Over 25 Locations Across Massachusetts in late March/April Follow-up to College Financing Seminar to provide key, timely information Topics include: Understanding award letters and bills Loan options (parent and student) Payment Plans Working with the Financial Aid Office for special circumstances such as job loss or other reduction of income Register for MEFA s to receive location details 31

32 Thank You Questions? 32