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Financial Aid Night |
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National Association of Student
Financial Aid Administrators
Planning and Conducting a Financial Aid Night was developed by National Association of Student Financial Aid Administrators (NASFAA) staff and was originally distributed to the state and regional presidents of financial aid associations with NASFAA's high school guidance materials in September 1999.
Table of Contents Introduction: Planning and Conducting a Financial Aid
Information Night
High school counselors and counselors employed by community social service agencies are a major source of information about the financing of education beyond high school. 300-400 financial aid workshops are held annually around the country and are designed to provide counselors with the basic knowledge and information they need to share with their constituents. If the information provided in these workshops is to have the desired impact, however, the information must be passed on to interested students and parents. There are several ways to transmit the knowledge that a counselor has gained. Perhaps the most obvious way of providing financial aid information to students and parents is through individual counseling sessions. However, in this time of constrained school and agency budgets, increasing student/counselor ratios, and additional administrative and teaching duties for counselors, individual sessions may not be practical. Other methods, such as financial aid newsletters and brochures, group sessions, and public presentations are probably more efficient in getting basic and essential information to those who need financial assistance for college.
This publication is divided into two parts and has been developed to assist counselors in planning and conducting a financial aid information night for students and parents. Part one is a planning guide and part two is a script for a presentation titled: "Financing Education Beyond High School." Counselors may want to ask a financial aid administrator from a nearby college or a representative of the state student assistance agency to help them in conducting a Financial Aid Information Night. Many state associations of financial aid administrators routinely provide such presentations, or support for such presentations, to secondary schools. Whoever makes the presentation, the following discussion will be helpful in making the necessary arrangements.
Eight Steps from Start to Finish 1. Setting the date Selecting an appropriate date for a Financial Aid Information Night is critical to its success. Ideally, we could suggest a range of dates that would serve you well in scheduling your meeting. However, the variables to be considered and the changes in those variables from year to year make such a prescription impractical. Consequently, the best we can do is to identify factors which should be considered each time you begin to select a date. a. DO pick a date far enough in advance of the deadline for submitting applications to the student assistance programs administered by your state and the priority filing dates announced by the institutions to which your students typically apply. Check state and institutional application instructions or catalogues to determine these dates and count back a month or even six weeks to allow time for completion and processing. b. DO pick a date that complements other school-related activities for parents. For example, you might make the Financial Aid Information Night the program for a monthly PTA meeting. If not, be sure to pick a date that does not have to compete with the PTA meeting or other community events appealing to college-bound students and their parents. c. DO be sensitive to religious observances affecting the families that need financial aid information. d. DON’T pick a date too close to major holidays. Family scheduling conflicts will affect your attendance. e. DON’T pick a date prior to the time that the need analysis forms used in your state are available. They are normally distributed to secondary schools in October, although changes to the forms or procedures for processing the forms may cause delays in some years. Since one of the main presentation items is the proper completion of these forms, it would be difficult to proceed without them. Check with a knowledgeable financial aid administrator to determine the probable distribution date in any given year. f. DON’T try to compete with entertainment or athletic events which draw well with parents and students. g. DON’T ignore the possibility of inclement weather. Select and advertise an alternate date.
3. Selecting a facility Based upon anticipated attendance, identify a facility that will comfortably accommodate the group. Since many parents tend to take extensive notes on such a presentation, tables, or at least chairs with writing arms, are desirable. Select a room that allows appropriate control over lighting to accommodate visual aids such as overhead transparencies, or PowerPoint presentations, etc. When selecting visual aids, remember that your audience will probably need to take notes. A microphone should be available if the size of the room or voice of the presenter requires it. An overhead projector, screen, and a chalkboard at the front of the room are desirable for impromptu notes and calculations. The facility selected should be readily accessible to the disabled and from available parking areas. Plan to provide directional signs to the proper room. Some facilities require special notification or arrangements for meetings held during non-working hours. To avoid the embarrassing absence of heat, air conditioning, lighting, and so on, be sure that the proper persons are advised of your meeting. 4. Advertising the event Once the date, time, and facility have been determined, you are ready to advertise the Financial Aid Information Night. Try to begin promotion two to four weeks in advance, which is early enough to get on parent’s calendars, yet late enough that they don't forget about it in the interim. Beyond the obvious announcements in homerooms and study halls, and flyers sent home to parents, consider the possibility of using public service announcements on local television and radio, news or calendar items in local newspapers, items in PTA or school newsletters, posters in shopping areas, public address announcements at sporting events, and other school and community activities.
If a financial aid administrator is handling the presentation, this step is easily resolved. If you are making the presentation yourself, you may wish to consider seeking the assistance of some other persons with specialized information to share with your audience. It is not easy on you or the audience to try to cover two hours by yourself, and it frequently makes for a more interesting presentation to have an occasional change of pace and voice. Bringing in an outside "expert" often increases the credibility of the presentation since it is impossible for you to be an authority on all aspects of college financing. We suggest that you consider inviting a local financial aid administrator to tell parents and students about assistance typically available from an institution and a representative from the state agency to describe state programs. Such outside presenters will add a positive touch to most presentations. 6. Making a list, checking it twice The rest of the planning process consists of following up to make sure that the arrangements described above are implemented as requested. Confirm everything about a week before your presentation and then again the day before. It is only human to forget, and periodic reminders are more easily done than a last minute frantic phone call ten minutes after the auditorium is to have been opened, with 50 participants standing in the hallway. 7. Delivering the information If thorough planning has been done, the presentation should go smoothly. Arrive well in advance of the stated starting time to make sure doors are unlocked, utilities are available, and audio-visual equipment is in working order. Put out directional signs as necessary to help people find their way. Have the registration materials organized when the first of the audience arrives.
Leave ample time for questions, either during or after the formal presentation. The presenter(s) should anticipate that some families will wish to ask personal questions after the session. 8. The finishing touches If outside presenters have assisted with the Information Night, thank them both publicly and in writing shortly thereafter. In most cases, they will have been donating their time and perhaps some expenses, so a sincere "thank you" is the only encouragement they will receive to assist you in the future. If the room and/or building need to be secured after everyone has left, be sure you have made arrangements with the individuals responsible for those tasks.
Financing Education Beyond High School The purpose of this section is to provide you with a presentation that can be used in conjunction with a Financial Aid Information Night for students and parents. This section has two interrelated components. The first portion is a narrative, or script, that introduces the basic concepts in financial aid. You may want to expand on those items which you know to be of special interest or concern to your school community. The second portion contains camera-ready art work which can be made into transparencies with the use of a paper copy machine and material suitable for making such transparencies. These transparencies are intended to be used with the narrative; the numbers in the narrative correspond to those pre-printed on the art work provided. The following script provides a basic framework within which to discuss financial aid. Depending on the composition of your audience, you may also want to modify the language used in the narrative. For example, the narrative as presented here assumes that your audience will be made up of students ("you," "your," etc). If your audience includes more parents than students, you may want to substitute "your child" or "student" for "you."
Vugraph Narrative In view of the rising cost of higher education, the ability to continue your education beyond high school may depend upon the availability of financial assistance. What is financial aid? Where does it come from? What kind of assistance is available? Who is eligible? How do I apply? These are all questions that need to be answered, and that is our purpose for being here tonight (today). [1] Financial aid consists of scholarships, grants, loans, and employment opportunities which are available to help students pay for the cost of attending the school of their choice. Most financial aid resources are intended to supplement, not replace, the financial resources of the family. [2] There are two major categories of aid: merit-based and need-based. Merit-based aid is generally awarded in recognition of special skills, talent and/or academic ability, with little or no attention given to the family’s ability to pay educational costs. Need-based aid, as the name implies, is awarded based on the financial need of the applicant and his or her family. Need-based aid is the focus of our presentation today. We also will be discussing the federal unsubsidized loan programs, which include the Federal Unsubsidized Stafford, Direct Unsubsidized, Federal PLUS, and Direct PLUS loans. While these loans are not need-based, they nevertheless are an important source of funding for many students and families.
[4] Cost of attendance is not a constant figure. It varies by type of school and the costs associated with attending that school. For example, independent (or private) colleges and universities do not receive government operational subsidies and therefore must charge students higher tuition and fees than a state-supported community college or other public institution of higher learning. Consequently, the cost of attendance at a private college or university is usually higher than that of a public college or university. Although the cost of attendance varies by school and student, theoretically, the Expected Family Contribution (EFC), or the amount the family must pay for educational expenses, remains constant no matter which college the student decides to attend. Thus, a student’s need for assistance will vary because costs vary. This is a very important concept, and one that students need to keep in mind when deciding which school to attend. If the family contribution is less than the amount it costs to attend a particular school, as is the case here with institutions 1, 2, and 3, eligibility for assistance from need-based financial aid programs is demonstrated. The amount of demonstrated need, however, is different based on the cost of attendance at each institution. If the family contribution is greater than or equal to the cost of attending school, the student is not eligible for assistance from need-based financial aid programs. The student or parent may be eligible for non-need-based loans. [5] The cost of attendance at a particular school may be estimated by consulting the catalog(s) of the schools in which you are interested in applying. In your estimate you should include the cost of tuition and fees, room and board, books and supplies, transportation, and any other miscellaneous personal expenses for the academic year. While the above categories cover most of the costs the student will encounter, expenses related to study abroad, dependent or elder care, disability, and cooperative education programs may also be included with adequate documentation. [6] A family’s ability to pay (i.e., the EFC) is calculated using a process known as "need analysis." Need analysis is based upon the principles that: • To the extent they are able, parents have the primary responsibility to pay for the education of their dependent children; • Students, also, have a responsibility to help pay for their educational costs • Families should be evaluated in their present financial condition; and • A family's ability to pay for educational costs must be evaluated in an equitable and consistent manner, while recognizing that special circumstances can and do alter a family’s ability to pay. [7] A certain amount of personal and financial information must be collected from the family to perform need analysis. This information is collected on the Free Application for Federal Student Aid (FAFSA). The FAFSA is available in two formats: paper and electronic. We will first briefly discuss the paper versions of the FAFSA and then move on to a discussion about the electronic versions. Most students who have never attended college before will complete a paper version of the Free Application for Federal Student Aid (FAFSA), sometimes referred to as the "regular" FAFSA. Students may obtain paper FAFSAs from their high school guidance offices, local libraries, or from the financial aid offices at the schools they are interested in attending. The second type of paper FAFSA is called the Renewal Free Application for Federal Student Aid, or Renewal FAFSA. These applications are mailed directly to students. Only those students who successfully applied for federal financial aid in 1999-2000, and received a valid Student Aid Report (SAR), will receive a Renewal FAFSA in 2000-2001. Once a student and his or her parents have completed the paper version FAFSA they must mail it to a FAFSA processor. FAFSA processors are responsible for key entering the FAFSA data into a computer system and electronically transmitting the data to a Central Processing System or CPS. For 2000-2001, the FAFSA will have a return postcard. If a student wishes, he or she can enclose the postcard with the completed FAFSA, and the processor will date-stamp it and return it to the student. This lets the student know when his or her application was received by the CPS. Rather than using a paper FAFSA, students may apply electronically for federal financial assistance using one of the Department of Education’s electronic applications: FAFSA on the Web, FAFSA Express, or Electronic Data Exchange (EDE).
The FAFSA on the Web site contains a list of ED-certified web browsers for students to use. If the browser the student is using is a higher version than the Ed-certified version, he or she will be allowed access into FAFSA on the Web with a warning message. On a quarterly basis, the Department of Education will evaluate new web browser versions and certify them for use with FAFSA on the Web. FAFSA Express is a stand-alone software application tool that allows students to apply directly to the Department of Education for Title IV assistance. The software for FAFSA Express can be loaded and transmitted from any IBM-compatible computer that has a modem. The screens in FAFSA Express resemble a paper FAFSA and include on-line help and instructions. FAFSA Express was developed for use by high school counselors, in libraries, Educational Opportunity Centers, and college financial aid offices. In addition, if students have the required hardware (PC and modem), they may install copies of FAFSA Express on their own PCs and apply for financial aid from home. Most schools now participate in the Department of Education’s Electronic Data Exchange, known as EDE. With EDE, students can submit a paper FAFSA to the school, and the school can enter and transmit the application data electronically to the Central Processing System. Students should check with the schools they are planning to attend to see if they participate in EDE. Students must complete and submit a FAFSA (paper or electronic) so that their Expected Family Contribution (EFC) can be calculated. The EFC is used to determine the student's eligibility for federal student aid. The student may be required to complete other supplemental applications to be considered for state and institutional aid. The student should contact the aid office at the school he or she is interested in attending to find out which application(s) must be completed. For the 2000-2001 award year, the earliest date that the FAFSA may be completed and submitted for processing is January 1, 2000. When the CPS receives applicant data, it runs the student and the student's parents' demographic, income, and asset information through a federally mandated formula to calculate an official Expected Family Contribution (EFC). Next, some of the information that the student provided on the FAFSA is compared to information stored in various federal databases. The results of these matches are printed on a Student Aid Report (SAR), which is mailed directly to the student. The EFC is also printed on the SAR. At the same time the SAR is sent to the student, the CPS also forwards applicant information and analysis directly to each school listed on the FAFSA. Institutions use this information, usually in conjunction with other documents submitted by student applicants, to determine eligibility for federal aid, and often institutional and state aid as well. When the student receives the Student Aid Report from the CPS, he or she must review the information reported on the document for accuracy. Because the FAFSA is often completed by students and their families before tax forms have been filed, the family may have reported estimated information on the FAFSA. When the SAR is received, if the student has more accurate information about his or her family's income or there are corrections that need to be made, he or she must correct the information on the SAR, sign it, and have at least one parent sign it (if required), and return it to the address listed on the SAR. The school to which the student is applying may be able to make these SAR corrections electronically, so before sending the SAR to a FAFSA processor for corrections, the student may want to check with his or her school to see if they can perform the changes.
When corrections are received, the FAFSA processor will enter the changes, transmit the changes to the CPS who will recalculate the official EFC, and mail the student a corrected SAR. The student should once again review the information on the SAR for accuracy. In most cases, unless the school instructs the student otherwise, the SAR does not need to be submitted to the school the student will attend. This is because schools that participate in the Department of Education's Electronic Data Exchange (EDE) will receive the student's information electronically, so these schools do not need the student's SAR (in fact, schools that receive ISIRs from the CPS cannot require a student to submit his or her SAR). The student, however, should keep a copy of the SAR for his or her records. The student’s FAFSA information will also be transmitted by the CPS to the state agency so that the student may be considered for any state-sponsored financial aid programs. In some states there may be a separate application for state funds. Students should check with their schools or state agencies to find out if a separate application is required, and when the application deadline is. At this point, it is important to note the distinction between "need" and "need analysis." Need has already been defined as the difference between the cost of attendance and the Expected Family Contribution (EFC). In other words, a student’s "need" represents the amount of money the student lacks, and thus needs in addition to the Expected Family Contribution (EFC) to afford the costs associated with attending a particular college. Need is determined by the school. Need analysis, on the other hand, focuses on determining the amount the family can reasonably be expected to contribute towards the student’s educational expenses for a given year, and is the mechanism used to calculate an Expected Family Contribution (EFC). In general, the need analysis formula considers several financial factors when determining how much a family can reasonably be expected to contribute toward educational expenses. The two most influential factors are a family’s income and asset equity. [8] Determining the contribution from parental income involves, in part, totaling all taxed and untaxed income and benefits earned by the student’s parents for the year being reported, and then subtracting any exclusions, such as child support paid. Normally the year reported on the FAFSA is the last complete calendar year prior to the academic year for which aid is being requested, and is commonly referred to as the "base year." For the 2000-2001 award year, the FAFSA asks about information for the 1999 calendar year. Before a percentage of all such income is assessed as an EFC, allowances are made for: • Federal, state, local, and Social Security taxes paid; • An income protection allowance which is intended to provide for the basic living expenses of all household members; and • An employment allowance for households in which there are two working parents or a single parent who works. The result of these deductions from total income yields "available income." A portion of "available income" is expected to be used for college costs and thus becomes part of the parental contribution. [9] A similar computation is performed to assess parental assets:
• An education savings/asset protection allowance to accommodate the retirement, educational savings, and emergency needs of the family is deducted from the total. The amount of the allowance is determined by the age of the older parent and whether it is a one or two-parent household. • Not all of the family’s assets are expected to be used to help finance the applicant’s education, since the parents also have other legitimate uses for any discretionary assets they may have. A percentage (12%) of the remaining assets is designated as an income supplement to help measure the parents' relative economic strength, and will be considered available for current educational use. [10] The parents’ contribution from assets is added to the available income, and the result is the adjusted available income (AAI). The AAI is multiplied by an assessment rate that increases as the adjusted available income increases. The result is the amount the parents are expected to use to pay college expenses. If more than one household member (excluding parents) is studying for a degree, certificate, or other recognized credential at an eligible school on at least a half-time basis, the total parental contribution is divided equally among them to yield a parental contribution for each student. [11] In addition to a parental contribution, students are also expected to pay a portion of their educational expenses to the extent that they are able. The dependent student's contribution consists of: • An amount calculated by adding all of the student's taxed and untaxed income, and subtracting any exclusions, such as Federal Work Study earnings, in the previous calendar year. Federal, state, local, and Social Security taxes are deducted from income, as is an income protection allowance of $2,200. The balance is assessed at 50%. If the student received Title IV financial aid in that previous year, it is not counted in this calculation. • 35% of the student’s assets. [12] Finally, all of these components are added together. The Expected Family Contribution (EFC) for the dependent student equals a portion of the parents' available income and the parents’ contribution from assets, as adjusted for more than one family member attending college (excluding parents), plus the student's contribution from his or her available income and assets. The analysis for the independent student is similar, except that no parental contribution is expected. Independent students with dependents are treated very much like the formula for parents. Independent students with no dependents other than a spouse are expected to contribute 50% of their available income and 35% of their net assets. Independent students with dependents other than a spouse are expected to contribute a percentage of their available income, which increases as the adjusted available income increases, and are expected to contribute only 12% of their net assets. The financial aid administrator then reviews the family contribution figure to determine the reasonableness of the amount the family is expected to pay toward the cost of going to school. [13] So far, our discussion of need analysis has described the regular need analysis formula that is used in most cases; however, if the family (in this case, the parents of the dependent student) meets certain conditions, the formula may vary. Building this variation into need analysis as a standard approach ensures equitable treatment. The alternate formulas for determining an EFC are as follows: • Certain families may qualify for a "simplified needs test." When the simplified needs test is used, none of the family's assets are used in the calculation. Families who qualify for the simplified needs test are not required to complete the asset portion of the FAFSA.
The student's parents filed, or are eligible to file, a 1999 IRS Form 1040A, 1040EZ, or 1040TEL, and are not required to file a Form 1040 (unless it is filed only to take advantage of the Hope or Lifetime Learning tax credits), or the parents are not required to file any income tax return, and 2) The student filed, or is eligible to file, a 1999 IRS Form 1040A, 1040EZ, or 1040TEL, and is not required to file a Form 1040, (unless it is filed only to take advantage of the Hope or Lifetime Learning tax credits), or the student is not required to file any income tax return, and (3) The 1999 income of the student's parents is less than $50,000 (Note: The student’s income is not added to the parents’ income to determine if income is less than $50,000). • Certain students are assessed no Expected Family Contribution (EFC). That is, they are assessed a zero EFC without having their income and asset information run through a need analysis formula. [14] In 2000-2001, a dependent student automatically qualifies for a zero EFC if both of the following are true: (1) The student’s parents filed, or are eligible to file, a 1999 IRS Form 1040A, 1040EZ, or 1040TEL, and are not required to file a Form 1040 (unless it is filed only to take advantage of the Hope or Lifetime Learning tax credits), or the parents were not required to file any income tax return, and (2) The sum of both parents’, if applicable, 1999 adjusted gross incomes is less than or equal to the maximum amount that may be earned to claim the Earned Income Credit, or if the parents are not tax filers, the sum of their earned incomes is less than or equal to the maximum amount that may be earned to claim the Earned Income Credit. For the 1999 tax year, the maximum amount that may be earned to claim the Earned Income Credit is $12,000. [15] In 2000-2001, an independent student who has dependents other than a spouse automatically qualifies for a zero EFC if both of the following are true: (1) The student (and spouse) filed, are eligible to file, a 1999 IRS Form 1040A, 1040EZ, or 1040TEL, and are not required to file a Form 1040 (unless it is filed only to take advantage of the Hope or Lifetime Learning tax credits), or the student (and spouse) are not required to file any income tax return, and (2) The student’s (and spouse’s) 1999 adjusted gross income is less than or equal to the maximum amount that may be earned to claim the Earned Income Credit, or if the student (and spouse) are not tax filers, the sum of their earned incomes is less than or equal to the maximum amount that may be earned to claim the Earned Income Credit. For the 1999 tax year, the maximum amount that may be earned to claim the Earned Income Credit is $12,000. [16] Let us assume that the student demonstrates need for financial assistance and talk about the various types of need-based assistance for which he or she may be eligible. Basically there are two types of need-based financial aid: gift aid and self-help aid. [17] Gift aid, as the name implies, does not have to be repaid and does not require a service commitment on the part of the recipient. It consists of grants and scholarships from federal, state, institutional, and private sources. Federal Pell Grants, Federal Supplemental Educational Opportunity Grants, and other federal, state, institutional, and private scholarship and grant programs fall into this category. [18] Self-help aid, on the other hand, does require either repayment or a service commitment on the part of the recipient. Federal Perkins Loans, Federal Stafford Loans, Federal PLUS (Parent) Loans, Direct Loans, and Direct PLUS Loans, as well as state, institutional and private loan sources are examples of self-help aid. Money earned through the Federal Work-Study Program, state work-study programs, and institutional employment based on need are also categorized as self-help assistance.
The institution’s decision usually will be communicated to the applicant via an award notification which identifies the cost of attendance at the school, the Expected Family Contribution (EFC), the actual amount of need, the types and amounts of aid available to the applicant, how the aid will be disbursed, and any other conditions of the award. The institution may require the student to sign the award notification to indicate acceptance, and to return it to the institution by a specified date to prevent cancellation of the offer. Many colleges and universities that have an enrollment response deadline will provide the first-time student with an award notification either concurrent with or shortly after acceptance, so that the aid information can be evaluated before the student decides whether to enroll at that school. To help you better understand the composition of an aid package, let’s take a closer look at some of the federal programs. [20] The Federal Pell Grant Program is for undergraduate students who have not yet completed a first baccalaureate or professional degree. Students may receive Federal Pell Grants for the period of time necessary to complete a first undergraduate baccalaureate degree, provided the student is making satisfactory progress towards the completion of that degree. The beauty of the Federal Pell Grant is its portability. If a student applies, demonstrates financial need, and meets all of the eligibility criteria, he or she will receive a Federal Pell Grant at any eligible school attended. Receipt of a Federal Pell Grant does not depend upon the availability of funds at a particular school. Eligibility for a Federal Pell Grant is determined according to Federal Methodology which computes an Expected Family Contribution (EFC). The aid administrator at the school the student attends must calculate the actual amount of the student’s award based upon the student’s Expected Family Contribution (EFC), cost of attendance, and enrollment status. Less-than-half-time students may also be eligible for Federal Pell Grants. The amount of the Federal Pell Grant depends in part on the amount that Congress appropriates for the program. For the award year 1999-2000 (July 1, 1999, through June 30, 2000), the maximum Pell Grant was $3,125. Eligibility or ineligibility for a Federal Pell Grant may directly affect a student’s eligibility for other aid, but, it is not uncommon for a student to be ineligible for Pell Grant yet still be eligible for other types of federal aid. The total amount of aid a student receives, including a Federal Pell Grant, cannot exceed the student's cost of attendance. The Federal Pell Grant is generally considered the "foundation" of the aid package. As with all other federal aid programs, students must reapply for a Federal Pell Grant every school (or academic) year. [21] In addition to the Federal Pell Grant Program, there are three "campus-based" federal programs: Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work-Study (FWS), and Federal Perkins Loan. Funds for these programs are allocated to participating schools who in turn award funds to eligible students. [22] The Federal Supplemental Educational Opportunity Grant (FSEOG) Program provides grant funds for undergraduate students who have not completed their first baccalaureate or professional degree. FSEOG must be awarded first to students who show exceptional financial need as defined by law (i.e., students with the lowest Expected Family Contribution (EFC)s at that school), and priority must be given to Federal Pell Grant recipients. A student’s eligibility for FSEOG may vary from school to school. The minimum annual FSEOG award is $100, and the maximum annual award is $4,000. Students in approved study abroad programs can receive a maximum FSEOG award of $4,400.
Schools that receive FWS funds are required to use at least 7% of their allocations to compensate students employed in community service activities. Such activities might include: child care, reading or math tutoring, and community improvement activities. Federal Work-Study employees must be paid at least the federal minimum wage rate. [24] The Federal Perkins Loan Program is the oldest loan program sponsored by the Department of Education, tracing its origins back to 1958 and the National Defense Education Act. The Federal Perkins Loan Program is a source of low-interest loans for both undergraduates as well as graduate and professional students, with awards going first to students who show exceptional need. Although the law requires that priority for Perkins Loan funds be given to student who demonstrate exceptional need, it does not define exceptional need. You should be aware that the definition of exceptional need will likely vary from school to school; consequently, a student’s eligibility for Federal Perkins Loan will also vary from school to school. Before an undergraduate student can receive a Perkins Loan, the school must determine his or her eligibility or ineligibility for a Federal Pell Grant. Currently, an eligible student may borrow up to: • $4,000 annually as an undergraduate; • $6,000 annually as a graduate or professional student; $8,000 aggregate for a student who has not completed two years of a program of undergraduate study; • $20,000 for a student who has successfully completed at least two years of a program of undergraduate study; • $40,000 aggregate as a graduate or professional student, including any amount borrowed as an undergraduate. Higher annual and aggregate loan limits may also be allowed for study abroad. The current interest rate is 5%; however, interest does not begin to accrue until 9 months after the student ceases to be enrolled on at least a half-time basis. Repayment begins nine months after graduation or termination of enrollment on at least a half-time basis. Students may be allowed up to ten years to repay the amount they have borrowed from the Federal Perkins Loan Program. Under certain circumstances, Perkins' borrowers may be entitled to have their loan repayments deferred, after they enter their repayment period. Deferments are available for Perkins Loans borrowers who are: Enrolled at least half time as a regular student at an institution of higher education. Enrolled at least half time at a comparable institution outside the United States. Enrolled as a regular student in a course of study that is part of an ED-approved graduate fellowship program. Engaged in graduate or post-graduate fellowship-supported study outside the U.S. Engaged in service eligible for postponement of that loan.
Seeking but unable to find full-time employment (maximum of 3 years cumulative). Experiencing economic hardship (maximum of 3 years). Engaged in service eligible for cancellation of that loan. Participating in an eligible internship program (2 years). Serving in the Peace Corps/ACTION program volunteer (3 years). Serving as a full-time volunteer in service comparable to Peace Corps or ACTION (3 years). Serving as a member of the U.S. Army, Navy, Air Force, Marines, or Coast Guard (3 years). Serving as an officer in Commissioned Corps of U.S. Public Health Service (3 years). Temporarily totally disabled, or unable to work while caring for temporarily totally disabled spouse or, for Federal Perkins Loans only, other temporarily totally disabled dependent (3 years). Serving full-time active duty member of National Oceanic & Atmospheric Administration Corps (3 years) Beginning not later than 6 months after a period of at least half-time enrollment: pregnant, or caring for newborn, or immediately following adoption, and not employed or enrolled (6 months). Mother of preschooler, and has just entered/re-entered work force at low wage rate (1 year). Effective October 7, 1998, Federal Perkins Loan borrowers who meet criteria for any type of deferment are eligible for that deferment regardless of when the loan was made or what the borrower’s promissory note stated. Finally, some Perkins Loan borrowers are eligible to have all or part of their loans canceled, including those who enter specific fields of teaching, teach in designated schools, work in Head Start Programs, provide certain health care services, provide early intervention services, work in a child or family service agency, serve in the military in areas designated as hostile or in imminent danger, volunteer under the Peace Corps or the Domestic Volunteer Service Act of 1973, or serve as law enforcement or corrections officers. A percentage of an eligible borrower’s Federal Perkins Loan will be canceled for each completed year of service in one of these categories, including the interest that accrued during that year. [25] The Federal Family Education Loan (FFEL) Program consists of the: Federal Stafford Loan (subsidized and unsubsidized) and the Federal PLUS Loan. The source of funds for these programs is private capital from banks, savings and loan associations, credit unions, and other similar types of lending institutions. [26] The largest source of low-interest loans administered by the Department of Education is the Federal Stafford Loan Program. Eligibility for Federal Stafford Loans is extended to all undergraduate, graduate and professional students. In addition to filing a FAFSA, Federal Stafford Loan borrowers must complete a promissory note. Undergraduate Federal Stafford Loan applicants also must have a determination of eligibility or ineligibility for a Federal Pell Grant before the Federal Stafford Loan can be certified. The lender must send the borrower’s loan proceeds directly to the school. The school is responsible for delivering the funds to the student. If a loan is for a first-time, first-year undergraduate borrower, the school may not give the funds to the student until he or she has been enrolled for at least thirty days of the program of study.
The maximum annual amounts that may be borrowed are: • $2,625 for the first year of undergraduate study; • $3,500 for the second year of undergraduate study; • $5,500 per year for each remaining years of undergraduate study; • $8,500 per year for graduate and professional students. The undergraduate annual loan limits are reduced, or prorated, for students enrolled in undergraduate programs of study that are less than an academic year in length. They must also be reduced for students enrolled in programs of study that are greater than or equal to one academic year, but whose remaining period of enrollment is less than an academic year. Also available are unsubsidized Federal Stafford Loans. These loans are intended to provide assistance to students who may not have "need" according to the above formula, but would benefit from having access to a low-interest federal student loan program. Unlike the other federal student aid programs, unsubsidized Federal Stafford Loan borrowers are not required to demonstrate "need" in order to be eligible. In other words, the Expected Family Contribution (EFC) is not included in the need formula for an unsubsidized Stafford Loan. As a result, the unsubsidized loan can be used to replace EFC. Unlike the subsidized Stafford Loan, the government does not pay the interest that accrues for unsubsidized Stafford Loan borrowers, even while they are enrolled at least half-time in an eligible program of study. Instead, the interest must be paid by the borrower. This can be done in one of two ways. While they are enrolled or in deferment status, borrowers can pay the interest that accrues as it accrues. Alternatively, rather than pay the interest during certain periods for which payments of principal are not required. All capitalized interest must be repaid. Repayment begins when the borrower leaves school. The important thing to note here is that capitalized interest becomes principal in this process. Thus, students who use this second option end up paying interest on accrued (and then capitalized) interest. The amounts of any Federal Pell Grant for which the student is eligible must be included as estimated financial assistance when determining the allowable amount of the unsubsidized Stafford Loan. In addition, to ensure that students borrow the least costly, and thus most desirable loans first, their eligibility for a subsidized Stafford Loan must always be determined before they are allowed to borrow from the unsubsidized Stafford Loan program. If eligibility for the unsubsidized Stafford Loan remains, the student may borrow from that program as well. [27] In addition to the Federal Stafford Loan limits listed above, independent students (or dependent students whose parents are unable to borrow a Federal PLUS Loan) may borrow additional amounts under the unsubsidized Federal Stafford Loan Program, as follows: • $4,000 per year for the first and second years of undergraduate study; • $5,000 per year for the remaining years of undergraduate study; • $10,000 per year for graduate and professional students. [28] All students are limited in the total amount they can borrow from the Federal Stafford Loan Program during their undergraduate and graduate academic careers. These limits are referred to as aggregate loan maximums and will vary depending on the student’s dependency status and degree being sought. The aggregate amount a dependent undergraduate student may borrow from the subsidized and unsubsidized Stafford Loan Program combined is $23,000. Independent undergraduate students or dependent students whose parents are unable to borrow a Federal PLUS Loan, may borrow $23,000 from the subsidized Stafford Program and $46,000 from the unsubsidized Stafford Loan Program less any amounts borrowed from the subsidized Stafford Loan Program.
[29] The interest rate for Federal Stafford Loans is variable and is capped at 8.25%. The interest rate is determined each year, on June 1st. For the period July 1, 1999, through June 30, 2000, the rate is 6.32% during in-school, grace, and deferment periods, and 6.92% during repayment. Lenders are authorized to charge borrowers an up-front origination fee of up to 3% of the principal amount of the loan. In addition, borrowers also pay an insurance premium which by law cannot exceed 1% of the principal amount of the loan. These fees are deducted proportionally from each disbursement of the student’s loan. Repayment with interest begins six months after graduation or termination of enrollment on at least a half-time basis. Students may be allowed up to ten years to repay based upon the amount they have borrowed. As with the Federal Perkins Loan Program, there are provisions for deferment of repayment under specified conditions. [30] The Federal PLUS Loan Program is a source of long-term loans for the parents of dependent undergraduate students. There is no established annual maximum a parent may borrow on behalf of each dependent child; however, the loan amount cannot be greater than the difference between the student’s cost of attendance and his or her other estimated financial aid. Also, there are no aggregate limits in the PLUS Loan program as there are with the Federal Stafford Loan program. Federal PLUS Loan checks are made co-payable to the parent and the school, and must be disbursed directly to the school. The interest rate on Federal PLUS is variable and may not exceed 9%. The interest rate is set annually on June 1st. For the period beginning July 1, 1999, through June 30, 2000, the interest rate is 7.72%. Lenders are authorized to charge Federal PLUS Loan borrowers a loan origination fee of up to 3% to offset the federal government's cost of the program. In addition to the 3% origination fee, borrowers also pay an insurance premium which by law cannot exceed 1% of the principal amount of the loan. These fees are deducted proportionally from each disbursement of the PLUS Loan. The federal government does not currently require parents to complete a FAFSA prior to borrowing a Federal PLUS Loan; however, schools have the discretion to require Federal PLUS Loan applicants to submit a FAFSA before certifying a Federal PLUS Loan application. Interested applicants should check with the school to determine its policy. For FAFSA filers, the school must determine the student's eligibility for a Federal Pell Grant and must include any Federal Pell Grant eligibility in the student’s estimated financial assistance on the PLUS Loan application. In addition, the school may also determine the student's eligibility for subsidized and unsubsidized Federal Stafford Loan before certifying the Federal PLUS Loan application. However, a parent does have the option of borrowing the amount of the student's Federal Stafford eligibility in a Federal PLUS Loan, if he or she chooses. The repayment period for Federal PLUS Loan borrowers begins on the day the loan is fully disbursed. Unless the parent borrower qualifies for a deferment, the first payment of interest and principal is due 60 days after the loan is fully disbursed. There are deferment provisions related to the parent borrower's circumstances. Deferment of Federal PLUS Loans is for principal only; the borrower must pay all of the interest that accrues on the loan after it is disbursed. However, a lender may agree to capitalize interest (add it to loan principal) when the repayment of principal resumes. Conditions for deferment include when the parent borrower is unemployed or is experiencing economic hardship. Enrollment by the parent in a school may, under certain conditions, also qualify the parent for a deferment of repayment.
The terms and conditions of loans made under the Direct Loan Program are identical to those made under FFEL, except that borrowers under the Direct Loan Program are afforded somewhat different repayment options. In fact, from the student's perspective, the Direct Loan Program is the same as FFEL, except that the federal government provides the loan capital, and the school performs many of the tasks previously performed by the private lender. Like the Federal Stafford Loan Program, to receive a Direct Loan students must complete and submit a Free Application for Federal Student Aid (FAFSA); first time loan recipients are also required to attend a loan counseling session prior to receiving payment; the student is required to complete and sign a promissory note before he or she may receive the proceeds from a Direct Loan. Direct Loan funds are provided by the federal government to schools. Schools then disburse the Direct Loan proceeds to students either in the form of a check or by crediting the student's account, if the school uses student accounts, and issuing a check for any credit balance. [32] Under the Leveraging Educational Assistance Partnership Program (LEAPP), federal funds are allocated to states to encourage the establishment and expansion of state scholarship and grant assistance to college students. The federal allotment must be matched by funds appropriated by the state. Specific eligibility requirements for LEAPP funds are determined at the state level; however, federal regulations authorize state agencies to extend eligibility to undergraduates, and if desired, to graduate students and less than half-time students. All students must meet the Title IV federal student aid eligibility requirements and must demonstrate substantial financial need as determined by the state, with the Secretary of Education's approval. Students apply to the state agency either directly or through the school. The maximum annual award a student may receive each academic year is $5,000. The maximum award must be prorated for enrollment of less than a full academic year. State agencies have the option of setting lower maximum award amounts. [33-34] In addition to the student aid programs administered by the Department of Education, Congress has authorized student aid programs for the health and nursing professions. These programs are administered by the Department of Health and Human Services (HHS), under Titles VII and VIII of the Public Health Service Act, and most are similar to the federal campus-based programs described earlier in that funds are awarded directly to schools. Schools are then responsible for managing program funds and awarding them to eligible students according to requirements specified in the law, regulations, and policy directives from the Department of Health and Human Services. These programs include: Nursing Student Loan Program (NSL) available to nursing students attending approved nursing schools offering a diploma, associate degree, baccalaureate or equivalent degree, or graduate degree in nursing. Health Professions Student Loan Program (HPSL) which provides assistance to students enrolled in specified health profession fields. Primary Care Loan Program (PCL) which provides assistance to allopathic and osteopathic medical students (that is, students pursuing an M.D. or D.O.) who intend to engage in primary care residency and/or practice upon graduating from their professional school program. Scholarships for Disadvantaged Students Program (SDS) which provides scholarships to individuals from disadvantaged backgrounds who are enrolled as full-time students committed to pursuing a career in the health professions. Loans for Disadvantaged Students Program (LDS) which provides low interest loans to disadvantaged health professions students.
Financial Assistance for Disadvantaged Health Professions Students (FADHPS) which provide scholarships to students from disadvantaged backgrounds with exceptional need who are enrolled in schools of medicine and dentistry, and commit to practicing primary care medicine or dentistry after graduating. National Health Service Corps Scholarships (NHSC) which are designed to encourage health professions students to perform as primary care practitioners in the underserved areas. [35] In addition to federal student aid programs sponsored by the Office of Student Financial Assistance and the Department of Health and Human Services, additional sources of federal assistance exist. Many of these programs are of an entitlement nature and are administered by a particular agency, or a state on behalf of a federal agency. Also, many of the programs are subject to the annual congressional appropriations process. The Robert C. Byrd Honors Scholarship Program is a merit-based rather than need-based program, the purpose of which is to recognize outstanding academic achievement. Selected students, known as "Byrd Scholars," must also show promise of continued excellence. Beginning with the 1996-97 award year, both first year and continuing scholars receive a prorated scholarship amount of $1,500 per year, for up to a maximum of four years of assistance. Ten recipients are selected from each congressional district.
Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) The 1998 HEA amendments established the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), which replaces the former National Early Intervention Scholarship and Partnership Program (NEISP). Congress developed GEAR UP to achieve two goals: 1) to give more low-income students the skills, encouragement and preparation needed to pursue postsecondary education, and 2 )to strengthen academic programs and student services at participating schools. GEAR UP provides competitive state and partnership grants for early college preparation and awareness projects, which can include scholarships for certain low income students. Eligible competitors for these grants include states, or partnerships composed elementary schools, high schools, degree-granting institutions, and at least two community organizations. Because of its early awareness focus, GEAR UP projects must start with students in the 7th grade or below. [36] National and Community Service The National and Community Service Trust Act of 1993 established the Corporation for National Service, which offers educational opportunities through the AmeriCorps programs. AmeriCorps members meet community needs with services that range from housing renovation to child immunization to neighborhood policing. AmeriCorps members receive a modest living allowance and health coverage while participating in the program. After completing one year of full-time service (from 10 to 12 months), AmeriCorps members receive an education voucher worth $4,725. The voucher can be used to cover future costs of college or vocational school and to pay back student loans. AmeriCorps members are sponsored by national, state, and local nonprofit organizations. In addition to the hundreds of local AmeriCorps programs, AmeriCorps also includes two national programs: AmeriCorps - NCCC (National Civilian Community Corps) is a full-time service program for men and women age 18 through 24. AmeriCorps - NCCC members focus their service on improving, maintaining, and restoring the natural environment; and
The Department of Veterans' Affairs (formerly known as the Veterans' Administration) administers three basic programs for veterans and service persons seeking assistance for education or training. These are: (1) the G.I. Bill, for individuals entering the military on or after July 1, 1985; (2) Dependents Educational Assistance Program (DEAP) benefits for the children and spouse of a veteran who died or is permanently disabled from a service-related injury; and (3) Veterans’ Educational Assistance Program (VEAP) for veterans and service persons who entered active duty for the first time after Dec. 31, 1976, and before July 1, 1985, and who signed up to participate in the program while they were on active duty. Eligible students should contact their school or the local Office of Veterans' Affairs. The Reserve Officer Training Corps (ROTC) offers military educational scholarships to college student's in exchange for a commitment of military service at the conclusion of that education. ROTC scholarships pay for undergraduate tuition, fees, and books for two, three, or four years, as well as a monthly stipend during the last two years of the student's educational program. Scholarship recipients must commit to serve in the military for a period of 7 to 8 years. The Army, Navy, Air Force, and Marine Corps offer ROTC programs. The appropriate military service recruiting office has scholarship information and a directory of participating institutions. Bureau of Indian Affairs (BIA) Grant is a higher education grant program for enrolled members of a tribe (Indian, Eskimo, or Aleut) who are pursuing an undergraduate or graduate degree at an accredited school. In order to be eligible for a Bureau of Indian Affairs Grant, students must show financial need as determined by the institution they are attending. Additional information may be obtained from any Bureau of Indian Affairs office. Some reservations also have education officers who can provide students with more information and application forms. Vocational Rehabilitation. Since 1973 access to educational opportunities for disabled individuals has been guaranteed through federal laws governing vocational rehabilitation. Some states offer access to these programs by providing grants or tuition waivers to eligible students. While students with disabilities may participate in any of the federal financial aid programs, additional aid through vocational rehabilitation programs may be used to pay for unique expenses incurred due to their disability. Vocational rehabilitation programs provide comprehensive services under an individualized written rehabilitation plan. The plan can include evaluation, vocational training, special devices required for employment, job placement, and follow-up services. Eligible students may receive funds for tuition, fees, books and supplies, as well as maintenance and transportation allowances. Disabled students should visit their state department of vocational rehabilitation for further information. Before we conclude our discussion of federal need-based aid, we should note that not all schools participate in these programs. If an institution is not approved to participate, or has chosen not to participate, students attending that school may not receive funds under most of the programs just described. In some cases, an institution will participate in some, but not all, of the federal student aid programs. Schools with high default rates may be ineligible to participate in the Federal Pell Grant, FFEL, and Direct Loan programs. Aid administrators also may refuse to certify FFEL or Direct Loan applications, or may reduce the amounts borrowed, if they document in writing the reason for doing so and provide an explanation to the student or parent in writing. You should be sure to find out what aid programs are available at each school you are interested in attending.
Conclusion
Planning and Conducting a Financial Aid Night was developed by National Association of Student Financial Aid Administrators (NASFAA) staff and was originally distributed to the state and regional presidents of financial aid associations with NASFAA's high school guidance materials in September 1999. |
Conducting a Financial Aid Information Night is a great way to transmit
important financial aid information to students and parents. Properly planned
and executed, it can save counselors hours of time in disseminating information.
Because of special circumstances, individual sessions may still be necessary and
desirable for some families. However, by providing general information in
written form and through group presentations, more time will be available for
those families who require special attention.
Hold financial aid presentations at a time convenient to both students and
parents. Even more than selecting a major or a college, financial aid is a topic
that concerns most parents. To schedule such a presentation during a working day
deprives you of a majority of your potential participants.
Because of the potential length of the presentation, make every effort to
start at the scheduled time. If anyone is to miss a portion of the session, it
should be those that arrive late, not those who arrived on time but had to leave
before you were finished.
[3] Need is defined as the difference between the cost of attendance at a
particular institution and the family’s ability to pay for those costs. The
amount the family is expected to pay is commonly referred to as Expected Family
Contribution, or EFC. The difference between the cost and the EFC is called
"financial need."
FAFSA on the Web (
Beginning in 2000-2001, students can change all data elements on their SAR
(except Social Security numbers) using "Corrections on the Web (COTW)."
For dependent and independent students, there is no signature page required when
using Corrections on the Web. The student's Personal Identification Number (PIN)
will be used to access COTW and serves as the student's signature. A signature
page or PIN will be required from a parent only if parental data is corrected or
changed. The PIN Enrollment Registration System Web
Site is scheduled to become operational in Spring 2000 and will allow students
and parents to request a PIN.
• Assets, including cash, savings accounts, checking accounts, business and
farm equity (after an adjustment to protect income-producing capacity), and
investments and other real estate equity (excluding home equity) are totaled.
Several criteria must be met in order for the student to qualify for the
simplified formula for 2000-2001:
[19] Eligibility for need-based aid is determined by the institution’s
financial aid office. The financial aid administrator will "package"
aid for each eligible applicant; that is, they will combine the various types of
available aid to best meet the student's need.
[23] The Federal Work-Study (FWS) Program provides jobs for undergraduates as
well as for graduate and professional students who are in need of such earnings
to meet a portion of their educational expenses. Jobs may be located on-campus
or off-campus. The employer may be the institution itself; a state, local
public, or federal agency (except Department of Education); a private non-profit
organization; or a private for-profit organization.
Enrolled in an ED-approved rehabilitation training for disabled individuals.
In addition, all first-time Federal Stafford borrowers must attend a loan
counseling session before receiving the first disbursement of their loan
proceeds.
Graduate students may borrow a total aggregate maximum of $65,500 from the
subsidized Stafford Loan Program and $138,500 from the unsubsidized Stafford
Loan Program less any amount borrowed from the subsidized Stafford Loan
Program. These aggregates include any subsidized and unsubsidized Stafford Loan
amounts borrowed for undergraduate study.
[31] In 1994, the federal government began operation of a new loan program
called the William D. Ford Federal Direct Loan Program, which includes Direct
Loans (Subsidized and Unsubsidized) and Direct PLUS Loans.
Exceptional Financial Need Scholarships (EFN) which are awarded to students
who have exceptional financial need and who are enrolled in public or private
non-profit schools of dentistry, allopathic and osteopathic medicine, in
exchange for a commitment to practice in primary care after graduating.
AmeriCorps - VISTA (Volunteers in Service to America) is a full-time service
program for men and women age 18 and older. AmeriCorps - VISTA members organize
"capacity-building" activities for the nonprofits they serve, like
recruiting and training community volunteers and setting up neighborhood
education programs. Members live in the low-income communities they serve.
The process of requesting and receiving student financial aid is a complex
one. A proper beginning is essential to maximize the amount of assistance
available to you. We hope this presentation has been helpful to you. If you have
unanswered questions we encourage you to contact either your guidance counselor
or the financial aid office at the institution(s) you are interested in
attending.
