Financial Aid & FAFSA CLASS OF 2020

Financial Aid & FAFSA

CLASS OF 2020

+ Financial Aid Overview

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What is Financial Aid?

● Financial aid refers to borrowed, given, or earned money that can be obtained from various sources to help pay for college.

● Financial aid helps make up the

difference between what you can afford to

pay and the actual cost of college.

Sources of Financial Aid

federal government

state government

college (institutional

aid)

outside/

private sources

▪ To receive aid from these sources,

especially federal, state and

institutional, you will

need to complete the

FAFSA

What is the FAFSA?

● Free Application for Federal Student Aid

● Used to determine eligibility for federal, state, and institutional (school) financial aid

● Fill out the FAFSA every year you wish to receive aid

● Apply early! Start date is October 1st for the

2020-2021 FAFSA

Who is eligible for Federal Financial Aid?

● U.S. citizen, permanent resident, or eligible non-citizen

● Valid Social Security Number (SSN)

● High school diploma, GED, or equivalent

● Male students only must register with Selective Service

● Maintain satisfactory academic progress

What about undocumented students?

If a student does not have a valid Social Security Number (SSN):

● Do NOT complete the FAFSA

● Must reply on private scholarships and institutional aid

● Ask colleges if they have their own financial aid forms you should complete

● Undocumented students are eligible for Illinois in-state resident tuition

If a parent does not have a valid SSN:

● Enter all 0s for the parent(s) SSN

● Only tax documents that use ITINs will be acceptable

● Parent will have to sign FAFSA by printing, signing and

mailing the signature page

Types of Financial Aid - Grants

● Need-based; Grants = Free Money

● Federal Pell Grant - $6,195

● Federal Supplemental Educational Opportunity Grant (FSEOG) - $100 - $4,000

○ Campus-based; not offered at every school

● Illinois MAP Grant - $4,869

○ Can be used at most Illinois schools only; not for out-of-state schools

○ MAP has an early suspension date; funds tend to run out, so complete the FAFSA before Nov. 1st to have a better chance at qualifying

○ Funding for MAP grant is dependent on the Illinois budget

Types of Financial Aid - Loans

Low-interest Federal Loans in the Student’s Name:

● Stafford/Direct Loan - Subsidized

○ Government pays the interest while you’re in school

○ Repayment begins after leaving school and a 6-month grace period

● Stafford/Direct Loan - Unsubsidized

○ Interest accrues while you’re in school

○ Repayment begins after leaving school and a 6-month grace period

Federal Loan in the Parent’s Name:

● Parent PLUS Loan

○ Repayment begins immediately

No more than

$3,500 in your 1 ^st year

No more than

$2,000 in your

1 ^st year

Types of Financial Aid - Other

● Federal Work Study

○ Money from a job, usually on campus

○ You will NOT have to report work study income on next year’s FAFSA

● Institutional Aid

○ Money from a specific college

○ Merit-based grants or scholarships

○ Need-based grants or scholarships

Financial Aid Award Packages

● Colleges receive the Student Aid Report (SAR) and your Expected Family Contribution (EFC) from the FAFSA

○ SAR = Summary of the information you provided

○ EFC = The amount the government thinks you can pay toward college expenses in a given year (not necessarily the amount you WILL pay)

● Each college puts together a financial aid award package/offer based on your financial need

● To fill your financial need colleges will offer some

combination of grants, loans, work study, and their own

institutional aid

Financial Aid Award Packages

Cost of Attendance (COA)

- Expected Family Contribution (EFC)

= Financial Need

College A College B COA (varies by school): $40,000 $20,000 - EFC (constant based on the FAFSA): $3,000 $3,000

= Financial Need ^(varies): $37,000 $17,000

+ Completing the FAFSA

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FAFSA Basics

● The FAFSA is in the student’s name, not the parent’s

● Complete the 2020-2021 FAFSA (the award year; your first year of college) starting October 1st

● Complete the financial information based on 2018 tax information (prior-prior year taxes)

● Do not need to update your FAFSA after filing 2019 taxes

FAFSA on the Web - www.fafsa.gov

Basic information that is mandatory for each applicant.

Section 1 Student demographics Section 2 School selection

Section 3 Dependency status Section 4 Parent information Section 5 Financial information Section 6 Sign and submit

Section 7 Confirmation

Note:

The student is the applicant,

not the parent.

Required Documents for FAFSA

● Social Security Number. Be sure that it is correct!

● Birthdates

● Dates of marriage/divorce/separation

● Records of income, such as income earned from work and

business, child support paid or received, and any other untaxed income. If available, refer to the W-2 Forms and the Federal Income Tax Return IRS 1040, 1040A, or 1040EZ.

● Information about assets, such as savings/checking account balances, stock options, bonds, 529 plans and other college savings programs, investment real estate, and business assets.

● Driver’s license number, if the student has one.

● Alien Registration Number, if not a U.S. citizen .

NOTE: Dependent students need the above information for

themselves AND their parent(s).

Dependent vs. Independent Status

● Dependent students need to report parent(s) information on the FASFA.

● Independent students do NOT need to report parent(s) information.

Students, you are considered independent only if you fit in at least one of these categories:

● 24 years of age or older

● Legally married

● Graduate or professional student

● Veteran or currently serving on active duty

● Have legal dependents (i.e. children) for whom you provide more than 50% of the financial support

● Orphan, ward of court, or in foster care

● Emancipated minor or in legal guardianship, as determined by a court

● Unaccompanied youth who is homeless or at risk of being homeless

Who is considered a “parent”?

Dependent students must report information for parent(s).

● Biological parent(s) that are married or unmarried with whom you live.

● Step-parents married to your biological parent.

● Adoptive parents.

If parents are divorced or separated:

● Report information for the parent you lived with the majority of the time over the last 12 months.

● If you live with both parents equally, choose the one who provides the majority of financial support.

Note:

● Grandparents and Legal Guardians are NEVER considered parents.

● FAFSA dependency status may not be the same as dependents claimed

on taxes, i.e. if you do not live with one of your parents, it does not

matter if that parent claims you on his/her taxes

FSA ID (Federal Student Aid ID)

A username and password that is used to verify your identity and give your access to your FAFSA.

FSA ID: What you need to create it:

● Serves as an electronic signature

● Parents and students will need a separate FSA ID

● FSA ID is considered temporary until it is verified by the Social Security Administration

● Parents without a Social Security Number will still sign the FAFSA by printing and mailing a signature page instead of using the FSA ID/electronic signature

● Students/parents will need a valid email account

● SSN and date of birth will be required

● You will create 5 challenge questions

○ 2 generated by the FSA ID system

○ 2 you create

○ 1 significant date that the user will remember (not your DOB)

HIGHLY RECOMMENDED:

1. Create the FSA ID during your FAFSA completion session 2. Use a personal email account (not CPS)

3. Write down the email address you used, username and password and/or email it to yourself

4. Parents, share your FSA ID with student

FSA ID Recommendations

● Use a personal email account (not CPS)

● Write down the email address you used, username and password

and/or email it to yourself

● Parents, share your FSA ID with student

● Create it ahead of time; will take

2-3 business days to be verified

by SSA

IRS Data Retrieval Tool

What is it? A tool developed by Federal Student Aid and the Internal Revenue Service (IRS) that quickly and easily imports tax data for students and parents into the online FAFSA application.

The IRS Data Retrieval Tool is built into the Financial Information section of the FASFA.

When will it be available?

Estimated to be available starting October 1, 2019.

Who should use it? ● Filed a 2018 federal tax return

● Has a valid Social Security Number (SSN)

● Has an FSA ID or can create one

● Has not experienced a change in marital status since December 31, 2018

Who can not use it? ● Did not file a 2018 federal tax return

● Filed an amended or foreign tax return for 2018

● Married and filed as “married filing separately” or “head of household” for 2018

● Does not have a valid Social Security Number (SSN)

Why use it? Using the IRS Data Retrieval Tool greatly speeds up the FAFSA

verification process (see below) and helps students receive their

financial aid award offers more quickly.

Head of Household Errors

● Head of Household requirements:

○ Pay for more than half of the household expenses

○ Be considered unmarried for the tax year, and

○ You must have a qualifying child or dependent

○ There can only be one Head of Household per residence

● Some tax preparers say filing Head of Household will save money; however, not that students may lose over $11,000 in financial aid

○ 2019-20 Pell Grant: $6,195

○ 2019-20 MAP Grant: $4,869

○ College grants and scholarships

● Make tax amendments; families with an income under $55,000 can qualify for free tax assistance

○ Ladder Up Tax Assistance Program

○ goladderup.org

How to Avoid Common Mistakes

● Do not confuse Student section and Parent section, i.e. reporting parent income under student section

● Make sure birthdates and Social Security Numbers are correct; can only correct by mail if you enter these wrong

● If parent uses an ITIN, enter all zeros for SSN

● Males must register for Selective Service

○ Click that you have NOT registered, then choose REGISTER ME

● For real estate assets, do not enter value of home you live in

○ For additional property, subtract the debt owed on property

● Complete FAFSA Verification requests immediately; usually listed under student’s college portal after acceptance or in January/February

○ Order parents’ 2018 Tax Return Transcript at www.irs.gov/transcript

○ Or use the IRS Data Retrieval Tool when completing the FAFSA

After the FAFSA

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Follow-Up to FAFSA

1. Review your confirmation page and your Student Aid Report.

● It may contain an alert to a mistake, such as not registering for the Selective Service.

2. Check on the status. Make sure it goes from “Processing” to

“Processed Successfully.”

3. Add more colleges after your FAFSA has processed, if needed.

● You can add up to 10 colleges at a time to your FAFSA. After it’s been successfully processed, you can log back in to remove some colleges and add additional ones.

4. Look out for verification requests from colleges.

● Check your students portals/accounts and email regularly.

5. Bring in financial aid award letters to review.

Questions?

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