How Financial Aid WorksAnd How It Makes College

Affordable for You

In a Nutshell

The financial aid system is based on the goal of equal

access— that anyone should be able to attend

college, regardless of financial circumstances.

In a Nutshell

Here's how the system works: Students and their families are

expected to contribute to the cost of college to the extent that they're able.

If a family is unable to contribute the entire cost, financial aid is available to bridge the gap.

$50,000

$5,000

Cost of College

Expected Family Contribution

Financial Aid

How Financial Aid Works:

Don't Rule Out Colleges with Higher Costs

• Say your EFC is $5,000. At a college with a total cost of $8,000, you'd be eligible for up to $3,000 in financial aid. At a college with a total cost of $25,000, you'd be eligible for up to $20,000 in aid. In other words, your family would be asked to contribute the same amount at both colleges.

Who Decides How Much My Family Is Able to Contribute?

• Expected Family Contribution, or EFC. The amount is determined by whomever is awarding the aid—usually the federal government or individual colleges and universities.

• The federal government and financial aid offices

use formulas that analyze your family's financial circumstances (things like income, assets, and family size) and compare them proportionally with other families' financial circumstances.

http://economix.blogs.nytimes.com/2010/08/23/how-americans-pay-for-college/

This is your

financial aid

Step 1:Fill out and

Submit FAFSA & NYS TAPS (after Jan 1)

Step 2: Review your SAR (w/in 30 days of filing

FAFSA)

Step 3: Compare

“Packages” from

Colleges

(March-April)

Step 4: Choose

College, let them know (May), and begin loan

process

FOUR STEPS TO FINANCIAL AID

Step 1:

Summer before Senior Year: Request College Applications and get financial info together

FALL of Senior Year:Fill out and submit college applications BEFORE deadlines hit

JAN-FEB of Senior Year:File FAFSA (deadline is usually Feb 1). You’ll need your parents tax forms, so may sure they will them out!!!

READ your SAR (Student Aid Report)

What does it tell you?

• FAFSA Info. The information you provided on your FAFSA will be listed on your SAR. Review this section carefully to make sure all the information is correct. If you find any errors, you can make corrections

• Estimated Family Contribution (EFC). The amount the government believes your family is able to contribute to college expenses. This number is based on information that you supplied on your FAFSA such as family income, assets, number of children in college, etc.

• Verification. If there is an asterisk next to your EFC, this means that your SAR has been selected for verification. Verification is a process used to verify the accuracy of information provided on your FAFSA.

• Next Step. The schools you listed on FAFSA will receive your SAR information electronically. The financial aid office staff at your school(s) will use this information to determine if you are eligible for financial aid and put together an award package for you

Step 2:

FREE MONEY!• From Government & School• ASK and you shall receive!

Work on Campus• Part-time employment• Usually on campus

MUST be repaid• Lots of Different Types• Varying Interest Rates

Step

3:

Com

pare

“Pa

ckag

es”

from

Col

lege

s

(Mar

ch-A

pril)

GRANTS• FEDERAL PELL

GRANT (based on need, up to $5,550)

• STATE GRANTS (TAP)

• COLLEGE GRANTS

SCHOLARSHIPS• Look around, there are

scholarships for everyone!

• Remember to fill out the Local Hamburg Scholarship form

• And check out…

http://www.fastweb.com/

CHECK YOUR UNDERSTANDING:1. What is the purpose of the FAFSA?

2. Will your expected family contribution (EFC) amount be different if you choose a more or less expensive college?

3. What is a “Financial Aid Award?”

4. What THREE things make up Financial Aid?

To determine your expected family contribution

No – your family is expected to pay a certain amount, no more

A letter from a college you were accepted at, outlining the financial aid you qualify for if you choose to go to that school.

Grants/Scholarships, Work Study, Student Loans

Step 4: Choose College, let them know (May), and begin loan process

Types of Loans

Perkins

Stafford PLUS

Private

TYPES OF LOANS

FEDERAL PERKINS LOAN• Awarded by college to students with a lot of

need• Fixed 5% interest rate with no fees• Repayment begins 9 months after graduation• Subsidized – government pays the interest on

the loan when you are in school

FEDERAL STAFFORD LOAN• Subsidized and unsubsidized • Subsidized: need based• Unsubsidized: not need based

YEAR SUBSIDIZED UNSUBSIDIZED2010-2011 4.5% 6.8%2011-2012 3.4% 6.8%2012-2013 6.8% 6.8%

TYPES OF LOANS

FEDERAL PARENT PLUS LOAN• Unsubsidized loan for parents to take out• Fixed 7.9% interest rate with 4% fees

PRIVATE STUDENT LOANS• Made by Credit Unions and Banks• Interest rate is based on credit worthiness (3-

10%)• Most have fees associated with them

TYPES OF LOANS

Paying Back Your LOANS

• Payment will probably begin 6-9 months after you graduate

• The payments will be the same each month for the term (usually 10 years)

• If you're having trouble making payments on your loans, contact your loan servicer as soon as possible. Options include:– Changing repayment plans. – Deferment—(temporarily stop making payments)– Forbearance – (temp stop, or make smaller pmts)

DON’T DEFAULT!• Your credit rating will go down, making it hard to buy a

car or a house. • You will be ineligible for additional federal student aid

if you decide to return to school. • Loan payments can be deducted from your paycheck. • State and federal income tax refunds can be withheld

and applied toward the amount you owe. • You will have to pay late fees and collection costs on

top of what you already owe • You can be sued.