Quick Reference to Financial Aid

• What is EXPECTED FAMILY CONTRIBUTION or EFC? "The estimated amount a family can contribute to college costs. The formula, established by Congress, is as follows:    
• Cost of attendance to the College(s) you have chosen
• MINUS
• Expected Family Contribution (same for any college you apply to)
• EQUALS
• Need Based Aid Eligibility (different for each school)

The Estimated Family Contribution is determined by taking into account your family's income, some assets, and certain expenses that are required (i.e. taxes), necessary (i.e. basic living expenses), and related to earning income (i.e. employment-related expenses). This information is obtained through the FAFSA form."

• There are two different types of Aid:
• >Gift Aid
• >Self-Help Aid
• Gift Aid does not have to be paid back

TYPES OF GIFT AID	WHAT IS  IT?	WHERE DOES IT COME FROM?
Scholarships	Free money available from various resources with a variety of eligibility requirements (academics, community service, athletics, health issues, parent's career, college major, etc.). Does not get repaid.	colleges, businesses, organizations, clubs, parent's employers, banks, department scores, etc.
Federal Pell Grant	Free money based on financial need and information taken from the FAFSA form. Does not get repaid.	the federal government
Federal Supplemental Educational Opportunity Grant (FSEOG)	Free money based on exceptional financial need and information taken from the FAFSA form. Does not get repaid.	the federal government

 

• Self-Help Aid - this money needs to be repaid or the student works to earn the money

TYPES	WHAT  IS  IT?	WHERE DOES IT COME FROM?
Work Study	Provides part-time jobs for students with financial need, allowing them to earn money to apply toward their education expenses. Awarded through the FAFSA   form.	Federal Government determines eligibility through FAFSA. School assigns job.
Stafford Loan	Two types of Stafford Loans: 1) Subsidized Stafford Loan is need based and the federal gov't pays the interest while you are in college. Repayment of loan can be held off until six months after graduation. 2) Unsubsidized Stafford Loan is NOT need based. You will be charged interest from the time the loan is borrowed until it is paid back in full. Repayment begins upon graduation.	Federal Government, Banks, Loan Departments; need to file the FAFSA form.
Plus Loan	Not a need based loan and is for Parents to borrow to help pay for the students college education. Parents begin repaying this loan while the student is in school.	Federal Government, Banks, Loan Departments; need to file the FAFSA form.
Federal Perkins Loan	For Exceptional Financial Need. Payments may be deferred until nine months after graduation.	Federal Government; need to file the FAFSA form.

 

• Educational Related Credits

1. The Hope Scholarship Credit - "May be claimed by individuals for tuition expenses incurred by students pursuing college or graduate degrees or vocational training. These credits are reported on IRS Form 8863. The Hope Scholarship Credit provides a maximum allowable credit of $1,500 per student for each of the first two years of post-secondary education. The Hope Scholarship Credit allows taxpayers a 100% credit per eligilbe student for the forst $1000 of tuition expenses (but not room, board or books) and a 50% credit for the second $1000 of tuition paid."
2. The Lifetime Learning Credit - "May be claimed by individuals for tuition expenses incurred by students pursuing college or graduate degrees or vocational training. These credits are reported on IRS Form 8863. The Lifetime Learning Credit allows a credit of 20% of qualified tuition expenses paid by the taxpayer for any year the Hope Scholarship is not claimed. The Lifetime Learning Credit is equal to 20% of the amount of tuition ;paid by the taxpayer and is available for the first $10,000 of tuition."

• New Tax Stimulus Information Regarding Education (posted Feb. 2009)

  My family: education

  Q:	I will soon have a child in college and with expenses only going up, can you tell me about the 'American Opportunity' Education Tax Credit and if I qualify?
  A:	The American Opportunity Tax Credit provides eligible taxpayers in 2009 and 2010 with a credit up to $2,500 of the cost of tuition and related expenses paid during a taxable year. You will need to spend at least $4,000 to get the full credit, however. Taxpayers receive a tax credit based on 100% of the first $2,000 of qualified expenses paid during the tax year and 25% of the next $2,000 ($500). Forty percent of the credit is refundable, which is good news for lower-income students and families paying for college. There credit begins to phase out for taxpayers with adjusted gross income in excess of $80,000 for individuals and $160,000 for couples filing jointly.
  Q:	My kids have 529 plan savings to pay for college = is there good news for me?
  A:	Yes. Generally when you withdraw money from your 529 plan(s), it's to help pay for college expenses such as tuition, books, room & board, and equipment required for attendance at the school. Now, in 2009 and 2010, you can also use your 529 plan money for qualified higher-education computers and computer technology = such as software and Internet service for students living at home.

   

  Visit www.digits.hrblock.com

• PLAN for COLLEGE COSTS - Below is a list to help you think about College Costs

1. Tuition
2. Room/Board
3. Texdtbooks/Fees
4. Insurance
5. Computer
6. Gas
7. Food
8. Car Payment
9. Campus Parking Sticker/Pass
10. Toiletries and other necessities
11. Travel (home to see mom and dad, etc)
12. Clothes and other shopping
13. Sorority/Fraternity or other Club Fees
14. Community Service Involvement and / or Mission Trips
15. Furnishings

• Beware of Scholarship and Financial Aid Fraud
• The FTC cautions students to look for tell tale lines:
• >"This scholarship guaranteed or your money back."
• >"You can't get this information anywhere else."
• >"All we need is your credit card number or bank account to hold the scholarship for you."
• >"We'll do all the work."
• >"This scholarship will cost some money."
• >"You've been selected by a 'national foundation' to receive a scholarship or 'You're a Finalist' in a scholarship competition you've never entered."

Making College Financial Planning Count online (by Monster.com)

• Your students and their families already know that a college education is valuable. But, do they know how they’ll pay for it?