A GUIDEBOOK TO FINANCIAL AID

CathedralHigh School

CollegeAdvisingCenter
Special thanks to Kristine Butz from the Office of Financial Aid at

ButlerUniversity for her assistance with this publication.

What is Financial Aid?

In theory, financial aid is intended to bridge the gap between the cost of attending college and what it is determined your family is able to pay. Over half of the students currently enrolled in college receive some type of financial aid. Financial aid is based on two principles:

  • Students and their families are first and foremost responsible for the educational expenses.
  • If a family is unable to contribute the entire cost, financial aid is available to help with the difference.

Who decides how much my family is able to contribute?

The Expected Family Contribution (EFC) is a factor used to determine how much financial aid a family is eligible. The EFC is calculated using a standardized formula and information provided on the financial aid applications. The federal formula(established as a standard by Congress) analyzes your family’s financial information (using factors such as income, assets, age of the older parent, family size and number in college) to determine how much of a family’s financial resources should be available to help pay for college. This factor will be the same at each school in which the student is applying.

The EFC is then compared against the Cost of Attendance, or the total amount it will cost a student to go to a specific college for one academic year. This amount includes tuition, room and board, books, supplies, other university-related fees, transportation and miscellaneous expenses. The remaining amount is the amount of need for which a student qualifies to receive or the amount of financial aid a student may receive.

Cost of Attendance

-Expected Family Contribution (EFC)

= Need (Financial Aid Eligibility)

How does this affect colleges with higher costs?

Because of the EFC (Estimated Family Contribution), all schools you apply to will use the same information about your family’s ability to contribute when determining how much aid for which the student is eligible. Therefore, the cost of attendance at each school weighs heavily in how much financial aid you may qualify for. Thus, don’t rule out certain colleges based solely on annual tuition costs or overall cost of attendance.

In the examples below, although the cost of attendance varies by $17,000, the cost for which the family may be asked to contribute remainsthe same. The remaining financial need amounts may be covered through various types of financial aid.

Example 1:Example 2:

Cost of Attendance $15,000Cost of Attendance $25,000

EFC $10,000EFC $10,000

Financial Need $5,000Financial Need $15,000

How will my financial need be covered?

Financial aid is any type of assistance or resource used to pay college costs. There are three main sources of financial aid: gift aid, loans, and student employment (work-study).

  • Gift Aid: merit scholarships and need-based grants do not have to be repaid, and the student will not need to work to earn them. Gift aid comes from the federal and state governments, individual colleges and outside sources.
  • Loans: must be repaid after the student graduates or leaves school. Most educational loans are low-interest loans sponsored by the federal government. There are two types of loans: subsidized and unsubsidized. Subsidized is awarded based on need and means no interest accrues on the principal balance until the student begins repayment after he or she graduates. Unsubsidized loans are available to all students regardless of financial need; however interest will begin accruing immediately. There are several options available for repayment of these loans.
  • Student Employment: provides students with limited part-time employment requiring the student to work and earn money to help with the educational expenses. The most common student employment programis theFederal Work-Study Program.

Although this is not a comprehensive list, some of the most common types of aid for our students are included in Table 1.

Table 1

Student Aid Program / Type of Aid / Program Details / Annual Maximum Award Limits
Federal Pell Grant / Grant – does not have to be paid back / Available exclusively to undergraduates pursuing their first bachelors degree; these grants are for students who demonstrate exceptional financial need / $4,050 for current academic year; subsequent year amount will depend on program funding
Federal Work-Study / Earned through work – does not have to be repaid / For undergrad and graduate students; jobs can be on or off campus; students are paid at least minimum wage / No annual maximum
Federal Perkins Loan / Loan – must be repaid / Fixed five percentinterest for both undergrad and graduate students; repayment begins nine months after student graduates or leaves school / $4,000 for undergrad students
Federal Stafford Loan* / Loan – must be repaid[1] / Subsidized1: US Department of Education pays interest while the student is in school and during grace and deferment periods. Fixed interest rate of 6.8%.
Unsubsidized[2]: The student is responsible for interest throughout the entire life of the loan. Interest rate is the same as the subsidized loan above. / Freshman $3,500
Sophomore $3,500 Junior $5,500
Senior $5,500
Graduate $8,500
Federal PLUS Loan / Loan – must be repaid / Available to parents of dependent undergraduate students. Fixed interest rate of 8.5%. / Cost of attendance minus other financial aid the student receives.
Frank O’Bannon Grant Program (formerly the Indiana Higher Education Grant Program)[3] / Grant – does not have to be paid back / Awarded to Indiana residents attending an eligible college / Tuition award amounts based on demonstrated financial need and high school curriculum completed
Indiana Twenty-first Century Scholars Program / Grant – does not have to be paid back / Income-eligible 7thand 8thgraders who enroll in the program and fulfill a pledge of good citizenship to the state are eligible to apply. Students must graduate high school with a 2.0 cumulative GPA or higher and have abstained from drugs, alcohol, and illegal activities. / Students are guaranteed the cost of four years of college tuition at any participating public college or university in Indiana. If the student attends a private institution, the state will award an amount comparable to that of a public institution.

*There are two types of Federal Stafford loans: The Ford Federal Direct Program and the Federal Family Education Loan Program (FFELP). The only differences between the two programs are the source of the loan funds and certain repayment provisions. University financial aid offices will determine which loan disbursement program will be used.

How do I apply for these programs?

The Free Application for Federal Student Aid (FAFSA) is the financial aid application form that must be completed to determine financial aid eligibility and to be considered for federal, state and school aid programs. The FAFSA comes in two versions—paper and electronic. Only one process should be chosen by each family.

  • The paper version is available in the CathedralCollegeAdvisingCenter, the public library, and the financial aid offices of most universities. Each FAFSA contains a self-addressed envelope with mailing address and will be sent to the Department of Education’s Central Process System.
  • To access the FAFSA on the Web, go to Submitting the online FAFSA version is highly recommended as the data is checked before it is transmitted to the processing center, thus limiting the opportunities for error. It can also reduce processing time by 4-6 weeks.
  • If you or your child plans to complete and submit the FAFSA on the Web, we recommend obtaining a U.S. Department of Education PIN (Personal Identification Number). The PIN will serve as yours and thestudent’s electronic signatures and gives you or the student the fastest way to submit the application. Both the student and one parent need their own PIN. To get a PIN, you and your student should submit the PIN application at . Your PIN will be e-mailed to you in 1-3 business days. You can still use the FAFSA on the Web, however, without a PIN; you will simply have to print out and mail in a signature page.
  • A PIN may also be used to:
  • check on the status of your FAFSA
  • view and print a copy of the Student Aid Report (SAR)
  • make corrections to the FAFSA
  • make corrections to a processed application
  • A PIN never expires, but may be changed if the security of the PIN has been compromised. Another copy of the PIN may be requested if the PIN number is forgotten.

Are there additional forms to fill out?

The federal methodology no longer factors in home equity, medical expenses, or elementary and secondary tuition paid for students other than the aid applicant. However, some private schools still consider the value of those factors when disbursing campus dollars (any funds available directly from the school itself and not funded from the federal or state governments). Therefore, some schools may require families to register with the College Scholarship Service, or the financial aid division of the College Board, to complete the CSS Profile Form. Not all schools require this form, so please call the university’s financial aid office! CSS Profile registration forms are available through the College Board at and in the CathedralCollegeAdvisingCenter.

Some universities may also require an institutional aid application, which will provide them with any additional information not available on the FAFSA. Please contact the school to obtain a form, if necessary.

When should I fill out the FAFSA form?

January 1st of your child’s senior year is the first day that you are eligible to file the FAFSA. We recommend you file as early as possible with the most accurate information – completed tax returns for the requested year. Indiana’s state aid deadline to submit the FAFSA is on or before March 10th. The FAFSA must be receivedno later than March 10 to be eligible. Your child should also pay attention to each college’s priority financial aid deadlines, which may vary from the dates above.

What happens after you file the FAFSA?

Once you or your child submits the FAFSA on-line, it is transmitted directly to the Central Processing System, which processes about 9 million forms each year. Within 5 – 10 business days of filing the FAFSA, you may view the Student Aid Report (SAR) on line, which contains the data you or your child entered on the FAFSA. Review the information carefully for errors and follow directions for submitting corrections. Submit corrections promptly to avoid long delays in processing your application. Make sure to keep copies of your original application and any corrections submitted for your records.

The EFC is sent electronically to SSACI (State Student Assistance Commission of Indiana) as well as to the colleges the student listed on the FAFSA. State agencies and colleges will use the EFC to determine the aid programs available to the student for that academic year.

If the student’s aid application has been selected for a routine process called “verification” the college needing the information will request copies of signed tax returns or other information to verify the information provided on the FAFSA. It is possible not all schools will request this information. Be sure to furnish this information within the schools suggested timeframe.

Upon receipt of all documentationeach collegeyour student has been admitted to will develop an offer of financial aid or financial aid packagebased on the student’s eligibility at their school and the aid programs available. This package may include gift aid, student loans and student employment. Students are given a specific timeline in which to respond to each school’s offers, usually 10 to 15 business days. Colleges and universities will try to mail their offers to families as soon as possible, usually in March or April. When you have questions about your student’s financial aid package, the best contact is usually the Financial Aid Office at that particular college.

TIPS ON COMPLETING THE FAFSA

  1. Instructions for filing the FAFSA are contained in this packet. Documents you will need to complete the form(s) are:

­Student’s Social Security Number

­Student’s driver’s license number

­W-2 forms and other records of money earned in 2006

­Federal income tax return from 2006 (IRS 1040, 1040A, or 1040 EZ) for both parent(s) and student

­Current bank statements and records of stocks, bonds, and other investments

­Current mortgage information

­Records of other untaxed income received, such as Social Security, Temporary Assistance to Needy Families (TANF), welfare, or veteran’s benefits

­Your business or farm records, if applicable

­Alien registration number, if you are not a US citizen

­If you are a dependent student, you will also need:

  • Your parent(s)’ Social Security Number(s)
  • Your parent(s)’ income and financial records as indicated above (if parents are divorced, please see the financial definition of “parent” under the glossary of terms)
  1. Read all directions before attempting to fill out the form! It is suggested that you complete the Pre-Application Worksheet before completing the FAFSA on the web.
  1. While completing the FAFSA:

­Round figures to the nearest dollar (as one does with taxes)

­Do not use commas or decimal points

­For dates, type numbers that correspond to the month, day, and year. For example, for November 7, 1974, enter 11071974.

­When using single digits (1-9), first write “0,” i.e. 01, 02, 03…

­“school year” indicates the school year from July 1, 2006-June 30, 2007

  1. You do not need to file your federal income tax return with the IRS before you file the FAFSA. However, if you are filing a 2006 federal income tax return, we recommend you complete it before proceeding with the FAFSA.

­If you have completed your return but not yet filed, the correct answer on the FAFSA is "I have already completed my return."

­If you intend to file but have not yet completed your return and are completing the FAFSA from an estimated return, the correct answer on the FAFSA is "I will file, but I have not yet completed my return."

  1. Electronically sign and date the FAFSA using the PIN for BOTH parent and student!

See below.

  1. After completing the form, print a copy for your records before submitting.
  1. Print a copy of the confirmation page for your records.
  2. If your financial situation changes drastically after the time you file the form (i.e. death, divorce, unemployment), call the Financial Aid Office of the college your child plans to attend to explain the situation.
  1. International and non-citizen students should contact the Financial Aid Office of the college or university for specific information regarding financial aid. See page 2 of the FAFSA instructions for more information.

In addition to the above, when completing the paper FAFSA, be sure to

1. If completing the paper FAFSA

­You should use a pen with black or dark ink to complete the paper FAFSA.

­While completing the FAFSA, remember to:

  • Print carefully in CAPITAL letters and skip a box in between words
  • Do not write “N/A” or margin notes
  • Do not include notes, tax forms, or letters.

­When mailing a paper FAFSA, obtain a Certificate of Mailing from the post office to verify the date your application was sent to the processor. (Do not send the FAFSA by registered mail.) Keep your confirmation number or certificate of mailing with a copy of your application and PIN for future reference.

­You will receive your blue copy of the SAR (Student Aid Report) from the Central Processing System (CPS) approximately one month after filing.


TIPS ON COMPLETING THE FAFSA: Item Explanations

Below are item-referenced explanations of key terms and factors used in computing your total family contribution. In the FAFSA directions, the word “you” refers to the student; the word “school” refers to any school beyond high school. Dependent students (99% of you) completing the paper FAFSA will be filling in the shaded areas of the form; parents will be filling in the purple shaded areas. Except where noted in the directions, do not leave any items blank.

Explanation

NamePlease be sure to print your name exactly as it appears on your Social Security card. This is very important.

Social Security NumberA student must have a SSN in order to receive aid. The name you list on the FAFSA must be the same name as on your SSN card.

Drivers’ License NumberThis provides a secondary identification source for the federal government

State of Legal ResidenceThe state of residence of a dependent student is the state of residence of the parent(s). Listing Indiana is vital for you to be eligible for Indiana state financial aid programs.

Selective Service RegistrationIf you mark “yes” here, male students will be registered for the draft automatically when they turn 18; male students must be registered with selective service in order to receive federal aid.

DegreeThis item is informational only, not rigid or immovable - indicating your plans to attend college for four years and obtain a Bachelor’s degree or attend a community college.

Grade levelAll high school seniors should select “1st year/never attended college.”

Types of Financial AidThis is simply a preferential question and is not binding. To see how much maximum aid you might receive, check the appropriate boxes. We encourage you to answer “yes” to both items.

Drug Offense ConvictionDo not leave this item blank. The government may limit the amount of financial aid awarded to anyone who has been convicted of an illegal drug offense.