FAFSA Form & Financial Aid Form Blog

There are some changes that will occur for this upcoming 2009-2010 school year that will effect any student that receives some sort of Federal aid. These changes are due to the 2009 Economic Stimulus bill. Here is a breakdown of the changes and what it means for you and your financial aid:

Pell Grant increases:  The maximum annual amount for Pell Grants (free scholarships for lower-income students) increases from $4,731 to $5,350 in 2009. Congress is considering President Obama’s proposal to further boost the maximum to $5,500 next year.

Pell Grants needn’t be repaid and can be used for tuition, books and living expenses while enrolled at a participating institution. To apply, you’ll need to complete the Free Application for Federal Student Aid (FAFSA) form at www.fafsa.ed.gov. Note that the federal deadline for FAFSA submission for the 2009-2010 school year is June 30, 2009.

New tax credit: The Hope Scholarship, an educational tax credit that reduces a student’s or family’s tax liability, is being replaced in 2009 and 2010 by the more robust American Opportunity Tax Credit. Enhancements include:

* Maximum credit amount increases from $1,800 to $2,500.

* Tax credits can now be claimed for all four years of college, instead of only the first two.

* Those with an adjusted gross income (AGI) of less than $80,000 ($160,000 for joint tax filers) qualify for the full credit - a significant increase over previous years. The credit gradually phases out for AGI between $80,000 and $90,000 ($160,000 to $180,000 for joint filers).

* Unlike Hope Scholarships, this credit is partially refundable, which means lower-income families paying for college can receive a refund of up to 40 percent, even if they owe no federal income tax.

Federal Work Study Program expansion: About $200 million has been added to this program, which provides on-campus part-time jobs to students. Eligibility is determined by information provided in the FAFSA.

Financing computers: Tax-free withdrawals from 529 College Savings Plans are now allowed for computers, in addition to tuition, room and board, and books.

Federal Stafford loans: An additional $2000 in the unsubsidized loans will be available for dependent students. Also, the interest rate for subsidized loans will decrease from 6.0% to 5.6% after July 1, 2009.

So with all these additions to the Pell grant, Stafford loans, work study etc…it seems like a lot of people should be seeing more aid in their award letters for the 2009-2010 school year. If you receive more financial aid, what will that mean for you? How will it help you personally? Leave a comment, share with me, and happy Friday:)

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With some schools no longer able to afford the overhead costs of running a college institution…many schools have decided to beef up their online degree programs. It saves the school money to have more students take classes online than it does to have them on campus. Online degree programs are growing rapidly, and more and more potential students are taking advantage of the convenience of taking a class on their own time.  In the past online degrees were shunned in the collegiate world…they weren’t thought to be reputable, and even referred to as scams…but that is all changing (and never had much merit), and it has been for awhile now. While some students are not full time online, many of them have taken an online class to help ease their busy schedule. Other students, who work full time and have families view online degree programs as the key to their education; the convenience of online classes coupled with increased financial aid offered through the US Dept of Education has definitely made it easier for some people to go to school, who otherwise would not have considered it.

The Free Application for Federal Aid can be filled out for any school that participates in the Title IV aid program. If you are interested in a certain online school, it would be wise to make sure the school participates in the program. Most online degree programs are branches of bigger institutions, so you shouldn’t run into many issues with being able to receive federal aid….but there are definitely online schools that do not handle these loans. If you plan on depending primarily on loans to pay for your school, I would highly recommend attending an online school that participates in the federal financial aid program. Funding an entire college education with private loans will not exactly get you ahead financially; it will do quite the opposite, and I have always said I really don’t see the point of working so hard for four years to complete your degree, only to be so buried in debt when you are done that even the best job offer won’t be enough to make your loan payments every month.

Recently, Sean Dove, an admissions representative at Devry University created a list of the top ten mistakes to avoid when choosing an online degree program:

1. Don’t be lazy. Investigate and request information from several online colleges.
2. Don’t eliminate an online college or university just because it is not an institution whose name you recognize.
3. Don’t be afraid to ask questions. In fact, put together a list of questions before talking with admissions representatives.
4. Don’t rule out a college immediately because of cost. Financial aid, credit for life experience, scholarships, and tuition payment plans may make a college or university far more affordable than it appears to be.
5. Don’t “blow off” any admissions representatives who may call you. Take advantage of the opportunity they offer you to learn more about their online degree programs.
6. Don’t trust your memory. Take good notes when you read college brochures and speak with admissions representatives.
7. Do not be discouraged or intimidated by financial aid forms. Most online colleges have staff members who will be happy to help you.
8. Do not settle on the first seemingly appropriate online degree program you discover. For instance, a general business program might not serve you as well as a program with a focus in accounting, marketing, management, etc. Conversely, a more general, broadly based degree program in business may better meet your needs.
9. Don’t keep your interest in continuing your education a secret. If you talk to friends, family members, and colleagues they can share their experiences and offer you important encouragement and support.
10. Don’t be intimidated by returning to “school”. The fact is, if you have good basic academic and time management skills, if you are motivated, and if you have the support of your closest family members and friends, your chances of achieving your degree (and career) goals are high.

If you are currently taking online classes or completing an online degree, please feel free to share your experiences here and add to Sean’s list. If you want to learn more about what schools are out there, and what programs are offered online then visit this online directory. You can also visit the financial aid forum to read more about other student’s experiences with online degrees, financial aid, and many other college related issues.

In a national address on Tuesday, President Obama spoke about making some important changes to the financial aid application (FAFSA), with the goal of making it easier for people to apply for financial aid. He called for plans to simplify the FAFSA form by reducing the number of data elements asked for on the application. He also said it could be simplified by corroborating with the information the IRS already has in regards to income (NO, they do not already do this).

Currently the FAFSA has over 100 questions on the application, and for a student that is applying without the help of parents this can be a pretty daunting feat. It also can be confusing for parents to fill out because it does ask for extensive details about income and assets. Records show that in 2008 there were about 10 million FAFSA applications filed. A recent changed that is already in effect makes it possible for students who have no contact with their parents to file an appeal through their school so that they can still file a FAFSA without their parents’ information.  This also works if the parents just refuse to release their information. For those who are unaware of the dependent v. independent status when it comes to financial aid, it may come as a surprise to you. The government views you as dependent if you are under the age of 24, and you are not married, you do not have a child, and you are not in the military. Even if you do not live with your parents, you live alone and work to support yourself, like a lot of young adults do, the FAFSA still requires your parents’ income information.

This recent change may make it easier for students to get that form filled out in these circumstances with the help of their financial aid officers at their schools. The simplification of the form and the change stated above should result in an increased number of FAFSA applications filed. …right? More FAFSAs filed typically means more students are applying to college, which is Obama’s ultimate goal. So while it can’t hurt to make the current FAFSA less confusing, what do you think about the way it is now? Is it that terrible that it is prohibiting people from filling it out? I want to hear what you guys think…

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Let me first start off by saying that even if your credit is has been severely affected by credit card debt, or any other kind of debt….you can still file a FAFSA and receive a Stafford loan. Your FAFSA results are not affected by your credit history. Recently there was a post on forum that is specifically for students and parents who have questions about financial aid, that relates to this question:

credit card affecting my student loans

by patti on Fri Mar 06, 2009 10:31 am

i took out credit cards while i am a full time student. i borrowed way too much and now one of those cards is in default. my F.A. adviser said that i cannot get any more F.A. with this happening. if i enroll my cards in a credit counseling AKA debt management program will this in any way affect my ability to 1. get more student loans, since i have 2 more years of graduate school. 2. cause me to have to enroll my already low interest rate student loans into this debt management account. i need help now !! thank you

Re: credit card affecting my student loans

by Ms. Stafford on Fri Mar 06, 2009 11:23 am

Hi Patti, your credit and any credit card debt you may have in no way affects FEDERAL aid….which means you can still file the FAFSA and borrow federal loans. Your debt would affect your ability to get approved for private student loans. Can you afford school with just federal loans? How much is your tuition?

Re: credit card affecting my student loans

by patti on Sat Mar 07, 2009 11:20 am

ms stanford, i need the loans due to the high cost of private graduate school. the f.a. officer denied a budget increase for this term. she said that the school approved the increase but the federal people denied it based on my credit card debt being on collections. she told me that i would not be able to get Federal aid next year if this or any other debt is over due 60 days.can you refer me to a contact in the federal area to contact to resolve this?

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If you have ever filled out a FAFSA form then you know all about the parent section in the financial aid application. In my experience I have come across 3 types of Parents.  Type 1 is the proud parent. They are so happy that their child decided to go to college make something of him/herself. These parents want and are willing to help the child in any way they can. Type 1 parents usually have money:) Type 2  parents are fearful. They are happy their kid is going to school, but they are fearful at the same time because they don’t have the money saved up to help pay for school and they don’t want to acquire more debt than they already have. Type 3 parents are hands off. Their child is going to college, and they will not be helping financially, either because they cannot or they choose not to…I don’t come into contact with these folks too much, since it is usually the child calling or emailing for help.

It’s the type 3 parent that will be my focus. I find that these parents usually disagree with their child’s choice of major (art, music, theater) OR they just simply cannot afford to help their kid out. Obviously each type of parent I have experienced, does not represent all the parents out there, so PLEASE do not be offended by my generalizations. This is just what I have experienced from working in the financial aid industry.

So what can an eager-student-to-be do if they want to apply for financial aid, but their parents will not give them their financial information to actually fill out the form? In previous years, students were basically out of luck. Their school could try and help them get more funds elsewhere, but the  FAFSA was not an option  which means the student couldn’t even borrow a loan from the Federal government.

Provisions made to the 2009-2010 FAFSA changed all that. A school now has the authority to deem a child independent based on their special circumstances, which means you can still fill out the FAFSA without your parents information IF the school works with you to do that. I have yet to hear how in fact a school over rides this, so if anyone has dealt with this recently please share your experience. If you find yourself in this situation my advice is to go talk with someone directly at the school.

If you feel there is a chance you can convince your parents to give up their information…then keep in mind that all the aid you will receive (Stafford loans, Pell grants etc) are in your name only. Your parent has no responsibility for those, even though their financial information is needed for that FAFSA form. Reiterating this to your parents may help change their minds, because it is the fear of ownership/responsibility for those loans that deter most parents from giving up their financial information. Also, DO NOT PASS THIS UP….the 10k Scholarship drawing is March 31st and takes 30 seconds to sign up for it. Any college student or high school senior can enter. Enter the drawing here.

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An article in USA Today pointed out that up to 40% of college students may be eligible for some form of financial aid but never receive it. Why?

They don’t apply.

Doh!

The FAFSA is a free form - granted, it can be a time-killer, but it is free to file, so there’s really no reason not to file one.

Maybe we’ll do a FAFSA together on the Financial Aid Podcast.

What do you think?

Loans they should be applying for include Parent PLUS loans and private student loans.

Have you graduated? Take a look at options for student loan consolidation!