More often than not I am asked questions about how much control a school’s financial aid office has over Federal aid awarded to the student. Many students argue that it is their aid and the school should not have a right to withhold it from them at any point in time. Unfortunately it is not as cut and dry as it sounds. Recently I received an email about a student who insisted on handling her own financial aid; this email was sent from an employee at a college who was concerned about how to deal with this student and her requests. Her argument was as follows:
She says the financial aid should not be going to the school, that it should be going directly to her since it is HER aid and not the school’s. She says she worked in the business office of a school for a short time, and she has also spoken to a financial aid person in California who told her that she should have control of her financial aid and that it should not go to the school first with her getting whatever is left over. She wants the aid to all go to her and she would then pay the school what she owes for tuition and fees.
While the student is correct that the aid is hers and not the school’s, she is probably not aware that while it may be Federal aid, it is still very heavily mandated by each school that participates in the Federal loan program. A school cannot just participate in the program, have no controls over the aid being disbursed, and expect that they will maintain their eligibly to participate in the program. If a certain amount of students from a college default on their loan, the college can (and will) lose their eligibility to certify Stafford loans for all students. My point is this: while yes, it is your aid, you are not entitled to it unless you follow the school’s rules. You must maintain a certain GPA, and you must be at least a part time students. School’s have all these measures in place to make sure that the people who get the aid, not only deserve it, but do not abuse it because there are consequences. A Stafford loan cannot become a loan until the school certifies it as such; plain and simple. A pell grant is money you don’t have to pay back, so if you get a grant for Fall semester and you flunk out or you get below a 2.0 GPA you will have to pay that grant back and pay the school back the money for the tuition the grant covered. The biggest mistake a student can make is believing that once you get the aid, it’s yours to keep. You have to be deserving of the aid, and if you are not…then there is without a doubt someone standing behind you who is.
One of the new questions on the FAFSA this year (question 103) asks if you are a dislocated worker. But what is a dislocated worker? Let me clarify for you. You are a dislocated worker if you meet one of the following conditions;
- Lost your job or been laid off
- Are receiving unemployement benefits and are unlikely to return to a previous occupation (like a telephone switchboard operator)
- Are self emplyed but unemployed due to economic conditions or natural disaster
- Are a displaced homemaker - someone who previoulsy provided unpaid services to the family, like a stay at home parent, is no longer supported by a partner, and is having trouble finding a job.
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:)
**For Scholarship Points members enter the code STIMULUS2009 to collect your points!
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:
Don’t be lazy. Investigate and request information from several online colleges.
Don’t eliminate an online college or university just because it is not an institution whose name you recognize.
Don’t be afraid to ask questions. In fact, put together a list of questions before talking with admissions representatives.
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.
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.
Don’t trust your memory. Take good notes when you read college brochures and speak with admissions representatives.
Do not be discouraged or intimidated by financial aid forms. Most online colleges have staff members who will be happy to help you.
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.
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.
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 the financial aid forum there are many posts from students who are at a loss. They had a rough semester….a family member passed away, or they got sick and couldn’t keep up with their school work. While I do feel bad for people when things like this happen, your school has no choice but to hold you to the standards of the rest of the student body. If something extraordinary happens in your life and you can’t keep up with your school work, the worst thing you can do is ignore it. A lot of people think that their school “will understand”. It is not that the school officials don’t empathize with you, but they do have policies they have to adhere to. So if you receive a Pell Grant and/or a Stafford loan and you cannot complete a semester, and you don’t officially withdraw from your classes then you may be faced with the following issues:
You will be required to pay back your Pell grant, since you did not maintain satisfactory academic progress. This will show up as an open balance to the school and you will not be able to register or take more classes until you pay that grant back
If your GPA drops below a 2.0 then you will not be able to borrow the Stafford loan for the next semester because you will have to get your grades up first, before you will be eligible again.
Your school can expel you if you don’t maintain a certain GPA
So the bottom line is, that while things don’t always go as you planned, you can’t just ignore your school work and deal with it later. The consequences of doing that can be severe, and can make it so that you cannot re-enroll in college because you have a large balance at the school that you are not able to pay for out of your pocket.
The first thing you need to know about filing your FAFSA online is that you’re not going anywhere without your 4-digit FAFSA pin number, which serves as your signature. And if you are a dependnet student both you and your parents must obtain separate pin numbers. If you need a pin number you can visit http://www.pin.ed.gov/ to request one.
PIN-related online options:
Apply for a PIN for the first time or request a duplicate pin
Check the status of a PIN application
Request that your PIN be changed if it has been compromised
FAFSA PIN numbers are optional. You may submit your FAFSA today without a PIN. You can also sign a printable FAFSA Form and make corrections on your paper Student Aid Report (SAR) without having a FAFSA PIN number(s). That said, having a PIN makes your FAFSA application go much faster. You can expect to receive your Student Aid Report (SAR) in about 3-5 business days.
Are you working full time and going to school? It is more common now for students to work while they are obtaining their degree. And even more common is the use of financial aid and student loans to pay for their tuition. There can be a gray area about how much you are eligible to receive if you are not attending school on a full time basis. So first lets clear up what is considered full time and what is considered part time.
Your school determines your official status. Most schools classify 12 credits as full time, while other schools consider 9 credits full time. For part time students it is usually 6-9 credits, and anything under 6 credits is usually considered below part time (which means you would not be eligible for aid or federal loans). Remember that school’s determine your actual status, and not every school uses these guidelines to determine a student’s status.
So that being said, if you are eligible for grants from the Federal government, then your grant amount is directly correllated with your status, so you will get less if you are a part time student. Loans can be different, and this is where we enter the grey area. The subsidized Stafford loan and the Perkins loan are loans that are based on financial need, meaning you have to show you need those loans in order to get them. These loan amounts can be decreased if you switch from a full time student to a part time student. Unsubsidized Stafford loans are not based on financial need, which means that regardless of your status (but must be at least part time) you can typically get up to the amount in which you are eligible for based on your classification as a student (independent v. dependent). I use the word “typically” because there is no clear cut “rule” for this, and it up to the school and their policy, but most school’s do work this way. If you have an experience with the financial aid office regarding your part time status and your financial aid please post a comment.
Progressive taxation is taxing the wealthy at higher rates than the poor, which is basically what the FAFSA does. The more money you make the more you are expected to pay toward either your own or your child’s education.
Generally speaking I do agree with how the FAFSA process works, but I can certainly see the other side of the coin. We live in a capitalist society that rewards forward thinking and ambition. Small-business owners help our nations GDP, and supply jobs for millions of Americans. And what do you get for your hard work and 16 hour days? You get a tuition bill larger than Oprah when she’s off the diet wagon.
It does seem a bit unfair to me that if you work hard your entire life to put yourself and family in a good financial position that you could wind up paying $160,000 in tuition for one student to attend a private school, and that’s just for his or her undergrad expenses. The government basically says thanks for working your butt off to get where you are. Now we’re going to use your tax dollars to help pay for some other child’s education while we continue to charge you sticker price for your own. Is that fair?
I’ve heard from countless students who’ve cried foul over the fact they can not get aid for school, but the best part was when they revealed to me that they did not even bother to complete their FAFSA. They had already come to the conclusion they would not be eligible because a couple of their buddies weren’t. I was just left scratching my head.
In 2007 alone, 16,000 eligible Massachusetts students failed to complete the FAFSA effectively leaving $59 million in federal aid on the table. I can’t urge you enough to complete the FAFSA. You can’t get a dime if you don’t complete that form. If nothing else you can at least take out a federal loan.
I love the Bay State and I love the Red Sox (first pitch of the ‘09 season is in 10 minutes), but I don’t love hearing that millions of dollars are going to waste that could help ease the cost of higher education for so many.
I am writing to remind you of the authority you, as a financial aid administrator, have under the law (section 479A of the Higher Education Act) to make adjustments, on the basis of adequate documentation, and on a case-by-case basis, to address circumstances not reflected in a student’s original Free Application for Federal Student Aid (FAFSA). This authority is particularly important for families who may be struggling during these difficult economic times. When families experience a layoff, face a costly medical situation, or lose a house to foreclosure, they are likely to feel vulnerable and unsupported. Simply stated, most do not know about their right to request that you adjust one or more of the components that determine their eligibility for financial aid. It is for this reason that I encourage you to do more than provide good service to the students who request that you make an adjustment. I would ask you to reach out to your students (and prospective students), particularly those who seem to have hit a rough patch, to make sure that they know there may be ways that you can help.
Your thoughtful use of professional judgment, especially to address a student’s financial and family circumstances that may have changed from the base year information originally reported on the student’s FAFSA, may be critical in determining whether the student can enter or continue in postsecondary education. A changed circumstance certainly includes the loss of a job or a reduction in work hours or wages, but it also includes, for example, the income loss associated with a prospective student’s decision to leave the workforce or to reduce work hours in order to return to school.
When you make adjustments related to the student’s or the student’s family’s income, it is appropriate to use information that realistically reflects the individual’s and/or family’s current and near-term economic situation. For example, for an individual who has lost a job or has taken a significant salary cut beginning in November of 2008, you may choose to project income for the next 12-month period (December 2008 through November 2009) and use that figure instead of the base year income (calendar 2008) that was initially used in the calculation of the student’s expected family contribution (EFC). Of course, you should seek to obtain, and maintain verifiable third-party documentation of the changed circumstances in order to support your decision to use professional judgment. By way of example, if an individual has lost a job, and you choose to project income for the next 12-month period, you should seek to obtain adequate documentation of the individual’s loss of employment.
While we encourage you to exercise professional judgment where appropriate, you should be mindful of the statutory limitations. Professional judgment must only be used to address special circumstances, which are conditions that differentiate an individual student from a class of students. While students may face common or similar issues in these economic times, you may not establish automatic categories of special circumstances and provide identical treatment to all students in that circumstance. You could, however, identify a category to reach out to (for example, all students that had a parent that had recently lost a job) but then would need to assess and document how each individual student’s situation was affected. (It would not be permissible to assume that every student in that category was affected in the same way.) You should refer to the complete information on pages 99-100 of the Application and Verification Guide of the Department’s 2008-09 Federal Student Aid Handbook for further guidance on the use of professional judgment.
While not every student will become eligible for a Federal Pell Grant as a result of an adjustment based on your exercising professional judgment, many may become eligible for a subsidized Federal Stafford Loan or for assistance from one of the three campus-based programs. And, of course, most students are eligible for Federal Unsubsidized Stafford Loans from either the Federal Direct Loan Program or from the Federal Family Education Loan Program. These federal student loans have much better interest rates, repayment options, and other terms than those that are available with private educational loans, credit cards, or most any other method of credit-based financing.
Most non-federal loans have high, variable interest rates, loan fees well above those for the federal student loan programs, limited repayment options, and almost none of the features and protections provided in the federal programs, including payment deferment, forbearance, and cancellation.
For more information about the advantages of federal student loans over private, non-federal loans, I encourage you to share with your students the information found at: http://www.federalstudentaid.ed.gov/federalaidfirst/index.html.
If you have questions regarding the information provided in this letter, please contact Carney McCullough by phone to (202) 502-7639 or by mail to carney.mccullough@ed.gov.
Within the next few weeks we will establish a “Frequently Asked Questions” page on our Information for Financial Aid Professionals (IFAP) website at www.ifap.ed.gov. An announcement of this new page will be posted to IFAP as soon as the page becomes live.
On behalf of Secretary of Education Arne Duncan, I thank you in advance for your cooperation as together we provide opportunities to ensure that all Americans have the opportunity to participate in our country’s outstanding postsecondary education system.
Sincerely,
Daniel T. Madzelan
Delegated the Authority to Perform
the Functions and Duties of the
Assistant Secretary for
Postsecondary Education
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awarded to the student. Many students argue that it is their aid and the school should not have a right to withhold it from them at any point in time. Unfortunately it is not as cut and dry as it sounds. Recently I received an email about a student who insisted on handling her own financial aid; this email was sent from an employee at a college who was concerned about how to deal with this student and her requests. Her argument was as follows:
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 
to beef up their 
their degree. And even more common is the use of 