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.

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.

Points code: parttime$$$

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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.

Points Code: LOCKDOWN

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For those who don’t know, if you have past drug convictions, for selling or possession while you were receiving Federal aid, then this can affect your aid eligibility. Your eligibility for Federal aid is revoked for a period of time (directly correlated to the type and number of convictions).

I did some research on this, and it appears that as long as you have completed an “acceptable drug rehab program”, you can still receive federal aid. There are no time constraints on this, either. You could be convicted of selling/possessing drugs, enter a rehab program, complete it, and still get federal financial aid right away

An acceptable drug rehabilitation program must include two random drug tests.

The program must also:

• Be qualified to receive funds from federal, state, or local governments

OR

• Be qualified to receive funds from a federal or state licensed insurance company

OR

• Be administered or recognized by a federal, state, or local government agency or court

OR

• Be administered or recognized by a federal or state licensed hospital, health clinic, or medical doctor

I also found that if this drug conviction (for selling or possessing) was 2 or more years ago, then a drug rehab program is NOT required, and you should still be able to get federal aid. If you have more than 1 drug conviction in the past 2 years, then your eligibility is suspended for longer.

If you have more than 1 drug conviction in the past 2 years, you have to wait longer in order to be eligible for Federal aid. (it appears that each drug conviction you have = 1 year of lost eligibility). If you have 3 or more drug convictions in the past, then you are ineligible for Federal aid indefinitely.

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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!