Posts Tagged ‘FAFSA’

Proposed Pell Grant Cuts: Will They Seriously Affect College Students?

Monday, March 21st, 2011

Lawmakers in the House of Representatives levied a $5.7 billion cut to the Pell Grant program, which provides aid to low and moderate income students. The changes, if passed, would take effect in the 2011-2012 school year. The amount of aid for the most needy students would decrease from $5,500 to $4,705, a difference of $845.

If the bill becomes law, over 9 million students will have a reduction in their federal funds. Also, approximately 1.7 million students who receive small Pell Grants will likely be made ineligible. Approximately 27 percent of U.S. college students currently receive Pell Grants. The primary cut to the Pell Grant program would be the year-round provision which allows recipients of the grant to receive more than one per year.

In general, the most needy students are barely able to pay their bills, and losing $845 a year would be a significant loss to them. These students will be forced to take out bigger loans. Pell Grants have allowed many part-time students to attend college on a full-time basis. A reduction in the Pell Grant may force some of these students to return to their part-time status.

Many students will be forced to work longer hours, which may decrease their study time and affect their grades. Other students may decide to pass on a bachelor’s degree and instead go for a less expensive associate’s degree from a community college. Pell Grants are also provided to working low-income adults who want to go back to school to specialize in something. These folks may decide to skip college altogether.

Some colleges and universities will find ways to make up for the loss in Pell Grant funding. For example, Thomas McWhorter, the Executive Director of Financial Aid at the University of Southern California, said his office would use other university need-based aid to fill gaps caused but cutting Pell Grants.

An article at the Chronicle of Higher Education website stated that the spending bill for the 2011 fiscal year, passed by the U.S. House of Representatives, would not only slash Pell Grants in the short term, but would also reduce funding of the program by $64 billion over the next decade (according to the Congressional Budget Office).

Rep. Virginia Foxx, a Republican from North Carolina, said, “It’s hardly a devastating cut when you are cutting such a small amount.” However, according to a report from the Advisory Committee on Student Financial Assistance (ACSFA), the cut in Pell Grant funding will reduce the number of low income students obtaining bachelor’s degrees each year by approximately 61,000.

If this bill is passed, there will be a lot less money available for college students in need. This would make looking for scholarships and other sources of funding all the more important.

Wes Harrison writes helpful articles about a variety of college topics for New Jersey Colleges.

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How to File the 2011-12 FAFSA

Tuesday, January 11th, 2011


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Useful Tips for Financing A Graduate School Education

Monday, December 27th, 2010

There is plenty of financial aid available for worthy graduate students, as long as they apply for it as early as possible. Graduate students taking out loans need to be realistic about the job opportunities and additional income generated by obtaining a graduate degree.

You can typically save thousands of dollars by enrolling in a graduate degree program at a public university in the state where you’re a legal resident. Also, some states have reciprocal agreements with neighboring states which lets each state’s residents attend their colleges and universities at state tuition rates. For more information contact your state department of education or some schools of interest. Some states consider out-of-state students as residents after they have attended the school for one year.

Government Assistance

  • Federal Perkins Loans: Need-based program.
  • Subsidized Federal Stafford Loans: Students must have financial need as determined by their school.
  • Federal Unsubsidized Stafford Loans: Not based on financial need.
  • Cooperative Education: Combines education with an off-campus job related to the student’s program.
  • Work-Study: Need-based program in which the college finds jobs for students. Salary is usually close to minimum wage.

Graduate Stafford Loans

Graduate Stafford Loans are fixed rate loans for graduate students attending a college or university on at least a half-time basis. These loans are one of the lowest-cost ways to pay for graduate school. Graduate students using Subsidized Stafford Loans are not charged interest before they begin repayment or during periods of deferment.

Graduate PLUS Loan

The Graduate PLUS Loan is a non-need credit based loan, guaranteed by the Federal Government. Students can borrow the total cost of graduate school, including tuition, supplies, room and board, travel, and lab expenses. It’s a fixed rate student loan and payment can be deferred while students are attending college.

School Financial Assistance

Many colleges and universities offer teaching assistantships, research assistantships, and administrative fellowships. These positions typically include tuition waivers and some of them offer health insurance.

The recipients of departmental fellowships and scholarships are often determined by the departmental chair and not the financial aid office. Prospective graduate students should talk to a department staff member who’s knowledgeable about financial aid opportunities.

Perhaps the best type of college based financial aid is the fellowship. It’s a cash reward that doesn’t need to be repaid and typically doesn’t require the student to work. Most are based on an excellent academic record, however some are based on financial need. Fellowships usually include a stipend.

Corporations

Many companies sponsor tuition assistance programs. According to IRS regulations, employers can provide up to $5,250 for each employee per year on a tax-free basis. Additional employer tuition assistance is taxed. Employers may restrict the choice of a major to a subject related to the employee’s current or future position at the company. Some employers stipulate that the employee work for the company for a specific length of time after obtaining the degree.

Foundations

The Foundation Center in New York City publishes a reference book about graduate study financial aid. Grants provided in different fields are included in Grant Guides, a fee-based databank.

The National Research Council provides hundreds of fellowships of up to $14,000 per year for students in the natural sciences, social sciences, engineering, and mathematics.

Mellon Fellowships cover tuition and provide stipends for graduates students in the humanities.

Medical School

Some of the loans available for Medical School are MedSHARE-Nellie Mae, AAMC Medloans-Alternative Loan Program, and Medical Access Loans-Access Group.

Business School Loans

Some of the loans available for business school are MBADHARE-New England Loan Marketing Association-Nellie Mae, Business Access Loan Program-Access Group, and M.B.A. Loans/Tuition Loan Plan.

Online Resources

There are numerous online resources that help students find graduate education funding, and these include the following:

  • National Association of Graduate and Professional Studies
  • FastWEB
  • Thomson Peterson’s Graduate School Planning
  • The Foundation Center
  • Catalog of Federal Domestic Assistance Programs
  • Education World
  • FinAid!
  • Education World

Putting together the best financial aid package requires a lot of research. However, taking the time to do this research could save you a lot of money on your graduate education.

Brian Jenkins writes about a variety of education topics for BrainTrack, including financial aid opportunities for college students.

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A Financial Aid Checklist for High School Juniors and Seniors

Thursday, May 27th, 2010
The University of New Haven is a Liberal Arts college with an emphasis on Career Preparation.

The University of New Haven is a Liberal Arts college with an emphasis on Career Preparation.

The financial aid application process can be exhausting and complicated. Some students, through preparation or chance, will find the process easy because they have at their disposal everything that they need. However, many are left confused and alone five minutes before their colleges’ financial aid application deadlines. If you read (and use!) the following list, you will be one of the former rather than the latter.

Juniors:

The good news: You can take your time! Set aside 30 minutes each day and begin to browse through scholarships. Apply for all of them that you can find, which won’t be many compared to the number that you’ll find next year.

The bad news: It’s difficult to stay motivated during junior year, and your likelihood of winning multiple scholarships is low. Remember, financial aid is a marathon not a sprint; hang in there!

· Necessary Information:

· Your parents or guardians’ complete tax returns and W2 Forms

· A list containing the net value of each of their assets, including home value but excluding tax-exempt, 401K type retirement plans

· Your complete tax returns and W2 Forms

· A list containing the net value of each of your assets

Things to-do:

· Start your scholarship search.

· Apply to all of the scholarships for which you are eligible.

· Draft a rough list of the colleges to which you plan to apply, and check their financial aid offerings and requirements.

· Begin to consult with your high school counselor (make him or her your friend).

· Consult with your parents’ financial advisor, their tax preparer, or a family member who knows a lot about finance. Ask questions about the taxability of specific scholarships and financial aid components in order to get a better idea of how much college will cost.

Seniors:

The good news: You are the prime target for most scholarships! Seniors in general are more likely to win scholarships than students in any other grade, and it will be easier for you to start a confidence-snowball.

The bad news: The second semester of senior year is the 11th hour for financial aid. Get ready for late nights and weekends of essay writing. Just remember, many students will be in the same position.

Necessary Information:

· Your parents or guardians’ complete tax returns and W2 Forms

· A list containing the net value of each of their assets, including home value but excluding tax-exempt, 401K type retirement plans

· Your complete tax returns and W2 Forms

· A list containing the net value of each of your assets

Things to-do:

· Spend an hour or more each day looking for scholarships.

· Apply to all of them for which you are eligible.

· Finalize your list of colleges and figure out the net cost of each. Carefully read each college’s financial aid application instructions (you’ll submit much of the necessary information when you apply to each school, unless you plan to do so early).

· Consult extensively with your high school counselor about financial aid options, and ask him or her to proofread your applications.

· Pose any last-minute tax related questions to your parents’ financial advisor, their tax preparer, or a family member who has extensive knowledge of personal finance.

The financial aid application process can be taxing and confusing. However, if you use the checklist outlined above, you will have an advantage over many applicants.

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The American Opportunity Credit

Thursday, May 6th, 2010
Students On Mitchell College in New London Connecticut

Students On Mitchell College in New London Connecticut

The American Opportunity Credit is one of the best education related tax incentives, and knowing how to use it can save qualifying taxpayers up to $2,500 per year.

Any part or full-time student who attends a postsecondary institution eligible to participate in federal student aid programs (this includes nearly all universities, colleges, and technical schools in the United States) may qualify for the credit. A qualifying student must also have been enrolled in postsecondary courses for fewer than four years prior to any year in which he or she uses the deduction. In other words, students are usually eligible for the credit during their freshman, sophomore, junior, and senior years of undergraduate studies but not during graduate school. Parents may claim an American Opportunity Credit for each dependent child enrolled in a post-secondary institution; however, a student and his or her parents may not claim the credit simultaneously. Additionally, one cannot claim both the American Opportunity Credit and the Hope Credit.

The amount of the rebate is based on the amount a student (or his or her parents) spends on qualifying expenses during a particular year. Qualifying expenses include tuition, fees, and books and supplies necessary for a student’s program of study. The cost of room and board is not considered a qualifying expense. Any expenses paid by a scholarship or grand do not count toward the credit.

The exact amount of the tax credit is given by the following formula: 100% of the first $2,000 in expenses and 25% of the next $2,000. In other words, if a student has $4,000 or more in qualifying expenses in a specific year, he or she may claim the maximum $2,500 tax credit; however, if the student has only $3,000 of qualifying expenses, he or she may only claim a $2,250 credit. Up to 40% of the credit is refundable; thus, if a student needed to pay no income tax and could claim an American Opportunity Credit of $2,000, he or she would receive a refund check for $800.

Cutting through the IRS jargon, the rules for the credit are essentially as follows:

· Almost any student in the first through fourth years of postsecondary education may claim the credit.

· Parents of a dependent student may claim the credit; however, in this scenario, the student cannot also claim it.

· Students may not claim an American Opportunity Credit in addition to a Hope Credit or tuition and fees deduction.

· Costs paid by a scholarship or grant are not considered qualifying expenses.

· Nearly all costs (except cost of living expenses and room and board fees) related to necessary courses are considered qualifying expenses.

Over four years, the American Opportunity Credit could save a student’s family up to $10,000.  However, in order to accrue these savings, one must be aware of the credit’s guidelines and keep a record of qualifying expenses. Be sure to look into the proper tax software to help you get the most deductions possible.

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Paying for college with the TEACH Grant

Wednesday, January 27th, 2010

Are you interested in becoming a teacher?  Are you willing to teach in a high-need subject area in a low-income school?  If so, you may be eligible for the Teacher Education Assistance for College and Higher Education (TEACH) Grant.  The TEACH program was created in 2007 to help provide highly qualified teachers to low-income schools for the most needed subjects.  The grant is a non-need based program (meaning you can qualify no matter what your income), provides up to $4,000 each year and can be renewed each year for a total of $16,000 for undergraduate students and up to $8,000 for masters students.

The grant is provided to students who intend to teach in either a public or private elementary or secondary school that serves low-income students.  Low-income, for the TEACH grant, is defined as any school receiving Title I funding or on an Indian reservation.  You can search for which schools are identified as “low-income” in your area by visiting: www.tcli.ed.gov.

Recipients of the TEACH grant must also work in a high-need or teacher shortage field.  These fields are defined as subject shortage areas, not geographic areas (unlike some other programs).  The TEACH program defines national high-need fields as: Bilingual Education or English Language Acquisition, Foreign Language, Mathematics, Reading Specialist, Science and Special Education.  However, recipients can also work in state-wide or local high-need subject areas, which often provide a much broader list of subjects.  You can see a complete list of state-by-state subject need areas here: www.ed.gov/about/offices/list/ope/pol/tsa.doc.

TEACH grant applicants must work as a highly qualified teacher in a high-need subject at a low-income school as defined above for at least 4 years within the first 8 years after finishing college or grad school.  Here are the other eligibility requirements to receive a TEACH grant:

  • Must complete a FAFSA (though you do not have to demonstrate financial need)
  • Must be a US citizen or eligible non-citizen
  • Must be enrolled in a school that participate in the TEACH program (which is most of them)
  • Must be enrolled in coursework that is necessary to becoming a teach or building your knowledge in the field you want to teach
  • Much sign a TEACH Grant Agreement to Serve (which just says that you understand the conditions of the program)
  • Must meet certain academic achievement requirements, which usually means maintaining a minimum 3.25 GPA in High School or in your first year of college OR scoring above the 75th percentile on a college admissions test

It’s important to be sure that you want to be a teacher before taking the TEACH grant, because if you do not fulfill the service requirements of the grant or you decide you do not want to be a teacher, the TEACH grant will be converted into an Unsubsidized Stafford Loan- meaning you will have to repay the cost of the grant with interest.  But if you are sure you want to teach and you are willing to spend a few years as a teacher in a high-need subject at a low-income school, the TEACH grant can be a great way get money for college without having financial need or extremely high test scores and grades.  You can find out more about the TEACH grant by visiting: https://teach-ats.ed.gov/ats/index.action.

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Filing the 2010-11 FAFSA

Tuesday, January 19th, 2010


Watch How to File the 2010-11 FAFSA in Family Videos | View More Free Videos Online at Veoh.com

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Get Ready to File the 2010-11 FAFSA

Monday, December 14th, 2009

As the year 2009 comes to an end, parents of high school students in the class of 2010 should start getting prepared to file financial aid forms.  The early bird definitely gets the financial aid worm.  While the FAFSA worksheet advises families to wait until they have filed their taxes to complete the FAFSA, this puts families at a definite disadvantage.  One dean of admissions used this analogy when describing financial aid: “Financial aid is like a pot of soup.  The first couple of ladles will be full, but when you get to the end, if the soup is gone, you can’t have any.”  Do not needlessly put yourself at the back of the financial aid line.  You should start to file your FAFSA as early in the new year as possible.  While you cannot file the form until after January 1, here are the things you should be doing now:

1.  Apply for pin numbers (www.pin.ed.gov).  These will serve as the online signature for the student and the parent (you each need your own pin number).  If you are a parent and you have older children who have previously filed a FAFSA, you will use the same pin number.  The pin number is a 4 digit number, and now they allow you to choose the number.  I recommend choosing either a common pin number, or the last four  digits of your social security number.  While you can retrieve the pin number if you forget it, you need to enter the answer to a challenge question and it is case sensitive.  So, if you can’t remember the exact answer within three tries you will be locked out.

2. Print out the FAFSA on the Web Worksheet , and start filling in as much as you can.  Since it is based on the 2009 tax information, and your 2009 taxes won’t be done for a while, you should estimate (there is a question that asks if the data is estimated or from a completed tax form).  If your 2009 information will be similar to your 2008 tax information, you can just use the 2008 tax return to estimate numbers.  Your assets should be current as of the day you file.  If your income will be significantly different, follow our next tip:

3.  Save your last few pay check stubs of 2009.  Use the Year To Date income information to estimate your W-2 income.  The way I recommend preparing to fill in your FAFSA is to get together your 2008 taxes and your 2009 paycheck stubs.  Go to an tax calculator, such as the one on www.hrblock.com.  Use your paycheck stubs to enter all your income information, then use your 2008 tax return for questions such as itemized deductions, interest income, and dividend income.  When you are done, it will give you an estimate of your AGI, as well as your 2009 income tax.

Fill out the worksheet as completely as possible so you are ready to fill out your FAFSA on the web application, www.fafsa.ed.gov, as soon as possible after January 1.  If you can, look at some EFC (Expected Family Contribution) Calculators and estimate what the schools are going to expect you to pay, so you can know now.  That will give you the opportunity to make some changes before filing, if it is going to be possible to lower your Expected Family Contribution (EFC).  We have our own calculator at CollegeTreasure.com.  We will also be putting videos of our Free FAFSA days online.  In our free FAFSA days we will walk families step by step through the filing of the FAFSA form.  Also, look in the CollegeTreasure.com resource area for our coming video on filling out the FAFSA on the Web Worksheet and common mistakes that cost people money.

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Paying for College

Thursday, July 2nd, 2009

The last week has brought about a number of different items of news related to how we pay for college.  I just wanted to take this opportunity to summarize some of the key changes:

  • The Obama administration has made it a priority to increase access to a college education.  To date, they have increased the size of the Pell grant, planned to modernize the Perkins Loan program, and offered the American Opportunity Tax Credit, a $2,500 tax credit each year for four years of college.  There most recent efforts have been aimed at simplifying the FAFSA.  The online FAFSA no has improved programming to make it possible to skip more of the unnecessary questions.  They are also working with the IRS to allow students to seemlessly retrieve relevant tax data.  This will be available in January of 2010 for students applying for aid for the Spring semester.  They hope to expand that program.  To read more about the changes, view this post on the Department of Education web page.
  • As of July 1 the interest rate on Subsidized Stafford Loans dropped to 5.6%.  Unfortunately, over the past month more lenders have dropped out of the program, the Connecticut Student Loan Foundation being one of the most recent casualties.  Also as of July 1, students who owe on FFEL program loans are now eligible for Income Based Repayment (IBR).  Visit the department fo education website to learn more about this program. View this document to learn more about Loan Forgiveness for Public Service Employees, and view this document to learn more about Loan Forgiveness for teachers.
  • Finally, this post on the Choice College Blog talks about how scholarships are becoming more difficult to find.  We are currently updating the database of college-based merit scholarships on collegetreasure.com and we have noticed that while some colleges are becoming more generous in these tough times, many colleges are actually reducing the size and number of their scholarships.  This as tuition continues to rise, and while this past year it rose at the lowest rate in almost 40 years, it is still outpacing inflation, so you would naturally expect scholarships to increase to cover that increased tuition.  There are still opportunities out there, we just recommend that students start looking for them earlier.  Now more than every it is critical that you have a financial safety as well as an admissions safety.

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