I’m happy to say I don’t hear this claim often, about children forging their parents name on student loans, but I do hear it enough that I felt it was blog worthy. Parent Plus loan are probably the most victimized loan type.
The Parent Plus loan lists the parent as the primary borrower on behalf of the student. Students generally become familiar with the Parent Place loan when they see it listed on their Awards Letter from school. Awards letters generally outline work-study, scholarships, grants, and loans (such as the Stafford and Parent Plus loans), that students and their parents may qualify for.
Repayment on the Parent Plus loan does not begin until the student is out of school (this repayment change went into effect last summer), so the student could literally take out a loan in the parents name each year without the parent being the wiser until the bill comes rolling in after graduation.
If you fear your student has signed you up for a federal loan and want to check you may contact the Department of Education at 800-433-3243 and request to speak with the borrower tracking department. If you confirm that a loan has been taken out in your name you may contact the DOE’s Office of Ombudsman, as they help resolve disputes and solve other problems with federal student loans. They may be reached at 877-557-2575.
It was Benjamin Franklin that quipped, nothing is certain but death and taxes, but in the world of financial aid the FAFSA is at the top of that short list. Completing your FAFSA is an absolute must. Without it I can tell you with great certainty that you will not receive federal grants or loans, so kudos to you for getting that done.
For those who have not yet completed the FAFSA, or wish to review our tips for effectively filing your FAFSA, in order to maximize your financial aid benefit package, (click here). Remember, you can always resubmit your FAFSA with updated data, which may lower your EFC (we’ll discuss EFC in greater detail shortly).
For the rest of you that completed and submitted your FAFSA and are wondering what to do next; you’ll have to wait as the Department of Education processes your application. When they’re finished they will send both you and the schools you highlighted on the FAFSA a three page report called a Student Aid Report (SAR).
The SAR is a report of what the government believes you can afford to pay out of pocket for college in the form of EFC, or Expected Family Contribution. This number is located in the top right hand corner. The lower the EFC number the greater the financial need.
As mentioned, the SAR is also sent to the colleges of your choice (up to six schools max), from which they create a financial aid awards letter detailing what aid they’re able to offer you. You will most likely receive this awards letter in the mail.
The awards letter is a comprehensive breakdown of all school related expenses, scholarship and grant money you qualify to receive, work-study eligibility, as well as the financial resources the school feels you have at your disposal to pay for one year of attendance. They also give recommendations as to the best loan options available.
The most common loan option students take advantage of when paying for school is the Stafford loan, which is divided into two categories, subsidized and unsubsidized.
Subsidized Stafford loans are awarded based on financial need. You will not be charged interest before you begin repayment or during periods of deferment. The federal government “subsidizes” (or pays) the interest during these times. No payments are expected on the loan while you are enrolled as a full or half time student.
Unsubsidized Stafford loans are not awarded based on financial need. Any eligible student can take out Unsubsidized Stafford Loans. You will be charged interest from the time the loan is disbursed, to the time the loan is repaid in full. No payments are expected on the loan while you are enrolled as a full or half time student.
For the upcoming 2009-2010 academic year the interest rate for subsidized Stafford loans, for undergraduate students, is fixed at 5.6%. If you fall into the unsubsidized category you will be extended a 6.8% fixed interest rate.
Private loans have also become a very attractive alternative these days with the prime rate at a 55-year low. Most private loans do require a co-signer. But the key is to send your FAFSA to as many schools as possible in hopes of fielding some attractive offers and limiting the amount of funds you need to borrow.
If you list multiple schools on your FAFSA you can use one school’s offer (awards letter) against another to try and land a better deal. Most schools generally set a May 1 deadline, which is why the financial aid officers refer to April as haggle month. Students and parents generally try to haggle for a better deal before the May 1 deadline.
So as you can see the FAFSA is just the beginning of the financial aid process, with many more steps in tow. But unlike the little engine that could, which repeated its motto I-think-I-can, as it climbed over that mountain top, I-know-you can! I know you can get thru the financial aid process, although sometimes it can seem daunting and overwhelming. You can do it, I just know you can.
There is a new economis stimulus Bill that has been introduced into the House of Representatives, that could potentially increase your student aid package that you receive from your school.
The stimulus bill, would be part of the “American Recovery and Reinvestment Bill of 2009″ which is being designed to hopefuly save millions of jobs, jumpstart the economy, and (cross your fingers) give you more financial aid:)
Here are the details:
Raise Pell grant maximum by $500 (from $4,850 to $5,350)
Increase unsub max amounts by $2000
provide $490 million dollars extra for work study for undergrad and graduate students
Provide $50 million to help the Dep’t of Ed administer new and surging student aid programs through this ever changing educational environment
Sounds pretty good to me…except the Stafford loan sub and unsub limits still don’t come any where close to covering tuition at a private university. Thoughts on this new proposal?
For those of who don’t keep up the happenings in the financial aid world…there have been a few changes recently. The Higher Education Act of 1965 was reauthorized in August of 2008, with some interesting amendments within it…keep reading because these changes could affect you directly.
Tuition Transparency List
The US Dept of Ed is going to release 6 lists annually regarding cost and cost increase in colleges:
Top 5% of schools with highest tuition increase in the recent year
Top 5% of schools with highest tuition increase in the past 3 years
Top 5% of schools with highest net price in the recent year
Top 5% of schools with highest net price in the past 3 years
Top 10 % of schools with the lowest fees
Top 10 % of schools with the lowest net price
The purpose of doing this is to hopefully keep tuition increases from continuing…school’s obviously do not want appear on lists 1-4, and so hopefully will keep costs down, which will benefit future and current students
Changes in Student AID
The Pell Grant max will increase by $400 every year until 2014-2015
Convicted sex offenders will NOT be eligible to receive financial aid
As of July 1, 2009 a student will receive an automatic $0 EFC if a parent or guardian died in Iraq or Afghanistan after Sept. 11, 2001.
The work study program was continued through 2014
Community Service now can include helping a community recover from a natural disaster
If a student is displaced because of a natural disaster, the college can continue to compensate the student for their “work study”, limited to one school year.
Federal Perkins Loan was increased to $5000 for undergraduate students and $8000 for graduate students
People who have been convicted of a drug charge, can now regain their eligibility if they pass 2 unannounced drug tests (no word yet on how the gov’t plans on executing this piece of the legislation)
Changes in Need Analysis (how your school determines your aid package)
military housing is no longer considered an asset
veterans benefits are no longer counted as an asset effective July 1, 2010
A FAO (financial aid office) now has the ability to use tax returns from 2 years prior to the school year to determine an aid package
FAO’s can now award Dependent students whose parents refuse to fill out the FAFSA or does not help financially for college, the full unsubsidized amount (same amount that independent students get)
Students from the Federated States of Micronesia and the Marshall Islands now must have a ssn in order to receive aid for a college.
Did you know under the federal work-study program you can work part-time to earn money for your education? So what are the primary benefits of the program? See below.
- Provides part-time employment while you are enrolled in school
- Helps pay your educational expenses
- Is available to undergraduate and graduate students
- Is available to full-time or part-time students
- Is administered by schools participating in the FWS Program
- Encourages community service work and work related to your course of study, whenever possible
So how do I know if I qualify?
Your school will inform you. It’s is all linked to your FAFSA and will be on your Awards letter. That said it’s important to get your FAFSA completed ASAP. The federal government provides only a certain amount of work-study funds to each qualified school and when those funds have been exhausted no additional work-study awards may be issued for the year.
Unsubsidized 