Student Loan Help

It depends when the child is going to be born if the student will earn a dependent or independent status.

The relevant language from the Application and Verification Guide states, “Students who have legal dependents are independent. Legal dependents comprise children (including those who will be born before the end of the award year) of the student who receive more than half their support from the student.

So if the baby will be born before the end of the award year than you may be granted an independent status to get more funds for school, provided you are supporting yourself.

If you still live at home and Mom and Dad are supporting you than the unborn child will most likely be listed under “family size” and that would keep your status dependent as you would still be dependent.

Online education has undergone a metamorphoses in recent years, not unlike the ugly caterpillar that blossoms into a beautiful butterfly. The concerns once raised by skeptics centering around the validity and relevance of an online degree in the marketplace have since been quelled. Questions now tend to focused on payment options. I think you may be surprised to learn just how easy it is to finance your online education.

Many online schools participate in the Federal Student Aid grant and loan programs, just the same as any certified ground campus you may attend. That means for schools such as the University of Phoenix, Kaplan University, American Intercontinental University, Argosy University, Walden University, Keiser University, Capella University, Everest University, and Grand Canyon University, just to name a few, federal loans are at your disposal. They are all Title IV certified schools that offer federal aid to their students.

To qualify for federal aid you simply complete your FAFSA and list the school or schools (up to four) that you are interested in attending. The school(s) will then receive a copy of your student aid report from the Department of Education which they use to determine your federal aid eligibility. But for those who do not qualify for federal aid, or don’t qualify for enough, private loans are also available to you.

Private loans serve as a great supplement or alternative to federal loans. And with interest rates at historic lows there has literally never been a better time to borrow the funds needed to help cover the cost of tuition, books, and other direct educational needs.

It is also a good idea to sign-up for as many scholarships as possible. Here at the Student Loan Network we give away free scholarships every month ranging from $500 to $10,000 to eligible students. What students love most is that you don’t need to hold a certain GPA or submit an essay to qualify. If you attend a certified Title IV school located in the U.S. you are automatically qualified. Don’t miss out. To register (click here).

Follow your dreams and find the online degree program that’s right for you.

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The third semester, better known as summer school, has seen an increase in student attendance in recent years. That’s really not surprising when you consider each graduating class has been bigger than the last. The U.S. population is now over 304 million, up from 273 million just a decade ago.

With enrollment on the upswing and the same amount of seats available in the classroom students have been turning toward summer school more and more to fill the gap when classes have been filled to capacity during the fall and spring semesters.

Of course because the academic period for most schools begins in the fall and ends the following summer many have exhausted their federal Stafford loan funds already. The loan periods determine the timing and amount of disbursements. In this case the fall and spring semesters would have disbursements, assuming the student was enrolled both semesters, which most are.

The next best option, after you’ve exhausted your federal loan funds, is a private student loan. Private student loans are popular these days because of the low interest rates that many enjoy. Banks use two main indexes to determine a borrowers interest rate, LIBOR and Prime. Regardless of the index used the interest rate is low across the board at this time to encourage consumers to borrow. That means you and I are the winners.

Additional note: Private student loans are in a students name and do require a credit worthy co-signer.

To enter for a chance to win a monthly scholarship ranging from $500 to $10,000 (click here).

For those students who’ve defaulted on their federal students loans the price can be steep. Below are some additional consequences which may arise if your loans fall into default.

Potential Defaulted Loan Consequences

Defaulted Student Loan Consequences (1 of 2)

I’ve fielded many questions from concerned students of late regarding their federal loans and what happens if they default on them.

The questions have ranged from “can they withhold my transcript” to “can they throw me in jail for not paying?” In the first of my two blog series, Defaulted Student Loan Consequences, we shall get to the heart of the matter.

Potential Defaulted Loan Consequences

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This article originally appeared on the Financial Aid Podcast.

Is there such a thing as negotiating your financial aid award package? Yes and no. No in the sense that your school’s financial aid office is not like a car dealership with a dean of admissions in the back room who will give you the manager’s Wednesday special. Yes in that if you can prove beyond question that your financial need and circumstances are greater than what’s provided via the usual financial aid paperwork like the FAFSA, schools can be flexible.

Before we get started, I recommend strongly reading this article on StudentLoanNetwork.com about how to read a financial aid award letter.

Get Your Budget In Order

If you don’t use any kind of personal finance software, be it a desktop application like Quicken or a web-based application like Wesabe, Mint, or Geezeo, I strongly recommend starting with one. The web-based applications are free, so if you’re trying to save money from every angle, start with one of those.

Start by importing any electronic records of your finances and your family’s finances for at least 90 days. You’ll want to take the time to categorize your expenses in terms of mandatory and discretionary, followed by breaking them out into individual categories, like mortgage or rent, utilities, etc.

Once you’ve got your budget broken out, you’ll want to compare it against your award letter, especially looking at what kind of discretionary income you have compared to the expected family contribution, or out of pocket expenses. If your EFC from your award letter divided by 12 (for what’s essentially a monthly EFC) is greater than your discretionary expenses budget (dining out, entertainment, etc.) then you’ve got a good starting point for a conversation about what you can and cannot afford.

Get All Your Paperwork Together

If you’re going to be asking for more financial aid based on changed economic circumstances, have ample paperwork available to back up your claims and requests. Did someone lose a job in the family? Have termination notices, unemployment insurance, or other papers ready. Did your income change? Use any of the budgeting software described above to graphically illustrate your monthly cash flow, along with things like pay stubs, tax returns, etc.

Know What To Ask For

It’s not enough to ask for more money. That’s way too generic. Ask for specific amounts, ask for specific assistance, and try to know some of the different types of things financial aid administrators are permitted to do. Financial aid administrators are permitted to make professional judgement overrides on:

- dependency. If you can prove that you are an independent student due to the involuntary dissolution of your family (i.e. parents in jail, social services removed you from the home due to abuse, etc.) a financial aid administrator can override the dependency requirements for undergraduate students, letting you complete the FAFSA and other financial aid paperwork without parental income information.

- future earnings and income. If you can prove that you or your family has had a significant change in income that impacts your ability to pay for college, a financial aid administrator can grant you more assistance. Be prepared with termination notices, tax returns, and every scrap of paper you can find to make your case.

Updated April 2, 2009: The Department of Education has offered additional guidance for this scenario. See this post at FinancialAidNews.com about the changes.

- cost of attendance. If you can prove that expenses in your student budget (transportation, medical, disability, dependents, and a few other select cases) do not reflect your situation, a financial aid administrator can alter your student budget, allowing for additional aid. If you pursue this override, again, be prepared to document every step of the way to show why, for example, traveling to and from your school requires a transportation budget greater than allotted.

- special circumstances. In some cases, parents divorce during the financial aid award year, but the FAFSA cannot be changed to reflect the divorce. With appropriate court documentation noting the dissolution of the marriage, a student can ask for a special circumstances override that will let them use the income of the custodial parent.

There are other, more narrow circumstances that apply as well. If you don’t know what to ask for, haul as much documentation to your financial aid administrator as possible so that they have as complete a picture of your finances as possible.

Be Polite

The single thing that will do the most good or harm in getting additional aid is how you approach the financial aid office. The best time to approach them is before you need their help, as is the case with virtually all professional networking. Stop by from time to time casually, and say hello. Ask if there are any new scholarships that have been posted. Check in. If you find a scholarship that you’re not eligible for but other students at your school might be, let someone in the office know about it so it can be posted in the office. If you want a real education in financial aid, apply for a work study job in the financial aid office.

If you know your parents are, shall we say, less than diplomatic, then try to mediate any discussions with the financial aid office so that overly aggressive or insistent requests don’t harm your chances of getting help.

I found this article from the Washington Post and found it to be interesting because it gives insight from the financial aid administers view. It also backs up my theory that students should (and probably need) to start considering schools because of their cost, and not focusing all on the school’s reputation. While you may not realize it now, student loans can be seriously affect your financial future, and borrowing excessive amount of student loans to attend a private university may not always make sense for you and the career path you have chosen.

College: How to Pay for It

By Stacey Garfinkle

The college decisions are mostly in and there’s lots of good news for the high school class of ‘09: Many private colleges accepted more applicants than usual this year. The bad news is the reason why: the recession.

Colleges this year are expecting the economy to affect the numbers of teens who choose to attend their schools. Surveys point to families looking much closer at financial aid packages. “Students are shopping around — no doubt about it,” Phil Day, president of a financial aid administrators association, told The Post.

And that’s exactly what they should do, according to Seth Allen, the dean of admission and financial aid at Grinnell College. Allen is also a member of the Board of Directors of The Common Application. Here’s some of a Q&A with him on financial aid:

Q: How should families approach financial aid? What can they expect?

Allen: The first thing I think, there are families out there who make a reasonable income. They feel comfortably well-off. They might be inclined not to apply for financial aid. That’s a mistake. A two-income household with one child that makes over several hundred thousand dollars is not likely to qualify for aid. But somewhere south of that, even families who earn $150,000 to $180,000, they really should sit down and fill out the Free Application for Federal Student Aid (FAFSA) — that’s the base instrument almost universally used by colleges/universities for need qualifications.

Step Two: While I’m sure financial aid offices don’t want to be inundated, there seems to be a hesitancy to engage financial aid offices about what might be available and if a family might qualify. Without FAFSA data, the aid office can’t give a specific recommendation, but they can talk to a family in general and give very good guidance to the family about what they might expect. A typical aid package is composed of three components: Grants from the college or university are typically the largest. The money is given to the student and family to fill part of the gap between what the college expects the student to pay and total cost of attendance. The second component is loans. Students, especially very needy students, are packaged with favorable loans and low interest rates [Sallie Mae recently changed the payback policies for its student loans so that students make interest-only payments while they are in school rather than fully deferring payments]. The third component is a job on campus, which is typically packaged as a federal work study job. The government earmarks money to colleges and universities to subsidize college jobs.

On their Web sites, colleges will often report out the average need-based package. That can give families a sense. They shouldn’t read it as “if I apply, that’s what I’ll get.” But it is a proxy about the kind of package they might expect to see.

So, what should a family do if their 529 accounts have plummeted?

Allen: Colleges would take the 529 as an asset specifically earmarked into college and factor that into family contribution. Most financial aid is not done on a real-time basis. It looks back at the previous year and what was available at that time goes into the calculation for the next year. Could a family make an argument if their savings and 529 have gone down dramatically? They probably could. And if the college has the resources to meet that need, it would be likely to do that.

Families now are going to feel far needier than they’ve felt in years, collectively. Colleges recognize that. At the same time, some of the income that colleges have relied on from endowments has gone down as well. I’ve heard from many institutions that they are going to put more funds to financial aid. At the same time, those are not limitless funds. Families need to be aware that colleges don’t have the same strong income that they’ve had in prior years [donations and endowments are down]. There’s potential this year more than in the past that they won’t be able to fund that gap.

What else should families consider?

Allen: Financial aid officers have the ability to make professional judgment calls. Families fill out an FAFSA and a CSS profile, send that in, and that helps the financial aid office make a calculation. Oftentimes, family situations aren’t that neat and tidy. Families have expenses that put pressure on finances that make the federal calculation of need not workable. If they have other kinds of qualified expenses, they can submit documentation to the financial aid office that establishes those expenses as legitimate and they can take that into consideration to recalculate. That’s one way families can find ways to afford college this year.

For example, a student might have a sibling at a private school. That’s not automatically taken into consideration and isn’t asked for on an FAFSA form. Many colleges consider that a legitimate expense and can take that off of the family’s income. That will make the family more eligible for a larger aid package.

Another example is the cost of living differentials in different parts of the country. The basic costs of living in D.C. are far higher than if you lived in the Harrisburg, Penn., area. Not every aid office will have a policy to do something with that information. But families could make a case for the allowances given housing and cost of living costs in your area. Where they may not help is something that’s clearly a voluntary choice — for instance, I live in New York and I want a break because I live in the West side in a very expensive apartment. You could live in less expensive place in New York.

What about other government aid?

There’s not a lot at the moment that we really know for sure with the new administration and secretary of education. But there are some nice things in the stimulus package that would be good for families to understand.

• Pell Grants: For very low-income families, the federal government grant is increasing by roughly $600 dollars from this year to next year. That will help make college a little more affordable.
• American Opportunity Tax Credit: This is up to $2,500 for families and is partially refundable. Very low-income families can get up to $1,000 back. So, it doesn’t help on the front end. However, the income levels on this have been raised dramatically. Under old tax credits, income levels were under $100,000. Under the new plan, the adjusted gross income is up to $160,000 for married couples. It should hit a broader swath of the middle class who, I think, is acutely feeling the pinch of these college costs. For full article click here.
  

If you read the fine print on the TEACH Grant, which is a grant providing up to $4,000 per year in grant assistance to students who are completing or plan to complete course work needed to begin a career in teaching, you will notice that in exchange for the grant, a student must sign an agreement to serve as a full-time teacher at certain low-income schools within certain high-need fields for at least four academic years within eight years of completing their course of study. Below is a list of high-need fields.

High-Need fields

- Mathematics

- Science

- Foreign language

- Bilingual education and English language acquisition

- Special education

- Reading specialist

- Other high-need fields must be listed in the Department of Education’s Nationwide Listing of Teacher Shortage Areas.

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Recently, President Obama has been talking about his plans to make college more affordable for families and students. The President’s plan is to increase the Pell grant, and make Federal student loans more accessible to students. Students from Kent State University recently asked Obama about his plans and when exactly those changes would take effect:

President Obama is pushing his budget proposal to overhaul the entire education system throughout the U.S. His plan would affect students of all ages with a goal of improving education levels all across the U.S. starting with preschool aged children. In a recent speech to the US Hispanic Chamber of Commerce, Obama began to divulge what exactly he has in mind for this giant overhaul. He spoke of a 5 tier reform plan that touches on what seems like every stage of the educational process. The President was quoted as saying, “We have let our grades slip, our schools crumble, our teacher quality fall short and other nations outpace us…The time for finger-pointing is over. The time for holding ourselves accountable is here.”

The 5 reform points that he spoke about are as follows:

1. Increase investments in early childhood programs such as Headstart etc.

2. Holding students accountable for higher/tougher testing standards

3. Increase teacher training and recruitment, and offer “merit pay” (teachers that produce more results will get paid more than others). Along with that, ineffective teachers would be let go if they fail to improve.

4. Renew his campaign for the support of charter schools. (definition of a charter school = Charter schools are elementary or secondary schools in the United States that receive public money but have been freed from some of the rules, regulations, and statutes that apply to other public schools in exchange for some type of accountability for producing certain results, which are set forth in each school’s charter). President Obama also proposed longer school days.

5. For Higher Education he wants to increase the annual Pell Grants maximum to $5550, and push for students from working families to receive a $2500 tax credit.

I can only imagine that the republicans must be reeling…especially about the money for Headstart. Also included in early investments was an idea to have registered nurses visit the homes of single moms regularly to make sure their children are healthy and ready for school life. Not a bad idea, but who will run this program? I will say that he has a point when it comes to holding students and teachers accountable for their performances. Have you ever had a bad teacher? I have, and it made me lose any interest I may have had in the subject at hand. Frankly our country collectively cannot really afford to have children caring less about school than some of them already do.

For those students that are fortunate enough to go on to college, Obama has some plans there as well. The Pell grant is a Federal grant given to students who exhibit more financial need than others; this “financial need” is determined when you fill out the FAFSA (Free Application for Federal Student Aid). Obama proposes to raise the annual maximum amounts on that grant from $4,731 for the 2008-2009 school year to $5350 for the 2009-2010 school year, and then increase it again to $5500 for the 2010-2011 school year. The unsubsidized loan amount for dependent students is currently $2,000, but Obama’s stimulus plan will add an additional $2000 to that, which will help a lot of students out whose parents cannot afford to help them through college. The President also proposes to eliminate the FFEL loan program (private lenders who lend Federal loans) and have all Federal loans run through Direct Loans (the U.S. Department of Education’s Loan program); but wait, there is more….the Perkins loan, which is another federal loan awarded based on need, is typically run through the college itself, but Obama is proposing to shift that loan program so it is run through the government. Now I have my loans from my undergraduate degree with Direct loans, and the customer service is definitely not top notch. I am wondering how the Department of Education is going to manage all the loans that are currently in the FFEL program AND all the Perkins loan and still make sure that those loan programs don’t fall at the waist side. I personally do not see it happening…and didn’t Clinton propose this at one point, but it failed?

A student tax credit is also part of this the Presidents budget proposal, which would put an extra $2500 in students’ pockets. This is definitely helpful to any student in school, and it can also serve as an incentive for someone to go back to school and finish their education.

This new budget proposal has a lot of big ideas, some of which already have the necessary platforms to execute the new plans. Others however do not. It seems like all the ideas would help to improve the education system in the US, but the road to get there might be a long and bumpy one.

Code: EDUCATIONOVERHAUL

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