03.06.13 | Sequester Impacts on Financial Aid

Posted in Federal Work-Study, Financial Aid, News, PLUS Loans, Stafford Loan by Student Loan Network Staff

As you may have heard by now, the recent sequestration has huge implications for education across the board, and Higher Ed. is no exception. The budget cuts that took effect on March 1, 2013 will affect most types of federal student aid, including Federal Work Study (FWS), Federal Supplemental Education Opportunity Grants (FSEOG), Service Grants, TEACH Grants, and the Direct Student Loan Program. Fortunately for many students, Pell Grants were specifically exempt from the budget cuts.

Here’s a brief overview of what to expect from student aid programs going forward:

Federal Work Study and FSEOG Programs

Budget cuts of $86 million do not only mean a reduction in the FSEOG program, it could also mean a loss of on-campus employment for as many as 33,000 students if colleges do not step in with funding. While these campus-based programs are funded through the remainder of this year, program cuts will take affect for the 2013-2014 academic year.

Iraq – Afghanistan Service and TEACH Grants

For both of these federal grants, funding has been reduced for any award first disbursed during the sequester. It should have no impact on grants first disbursed before the cuts took effect.

06.03.10 | Don’t Forget About Federal Work-Study

Posted in FAFSA, Federal Work-Study, Financial Aid, Stafford Loan by Student Loan Network Staff

Federal work-study isn’t often brought up when discussing paying for college, but it is an amazingly useful and convenient avenue for cash.

Federal work-study programs are based on demonstrated financial need.  All you have to do is meet certain eligibility requirements and complete a FAFSA, where you will be asked if you are interested in student employment.  If you are eligible, your work-study funds will be noted on your award letter.

Federal work-study allocates a set amount of funds per semester that you can earn in various on-campus jobs. Like a scholarship or grant, it doesn’t need to be paid back. You earned it. You keep it.

There is also Non-Federal work-study, which is not based on need and is available on many campuses across the nation. Ask your school employment office about on-campus jobs that are available.

Federal work-study, unfortunately, is not guaranteed. If you don’t use it, you might lose it for future semesters.

Looking for another way to earn money for college that you don’t have to pay back? Visit ScholarshipPoints.com for the chance to win free money to pay for your education. Use the code “WORKSTUDY” to get started.

02.17.10 | Federal Work Study, in Plain English

Posted in FAFSA, Federal Work-Study by Student Loan Network Staff

Well, it’s that time of the year again; time to file your taxes, FAFSA, and other paperwork goodies to your respective school(s). I have received a lot of questions about how different student programs work, and decided to start this “… in Plain English” blog series to address them and simplify the entire experience for you, our readers.

Today, we are going to explore how the Federal Work Study program works, and why it probably is a great way for you to make some pocket money without getting in the way of your studies or classes.

First, what is it? Work study is a federal program that was established in 1964 as part of the Economic Opportunity Act. Basically, it was introduced so that college students have more part-time jobs available to them to offset poverty and afford basic necessities (and potentially repay some of their debt) during their time at school. In the years since, work study has become an excellent tool for getting job experience while in school and serves as one of the primary ways colleges fill what normally would be intern spots in their various departments.

How does it work? Work study eligibility is determined based on the information in your FAFSA. Depending on your level of financial need, you typically can receive anywhere up to roughly $2,000 for the academic year in available earnings. The way you then receive these funds is through working in one of the campus jobs offered by your school — the money is actually kept in an account in your name at your school, and disbursed to you through payroll as you work the hours.

So essentially, the government grants you X amount of dollars for the year, and you pick a position at your school to work to earn that money. It’s just like a normal part time job, except for the fact that there is a total limit on how much you can earn during the year. As far as the pay rate for each job, your financial aid department has a sliding scale that they use to figure out how many hours per week and dollars per hour you can earn based on your award.

Why should I do it? Simply put, it’s a guaranteed job (and money, as long as you work). You get to pick a position that you find interesting — check with your financial aid office for a list of open ones — and this gives you valuable experience, as well as a regular paycheck. One other cool thing is a lot of the work study jobs are somewhat low key, so you may be able to get some homework done in between tasks. Also, every work study job has different hours, and usually are flexible… so you can work as little or as much as you need to (within the guidelines of your award.)

Important Note: If you don’t use your work study grant, it is possible that you will not be awarded another one the following year. Work study is considered a need-based privilege, and if you do not claim it and work at least one semester per academic year, the government may not offer it to you again. This doesn’t always happen, but it is just something to be aware of.

ScholarshipPoints Redemption Code: P-ENGLISH1

10.26.09 | Graduate Loan Deferment

Posted in FAFSA, Federal Work-Study, Financial Aid, Graduate Loans, Stafford Loan by Student Loan Network Staff

Graduate DefermentThe day you can hoist your graduate degree overhead will be a proud day no doubt, but then the reality sets in.  How much did I borrow for this piece of paper exactly?

The truth is most students have no idea how much they borrowed.    Grants, federal loans, private loans, work-study, and scholarships fall under one giant umbrella to most.  Their philosophy is simple, why worry about it today when I can worry about it tomorrow?

Well, when tomorrow comes knocking it will serve you well to have a game plan.  Today we shall focus on federal loan deferment. Keep in mind that deferment is not a means to an end, but rather, a way to stay afloat if you are having trouble making your monthly loan payment.

There are two common deferment types that are utilized.  The first one is the Economic hardship deferment.  In order to qualify for this deferment type you must fall into one of the following categories:

  • You are receiving payment under a federal or state public assistance program, such as Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Food Stamps, or state general public assistance.
  • You are serving as a Peace Corps volunteer.
  • You are working full-time and your total monthly gross income from employment must be less than or equal to the larger of (A) the monthly minimum wage rate or (B) 150% of the Poverty Guideline amount for your family size and state.

The second deferment type is loan forbearance which anyone can basically receive.   The big distinction between the two deferment types is that while in forbearance interest accrues on the principal and any capitalized interest. Your debt will continually increase while in deferment making your repayment period longer.  When you are in an economic hardship deferment no interest accrues on your subsidized loan portion.

You have 36 months of federal loan deferment entitlement regardless of which deferment you take advantage of and must reapply every 12 months if you wish to continue in your deferment state.

10.22.09 | Help, My Parents Won’t Complete the FAFSA

Posted in FAFSA, Federal Work-Study, Financial Aid, Private Student Loans, Stafford Loan by Student Loan Network Staff

Parents FAFSAAre your Mom and Dad not willing to file the FAFSA with you because they don’t want people knowing their earnings? Are they instead willing to co-sign on a private student loan?  If this is the case the logic behind their actions is illogical.  In fact, you should direct them toward this blog as I will chronicle why their judgment is severely lacking and will only hurt you in the long run.

  • By filing the FAFSA you open yourself up for all types of financial aid which includes scholarships, grants, and work-study programs.
  • When you file your FAFSA you become eligible for a federal Stafford loan which is in the students name only.  Mom and Dad do not need to co-sign for a Stafford loan like they would for a private student loan.
  • You enjoy the security of a fixed interest rate
  • You have three years worth of deferment time attached to a federal loan opposed to 1-year on average for private loans
  • You may be eligible for 100 percent loan forgiveness if you work in certain fields. Private student loans do not offer forgiveness potential.

The one thing I will say about private loans is that interest rates are very low at this time which is one reason some parents prefer the private student loan to the federal, and if this is your logic it makes good sense.  In fact, after federal aid options are tapped many parents end up subsidizing the rest of their students education with a private loan.  This too is smart. But the parents who are steadfast on protecting their private information are doing so at the detriment of their child.

10.20.09 | FAFSA and the Middle Class

Posted in FAFSA, Federal Work-Study, Financial Aid, Scholarships by Student Loan Network Staff

Tuesday Rant – Opinion Piece

Here’s something you will never hear legions of die-hard fans chanting at a home game. We’re an average team – neither terrible or great. We’re somewhere in the middle – that’s not open for debate! Woo hoo!

No one wants to be in the middle yet the middle is where many of us find ourselves, the middle class that is. The middle class is where most Americans reside.  It’s where money gets tight.  And when it comes to financial aid, being stuck in the middle earnings category is like a death sentence. Ok, I may be going a bit over bored with that statement but it certainly has some serious disadvantages.

People who come from low-income families generally qualify for a wide array of financial aid because of their outstanding need. That need is based off the expected family contribution number (EFC) generated from the FAFSA.  In the case of low income families their EFC will come up zero qualifying them for maximum aid benefits. Federal aid, institutional scholarships, and work-study programs allow many to enroll in some of the top schools in the U.S. at a fraction of the cost.

On the other side of the coin you have those who come from high-income families. While they will not qualify for federal assistance the family can usually afford the cost of higher education with little problem. That only leaves the lonely middle class with their pockets empty.

For the middle class student scholarships are often your best bet, and it’s all about power in numbers.  Apply for as many as you can.  You can checkout a scholarship database that houses hundreds of scholarships or enroll in a free scholarship program that give money away each month.  True, the middle class may have to work a little harder to get the aid for school they so richly deserve, but the money is out there if you put the time and energy into the search, and I know you will.  The middle class is always willing to work a littler harder.

10.15.09 | Right Place, Right Time for Federal Aid

Posted in FAFSA, Federal Work-Study, Financial Aid, Stafford Loan by Student Loan Network Staff

So much of life is being in the right place at the right time.  The guy behind you at the convenient store may be the one to scratch that winning lotto ticket while you may be the one that gets hit pulling out of the parking lot.  It’s all about timing.  It’s all relevant.  It’s all this thing we call life.

America has seen a surge in the average age of students enrolling in college (non-traditional) over the past few years since the economy went south.  For once being older may work in your favor.

When completing the FAFSA, if you are under the age of 24 you are listed as a dependent student, unless you are emancipated or married for the most part.  That’s why many students get so frustrated.  Those who are say 22 and living on their own still need to list their parents information on their FAFSA despite the fact that their parents are not helping pay for college.  It doesn’t really seem fair.  But for all of you nontraditional students (ages 25 or older) you can rejoice.

Gone are the days of listing your parents income.  Finally you can cash in on the fact that you barely have enough money for a slice of pizza on a Friday night.    And if you have children, even better.  All of these factors work in your favor to help maximize the federal aid you are eligible for.   And you thought getting old was a bad thing.

File Your FAFSA

10.13.09 | Why Some People Do Not File the FAFSA

Posted in FAFSA, Federal Work-Study, Financial Aid, Stafford Loan, Student Loans by Student Loan Network Staff

college parentOne of the most common statements I hear from my college friends is that their parents never let them fill out a FAFSA. This is a frequent and sometimes costly mistake that students and their parents make when financially planning for college. The following are a few of the main reasons why people do not file the FAFSA and why you should not fall into the same trap.

Reason #1: I will not be eligible for financial aid.
According the Department of Education, approximately 1.5 million students who would be eligible for the Pell Grant do not complete the FAFSA. Could you be one of these people? The only way to even be considered for Pell Grants, Perkins Loans and Stafford loans is by filling out a FAFSA. Additionally, many colleges offer other kinds of financial aid that is not need based, but you still might need to submit a FAFSA to qualify. Some of these scholarships and grant programs are strictly designed for students who have been denied federal aid.

Reason #2: My parents do not want to disclose personal financial information.

This is probably the excuse I hear most often. The good news is that the information that you submit with your FAFSA is strictly confidential. Only a handful of people ever see the information. Try to be proactive in helping your parents understand the benefits.

Reason #3: The FAFSA is long and complicated. Filling it out will not be worth my time.
Although the FAFSA involves gathering a lot of information and can take a significant amount of time you should not dismiss it. College is going to be hard so the FAFSA will be good practice! In all seriousness, the FAFSA is free so why not take a couple of hours to talk to your parents, gather the necessary information, and fill out the form online. You could find out that you are eligible for a lot of financial aid. Also, changes are coming for FAFSA in 2010 so it will be shorter and more manageable than it was before.

07.20.09 | What does federal aid consist of?

Posted in FAFSA, Federal Work-Study, Financial Aid, Stafford Loan by Student Loan Network Staff

When you hear the term “federal student aid” that can be classified into one of three categories.

Grants: Free money that doesn’t have to be repaid, except in some cases when you withdraw from school.

Work-study: You earn money to pay for your education.

Loans: You borrow money for school, which you must repay with interest.

04.01.09 | My Child Signed My Name On Their Loan, Now What?

Posted in Federal Work-Study, Student Loans by Student Loan Network Staff

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.