Opinion Piece – Friday Rant

As anyone who has gone through the financial aid process knows, Pell Grants are only offered to undergraduate students and have a maximum lifetime limit of 18 semesters or its equivalent and are not offered to Grad students.

So let me get this straight.  I can toil around in the undergraduate ranks for years until I get my degree but can not attend a four year school, secure my degree in 8 semesters, and then qualify for any grant assistance if I elect to go to Grad school?  How is that fair?

What are we doing to help the future leaders of our country?  Oh yeah, we are keeping the interest rates on their federal loans at levels well above the federally mandated yield.  I think it’s really great that Grad students are paying the mandatory government rate of 6.8% on Grad Stafford loans and not the student market rate of 2.5%.  And since the federally mandated yield to lenders for Stafford loans dropped to 2.08 percent, which is an earnings cap for lenders, where does the rest of that money in interest go?  You guessed it, back into the pocket of the federal government to spend frivolously.

If nothing else your graduate degree may give you better insight as to why the system is the way it is.  Of course that’s assuming you can afford to pay for grad school.

Sound off below!

Many recent college graduates have fallen victim to the state of the US economy. Although financial experts suggest that conditions are improving, 263,000 jobs were cut in September lifting the unemployment rate to 9.8%. This statistic does not bode well for new job seekers.

It’s sad because after graduation most young adults are itching to enter the workforce.  All those years stuck in a classroom really take their toll. Earning some money and gaining independence is the next step in life.  However, with so few jobs available some savvy students are choosing to go back to Grad school now.

Going to grad is an excellent way to bide your time while you wait for the job market to turn around, and the good news is that there are a ton of graduate loan options for graduate students.

Another benefit of going back to school is loan deferment on your undergraduate loans. If you graduated in May of 2009 chances are that you will have to start paying your undergraduate college loans back next month. However, if you are in grad school you are eligible for in school loan deferment.

And though you may worry about piling more debt on, with a graduate degree you will increase your earning potential which will benefit you in the long run.

Did you realize that when you withdraw from a class it may hurts your federal aid?  Isn’t that ridiculous?  At least I think so.  As it is you are already out the money for the class, but you may get hit with a double whammy.

I say you “may” get hit because each school handles this differently. While The official eligibility requirement states that students must maintain a “C” average, or standing consistent with graduation requirements, it does not speak specifically to the attempted vs. completed credit hours.

Many schools require that you complete 75% of the credits you attempt (including all transfer credits) in order to be eligible for federal aid.  Make sure you check with your school to confirm what your satisfactory academic progress standards are.

What do you like most about the Stafford loan?  Is it the low fixed interest rate?  Is it the fact you don’t have to begin repayment until you are out of school? How about the fact you don’t need a co-signer at a time when everyone is required to have a co-signer on a loan?  Or perhaps it’s the possibility of having your entire loan balance forgiven if you go into certain fields.  It seems there is no shortage of reasons to love the Stafford loan.  Stafford loans are like the loan for the people, though they do have set thresholds.

Keep in mind if you do fall short of the funds you need you can always go the private student loan route, though those loan types do requre a co-signer.  You can also look into scholorship opportunites.  You can search a scholarship database or sign up to be a Scholarship Points member with a chance to win one of the free monthly scholarships given away to students here in the United States. Monthly scholarship awards range from $500 to $10,000 per month.

Did you know that you do not need to demonstrate financial need to qualify for a work study at school?  Both federal and non-federal work-study programs exist.

Federal work-study programs are based on demonstrated financial need.  An individual must meet certain eligibility requirements and complete a FAFSA.  On your FAFSA you will want to make sure you mark “yes” to the question asking if you are interested in student employment.  If you are eligible your FWS award will be listed on your awards letter from the school.  If you did not qualify for any reason but are still interested you may be able to scoop up a non-federal work-study job.

The Non-Federal Work Study is not based on financial need which means any student is eligible.  You should inquire with your school about any available opportunities on campus.  It is generally advisable to seek employment on campus before seeking any off-campus job as on-campus employers tend to be more understanding to your class schedule and school commitments.

If you are still short on funds after grants, scholarships, or federal loans like the Stafford loan you may also want to consider a private student loan.  With interest rates at historic lows there has never been a better time to take out a private student loan.

- Complete Your FAFSA

- Apply for a Private Student Loan

In all of the debate about changes to financial aid, lots of small stuff is getting overlooked, such as proposed changes to the Student Aid Report, the report that families and students get after successfully completing the FAFSA. The SAR in the past has been a hideously ugly, incredibly complex affair to attempt to decode. Happily, the Department of Education has been simplifying how the SAR looks and how it presents information to you. Here’s a preview of the new SAR compared to the old one.

Old

See how completely unclear your federal financial aid eligibility is? You’d be hard pressed to know what you’re eligible for. The number you’re actually looking for is in the upper right hand corner, the EFC.

New

This is much, much easier to read for everyone. In the second section, the federal student aid eligibility, we can see plain language detailing what your EFC is, plus what that means for scholarships, grants, and loans in the text.

This is a huge improvement and should help reduce some of the anxiety students and families feel about the financial aid process.

Stepparents may not be obligated to aid you with your studies, but that doesn’t mean their financial details are not required.

I realize that probably doesn’t sound fair to you – that someone who doesn’t contribute a single dime toward your college education is calculated into the FAFSA, but it really does make sense. His or her income and assets represent significant information about families resources as a whole.

Perhaps this stepparent helps pay the mortgage, put food on the table, or pays the electric or gas bill.  These may sound like basic necessities, which they are, but it is all part of the cumulative family picture that the Department of Education is examining when considering all applicants for federal aid.

Lately I’ve been administering our FAFSA twitter account, and noticed that a LOT of people are talking about the FAFSA and musing aloud why it’s so hard. Here’s why: the FAFSA is designed to be complex and ask a ton of very detailed questions for one reason alone:

To discourage fraud.

See, the FAFSA is the gateway to a limited pool of money set aside by the government in order to help families pay for college. That pool includes scholarships, grants, and subsidized student loans like the Stafford loan. Because that pool of money is limited, everyone and their cousin wants to get a piece of it.

Now here’s the twist: as with any system, there are loopholes in the FAFSA. Originally, it was a much simpler, much less complex form. What happened? Wealthy families hired really good accountants and financial planners to figure out all of the loopholes in an hour or so and then restructure their finances so that their kids – who didn’t need the money – would appear dirt poor on paper and get free money from the government.

For example, there used to be a provision prior to 1992 on the FAFSA that said if you were self supporting for two years, you could claim independent status and qualify for a lot more financial aid. Well, no surprise, the paid financial consultants of the rich got their kids all set up as independents and leeched a lot of money out of the system that should have gone to legitimately needy families. That provision was revoked, making it harder for those accountants to do it again. This frustrates kids who are legitimately self supporting but are still classified as dependent students, and understandably so, but the alternative is to have much less money available for everyone.

This is why the FAFSA is as complex as it is today, and why we need to take FAFSA simplification efforts both seriously and cautiously, so that we don’t inadvertently make it easier for people who don’t need the money to get at it. The alternative is that we just crank up taxes on everyone really high and make education free, but 70% of every paycheck goes to the government.

If you’d like help making the FAFSA easier, check out our free FAFSA guide eBook. It’s written to walk you through each of the questions on the FAFSA and explain in plainer language what the question is really asking you. Be sure to also check out our free college scholarships program while you’re at it.

In May, Education Secretary Arne Duncan alerted financial aid administrators that they should make students, parents, and families more aware of options for increased financial aid due to loss of job and income using the professional judgement override system. For consumers, asking for a professional judgement override on future earnings and income, along with proper documentation (tax returns denoting previous income, termination notice, and unemployment benefits paperwork) will allow families to ask for reconsideration of financial aid.

In recent professional judgements, additional help is being given by financial aid administrators by implementing guidance from the Department of Education that says unemployment benefits should also be discounted in financial aid appeals. This means that for families where unemployment benefits are the only source of sustenance income, financial aid will not be eating into your unemployment insurance.

If you’ve faced job losses recently, make sure you contact your school’s financial aid office to potentially appeal for more financial aid, and when you complete your 2010-2011 FAFSA, be sure you do NOT include unemployment benefits as additional income on your FAFSA.

The Department of Education has published the latest draft FAFSA for the 2010-2011 school year. As part of our ongoing efforts to keep you informed of FAFSA changes, here’s what’s in the latest patch notes:

Colors

The 2010-2011 FAFSA colors are blue for student information and purple for parent information.

Year References

All year references have been incremented by one year.

Design

The design and layout of the FAFSA are consistent with the 2010-2011 FAFSA which was redesigned into a booklet format. The application pages are numbered three through eight and can be torn out for submission.
The informational pages and notes pages surround the application (pages one through two and pages nine through ten).
As in previous years, a return envelope is included.

Data Elements added

For both the student and parent a data field has been added to the Additional Financial Information. Questions 44(f) and 92(f) will collect amounts for earnings from work under a cooperative education program offered by an institution of higher education.

Data Elements deleted

The two data elements for veterans education benefits are deleted (formerly Questions 44 and 45).

Other changes

State deadlines have been updated.
Revisions to marital status responses (Question 16).