It’s tax season again and one of the most common questions from students right now is whether or not they have to claim their financial aid (grants, loans, or scholarships) on their taxes. So to clarify, students have to claim on their IRS tax forms any money gained from services for which they received payment, investments, and self-employment income. Generally, amounts spent on education, scholarships, grants, and loans are non-taxable, though there are some exceptions. To note, most tax-free treatment of income, credits, and deductions require the student to be a degree candidate, but not all. (more…)
12.12.10 | Top 5 End of year financial aid strategies
Source: FAFSA blog
As we approach the end of calendar year 2010, it’s a good idea to turn our eyes to the future and start thinking about our 2008 financial aid efforts. Here are 5 strategies to help you make the most of the waning days of 2010 with payoffs in the year to come.
1. See an expert. Most community banks and credit unions offer access to a certified financial planner for little or no charge, making them a great, hidden resource for figuring out your finances. Take the opportunity and an hour or two on a weeknight or weekend to see one and review your personal finances. Get a sense for where you are and how your finances are currently set up.
2. Start writing scholarship essays. Scholarship season really starts in earnest in January of each year, and the sooner you can get your applications in to a scholarship foundation, the sooner you can move onto the next application. Do your research for which scholarships would be appropriate to apply to, and download their applications. The most time consuming part of the scholarship search is the essay, so start writing now!
3. Do your budget. January is often thought of as the time to embark on resolutions, but now is the time to plan for those resolutions so you can hit the ground running after the champagne’s gone.
4. Set goals. Set measurable, achievable goals for yourself in 2011, like a scholarship application a weekend. Be sure to have a calendar set up so you don’t miss any deadlines.
5. Get ready to file your FAFSA. The FAFSA process kicks off on January 1, but having your IRS 1040 mostly done will speed up the process, as will doing the FAFSA worksheets. Run through our FAFSA tutorials here on FAFSAonline.com and make notes of where you have questions – then contact your financial aid officer or attend a College Goal Sunday event to get those questions answered!
The FAFSA blog is sponsored in part by:
Five most recent FAFSA form help blog posts:
In my previous post, I gave a quick run down of the types of financial aid that I can apply for to help finance my education. Applying for federal aid will be my first step, so I want to start preparing my FAFSA form.
Why do I need to fill out a FAFSA form?
In order to qualify for federal aid for students, you must complete and submit the Free Application for Federal Student Aid (FAFSA) to the U.S. Department of Education. This form is used to calculate your financial aid eligibility based on the financial and demographic information for you and your family.
Once complete, the Department of Education will forward a record of the application to the school/schools you specify.
What can I do now to prepare my FAFSA?
While the FAFSA needs to be filed with your 2010 tax information (which you won’t get until at least January of next year), it is recommended that you get a head start on gathering the right information now. In fact, most of what you’ll need for the FAFSA can be taken care of now. You can also estimate your tax information based on this years forms, however, this is only recommended if you can make a very accurate guess.
Below is a check list for what you and your family can do now to prepare early for the college financial aid application process:
Financial Aid Deadlines: Begin gathering the deadlines for your financial aid applications. Each school may have different deadlines.
Tax Information: Grab your 2010 tax forms, and anything else you are preparing for 2011 as well. You’ll receive your W2′s in February of next year and you may want to update your FAFSA when that information arrives.
Asset and Demographic Information: This where you list the financial details about you and your family, including your assets and demographic information. For help with what this will entail, visit FAFSAOnline.com and send your parents here.
School List: You can tell the Department of Education to send your results to a maximum of 10 schools. You will have to list the schools by their school code, which can be found here: FAFSAOnline.com – School Code List. When you’re looking into schools and noting their deadlines, make sure you find their code as well.
FAFSA Pin: Both you and your parents need to sign up for a FAFSA Pin #. This number will be used to identify you throughout the application process, and you can get it early and put it away in a safe place!
Ok, now go! You can download the FAFSA form now. You may file it early, but you will have to then update the forms next year with your new tax information.
08.31.10 | Crash Course in Financial Aid for a Newbie
My mission: In one month, learn everything there is to know about the financial aid process, and federal student aid programs so that I can get a jump start on my applications.
Armed with: ejacobs (Student Advocate from FinancialAidForum.com), a variety of web resources that I found from the Student Loan Network, some books and packets, federal student aid guides, the web-o-sphere, and my peers.
Reason: I’d like to go back to school, but I’m not swimming in cash. I recently read that incoming students often underestimate how much financial aid they will get from the government and fail to take advantage of it. I’m determined to find the maximum amount of aid possible for my situation.
There are a variety of online resources I found helpful in the start of my learning process, and I will share some of them with you below. (more…)
08.25.10 | Get a Private Student Loan to Pay for School
Hey, fellow college kids! It’s the time of year again for school to start. Are you wondering how you’ll be able to pay for it? Don’t let a school’s price tag or lack of financial aid scare you away. Be sure to look into getting a private student loan.
Private student loans are offered by a wide variety of companies, and allow users to borrow up to the full cost of their education. Besides your actual school tuition, you can also use a private student loan for textbooks, housing, meals, and any other school-related fees. Unlike federal loans, interest rates for private student loans vary, and there are absolutely no deadlines. While scholarship applications and FAFSA enforce deadlines, you can apply for a private student loan at any time.
To qualify for a private student loan, you need to be a United States citizen or permanent resident applying alongside a co-signer with good credit history, and be enrolled in school at least half time. Find out what your options are now!
03.24.10 | Federal loan package not enough? What now?
If you have recently been disappointed with your financial aid award letter, you might be left wondering how you can cover some of the costs of tuition. What if the federal Stafford loan simply isn’t enough?
Rest assured, you’re not alone. In the vast majority of cases, a Stafford loan will not cover the entire cost of attendance. If your federal aid is less than you hoped, you may seek out alternative options. Private student loans are a common supplement to federal loans as they are based on credit, not need. You can learn more at PrivateStudentLoans.com.
In some cases, there has been a change to your situation since you filled out your FAFSA. If a parent has since become unemployed or suffered another financial setback, you may be able to request additional funds. You should speak with your school’s financial aid office as they will work to secure you additional federal loans. Be prepared to provide paperwork to support your case (pay stubs, etc.).
03.23.10 | Let’s Plot Out Your School Expenses
As a recent college graduate, if I can share one piece of advice with all of you that are just starting college, or currently working on your degree, it’s this: plan and budget where your financial aid is coming from.
There is nothing worse than being a month out from the start of your semester with a huge tuition bill on your kitchen table and no idea how you are going to cover the few thousand dollars left behind after federal loans and scholarships are taken out. (Believe me, I’ve gone through this more than once in small panics.) So, the best way to make sure you are organized and 100% ready to start your semester with a clean, low-stress slate is to plot it all out.
03.08.10 | Pell Grants, in Plain English
The Pell Grant is an excellent award set up for financially needy students to help afford the cost of college. It is maintained by the federal government, and acts differently than other financial aid offerings.
How does a Pell Grant work?
Pell Grants are based entirely off of the information presented on a student’s Free Application for Federal Student Aid or FAFSA form. They are meant for low-income students, and do not need to be repaid unless the student drops out of their degree program. One additional criteria to qualify for a Pell Grant is that the student must be pursuing his or her first bachelors degree. This means that if you are going back to school for another bachelors or are taking classes casually, you will not qualify for a Pell Grant.
In addition, your school must participate in the Direct Loan or FFEL programs for you to qualify for a Pell Grant. Check with your school’s financial aid department to see if they are approved to receive Pell Grants for their students.
Pell Grant Awards
For the 2010-11 academic year (Fall 2010 to Spring 2011), the maximum you can receive through a Pell Grant award is set at $5,350. As I said before, your individual award is largely based on the information presented in your FAFSA, but also on the total cost of attendance reported by your school. To receive the most you can from the program, you ideally want to show low family income and high cost of attendance at your chosen college.
Because of these very strict requirements, the Pell Grant is typically only seen in the aid reports of very financially-needy students. If you are an independent, low-income student, the chances of receiving one of these awards is much better than if you were reporting the income of family members on your FAFSA as well.
This can be tricky for most students, as you are forced to include your parents’ income on your FAFSA until you are 24 years old. However, if you live apart from your family, don’t have a relationship with them, and support yourself, you can legally emancipate yourself to greatly boost how much need-based financial aid you receive (assuming you are low-income, yourself.) I personally would not recommend this, but if you are in a dire enough situation that you desperately need the financial aid, a legal emancipation will strip away your parents’ ability to report you on their taxes, and therefore lower your income for the purposes of filing your FAFSA and receiving more need-based aid.
03.02.10 | Why get a Federal Stafford Loan?
First off, if you haven’t filed your FAFSA yet… get on it! Many schools’ deadlines have already arrived for financial aid, and the rest are all due within the next month. Without the information contained in your Student Aid Report (SAR) submitted to your school, they can’t begin to put together your aid package.
OK — PSA aside, let’s talk a little about Stafford loans. If you’ve read my Stafford Loans, in Plain English blog (and I hope you have… it has good stuff in it), you know the basics.
To use an analogy, a Stafford loan is like a pair of designer jeans you happened upon in a discount store. They have a lot of value, and cost much less than if you bought them at their original store (or in the case of loans, applied for a private student loan instead.)
Stafford loans are the most desirable type of loans that you can take out for your education due to their low, fixed interest rates. In contrast, private student loans generally have higher, variable interest rates that fluctuate with the economy and can end up costing you ridiculous amounts of interest. So, if you need to take out a loan… try to make it a Stafford. It will save your money in the long run.
02.17.10 | Federal Work Study, in Plain English
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