Friday, October 29, 2010

FAFSA: One Application for Student Loans, Grants, Scholarships, and Work Study

The Free Application for Federal Student Aid is a pretty versatile form. Recently the FAFSA has been overhauled, making it even easier for students to apply for financial aid. However, many students are still not aware that the FAFSA allows a student to apply for all types of federal aid on one simple application. The FAFSA allows students to apply for a lot more than just subsidized and unsubsidized federal student loans. You can also:

*Apply for grants. Federal or school-specific grants can be applied for by filling out the FAFSA. Income information collected will be used to determine what grants you qualify for. As most federal grants are based upon financial need, the more need you have, the more likely you’ll be to get good grants. Don’t forget there are also state-level and private grants that you can apply for locally and on the web.

*Apply for scholarships. Eligibility for federal or school-funded scholarships will be automatically determined when you fill out a Free Application for Federal Student Aid. Scholarships will have more requirements in order to qualify, but often offer better availability and more money than grants. There are also thousands of scholarships available from businesses, organizations, and private individuals.

*Apply for Federal Work Study. Federal Work Study eligibility is determined based upon the financial need established on the FAFSA. Federal work study is usually offered in conjunction with scholarships, loans, and grants, enabling you to get all the money you need to reach your educational goals.

Thursday, October 28, 2010

FAFSA: New Regulations under the Obama Administration Effective July, 2010

While the FAFSA has long been a fixture in American colleges, universities, and schools, it wasn’t that long ago that the form and process was entirely different. New legislation passed by the Obama administration took effect in July, 2010 that significantly changes the FAFSA, or Free Application for Federal Student Aid.

Perhaps the most significant change is the elimination of the old FFEL program, or Federal Family Education Loan program. As of 7/10, all educational loans will be administered by the United States Department of education under the Federal Direct Student Loan Program. Students who still have FFEL balances can continue to pay them as planned, or may utilize a loan under the FDSLP to payoff and restructure the FFEL. By making this change, the Obama administration hopes to save $80 billion dollars over the next ten years. These savings will be reinvested in the educational system by bolstering grants and scholarships, and by funding opportunities for those with financial need.

Now that all student loans come from the Fed, the FAFSA has been streamlined, has fewer questions, and is less complicated. It’s also a one-stop-shopping document: filling out the FAFSA allows a student to apply for loans, grants, scholarships, and work study programs on one integrated form.

The FAFSA and its management were also changed as of July, 2010. The database system that stores student loan information has been streamlined and is managed more efficiently than previously. This means that your loans and other forms of student aid can be approved quickly.

Wednesday, October 27, 2010

Complete the FAFSA: Know what's on it BEFORE you fill it out

Students who are prepared for the SAT’s are statistically more likely to perform well on them than a student who did not prepare for nor had no prior knowledge of what the test would consist of. The same can be said of the FAFSA, or Free Application for Federal Student Aid. Knowing what’s on the form will enable you to be more effective when filling it out, as there are a number of documents and pieces of information that must be collected in order to validate your information. This will result in getting all of the financial aid you deserve, whether that be loans, grants, scholarships, or work study.

The best way to begin is to download a FAFSA from the US Department of Education website. FAFSA’s are also available on most school’s websites. Study the form, and collect the documents requested. In general, the information you must provide will include:

*Your income and personal information. Your full name, address, date of birth, social security number, etc. All income earned from all sources, including dividends earned on investments. This will include providing your most recent year’s tax returns.

*Your parent’s income and personal information. Their full names, birthdates, social security numbers and more. If you are a dependent student, your parent’s income information will determine how much aid you receive.

*Your student status is a primary question on the FAFSA: Are you part time or Full time? Dependent, Independent, or Independent with dependents?

*Military service. You must indicate on the FAFSA whether service is active duty, reservist or Veteran.

*Information about the school/ program you intend to enroll in

*Information regarding your interest in non-loan programs, such as scholarships and grants

*Your parent’s education history

*Information regarding your criminal history is required on the FAFSA, as some drug convictions can bar you from receiving awards.

*Your marital status

Being prepared by having these documents and pieces of information available can go a long way toward getting you the financial aid you need. In fact, if you have this information available, completing the FAFSA can take as little as 25 minutes. However, if you don’t understand something on the FAFSA, you may use the help feature on the US Department of Education’s website, or ask a financial aid official at your school.

Tuesday, October 26, 2010

Where do you stand? The FAFSA and Your Student Status

Many students find themselves confused about their student status as determined by the Free Application for Federal Student Aid, or FAFSA. Student status is used to calculate available loan, grant, scholarship, and work study programs. Because the FAFSA generally awards these programs to students with financial need, the establishment of student status is crucial in making financial need determinations. However, many students fill out their FAFSA using the wrong student status, resulting in delays in loan approvals, and the possible loss of a class if it fills up before all FAFSA issues have been resolved. Therefore, understanding your status is essential to effective use of the FAFSA.

You don’t really need to figure out if you’re one or the other- you only need to figure out if you are NOT independent. Independent students are those that:
*Are married at the time of FAFSA
*Are 24 years old or older as of December 31 of the FAFSA award year
*Are enrolling in a Master’s or Doctoral program
*Were an orphan or ward of the state
*Parents were deceased after age 13
*Were legally emancipated (special conditions apply)
*Were determined to be a homeless youth by a state-approved youth services facility
*Have dependents that get more than ½ their support from student
*Have dependents that live with student and receive their support from student, including dependent adults
*US Armed Forces Veterans
*Military members on active duty (for other than training purposes)
If you do not fit into one of these categories, chances are that your student status is dependent according to the FAFSA. Some exceptions may apply. Students that do not communicate with their parents or those that come from abusive homes may be able to get a dependency override. Regardless of the situation, all students who do not clearly fit into one of the described statuses above should speak to financial aid counselors at their school in order to determine the correct status to use.

Wednesday, October 13, 2010

FAFSA Application Questions

The FAFSA or Free Application for Federal Student Aid is the comprehensive form that all college students must fill out in order to determine eligibility for college money. This form is comparable in content and length to the IRS 1040 form, but may have additional questions for students with financial need. You would think there would be dozens of companies out there trying to get you to hire them to help you fill out the form. Well, there is not. There is only one mainstream company that you can hire to help you file the FAFSA. Or, of course, you can do it for free with the help of the contractor of the federal government. They do have a call center staffed with highly trained, er more like sweat shop workers that are happy to answer your questions and walk you through anything. Of course, as long as you can do it in under 3 minutes!

So how on earth are you supposed to answer questions like, "IRA deductions and payments to self-employed SEP, SIMPLE and Keogh"? Wow, would your accountant even know that? Well, of course they would, but that is not the point. The FAFSA application questions are pretty tough and you want to make sure you know exactly what you are doing so as to not cheat yourself out of any federal aid by making mistakes.

You can always go to the FAFSA site and go through a worksheet first to make sure you have all the information handy when you start the application. Most colleges offer a "Super Sunday", where you can go down to the college with all your information and there are people there ready to help you submit your application.

Whatever you decide to do, please make sure you know the FAFSA application questions before you start.

Thursday, October 07, 2010

College is a Privilege, not a Right!

Going to college and getting a degree is almost a necessity in the US today. Statistics have been published that indicate college graduates make something like one million dollars more in their lifetime than a high school graduate. This is not the case for 100% of the people in this country. Bill Gates, Paul Allen, and Sheldon Adelson are all college dropouts.

Back to my point. I have met so many teenagers that are about to graduate that are getting a hard dose of reality when it comes to paying for college. They think that going to college and getting a degree is a birth right and they get mad when they realize how much a degree actually costs.

So you want to go to a party school or an out of state college? Plan on shelling out tens of thousands of dollars to go. If you think that financial aid is going to pay for it all, think again.

If you and your parents are living below the poverty level and you are eligible for the most financial aid possible, you are only looking at about $15,000 total for the entire year. That includes a full Pell grant, FSEOG grant and the maximum Stafford loan.

It is VERY hard to get a full Pell and FSEOG; they are reserved for people with very little money, not very little money for college.

Tuesday, October 05, 2010

Community College vs State School

I get questions all the time asking me if students should go to a community college or a state school first. These are also the same students who are asking about or looking for money for college. If you do not have enough money for college and the financial aid offers are not pouring in, then you should DEFINITELY consider going to community college for 2 years first. In my area of the country community colleges are about 25% of the cost of traditional 4 year schools; and the education is the same.

Not everyone is going to be able to attend an Ivy league school for all four years, so it is best for you to plan for your life right now. That is going to include planning for the debt you are going to incur. I will always suggest going to community college first.

Monday, October 04, 2010

FDSLP

I have had a couple of questions recently about the FDSLP. This is the acronym for Federal Direct Student Loan Program. It is the blanket term for all the direct student loan programs for college students. It includes subsidized and unsubsidized student loans, consolidation loans, and PLUS loans. All direct loans are now serviced and funded by the United States government.