September 26, 2007
President Bush is certainly keeping students waiting. Graduates debating loan consolidation and lenders pressuring them to go through with it are standing by to see if the Congress-approved College Cost Reduction Act will finally be signed by the president.
If the bill is passed, the government will cut lender subsidies by October 1st. The savings will then be used to increase Pell Grants to needy students. October is fast approaching, but the president has yet to make a move on the bill approved by Congress on September 7th. The potential law is not only important because of the grant factor; it is important because it may mean cuts in financial breaks offered by student lenders.
Lenders have warned that if the bill passes, students will not be granted many of the financial perks they were once eligible for. One of the perks in jeopardy is the Sallie Mae (the largest lender in the business) interest rate cut on consolidated loans to borrowers who pay on time for three years. Sallie Mae and other lenders are making the best of the situation by pressuring students to consolidate with them before things change.
Except that consolidating is not always in a student’s best interest. Students who have loans issued before July 2006, ones with interest rates that change each year, may lock in this year’s rates by consolidating. (loans borrowed after July 1, 2006 have fixed yearly rates.) If interest rates increase, students may be doing themselves a favor. They will be able to keep their discounts and maintain lower rates.
But there is a large chance that rates will go down. If students wait, they may be able to get lower rates that can offset lender discounts, ones that many students aren’t even eligible for. Students should also remember that by consolidating and increasing the lifespan of their loan, they will be paying more in the long run. They will be paying less each month, but additional payments mean more interest buildup.
Consolidation is a tough call. It’s hard to foretell the future. Numerous financial aid administrators suggest that students contact their lenders to find out exactly what discounts they can keep by consolidating. If they are big and the likelihood of eligibility is there, they can consider.
September 25, 2007
The debate on whether ACT and SAT scores are an accurate tool for assessing student abilities has been going on for years. Even though recent studies found SAT scores to be less effective in predicting long-term college success than was previously thought, dealing with these tests is still pretty much unavoidable. Until standardized tests are out of sight and out of mind, students should do their best to get acquainted with them. Below is a sampling of average college SAT and ACT scores as reported by the Department of Education. To find more college ACT and SAT scores, information about estimated costs of attendance, and the number of applicants at schools across the U.S., check out our college search.
September 24, 2007
This week's “Scholarship of the Week” is the Students Serve Grant. By providing students with grants, Student Serve, a not-for-profit organization managed entirely by students, hopes to encourage the application of knowledge in conducting community service.
Students who apply will have to come up with a service-learning project (one that applies class knowledge to service) that will be helpful in solving a community problem. The project should be unique and have the potential to make a significant community impact.
Up to $3,000
1. Applicant must be a high school senior or an undergraduate attending a U.S college or university 2. Winners will have to complete a self-created project that aids a U.S. community
November 15, 2007
1. A description of 1,000 words or less that outlines a service-learning project 2. Two letters of recommendation from professors who can advise applicant on project 3. A completed application
To find additional awards, conduct a free scholarship search.
On September 20, 2007, a meeting of more than 40 representatives and national associations was held to discuss college ethics matters. The off-the-record discussion was organized by David Ward, the president of American Council on Education (ACE), in part as a response to recent investigations into unethical business practices between student lenders and colleges.
According to The Chronicle of Higher Education, the meeting dealt with problems within the student lending industry as well as with questionable credit card solicitations to alumni and sporting-event ticket distributions. Mr. Ward was quoted as saying, “"If, for example, a president is about to sign a contract, somebody should say, 'What's the story we're giving to the public on this?' And if the president pauses, then maybe they need to pause on the contract too."
Pressures on schools to come up with funds have led to questionable actions that include receiving kickbacks from lenders and study abroad organizations. The meeting was to address such actions and to come up with plausible solutions. During the conference, Mr. Ward was asked to create a committee that would address legal problems between colleges and businesses and to come up with a checklist to assist college administrators in recognizing potential ethical problems.
To avoid or minimize the use of student lender services, students can look to scholarships and grants that can assist them in funding a college education. Conducting a free scholarship search will allow students to find myriad awards they are eligible to receive. For additional information on financial aid and college-related issues, students can take advantage of Scholarships.com Resources.
September 21, 2007
Filling out a Free Application for Federal Student Aid (FAFSA) is kind of like filling out a super complicated Christmas wish list. You write it, you hand it over and you cross your fingers when the time to open approaches. A lot of times you’re disappointed with the results. Students should never dismiss the prospect of government aid. Even if they are not eligible to receive need-based grants, they will still have unsubsidized Stafford and PLUS Loans options. Receiving award letters with little or no aid options is frustrating, and it’s all because of that stupid Expected Family Contribution (EFC) formula.
How much government aid a student receives is largely dependent on how much the government thinks a family can contribute to the education of their child. This is what is known as the Expected Family Contribution. Based on the income and asset information students provide on their FAFSA, the government determines a student’s EFC number. The number is then sent to the student’s school of choice which subtracts it from their estimated Cost of Attendance (COA). What’s left over is used to determine if a student is eligible to receive federal or nonfederal aid.
The problem with the EFC is that it often overestimates how much a family is really able to contribute to a child’s education. Although factors such as a (dependent) student family size and the number of family members attending college are considered, the expectations can still seem high. According to a 2004 Department of Education report, a family making between $45,000-49,000 per year was expected to contribute $6,000 to their child’s education. One making between $50,000-54,000 was expected to contribute $7,000 and one that made between $95,000-99,000 was expected to contribute $18,900. It is doubtful that the average family can afford to contribute that much after paying all bills. Those with particular need, families with an EFC lower than $4,110, are eligible for free Pell Grant money this year, but only up to $4,310. That is not the average grant aid a student receives.
Recently released government data shows that, based on the average cost of an education at a public college, a family who sends one student to school is expected to contribute about 25% of their median household income. Those families who send their child to a private school are expected to contribute about 57% of their median household income. Even if students receive the maximum Pell Grant award, $4,310, the family may be nowhere near meeting the costs associated with a college education. If students are lucky, the new Congress-approved Pell Grant increase outlined in the College Cost Reduction and Access Act will be signed by President Bush. Based on White House reports, the president is expected to sign the legislation, but some doubts are still present.
Students who have been offered little or no financial assistance from the government can always look to scholarships and grants for financial assistance. Conducting a free scholarship search will allow students to find myriad awards they are eligible to receive. By using Scholarships.com’s resources, students can find the scholarship and financial aid information they need to fund their education.
September 20, 2007
Attorney General Andrew Cuomo’s investigation into illegal incentives within the student lender industry has burgeoned into a full-out hunt for immoral use of student funds. The buzz has recently spread into college study abroad offices where administrators frequently receive money and free-of-charge trips in exchange for recruiting student travelers. As always, there are two sides to every story, and many college officials have been eager to tell theirs.
According to some study-abroad advisors, the trips were much more business than they were pleasure. College administrators have said that travel was a necessary tool for advisors who educated students on their locations of interest. According to The Chronicle of Higher Education, Ms. Gayly Opem, executive vice president of marketing at the Institute for the International Education of Students, held such an opinion stating, “I don’t know of any other way for them to do it than to visit the program.”
An accusation more difficult to justify was one that claimed students who chose to travel without school program assistance were sometimes denied approval for credit transfers. The New York Times article about Brendan Jones, a Columbia student denied credit transfer from Oxford told the story of one such case. Although Oxford is well known for its academic excellence, and ranked higher than some abroad institutions Brendan’s Columbia peers received credits from, the transfer was denied. Instead of returning, Brendan decided to finish school at Oxford.
Studying abroad is generally regarded as an enriching experience, in a both intellectual and social sense, but brows are rising at the business side of college travel. After Cuomo’s investigation revealed questionable administrative tactics, the idea of colleges and travel agencies marketing travel as a full-out panacea just feels tainted. A 2004 issue of Transitions Abroad magazine featured the results of a study by the Institute for the International Education of Students (IES) which claimed that 98% of students who spent a year abroad returned with increased sef-confidence and a higher level of maturity. It also reported that about 70% of the travelers returned with an ignited interest in a career direction they pursued after the experience. I have a feeling that plenty of students studying in the U.S. also developed career interests during college.
The overall theme of the investigation is that college costs are out of control, and college administrators who act like businessmen are in part to blame. While hope for a major overhaul of the funding system is a bit premature, new legislation passed by Congress will increase Pell Grants and decrease some student loan interest rates. In the mean time, students can fill funding gaps by conducting a free scholarship search and applying for awards. Students can also use Scholarships.com’s resources to find much-needed information about taking control of their finances and planning ahead for college costs.
September 19, 2007
Scholarships are great, all free money is. But as is true for earned income, students who receive awards may have to report them to the Internal Revenue Service (IRS). To be in the clear, undergraduate and graduate students should take the time to check if their scholarships and fellowships are tax free. As long as students are careful about how they spend the money, their awards will probably be tax exempt.
Scholarships and Grants are tax exempt if:
1. The recipient is a degree candidate at an educational institution with a regular faculty, curriculum and enrolled body of students who attend at the location of educational activities.
2. The scholarship money is used for required tuition, fees, books, supplies and equipment. Scholarship money used for room and board, travel and optional supplies is taxable.
3. The recipient is not accepting the scholarship in exchange for services received (e.g., teaching and research). This rule does not apply to scholarships received from the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.
Sometimes, only a part of a student’s scholarship or fellowship will be taxable. For example, a student may receive $3,000 in fellowship money from a school. However, $2,000 of the money will be offered in exchange for assisting a professor in her research (fellowship money usually accompanies such stipulations.) The remaining $1,000 will not be taxed, as long as it is used for qualified school expenses. A student’s future research service earnings may have to be estimated and reported, even if the work has not yet been completed.
To be certain that all income is accounted for, students should take a look at scholarship conditions and whether they can be used to cover qualified expenses. Students who believe their scholarship and grant money may be taxable should report their award to the IRS. If the scholarship is not taxable and the student has no income aside from the scholarship, a tax return does not need to be filed. To find additional information on scholarship, grant and fellowship opportunities, students should conduct a free scholarship search and take a look at Scholarship.com’s financial aid resources.
September 18, 2007
When students unfold their FAFSA award letters, they may find that in addition to loans and grants, they were granted Federal Work Study (FWS) awards. What does work have to do with government assistance? Good point.
Aid in the form of work may not be the ideal award, but students who need significant financial assistance may want to consider working part time. Undergraduate and graduate students may be able to eliminate, or at least decrease, their borrowing needs by conducting a free scholarship search and by accepting Federal Work Study (FWS) positions.
These jobs are administered by colleges and often require cafeteria work, administrative assistance and research help. The work is not always glamorous, and it is often low in pay—think minimum wage. Don’t worry; there are some benefits.
Although FWS income is taxed, students are usually refunded a good chunk of it, and their financial aid eligibility is not hurt in the process. Students who work outside of school may find their future financial aid to be in jeopardy because of earnings. Students who accept FWS positions won’t have to worry about this. Their earnings will not be considered when government aid is determined. This is a great benefit as personal income is counted against students at a much larger rate than is that of parents.
Students who are interested and eligible for Federal Work Study are bound to find a job, and a flexible one at that. And because the jobs are created with students in mind, they tend to offer convenient schedules. The same can’t always be said for stores and restaurants which offer the finest of hours—late nights and weekends. When finals and class schedules changes come into play, flexibility will matter.
Like other FAFSA awards, Federal Work Study money is limited. If an award letter states that a student is eligible for $2,000, they can only work until they reach that point. This may or may not be enough. Eligible students looking for work will have to decide whether FWS jobs or outside positions are right for them. Depending on schedule flexibility, pay rate and interest, one, the other or neither may be the best option.
September 17, 2007
After what seemed like a never-ending battle between the Senate and the House, a compromise was finally reached on the College Cost Reduction and Access Act. What’s more, based on White House reports, President Bush is even going to retract his earlier threat to veto the bill. The proposal was sent to the president on Friday, and a signature is expected shortly.
The main points of the bill include an increase in Pell Grant allocations to students and a decrease in government subsidies to student lenders. According to Bloomberg L.P., about $20 billion of the estimated subsidy savings will be redirected to student loan programs. Among these is the Pell Grant program which, for the 2007-2008 year, awards a maximum $4,300 per student per year. Over the next few years, the maximum sum is expected to rise to $5,400.
Lenders are obviously unpleased and warn that the new bill will harm students in the long run. Certain lender and Congress members predict the changes will push many smaller lenders out of business and will lead to cuts in fee reductions for students with good payment records. However, with many large lenders still competing for business, the bill is likely to help much more than it hurts.Additional bill provisions include a forgiveness plan that will allow students to stop loan payments after ten years of work in public sector fields such as education. Only those who borrow under the Federal Direct Loan Program are eligible, but students who borrow under the Federal Family Education Loan Program (FFELP) can still apply by consolidating their loans under the direct plan.
The bill was initially proposed as a reply to the student loan investigation that uncovered numerous illegal actions within the student loan industry. Many student lenders were found to have offered financial aid officials money in exchange for spots on preferred-lender lists. As the investigation continued, incentives such as stock tips, vacation packages and tickets to entertainment venues were found to be offered regularly.
As always, students should look to free grants and scholarships before taking out loans. However low the rates are, loans still have to be repaid. By conducting a free scholarship search at Scholarships.com, students will be exposed to a world of financial aid opportunities that may enable them to bypass loans altogether.
The “Scholarship of the Week” for this week, the first week, is the Blade Your Ride Video Scholarship award. This award creates an outlet for students who are eager to make a positive environmental change.And the outlet is fun. Those who wish to apply will get to create a 1-2 minute broadcast video expressing their feelings and concerns about the environment. They must do their best to sound convincing about the urgency of changes and the ability of the public to make a significant difference—a topic of bitter debate.
1. One $10,000 scholarship prize 2. Four $5,000 scholarship prizes
1. College Freshman, Sophomore, Junior or Senior. 2. Students enrolled full time in a Bachelor’s degree program 3. Attendance at an accredited U.S postsecondary institution 4. GPA of 3.0 out of 4.0 or a 4.0 out of 5.0 5. No U.S. citizenship requirements 6. Passionate about the global climate crisis
1. Resume 2. Transcript 3. Letter of referral 4. Video
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