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What’s in a Decimal Point?

Online FAFSA Error Makes Low-Income Filers Look Like Millionaires

July 7, 2014

by Suada Kolovic

When it comes to the Free Application for Federal Student Aid (FAFSA), a decimal point could make a world of difference: An update to this year’s FAFSA has cost some low-income filers a chance at some serious federal student aid.

For the 2014-15 FAFSA, the government expanded several income and asset fields in the online form to accommodate higher incomes. Herein lies the problem: Some lower-income filers are missing the .00 outside the box and entering cents into the text field. And when the do that, an income of $28,532.79, for example, is converted into $2,853,279. Big mistake. Huge. If the error isn't caught or corrected on individual forms, the filers could lose out on Pell Grants or other need-based student aid. According to Jeff Baker, policy liaison at the Education Department’s Office of Federal Student Aid, the department has already identified 165,000 individuals who've made the mistake. He's estimated that a majority of colleges have at least one affected student, while some may have hundreds. "It's a serious problem," said Baker at the National Association of Student Financial Aid Administrators’ annual meeting. "We have to fix it." (For more on this story, click here.)

With all the headaches that typically go into applying for federal aid using the FAFSA, what are your thoughts on the current roadblocks? Why not just have filers round income to the nearest whole dollar amount? For more information on the FAFSA, the importance of applying and what you'll need before you get started, check out Scholarships.com’s Federal Aid section.

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Which Colleges Are Worth the Sticker Price?

Colleges with the Highest Return on Your Investment

March 28, 2014

by Suada Kolovic

With all this talk about possible Pell Grant cuts, acceptance rates plummeting and universities facing serious tuition hikes, which schools are worth the outrageous sticker price of about $200,000? According to PayScale.com’s annual survey of colleges with the highest return on investment rates, Harvey Mudd College tops the list with a 8.8% annual return. PayScale.com’s data is pulled from 1.4 million pay reports from persons who obtained bachelor's degrees in the last 20 years, for more on their methodology click here. Check out who made the cut below:

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Understanding President Obama’s Student Aid Bill of Rights Initiative

March 13, 2015

by Suada Kolovic

The financial aid process can be a daunting one but if you're planning on attending college any time soon, you should know that there are tons of federal student aid options available. From Pell Grants to Perkins Loans to the FAFSA, the funding is out there but your eligibility to receive aid depends on your level of need and, subsequently, how much aid you are eligible to receive. Translation: For the majority of students, loans are inevitable. But don't fret just yet because President Obama announced the Student Aid Bill of Rights initiative to help student borrowers with the challenging student loan process.

What it does:

  • Helps borrowers keep track of their student loans. For years, consumer groups and colleges have been warning that borrowers with more than one servicer are losing track of their loans — and winding up in default as a result. The Education Department acknowledged those concerns last fall, when it adjusted some institutions' "cohort default rates," or the share of borrowers who default on their loans within a certain time frame.
  • Make it easier for borrowers to file complaints involving their student aid. Right now, borrowers can file complaints with a variety of agencies, including the Consumer Financial Protection Bureau, the Department of Veterans Affairs, and the Defense Department. But there isn't a centralized website where all borrowers can lodge their grievances against lenders, servicers, debt collectors, and colleges.

What it doesn't do:

  • Prevents students from overborrowing in the first place. Many of the challenges that student-loan borrowers face in loan repayment are the result of unmanageable debt. After all, if borrowers could afford their loan payments, they wouldn't have to turn to income-based repayment or deal with debt collectors.
  • Overhaul student-loan debt collection. They want the government to handle debt collection itself. But the president's plan merely talks of "raising standards" for student-loan debt collectors, and it’s pretty vague about what those higher standards would look like.

For more on the president's Student Aid Bill of Rights, head over to The Chronicle of Higher Education. . What do you think of the president's attempt to ease the financial burden associated with student loans? Share your thoughts in the comments section. And don't forget, going to college doesn't have to break the bank! Check out our Financial Aid section for more info on federal funding and while you're there, conduct a free college scholarship search where you'll get match with countless scholarships, grants and other financial aid opportunities!

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Draft of House Stimulus Package Revealed

January 16, 2009

by Scholarships.com Staff

While it's still a long way from becoming law, the first published draft of the economic stimulus legislation created by the House of Representatives includes billions of dollars for higher education, including several provisions designed to make paying for school easier.  The bill still has to be approved by both the House and the Senate (which is drafting its own stimulus legislation) then signed by the President, so it remains to be seen how many of the following appropriations will make it into the final version of the stimulus package.

The stimulus bill would increase funding to several federal student financial aid programs, as well as providing emergency funds to states to prevent further drastic budget cuts, and designating money to help colleges, especially ones affected by disasters, make needed improvements and repairs.  If the bill is passed, federal work-study will receive a boost in funding, as will Pell Grants, eliminating a projected budget shortfall for the program.  Unsubsidized Stafford Loans will increase by $2,000 per year, bringing the loan limit to $7,500 or more for undergraduate students.  The maximum Pell Grant award will also increase to $5,350.  In addition, lender subsidies will also increase, hopefully enticing more banks to remain in the FFEL program.  The Hope tax credit and a provision that allowed families to deduct up to $4,000 in educational expenses will also be combined into a new $2,500 tax credit, through which families with too little income to file taxes could still receive $1,000.

As Congress hammers out the details of the stimulus bill in coming weeks, these numbers will likely change.  A more detailed breakdown of these and other proposals affecting colleges and universities is available from Inside Higher Ed.

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Both House and Senate Include Higher Ed in Stimulus Bills

January 27, 2009

by Scholarships.com Staff

It's looking like federal student financial aid will be increased in the forthcoming economic stimulus package, at least based on the legislation presented in each house of Congress in its current form.  While the House stimulus bill contains more aid for education, the Senate bill also proposes higher education tax benefits and increases in Federal Pell Grant funding.

The House bill promises:

  • $15.6 billion to increase the Pell Grant by $500 to $5,350 and fully fund the increase
  • $490 million to Federal Work-Study
  • $12.5 billion over the course of 10 years to offer a $2,500 tax credit that will be 40% refundable for those who would otherwise make too little to qualify
  • $6 billion to higher education infrastructure
  • $1.5 billion to improve energy efficiency for colleges, schools, and local governments
  • $39 billion to school districts and state colleges
  • $25 billion to states for "high priority needs" which can include education
  • a $2,000 increase in loan limits on federal Stafford Loans

The Senate bill appropriates:

  • $13.9 billion to increase the Pell Grant by $281 in 2009-2010 and $400 in 2010-2011 and fully fund the increase
  • $12.9 billion to create a 30% refundable $2,500 tax credit
  • $61 million to Perkins Loans
  • $3.5 billion to improve energy efficiency and infrastructure on college campuses
  • $39 billion to school districts and public colleges
  • $25 billion to states for "high priority" needs which may include education

The House bill also includes money to improve financial aid administration and further assist student loan lenders, while the Senate bill will allow computers to be counted as education expenses towards which 529 plans can be used.  The bills are facing some Republican opposition, especially regarding education spending, as it's been argued that construction projects and increases to student financial aid will not directly and immediately benefit the economy.  As Congress and the White House continue to hash out the details of these bills, amounts are likely to change.  But for now, it appears that colleges and college students may receive a little extra financial aid from the government this year.

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House and Senate Reach Compromise on Stimulus

February 12, 2009

by Scholarships.com Staff

The Senate passed their version of the economic stimulus bill Tuesday, and by late afternoon yesterday it was announced that a compromise had been reached between the House and the Senate. The compromise bill includes less funding than either version--$789 billion as compared to $820 or $838 billion, and one of the areas that faced cuts was education.

While the final draft of the stimulus bill has not been released--or necessarily written--yet, some details are emerging in media coverage. It appears that a Pell Grant increase has made it into the final draft, though the exact amount is still unknown. Federal Work-Study also receives a funding boost, though it's also unclear whether it's the full $490 million appropriated by the House. The $2,500 tuition tax credit has also survived, as have several other tax credits not related to education. Proposed increases to Perkins Loans and unsubsidized Stafford Loans appear to have been axed from the conference committee's version of the bill. States will receive some money to offset educational expenses and aid in school construction and renovation, though not as much as the House had appropriated.

More details will likely emerge over the next couple days as the bill makes its way back through the House and Senate for final approval. The stimulus package could be signed by President Obama as soon as Monday. While the stimulus will provide some help to most people attending college, it's not too late to find other ways to boost the funding to your own college education. Conduct a free college scholarship search to see what financial aid is out there.

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House Passes Economic Stimulus Bill

February 13, 2009

by Scholarships.com Staff

The House of Representatives just passed the compromise version of the economic stimulus package.  Now there are just two stop left for it before it becomes law: the Senate and President Obama's desk.  The Senate plans to vote later this evening, putting it on track to be signed on Monday.

As the dust settles, more detailed accounts of what's actually in the bill are emerging.  While the final totals have not yet been made public, Inside Higher Ed has an updated version of their stimulus chart online today, featuring many of the stimulus provisions related to higher education.  The $787 billion stimulus package will include: 

     
  • $17.1 billion to increasing the maximum Pell Grant award by $500 and eliminate a shortfall in funding
  •  
  • $200 million to college work-study programs focused on community service
  •  
  • A $2,500 education tax credit available for four years of college.  The credit is 40 percent refundable, so people who don't make enough to pay taxes can still receive $1000.
  •  
  • A provision to allow computer purchases to count as qualified educational expenses for 529 plans
  •  
  • $39.5 billion to offset state budget cuts to education, including money to modernize facilities
  •  
  • $8.8 billion for states to award to high-priority needs, including education
  •  
 While several items related to federal student financial aid were cut from earlier versions of the stimulus, the final verison will hopefully minimize tuition hikes by giving states more money for education, help the neediest students deal with tuition increases through an increase in grants and work-study, and help all college students a little with the tax option included.  The stimulus package also includes tax rebates, increased funding to several social welfare programs, and changes to unemployment benefits, which could further aid struggling students and families.

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House Approves 2009 Appropriations Bill

February 26, 2009

by Scholarships.com Staff

An omnibus appropriations bill for the current fiscal year passed the House yesterday and is on its way to the Senate.  This piece of legislation will raise the maximum award for Federal Pell Grants to $5350 for 2009-2010.  The bill was put on hold last year due to threats of a veto from President Bush.

While Pell Grants received a funding boost, SEOG grants will remain at 2008 funding levels, as will work-studyPerkins Loan cancellation programs will receive a boost in funding to cover shortfalls.  Additionally, TRIO and Gear Up programs, aimed at helping low-income students get into college, also received more funding.

The first draft of the budget for the 2010 fiscal year is also heading to Congress soon after being unveiled by President Obama this morning.  While details are still emerging, based on an address the president delivered Tuesday, it's likely that further funding for financial aid programs and higher education in general will be included. 

While budgets are being hashed out and college aid is generally on its way up, more trouble may be brewing for student loans.  A PLUS loan auction program slated to go into effect this summer could reduce the availability of these loans that parents take out on behalf of their students, at least at schools participating in the FFEL program. Financial aid officers have petitioned Congress to delay the scheduled cut in PLUS loan subsidies so as not to jeopardize students' ability to pay for school in the midst of a recession that has already driven dozens of banks away from one form of student lending or another.

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Yet Another Boost to Pell Grants in 2010 Budget Proposal

February 27, 2009

by Scholarships.com Staff

Details of President Obama's proposed 2010 budget are emerging, with education being one of the first sections unveiled.  In the budget proposal are increases and structural changes to Federal Pell Grants, changes to Federal Perkins Loans, and the potential elimination of the Federal Family Education Loan Program, so that all new Stafford Loans and PLUS Loans for 2010-2011 would be originated by the federal Direct Loans program.  The president's budget also recommends that the new $2500 American Opportunity Tax Credit be made permanent, and that $2.5 billion be devoted over the next five years to programs to increase college access and completion.

After remaining nearly stagnant between 2002 and 2007, the maximum award for the Federal Pell Grant has increased significantly over the last few years.  It shot up from $4050 in 2006-2007 to $4310 in 2007-2008, then $4731 in 2008-2009 and now stands at $5350 for 2009-2010.  If this provision in President Obama's 2010 budget is adopted by Congress, the maximum Pell Grant will be set at $5500 for 2010-2011, and from there on out, it will increase in step with the consumer price index, plus 1%.  This award amount would become mandatory, as well, saving Pell funding from being at the whim of Congress.  This is good news across the board for now, but may be a problem later, since tuition and fees have steadily outpaced inflation for most of recent memory and it is entirely possible that they will soon leave the Pell Grant in the dust, despite this new funding commitment.

While the president's plans for Pell Grants and tax credits have largely been met with enthusiasm, the proposed changes to student loans have received mixed reactions.  Changes to Perkins Loans would be good for some schools and students and bad for others, but would increase access to the loans overall.  The move from FFELP to Direct Loans also has its ups and downs.

Channeling all Stafford Loans and PLUS Loans through Direct Loans would save money and streamline the process, and it may even reduce confusion about federal versus private loans, since students would no longer be borrowing both from the same bank.  However, some worry that despite the extent to which incentives have already disappeared and the FFEL program has been subsisting off temporary goverment support for the past two years, abolishing it entirely may hurt students in the long run.  Moving to a single lender system would eliminate what little competition in the student loan market remained, doing away with the possibility of future repayment or loan consolidation incentives.  Others worry that some of the counseling and support that FFELP funding provided to borrowers would disappear, though a new $2.5 billion grant program would likely supplement these programs.

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The State of Federal Student Financial Aid

March 3, 2009

by Scholarships.com Staff

With all the talk about spending and stimulus legislation and bailouts, it can be easy to lose track of what benefits taxpayers can actually expect to receive. Most likely, everyone knows that the American Recovery and Reinvestment Act, perhaps better known as “the stimulus,” will create jobs through funding “shovel-ready” projects and will put a little extra in paychecks through a tax rebate that will take effect this summer.  You probably also know that there’s also financial aid in there for education, but you may not be sure exactly what.

Frankly, so much federal legislation and talk of change has been floating around in the last two years that anyone who last paid a tuition bill as recently as 2007 probably doesn’t even recognize financial aid in 2009.  To help, we’ve prepared a breakdown of where student financial aid stands currently.

Pell Grants. The American Recovery and Reinvestment Act increased the maximum Federal Pell Grant award from $4,731 for 2008-2009 to $5,350 for 2009-2010.  The maximum Pell award will go up again in 2010-2011 to $5,500 under this legislation.

The income threshold to qualify for federal grant programs also increased.  Now students with an expected family contribution (a number determined by completing the FAFSA) of up to $4,671 (up from $4,041 this year) can qualify for Pell grants.  They will not receive the whole award, but even the minimum award has increased—from $400 for full-time students in 2007-2008 to $976 for the same group in 2009-2010, due in part to the College Cost Reduction and Access Act, which increased all Pell awards by $490.

Students qualifying for Federal Pell Grants can also pick up additional college funding through Academic Competitiveness Grants or SMART grants, which include Pell eligibility in their criteria.  Many non-federal college scholarships and grants also use Pell eligibility to determine awards, so the newly Pell-eligible will definitely want to do a scholarship search to see what’s out there.

Work-Study. More students will also see “federal work-study” on their financial aid award letter in 2009-2010 thanks to the economic stimulus legislation.  More money is available to work-study programs that allow students to get a part-time job on (or occasionally off) campus and count the income as financial aid.  Work-study programs provide great job opportunities for student workers, and since the money is given in the form of a paycheck, students can use these funds to pay their tuition bills or to cover living expenses.

Tax Benefits. One of the biggest perks of the American Recovery and Reinvestment Act is the creation of the American Opportunity Tax Credit, which replaces the Hope Credit.  The tax benefits under Hope only went up to $1,800 and only could be taken for two years.  The American Opportunity Tax Credit can be used for four years, can fund up to $2,500 of college costs (100% of the first $2,000 plus 25% of the next $2,000, for a total of $2,500), and up to 40% is refundable, so people who don’t pay as much in taxes as they would qualify to receive in the credit can still get something.

Additionally, the income level at which the American Opportunity Tax Credit phases out is higher than the Hope credit, allowing individuals with incomes of up to $90,000 and married couples with incomes of up to $180,000 to take it.

Families will be able to start taking advantage of the American Opportunity Tax Credit on their 2009 taxes.

Other Benefits. Much more is included in the American Recovery and Reinvestment Act.  For example, students with 529 savings plans can now use that money to purchase a computer for school.  Additionally, states will receive billions of dollars over the next two years, with a portion of the money devoted specifically to funding projects at public institutions of higher education, as well preventing or reversing massive reductions in state education spending.

While student loans stayed the same in the stimulus, they did receive a boost in the fall through the continuation of the Ensuring Continued Access to Student Loans Act, as well as other recent legislation, including some new aid to lenders.

If you’d like to read more about how recent legislation has affected paying for college, our blog archives feature breakdowns of the 2007 College Cost Reduction Act, the 2008 Higher Education Opportunity Act, the 2008 Ensuring Continued Access to Student Loans Act, the 2008 GI Bill, and more examples of what's going on with college in Congress.

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