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More Early Filers for 2009-2010 FAFSA

March 12, 2009

by Scholarships.com Staff

More students are completing the FAFSA early for 2009-2010 according to data collected by the Department of Education.  By the end of February, more than 3 million students had filed their FAFSA for the next academic year, an increase of over 20 percent from the first two months of 2008.  As application deadlines approach, this flood of applications could slow, but right now it looks like there will be more demand for financial aid in the coming school year.

Federal student financial aid is becoming an increasingly attractive means of paying for college.  For starters, federal aid is up for 2009-2010--in the case of Federal Pell Grants, way up.  A combination of factors has boosted maximum grants to $5,350 in 2009-2010, while simultaneously raising the minimum award to $976 and the maximum qualifying Expected Family Contribution to $4,671.  Low interest rates and expanded federal loan cancellation and consolidation options are also making federal student loans more appealing.

Meanwhile, several other payment options aren't doing so well.  Private loans became harder to obtain in 2008, and also saw fairly substantial interest rate increases.  College savings plans, such as 529 plans, took big hits in the stock market, and even some prepaid tuition plans are struggling to guarantee payouts for upcoming years.  College endowments have also been affected by financial troubles, and some endowed scholarships may be reduced or unavailable for the coming academic year.

However, this doesn't mean the FAFSA is the only option for student financial aid.  Most states are maintaining funding for their scholarship programs, many colleges are increasing aid where possible, and scholarship opportunities are still out there--though many deadlines are approaching--for students who are willing and able to take the time to do a scholarship search and complete some scholarship applications.

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Making Sense of Your FAFSA Award Letter

August 21, 2007

by Scholarships.com Staff

That I needed to fill out a FAFSA was a given. All counselors advised students to search for aid, and it seemed wrong to miss out on the opportunity—especially when other students came home with awards. Admittedly, applying was a bit confusing (but worth it). After receiving my FAFSA award letter, however, I was totally mystified. There were columns for college grants, Stafford Loans, Perkins Loans and Federal Work Study. I didn’t know if I had to accept all financial aid, if I could request more or if this was just my receipt. Out of fear for signing away my future home, I was almost ready to not sign anything. Thankfully, things became much easier after the first year (although the FAFSA part was still confusing). Knowing the basics made the award letter much easier to read.

Your award letter only reflects how much aid you are eligible for.

Using the information provided in your FAFSA, the amount your family can potentially contribute to your schooling is weighed against the actual cost of attendance. The award letter will reflect all federal, state and university offers of aid. This includes scholarships, college grants, and student employment. Financial aid gifts such as tuition waivers, assistantships, fellowships, resident hall advisor compensation and scholarships from organizations may not be listed until a school is notified about them. Your award letter is not a receipt. You will not take on a $5,000 loan by not responding, but you may lose some award money if you don’t. You can take advantage of as much or as little of this money as you wish.

What You May Find

If you see any college grants in your letter, that’s a good sign. Government grants are basically free money, and you should take advantage of it. Student loans are also common. Students may see awards for Stafford, PLUS, and Perkins Loans. While government loans are not free awards, they are a good bet for students who need to take out additional funding. The government provides students with interest rates that beat those offered by private loan companies. Federal Work Study is another pseudo award. Many colleges and universities will find work for students who would like to earn money. While such work is unlikely to make a student rich—much of it close to or commensurate with minimum wage—it is easy to find, and it is flexible. You are not required to accept any or all aid offered.Students may choose to decline some or all of their financial aid. Those who only wish to take advantage of free grant money may turn down the loans and federal work study funds. If a student needs $3,000 but is only offered $1,000 in grant money, they may use up their entire grant award as well as some or all of their loan award.Students unsatisfied with awards still have options.

Government Assistance May Not Be Enough

Students who feel they need more may speak to financial aid officials and request additional funds. Sometimes, schools may offer additional aid to coveted students or to those with new financial difficulties. Schools are not required to do this, so going in with a temper is not the best approach. Those who find no luck may still apply for additional scholarships, college grants and loans. Free grant and scholarship money is best, but additional, government-subsidized or private loans are available. Schools usually have a preferred-lender list for those who need to borrow, but it is important for students to conduct personal research on the side.

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Why Credit Cards Don’t Deserve the Bad Rep

August 21, 2007

by Scholarships.com Staff

Depending on the hands it falls into, a credit card may serve as an ultra-convenient money stack, or it can—if I may be overly dramatic—lead to financial suicide. For those who can manage their expenses and pay their monthly balances in full, owning a credit card is a great idea. Walking around with large amounts of cash is dangerous, and buying online is quite a hassle a without a credit card. Emergencies that necessitate fast funding also come up, and when they do, a bit of debt pales in importance. As you probably know, building up a credit report is one of the biggest incentives for taking advantage of credit cards. Credit card companies know that many parents will take care of student debt, and they’re not shy about making application offers to students. Booths with pizza and t-shirt giveaways fill up campus corners and busy sidewalks on sunny days. According to CBS, the average student is offered eight credit cards during their first college semester—no job required. Once students graduate, they are less likely to receive financial backing from their parents. With new expenses and student loans kicking in, graduate fledglings are considered to be bigger liabilities to credit card companies. Ironically, just when credit cards become most important, they become most difficult to come by. Renting an apartment involves a credit check, as does taking out a car loan and a home mortgage. People with bare credit reports are big question marks to sellers, landlords and credit card companies. If there is little or no credit history on your report, you may find yourself staring at bigger bills or doorknockers. I’m not saying it’s impossible to make it without a credit card, but having one sure does help. Good track records with a national credit card such as Master Card, Visa, and Discover (lesser-known store cards may not contribute to credit ratings) give lenders some evidence of dependability. Unfortunately, many students have a hard time creating a positive track record, and therein lays the problem. Students frequently look to credit cards for tempting pick-me-ups and tuition aid. Don’t get me wrong, not all indebted students are shopoholics, but those who look to credit cards for financial aid might want to look elsewhere.

Scholarships, grants, jobs and less expensive student loans are a student’s best bet because late payments may hurt in more ways than one. They will show up on credit reports, result in $20-$25 late bank fees, and lead to increases in credit card penalty charges. If you handle your credit card wisely, you won’t need to worry much about penalties and annual percentage fees, but you should definitely shop around before applying. Search for a card with the lowest fixed annual percentage rate (APR). Numerous cards will start you off with a low APR but raise the rate after 6 months. Also, be on the lookout for standard annual fees. There are cards that charge standard usage fees, regardless of payment history. Look for those that don’t. Once you build a good payment history, you may receive credit card offers galore. Little cards with your school logos may arrive in your mailbox. Yes. That’s cute. Chase knows that you go to the University of Illinois, but you already have a card. Refrain from getting another one. According to the United Marketing Service (UCMS), the average Joe carries 2.8 credit cards in his wallet: don’t be Joe. When you apply for a new card or loan, a credit inquiry will be recorded on your report. The more inquiries are made, the lower your credit score. I know, just because you want a discount on American Eagle jeans does not mean that you will not pay your bill in full. Unfortunately, lenders may assume that credit inquiries suggest financial need—even if they don’t. If you can stay on top of your expenses and limit the number of credit cards you own, you should take advantage of college application offers. As long as you can control the card before it takes control of you, using a credit card can bring you one step closer to a secure financial future.

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Students Returning from College, Without Diplomas

August 10, 2007

by Scholarships.com Staff

Ever been told to finish what you started? That’s not bad advice. Students are being taught the value of a good education, and the counsel is working. College entrance rates have been going up for years. Classrooms are filling up, and dormitories are busting at the seams. Whether or not students are graduating is a different story.

According to a study conducted by ACT, a not-for-profit organization providing research services, only 74.5% of first-year students attending public four-year colleges return the following year. Those attending private four-year colleges fared a bit better, but barely. Graduation rates at private colleges were only .7% better than those at public ones, down from 5.8% in 1988. Sending a student to a more expensive private college is unlikely to solve the problem.

And arguing that these students are simply transferring doesn’t cut it either. According to an article released by the Associated Press, only 54% of students who entered a four-year university in 1997 had a degree six years later. Unless you’re Van Wilder, you should have something to show after six years.

Despite a spike in the number of students who attend college and obtain degrees, a high dropout percentage continues to be a problem. As a matter of fact, the rate is the same as it was in 1988. So many more ambitious students are vying for each college spot, but about one in four still quits after the first year. What’s the problem?

According to the ACT survey, the top two factors contributing to student failure were lack of motivation and inadequate financial resources. These two problems can be solved, but students need to take matters into their own hands.

Lack of student motivation was ranked as the biggest determinant of college failure—even more than a student’s academic fit for a particular school. This means that a student who can get their act together need not be discouraged by campus nerds. Hard work beats talent when talent doesn’t work hard.

Students should also keep their future in mind during stressful college times. Those who have yet to pinpoint a career may have a hard time identifying goals, but obtaining a degree is a great goal in itself. A degree gives students options. Those who change their minds about future plans may always return to school. In the mean time, a degree gives students something to fall back on.

As you surely know, more jobs than before require degrees. In fact, degrees are just the beginning. It is not uncommon for an employer to look your resume up and down and declare that your impressive background would make you a perfect fit for the company: no one would match your paper-filing skills.

The second biggest obstacle standing between a student and their degree was financial need. Students who spend a bundle on their education may suffer financially after dropping out. No education and no money is not a good combo. There are plenty of financial aid options, and students should take advantage of them.

The best money is, of course, free money. By filing a FASFA and searching Scholarships.com for grant and scholarship opportunities, students have the chance to find free college funding, no strings attached. Those who can save ahead of time should look into setting up a college savings account. Some good choices may be the 529 and the Coverdell as they allow students to accumulate money, tax-free. For more savings account options, visit the Scholarships.com Resources Section. Loans, as a last resort, can generally be obtained at lower rates when borrowed from the government. Take advantage of any aid offered. Don’t leave your purchase at the door: get the degree and the education you paid for.

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College and the Economy



President Obama Uses Executive Action to Push Student Loan Forgiveness

June 20, 2014

by Scholarships.com Staff

President Barack Obama reportedly issued an executive action on Monday in an effort to alleviate student loan repayment problems for those with large post-college debt and salaries that make their loan payments unaffordable.

The executive order issued by the president, pushing through a program known as the Pay As You Earn Repayment Plan would cap loan payments at 10 percent of monthly income for the borrowers of federal direct loans. Federal law currently allows most students to do this already, but President Obama's order further extends this option to students who took out a federal direct student loan before October 2007 as well as those who haven’t borrowed since October of 2011. As many as 5 million more borrowers will reportedly be affected by this extension, which will begin in December of next year. You can determine eligibility by visiting the Federal Student Aid Repayment Estimator

Opponents of the executive order are concerned by the potential of students taking out enormous loans to attend expensive schools and majoring in subjects that are unlikely to prepare them for (or align them with) lucrative careers and the ability to repay the debt. This would result in taxpayers throughout the country bearing the burden of these loans, regardless of whether they or their children benefitted from a college education, let alone forgiveness of any of their debts.

For some, this is an opportunity to get out from under crushing debt, but at what cost? Where does the “forgiven” balance show up? Should the taxpayer at large shoulder this additional burden or should aspiring college students be seeking more affordable options for education and/or preparation for their professional lives?

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Alternatives to Employment for College Grads

March 18, 2009

by Scholarships.com Staff

New college grads may face an especially tough time due to the recession.  The growth in anticipated new hires, which is measured twice a year by The National Association of Colleges and Employers, has been slowing since it reached a high in spring 2007, falling almost flat in the fall.  The numbers for spring 2009 show that for the first time in years, businesses actually anticipate hiring fewer college graduates this year than last--22 percent fewer, in fact.  According to The Boston Globe, the business and finance sectors have an even bleaker outlook, as does the northeastern region of the United States.

With this dim hiring picture in mind, soon-to-be college graduates are looking at alternatives to the traditional workforce. Additional education, teaching fellowship programs, and volunteer work are all proving popular. If you're a college student staring graduation in the face, keep in mind the increased competition and start researching and applying sooner, rather than later.

Graduate programs, including ones offered by business schools, are seeing increased enrollment as many students choose to either delay their entry into the workforce or push up their long-term plans to attend graduate school.  Graduate students can potentially land full-tuition fellowships or assistantships, as well as generous scholarship awards.  Many graduate degrees can help recipients become more competitive when they do enter the workforce, even if the economy does not recover substantially.

Similarly, teacher certification programs, such as the popular Teach for America, are seeing an increase in applicants.  These programs offer a stipend, as well as teacher certification, and in some cases a master's degree in education, in exchange for a commitment of one or two years teaching in a low-income school or a high-need subject.  Other programs exist with similar benefits, including teaching fellowships in several major cities such as New York and Chicago.  College students or recent grads who want to teach but don't want to pay for more school may want to consider these options.

Other volunteer programs, like AmeriCorps and the Peace Corps, also are seeing more applicants.  Such programs often come with a stipend or living allowance, as well as student loan deferments or even loan cancelation or repayment benefits.  Students can also participate in many of these programs while still in college or while pursuing graduate degrees.  If you're interested in an alternative to the post-collegiate rat race, there's no time like the present to start considering your options.

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House Passes National Service Bill

March 19, 2009

by Scholarships.com Staff

A bill to expand AmeriCorps and create new community service opportunities has passed the House of Representatives.  The Generations Invigorating Volunteerism and Education, or GIVE, Act passed today with bipartisan support in the House, and a similar bill, named the Serve America Act, has also been approved by the Senate education committee.  It will move to the Senate floor early next week, where it is expected to be met with a similar level of enthusiasm.  National service has been a priority of the Obama administration, so expect to see opportunities for community service expand shortly.

Over the course of five years, the bill will appropriate $6 billion to AmeriCorps, increasing positions from 75,000 to 250,000 and also increasing education stipends to $5,350--the same dollar amount as Federal Pell Grants.  The GIVE Act also includes provisions to encourage middle school students to volunteer, as well as funding to increase volunteerism on college campuses.  The GIVE Act will create volunteer programs focused on issues that have become major priorities in recent years, such as education and healthcare.

This legislation is heralded as the largest expansion in national service since the Kennedy administration.  While AmeriCorps and other volunteer programs pay far less than a full-time job, many students have been showing increased interest in them due to the education stipends and living allowances they provide, as well as the opportunities for service and unique experiences volunteers gain.  People serving full-time in positions affiliated with AmeriCorps or other programs also qualify for a new federal loan forgiveness program, which forgives Stafford loan debt for public service employees after ten years.

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Sallie Mae Sets New Terms for Private Loans

March 20, 2009

by Scholarships.com Staff

On the heels of last week's announcement that Sallie Mae would not participate in the upcoming PLUS loan auction, the student lending giant once again comes bearing news that may ruffle some feathers and potentially hurt its customers' ability to pay for school.

In a move to reduce default rates, Sallie Mae has announced changes to their popular private loan program.  As of next week, borrowers will be expected to make interest payments on their loans while they're still in school.  Additionally, the repayment period will be kicked down to under 15 years, as opposed to the current norm of 15 to 25, and the bank will also grant forbearances only in the case of serious financial hardship.  Other student lenders have expressed interest in this plan and may soon follow suit, according to an article in The Chronicle of Higher Education.

This is actually good news for student borrowers with the means to repay their student loans quickly and make interest payments while still in school--the total amount they repay will be much smaller under this plan.  Additionally, if Sallie Mae's loans become more appealing to buyers, it may help the bank stay around to make more loans and could potentially increase loan availability.  This move will also cause borrowers to think twice before applying for a private loan from Sallie Mae, which could encourage more responsible borrowing.

However, not everyone is taking out tens of thousands in private loans to drive a sports car to the campus climbing wall at an elite private college.  Many borrowers may already be at a community college or state university and may be using their private loans to buy ramen.  These students could potentially be edged out of college unless they find alternative sources of funding.  If they do stick with private loans, they may need to borrow more to be able to cover their interest payments on their current private loans.  This will in turn drive their interest payments and loan balances even higher, while allowing them fewer opportunities to receive a forbearance if they struggle to make payments.

Students who are currently relying on private loans from Sallie Mae to remain enrolled in college should be aware of these changes and search for other funding options if paying interest while in school is not an option.  Make your first move a scholarship search before reviewing other private loans or alternatives to alternative loans.

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Student Loan Scam Uncovered in Florida

March 24, 2009

by Scholarships.com Staff

Student loans are becoming increasingly difficult for the average college student to obtain.  However, it appears at least one group is able to borrow private loans with relative ease: 80-something hospice patients in Florida.  A student loan scam recently uncovered in St. Petersburg, Florida involved two stolen identities and between $15,000 and $18,000 in loans.

An 80-year-old woman and an 83-year-old man had their identities used to take out private student loans from Sallie Mae.  A news story in The St. Petersburg Times describes the fraud as "poorly executed," involving blatant and inconsistent forgeries, including a fake ID with nothing changed but the picture--not even the 80-year-old's birth date. Private student lenders have previously come under fire when student loan scams were revealed, as private loans are by far the easiest type of student loan to fraudulently receive.

While many student loan scams don't even involve the pursuit of a real college degree, this one appears to have been perpetrated by a nursing student who had previously cared for the two victims of identity theft.  The woman accused of identity theft successfully completed coursework at Keiser Career College and received her Licensed Practical Nurse certification in the fall. Bail is currently set at $40,000--already more money than she would have owed had she taken out the loans herself.

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Student Loan Default Rate Rose in 2008

March 27, 2009

by Scholarships.com Staff

Student loan default rates increased in 2008, according to a preliminary report released by the Department of Education.  The numbers, which still aren't finalized, indicate an increase from 5.2 percent last year to 6.9 percent this year in the two-year default rate on federal student loans. The increase in default rates is likely due to continued economic difficulties facing new graduates.

The report also shows a difference in default rates between the Federal Family Educational Loan Program and the Federal Direct Loans Program, though FFELP advocates are arguing that the differences are largely due to different makeups of the schools participating in each program (For example, students at for-profit schools are more likely to default, and are also more likely to participate in FFELP).  However, even among similar groups, FFELP still had a slightly higher default rate.

Typically, reports on default rates are released around September and don't compare FFELP and Direct Loans, but Congress had requested data earlier to aid with the federal budget decision-making process.  This is only the latest bit of bad news for FFELP, which President Obama urged Congress to eliminate in the 2010 federal budget.  The Congressional Budget Office has said that eliminating FFELP could save more money--$94 billion, double the previous estimate.  Additionally, a report by two interest groups states that the proposed increases in Pell Grants, some of whose funding is tied to cutting FFELP, would increase the average grant award by $121 and would make 260,000 more students eligible for the program.

If you're a college student looking to minimize student loan debt and reduce your risk of default, it's still not too late to start your scholarship search and find free money you won't need to pay back.

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