April 29, 2008
Financial aid in the form of scholarships and grants is a student’s best bet when searching for college funding. Families who cannot pay for a student’s education without outside assistance should first turn to cost-free resources. When these prove insufficient, students can consider borrowing money for college.
With recent articles detailing the plights of indebted students and their troubled lenders, it’s no surprise that students are intimidated by the borrowing process. If one’s economic situation calls for assistance in the form of student loans, getting comfortable with the lending process is a good way to get rid of the loan jitters. So before you sign on the dotted lines, familiarize yourself with the following terms:
May 2, 2008
After passing the Senate and the House in varying formats, a compromise was reached on legislation that would help lenders stay afloat in a troublesome student loan market. The Ensuring Continued Access to Student Loans Act of 2008 was sent to the President yesterday, and rapid approval is expected.
If signed into law, the bill would give the Secretary of Education the right to buy loans from struggling lenders, thus providing them the capital needed to offer new student loans. Worried that lenders may continue to depart from the Federal Family Education Loan (FFEL) program—as fifty have already done—legislators have been scurrying to provide financial assistance before the school year begins. Though the law would only serve as a backup plan, the hope is that knowledge of a federal cushion would make both lenders and students more willing to engage in business.
To decrease student dependence on private lenders, ones generally offering loans options that are more expensive and less flexible than those offered by FFEL lenders, the maximum sum a student could borrow from the government was also increased. According to The Christian Science Monitor, the caps on unsubsidized loans available to students of any income level would increase by $2,000 for each school year. Dependent students would now be able to borrow up to $31,000 for their undergraduate education.
August 21, 2007
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.
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.
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.
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
March 9, 2012
For those of us who cannot afford large out-of-pocket expenses for college, financial aid is our only option. Many, if not all, universities require their students to fill out the Free Application for Federal Student Aid – aka the FAFSA – which uses your family’s finances and taxes in order to best determine how much aid you get. It can be confusing but it is definitely worth your time to file the application.
Depending on the state of the school you attend and live in, the FAFSA has different deadlines. States offer different grants and scholarships as long as you qualify and apply by the stated deadline and private schools also have different deadlines for private funding which can be found on their websites. The dates for states can all be found on the print out form on the FAFSA’s website. Remember to use this official government website – other sites charge fees.
The FAFSA requires you to have a federal PIN number. To apply for one, request one from the FAFSA website. (Make sure to do this even if you don’t have your tax returns, as the PIN number sometimes takes some time to receive.) Also, a new procedure that the FAFSA has is the IRS data retrieval tool, which takes the tax information directly from the IRS database and filters it into the FAFSA. This option not only makes life easier for those filing the FAFSA but it helps college financial aid offices, as they won’t require you to turn in additional documents to verify if the information is correct.
Always try to have yours and your parents' tax returns completed as soon as possible to have your FAFSA completed on time; however, since required documents like W-2s and other federal papers often aren’t available when you need them, file the FAFSA and select the option “Will File” rather than “Already Completed” for the question asking if you have already filed the tax returns. Use the tax information from the previous year so that you can have it completed by the deadline and once your tax returns are complete, go back into the FAFSA and use the “Make Corrections” option to update the information.
Happy filing, everyone!
Radha Jhatakia is a communications major at San Jose State University. She's a transfer student who had some ups and downs in school and many obstacles to face; these challenges – plus support from family, friends and cat – have only made Radha stronger and have given her the experience to help others with the same issues. In her spare time, she enjoys writing, reading, cooking, sewing and designing. A social butterfly, Radha hopes to work in public relations and marketing upon graduation.
January 3, 2013
Though it’s a day off from school and work, New Year’s Day is also a day to get down to business. While you’re starting in on your New Year’s resolutions, opening up a new calendar, and packing up the holiday decorations, there’s one more thing that college students and college-bound high school students should do each January. The Department of Education starts accepting the Free Application for Federal Student Aid (more commonly known as "FAFSA") on January 1 each year. State application deadlines fall soon after—as early as February in some cases. So while you might not start classes until August or September, you want to start applying for financial aid as soon as the FAFSA is available each year.
In order to complete a FAFSA, you will need the following:
May 7, 2008
Complicated student loan legal jargon is an unfortunate component of the borrowing process. Two words all students should be familiar with before borrowing are "subsidized” and “unsubsidized”. Let's break these down:
Subsidized Loans Students who borrow subsidized loans through the Federal Direct or the Federal Family Education Loan (FFEL) programs will receive government-backed college money. Because the government agrees to compensate FFEL lenders for loan defaults, student lenders agree to offer low-interest loans. They do not charge students for the interest that accumulates during the college years and post-graduation six-month grace period as the government takes care of these costs. Unfortunately, not all students are eligible for federal subsidized loans because finances are among the eligibility criteria. Students whose FAFSA results suggest financial need and those whose parents applied for but were denied a PLUS Loan may take out subsidized loans.
Unsubsidized Loans While federally unsubsidized loans boast fewer benefits than subsidized ones, their interest rates still tend to be lower than those offered by private lenders. Students are responsible for all interest that accrues during their years in school, deferment, and grace periods. As long as students don’t exceed their annual loan borrowing limits, they may take out both subsidized and unsubsidized loans. Because unsubsidized loans are not based on financial need, students who are not deemed needy by the government may still take out these loans. The borrowing limit on these loans will vary based on year in school and dependency status, but the sum may not exceed the estimated cost of attendance for each school minus other financial aid a student receives. Students may borrow both subsidized and unsubsidized loans during the same period as long as the limits for each are not surpassed.
May 8, 2008
As expected, President Bush signed into law the Ensuring Continued Access to Student Loans Act of 2008. After receiving bipartisan support from the House and the Senate, the bill aimed at ensuring student loan availability was approved by the president.
Worried that the departure of student lenders from the FFEL Program could make student loans more difficult to obtain, legislators hurried to secure a backup plan. According to House Representative George Miller, “The bill carries no new cost for taxpayers.”
The Ensuring Continued Access to Student Loans Act of 2008 indicates that:
o The limit on federal loans will soon increase. Students will be able to borrow $2,000 more to cover tuition and other costs.
o Parents will have more time to save for PLUS Loans. Rather than having to pay as soon as money is disbursed, they will have until six months after the child graduates before initial payments are due.
o Families slightly behind on their mortgages or medical bills may still be eligible for PLUS Loans.
o The Secretary of Education has the authority to advance federal funds to student lenders and guaranty agencies acting as lenders of last resort if the lenders run out of capital.
o Shall a lender of last resort plan be put into practice, guaranty agencies acting as lenders will have to abide by rules and restrictions similar to those governing FFEL lenders.
o Congress may call on the Federal Financing Bank to consider injecting money into the student loan market at no cost to the taxpayers.
May 22, 2008
Following talks of purchasing FFEL loans and using a lender of last resort program to ensure student access to federal college funds, the Department of Education officially agreed on a temporary bail-out plan. For the next year, the Department has agreed to purchase loans federally subsidized student lenders have trouble selling at a profitable rate.
The credit crunch, caused in part by rising default rates and a decrease in federal student aid offered to student lenders, has caused about 80 lenders to leave the student market, reported the Los Angeles Times. Even the most important name in the market, student lender giant Sallie Mae, has threatened to pull out of the FFEL business. Attempting to ease fears that students loans would be difficult to secure, the Department of Education has been working with Congress on a regular basis to establish a quick and effective alternative.
The most recent announcement lays out an number of methods for ameliorating family and lender fears—at least temporarily. In a letter sent to Chief Executive Officers of student loan companies, Margaret Spellings promised that by July 1, 2009, the Department would purchase FFEL loans originated for the 2008-2009 school year. “Many lenders today do not have access to funds at a cost that justifies originating new loans. Our plan is designed to provide viability in the marketplace for lenders who step up and make loans in this difficult environment,” she stated.
To further assure that all students will have access to loans, the Department has agreed to put into play the Lender of Last Resort Program (LLR) which will be used to lend money to students who have trouble securing finances from weary lenders. Schools that choose to opt for the Direct Loan Program, a lesser used school loan program wherein students borrow directly from the government rather than from federally subsidized lenders, will also receive aid through a $15 billion boost in available funds. “This program should ensure that the market works for students needing loans this school year,” said Secretary Paulson of the Treasury.
June 12, 2008
The Higher Education Reconciliation Act of 2005 created two new grant opportunities for college students—the Academic Competitiveness Grant (ACG) and the National Science and Mathematics Access to Retain Talent Grant (SMART). Though these grants have already been in effect for two years, few students know about them. Below you will find information about the Academic Competitiveness Grant. For details concerning the SMART Grant, you may visit the Scholarships.com Blog or the Federal Student Financial Aid for College Section.
Academic Competitiveness Grant Overview
The Academic Competitiveness Grant is available to undergraduate students who are US citizens and who are enrolled in their first or second academic year at a two or four-year degree-granting institution. This grant is called competitive for a reason. To receive the award, students must have demonstrated their academic potential by having completed, successfully, a difficult program of study during high school. Those who are found to be eligible during their sophomore year of college must also maintain a minimum 3.0 GPA.
What one considers competitive can be a matter of option, but the Department of Education has set up some guidelines. Students who have completed a minimum of two AP or IB courses and those who have participated in the State Scholars Initiative or a similar program may be eligible for the grant. Students who meet the eligibility requirements can receive up to $750 for their first year of study and up to $1,300 for their second year of study.
Those interested in receiving the grant will have to submit a FAFSA. (Financial need is one component.) The Student Aid Report, a summary of answers reported on the FAFSA, will indicate whether a student is eligible to answer further ACG questions. If an ACG is granted, it will be awarded as a supplement to the Pell Grant money received by the student.
July 7, 2009
Congress has passed and President Obama has signed a bill that provides "technical corrections" to the Higher Education Act, which Congress renewed last year. In addition to offering clarification on several points and correcting minor errors, the Technical Corrections bill also makes some useful changes to federal student financial aid.
Minor clarifications include:
The Chronicle of Higher Education has more information on the HEA Technical Corrections legislation here.
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