The Obama administration has made it clear that college affordability for the less fortunate is a high priority on the presidential to-do list. One of the major stumbling blocks in getting economically challenged students into college has been complete and utter frustration when it came to applying for federal funds through the FAFSA (Free Education for Federal Student Aid) application. Rather than make their way through the complicated form, many families would simply throw up their hands and walk away.

As Education Secretary Arne Duncan once said as he spoke off the cuff to a small group of reporters, “This damn form was killing us.” He was referring to his time as superintendent of Chicago’s public school system and the role the FAFSA form played in preventing students from low-income families from applying to college.

In order to combat this problem, the DOE intends to gradually introduce changes to address this and other problems recognized with the current application process:

- No longer requiring students with low incomes to answer questions about their parents’ financial assets.

- Questions concerning drug convictions will only be asked to returning students since it does not apply to first-year students.

- Potentially allocate Pell Grants based on the aid applicant’s adjusted gross income (AGI) vs. the current needs analysis formula, which takes into consideration the income and assets of both the parent and the student.

- Provide incentives to institutions that admit a larger ratio of students from low income families by increasing their access to federal money.

- Simplify the FAFSA form through the elimination of questions that would allow financial aid need, and therefore eligibility, to be based upon approximately 18 questions that are contained on the federal tax form. This would give the applicant the opportunity to instruct the IRS to send the information directly to the DOE, hence, streamlining the aid process. A test of this communication between government agencies that will allow students to send Mom and Dad’s tax information to the DOE for financial aid eligibility purposes is scheduled for January of 2010 for aid assistance during the spring semester of that same year.

- Potentially eliminating some or all of the asset assessment for every applicant.

- Consider eliminating interest subsidies for students as they attend school.

- Consider capping the maximum amount of federal loans available for the student to borrow based upon the federal poverty level for individuals.

Determining how to implement some or all of the above with the blessings of universities across America could potentially be a tricky road for the administration to maneuver. Most universities and states use information obtained from the FAFSA to determine student eligibility for the institution’s own funds. If they feel that the revised edition of the FAFSA is incomplete regarding the information needed to determine allocation of institutional funds, they may be compelled to create their own form to assist with this determination.

This, in essence, would create a new profile form for public institutions. And for those of you who have had experience with this form, which is used by approximately 300 elite and private institutions across the country, you may have already guessed that this may create a whole new set of road blocks in obtaining preferred financial assistance for those who are already expected to pay for their child’s education.

source: http://www.submityourarticle.com/articles/Marc-Hill-5007/FAFSA-65663.php

It often seems that the star athlete, musical prodigy or class valedictorian has a lock on lucrative college scholarships.

Yet there are ways to get financial assistance for higher education even if a student isn’t team captain or doesn’t make the grade on academic merit.

Many universities and private sponsors make scholarship money available to students who don’t particularly excel on the field or in the classroom.

In fact, fewer than 1 percent of students receive athletic scholarships, said Mark Kantrowitz, publisher of college financial-information Web sites.

“There are plenty of scholarships out there that don’t require you to be a star athlete or the top of your class,” Kantrowitz said. For example, the David Letterman Scholarship at Ball State University rewards students with “an average yet creative” mind, he said.

“There’s even a scholarship from a duct-tape manufacturer for making a prom outfit out of duct tape,” he added.

If you need aid for the school year beginning this fall, apply now because many deadlines have already passed.

“There are still some scholarships with August deadlines that pay the award in September, but once we get into the fall, what you’ll find will be entirely for the next academic year,” Kantrowitz said. “Start searching now so you know what’s available.”

The first step when looking for financial aid for any student – all-star, academic or average Joe – should be to fill out the U.S. Department of Education’s Free Application for Federal Student Aid, or FAFSA.

Completing the FAFSA helps determine whether a student is eligible for aid from the school as well as federal and state governments in the form of grants and low-interest loans. The FAFSA can be found online at www.fafsa.ed.gov.

“If you’re looking for ways to help finance your educational expenses, absolutely, unequivocally, filing the FAFSA is the most important thing, and is the starting point,” said Richard Bellows, executive director of financial aid at Butler University.

The FAFSA, which has to be refiled for each school year, can be submitted as late as the end of the academic year for which you’re looking for aid – but it’s best to fill the form out early each calendar year.

Filing in January or February means there’s more money to go around, but aid is still available for students who start school this fall and haven’t submitted the FAFSA – if they file as soon as possible, Bellows said. He noted that needy students can still qualify for the federal Pell Grant, for example.

“There’s still the opportunity for some financial aid, but if you don’t file the FAFSA and you don’t look into it, you’re not going to know whether you’re qualified.”

Those getting ready to begin their senior year of high school should use the time they have to prepare and research financial aid deadlines and school procedures, said Cindy Bailey, a senior policy analyst and former executive director of education finance services at College Board, a not-for-profit organization that serves students.

“One of the first things they should be thinking about is where they want to go to school, the tests they have to take, the timetable and then beginning the conversations with institutions,” she said. “Most colleges will be happy to talk to kids about their financial aid options early in the process.”

It’s beneficial for students to use other areas in which they excel – whether their abilities are in cooking or mechanical engineering – as a means for obtaining scholarships, Kantrowitz said. Students looking for niche scholarships should create an “accomplishments resume,” where they list hobbies and areas in which they excel, he said.

“There are essay competitions, artistic competitions, competitions for every hobby under the sun,” Kantrowitz said. “If you want to attract schools’ attention or scholarship sponsors’ attention, pick your favorite hobby and try to go all the way in that hobby.”

Once students have outlined a clear picture of what they’re good at, it’s time to do the homework.

“They can use (the resume) as a basis to start searching for scholarships that match their background,” Kantrowitz said. For instance, FinAid.com provides a list of scholarships for average students as well as scholarships for volunteering and community service.

Students and their families should look at scholarship search engines and publications about the student’s financial aid options, added Bailey.

Applicants should also discuss scholarship options with high school guidance counselors and university personnel.

In addition, some fraternal organizations and unions sponsor scholarships for students whose family are members, she said.

Said Bailey: “Research as much as you can.”

source: http://www.gainesville.com/article/20090813/ARTICLES/908131035/1002?Title=Scholarships-for-non-scholars-

This week’s U.S. News and World Report has an excellent section on financing education during this endless recession. One of the issues they address is the availability of student loans to adults who have seen one career sink beneath the waves and want to educate themselves for another business, another profession, another set of skills that matter in today’s information based economy.

Adults returning to school can qualify for student loans in much the same fashion as first-time college students do, if they aren’t at the limit on student loans already, or delinquent on loan payments from a previous stint in post-secondary education. The range of Pell grants and Stafford grants that are the two cornerstones of federal school loans are available to adults. The theory behind these loans is that students qualify for a loan that will cover the costs that the student’s family cannot. That figure is generated by the baseline document for all student loans, the Free Application for Federal Student Aid, popularly referred to as the FAFSA.

Adult applicants for student aid should discuss their eligibility with the student financial office at their prospective school. Adults who may have filed a FAFSA some years ago probably aren’t meeting that income level today if they are returning to school in search of a new career. Some of the most adept student finance offices on this issue are found at the online schools, because they provide educational services to so many returning adults.

According to U.S. News & World Report, low-income upperclassmen who get good grades and major in computer science or other tough, in-demand subjects at least half time could also qualify for $4,000-a-year SMART grants. (SMART stands for Science and Mathematics Access to Retain Talent.) This profile fits thousands of returning students who have chosen to study for careers in the IT industry. There are other grant programs, including one for students pursuing a career in the highly under populated teaching profession.

The federal government is also intervening in the formula for calculating loan eligibility. The FAFSA formula bases the prospective student’s eligibility on household income from the previous year. Because so many people who had good incomes in 2008 are now unemployed and in debt, Department of Education has asked colleges U.S. Department of Education this spring asked colleges to help those whose families have recently unemployed breadwinners be estimating a family’s need for aid based on this year’s lower income instead. Aid officers are also taking into account expenses that aren’t reported on the FAFSA, such as medical bills.

There are some good recommendations in the magazine’s report, but there is a wealth of up-to-date knowledge on student loans to be found in college financial aid offices. Accredited for-profit and online institutions know what it takes to establish eligibility for loans. If you need to utilize online coursework, you may find that the established distance learning institutions are as inexpensive, or more so than some of the traditional four year colleges. Some of those that are rolling out online class programs today are treating them as an added service subject to a surcharge.

source: http://www.getdegrees.com/distancedaily/scholarships/federal-school-loans-available-for-returning-adults-too/

Few things are more demoralizing than receiving a bill that exceeds the amount of money in your bank account. Especially if your child’s future hangs in the balance.
That’s the predicament facing many cash-strapped parents of college students as bills for the upcoming semester start to arrive in the mail.
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Fortunately, even at this late date, you have options. Among them:
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•Extended-payment plans. These plans let you pay your tuition bill in monthly installments instead of one lump sum. You’ll typically pay a fee of $50 to $100 to set up a payment plan. The plans are provided through colleges and universities, so contact your school’s financial aid office for more information.
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You don’t have to put the entire amount you owe on a payment plan, says Thomas Blair, director of financial aid at Roanoke College in Salem, Va. But paying even a small amount of the balance in monthly installments will reduce the amount you have to borrow, he says.
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FIND MORE STORIES IN: Roanoke College
•Federal student loans. Unsubsidized federal Stafford loans are available to all full-time students, regardless of financial need. They carry a fixed rate of 6.8%. For the 2009-10 academic year, dependent students can borrow up to $5,500 for their freshman year. Sophomores can borrow up to $6,500 and juniors and seniors can borrow up to $7,500.
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To qualify for a federal student loan, you must fill out the federal Free Application for Federal Student Aid, or FAFSA. You can find the form online at www.fafsa.ed.gov.
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•PLUS loans. If federal loans won’t cover all of your costs, you can apply for a federally guaranteed Parent Loan for Undergraduate Students to fill in the gap. Parents are responsible for repaying the loans, but have the option of deferring payments until the child finishes school. PLUS loans carry a fixed rate of 8.5%.
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That’s higher than the current rate on some private loans, but private loan rates are variable, which means they could become a lot more expensive if interest rates rise.
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You don’t need a high credit score to qualify for a PLUS loan. However, PLUS lenders can reject applicants who have a foreclosure or bankruptcy on their credit report, says Mark Kantrowitz, publisher of Finaid.org, a financial aid website. A debt that’s more than 90 days overdue could also disqualify you for a PLUS loan.
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But even then, you have options. Dependent students whose parents have been rejected for a PLUS loan are eligible for higher Stafford loan limits.
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For example, a freshman whose parents were denied a PLUS loan would be eligible for up to $9,500 in federal student loans.
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•Private loans. In the past, many families used private loans to cover costs that weren’t covered by financial aid or federal student loans. But in the wake of the credit crunch, many private lenders have left the business. Lenders that are still offering them have tightened their standards, says Brian Cox, chief business developer for TuitionU.com, a social-networking site that links students to lenders.
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Recently, though, some credit unions have started offering private student loans, often at more favorable rates than for-profit lenders.
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More than 80 credit unions are participating in Credit Union Student Choice, a group that helps credit unions offer private student loans, Executive Vice President Scott Patterson says.
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The average interest rate on the loans is 5.8%, with no origination fee. Like interest rates on most private loans, rates on these loans are variable, so they could go higher.
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To find a list of participating credit unions, go to www.studentchoice.org.
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•Financial aid. Most schools award their financial aid packages in the spring, but if you’ve suffered some fiscal setbacks since then, ask the school’s financial aid office to review your situation. Depending on your circumstances, you may be eligible for more aid, Kantrowitz says.
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Be prepared to document your troubles. If you’ve been laid off, for example, show the financial aid office a letter verifying your eligibility for unemployment benefits.
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Financial aid is based on your income and assets from the previous year, but schools have the authority to consider the current year’s income and assets instead, Kantrowitz says. You may be eligible for more aid if you’ve lost your job, if your wages or hours have been cut, or if you’ve been hit with large unreimbursed medical bills.
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source: http://www.usatoday.com/money/perfi/columnist/block/2009-08-10-financial-aid-for-colllege_N.htm

Today, the interest rate for new subsidized Stafford loans for undergraduate students drops to 5.6 percent from the current rate of 6 percent. This rate, which applies to loans issued between today and June 30, 2010, will remain in effect for the life of the loan. Subsidized Stafford loans are available for borrowers who demonstrate financial need.

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The reduction is part of a series of rate cuts embedded in a $20 billion college aid bill signed into law in 2007. The lower rate won’t affect loans issued before today, says Bob Murray, spokesman for USA Funds, the nation’s largest student loan guarantor. “If you’re an undergraduate with a subsidized loan and got it last year, the rate is 6 percent and will stay 6 percent for the life of the loan,” he says.

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Rates for new unsubsidized Stafford loans, which are available for all students, will remain at 6.8 percent. However, all Stafford borrowers will get a break on upfront borrower fees, Murray says. Today, the maximum fee that lenders will be permitted to charge on Stafford loans disbursed between today and June 30, 2010, will drop to 1.5 percent from 2 percent. Upfront fees are deducted from the loan amount when the loan is disbursed.

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If you have federal student loans issued before July 1, 2006, there’s even better news. Today, the repayment rate on those loans will drop to 2.48 percent from the current rate of 4.21 percent. Interest rates on federal PLUS loans — Parent Loan for Undergraduate Students — issued before July 1, 2006, will drop to 3.28 percent from 5.01 percent.

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Borrowers who consolidate these loans after today will lock in a rate of 2.5 percent for the life of the loan. Borrowers who are in their grace period, the six-month interval between graduation and the start of repayments, can lock in a rate of 2 percent. PLUS loan borrowers who consolidate can lock in a rate of 3.38 percent.

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Rates on student loans issued before July 2006 are based on the rate for Treasury bills at the last auction in May. This year, the T-bill rate was 0.18 percent — “as close to zero as you can get,” says Mark Kantrowitz, publisher of FinAid.org, a financial aid Web site. Since it’s unlikely rates will go lower — they’ve already risen since the May auction — locking in current rates is a smart move.

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You only get one chance to consolidate your student loans. If you’ve already consolidated, you can’t reconsolidate and lower your rate.

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Lenders aren’t lining up to consolidate student loans. The credit crunch and a cut in federal subsidies have made these loans unprofitable, and lenders have, for the most part, abandoned the consolidation business, Kantrowitz says.

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However, you can still consolidate your loans through the Federal Direct Loan Program.

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There are two types of student loans: Federal Family Education Loans, which are offered by private lenders and guaranteed by the government, and Federal Direct student loans, which are offered directly to students at schools that participate in the direct lending program. You can consolidate FFEL loans through the Federal Direct Loan Program.

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Even if you don’t qualify for a subsidized student loan, a 6.8 percent fixed interest rate is probably better than you’ll find in the private student loan market. Federal student loans also offer more flexible repayment terms than private loans.

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Yet, every year, thousands of students who are eligible for federal student loans borrow using more costly private loans. One reason may be that private loans are easier to get, Kantrowitz says. To qualify for a federal student loans, you must fill out the Free Application for Federal Student Aid, or FAFSA, a voluminous document that requires you to provide detailed information about your finances.

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The Obama administration has pledged to make the FAFSA more accessible. But in the meantime, if you plan to borrow, completing the FAFSA is worth the trouble, Kantrowitz says.

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source: http://www.courierpostonline.com/article/20090701/BUSINESS01/907010326/1003/BUSINESS

Here at the Middle Class Task Force, we have been working on ways to make college more affordable for families in America. The President, the Vice President and the Middle Class Task Force are committed to making sure that every student has the opportunity to earn a college degree.

In April, the Vice President hosted a Middle Class Task Force Meeting on college affordability in St. Louis, Missouri to discuss ways to expand opportunities and help make the dream of a college education a reality for more families. In Missouri, we released a staff report on ways that the administration can work to increase college affordability.

For high school seniors or aspiring college students facing the daunting task of applying for financial aid, the FAFSA (Free Application for Federal Student Aid) form can be a needlessly difficult obstacle on the path to higher education. Previous versions of the FAFSA have included as many as 153 questions, most of which had no relevance to financial aid packages.

On Wednesday, Secretary of Education Arne Duncan – a Task Force Member – followed up on our Missouri findings and announced a shorter, simpler, and more user friendly FAFSA form that will make it easier to apply for financial aid.  Starting this summer, students will be able to access the new web based FAFSA that dramatically simplifies and shortens the application form, and by next January, the FAFSA application will be streamlined with the IRS for a one stop, easy and pain free application.

The new version will make it easier and less intimidating to apply for aid, and will increase access for hundreds of thousands of students who are eligible, but do not apply for aid.

Simplifying the financial aid application is a policy that members of the Middle Class Task Force believe will help families benefit from important resources to cover the cost of college. We are continuing to work with Congress, the Treasury Department, the Department of Education, and the Administration to strengthen and affirm the opportunity for every student to pursue higher education.

source: http://www.whitehouse.gov/blog/Blogging-to-the-Middle-Simplifying-Financial-Aid-Applications/

Filling out the FAFSA should be a student’s first step in securing financial aid. This article explains what the FAFSA is and tells you how to apply for student aid.