Category Archives: financial aid

FAFSA, financial aid, Uncategorized

From FAFSA to Financing: Financial Aid 101

financial aid 101

As part of NBC News’ Education Nation initiative and our Parent Toolkit site, my team hosts a monthly Twitter Chat about a variety of different education and parenting topics.

On Tuesday, January 19 at 7 pm EST we will be cohosting our monthly #ToolkitTalk conversation with the First Lady’s Reach Higher Initiative called From FAFSA to Financing: Financial Aid 101.  The chat will focus on information that high school students and their parents need to know about affording a college education.  Our featured guests will include the National School Counselor of the Year and representatives from the Federal Student Aid Office.

Join me and @EducationNation and others discussing tips for parents regarding financing a college education.

FAFSA, financial aid

FAFSA Week: 10 Good Reasons to File the FAFSA

 

file the fafsa

Parents of college-bound teens look forward to filing the FAFSA as much as they look forward to filing their income taxes. It’s a federal form and all federal forms aren’t exactly user friendly. Many parents are so intimidated by the form that they choose not to file, telling themselves that their student wouldn’t qualify for aid anyway because they make too much. But don’t fall into that trap.

Here are 10 good reasons to file the FAFSA:

1. College is expensive

Even if you’re rich and can afford to pay for your child’s education, it’s expensive. Why would you pass up an opportunity to help with some of the cost?

2. It’s FREE

That’s right. It’s completely free to complete the FAFSA. You’ll spend some of your time completing the FAFSA and you could get thousands of dollars of financial aid in return. So one could say, it’s BEYOND free–they pay you!

3. Getting help is easy and FREE

If you get stumped, help is available using the online help tool or by submitting a question at the FAFSA web site or calling the help number listed on the site. Many schools even host a FAFSA day where they offer help to parents and students on how to complete the free form.

4. FREE money could be waiting for you

According to a recent Reuters article, about 1.8 million lower income undergraduates who might have qualified for aid neglected to file the FAFSA and missed out on financial aid. No matter what your income level, you should file the FAFSA because there is more money out there to be awarded than just need-based aid.

5. Federal money

The federal government provides over $80 billion dollars in grants, loans and work-study programs every year. The only way to get pell grants, perkins loans, stafford loans and other federal aid is by submitting the FAFSA. Federal loans offer the best interest rates and repayment terms for student borrowers and are superior to private student loans.

6. State money

FAFSA is the gatekeeper for state financial aid programs. Each state’s programs are different but they all require the FAFSA to distribute the funds. Check with your state’s higher education agency for deadlines and requirements. In some states the financial eligibility ceilings are much higher.

7. School money

Colleges and private scholarship sponsors offer billions of dollars in financial aid. Even if you don’t have financial need, you may be eligible for these awards. Some school and private scholarship programs are specifically designed for students who were rejected by federal financial aid. Some schools will not award merit aid unless you complete the FAFSA.

8. Scholarship applications ask if you’ve applied

In addition to the aid that a student may receive from federal and state agencies, many scholarship applications include a box to check asking whether the student has submitted a FAFSA. According to Monica Matthews of How to Win College Scholarships, “Scholarship providers want to know that the student is doing everything possible to get financial help in paying for college and submitting the FAFSA is a very important step in the process.”

9. You have two or more children in college

With two in college, your expected family contribution (what the parents can afford to pay) drops by 50%. Even if you didn’t get financial aid with the first, file the FAFSA because having a second child in college can net you some financial aid.

10. You really don’t have a choice

Look at it this way: FAFSA is the ONLY way to be considered for federal, state and college financial aid. Even if you don’t NEED the aid you still want to get it. Who doesn’t want FREE money?

FAFSA, financial aid

FAFSA Week: Reporting Parent Information on the FAFSA

Reporting parent information on the FAFSA

Reporting parent information on the FAFSA might make you want to pull your hair out.

If you are completing the FAFSA, some terms can confuse you. Today’s post addresses those questions in an effort to help you understand them more clearly and fill the ambiguous categories like divorced, separated, living together but not remarried, divorced and living together, separated and living together, and stepparent married to biological parent.

Here are some detailed articles that will help you discern which FAFSA parenting category you fit into.

From TeenLifeMedia, “How Divorce and Separation Can Affect Financial Aid”

When students apply to college, there are many forms to complete. And if they are applying for financial aid, the FAFSA is No. 1 on the list. This form asks the obvious questions: name, date of birth, Social Security number, address etc. It also asks questions about parents’ financial information to determine financial aid eligibility.

If you are separated or divorced, this part of the FAFSA raises many questions:

  • How will colleges treat the income of two separate families?
  • Which parent’s income is used for determining the expected family contribution, or EFC?
  • Do both parents have to report their incomes?
  • What do the words “custodial parent” mean?

Read the entire article for clarification.

Studentaid.ed.gov published a PDF, “Who is My Parent When I Fill Out the FAFSA”:

Maybe you know you’re considered a dependent student* by the Free Application for Federal Student Aid (FAFSASM), and you’re supposed to put information about your parents on the application. But what if your parents are divorced? Remarried? What if you live with your sister? Whose information should you report?

Below are some guidelines that might help. Unless otherwise noted, “parent” means your legal (biological and/or adoptive) parent or your stepparent. In addition, the rules below apply to your legal parents regardless of their gender.

Download the PDF for instructions on how to complete this section

EdAdvisors Network addresses the issue of divorce and separation, “FAFSA Tutorial: Divorced and Separated Parents on the FAFSA”:

The marital status and living arrangements of a student’s biological and adoptive parents determines whether the Free Application for Federal Student Aid (FAFSA) requires financial and demographic information from one or both parents.

These topics are addressed:

  • Who is Considered a Parent?
  • Parents who are Married to Each Other
  • Parents who are Unmarried
  • Who is the Custodial Parent?
  • Stepparents
  • Increasing Aid Eligibility

Read the tutorial for detailed explanations of each category

SmartAsset.com provides parents with an easy-to-understand guide and some examples, “Divorce, FAFSA, and the Financial Aid Process”:

The Free Application for Federal Student Aid, known as FAFSA is the Hydra that strikes terror in the hearts of even the most financially savvy parents. Rendering otherwise competent adults mumbling, muttering wrecks. Creative hyperbole aside for the moment, most people are intimidated by FAFSA to some degree but those preparing the form as divorcees face a special kind of torment.

There are several problems with FAFSA when divorce is involved, none of which are insurmountable but lack of understanding can tear open long healed wounds and foster a renewed sense of acrimony. However, knowing the rules of the game can make life and FAFSA easier.

To understand the rules and see some practical examples, read this article

 

FAFSA, financial aid, Uncategorized

FAFSA Week: 5 FAFSA Myths

 

FAFSA myths

This week is FAFSA week. An entire week devoted to the FAFSA. I’m going to scour the my blog, the web, and social media to find you the best information, tips and advice related to the FAFSA. If you’re a go-getter and you’ve already completed the FAFSA, congratulations! If you haven’t recovered from the holidays, these words of encouragement should help you get motivated to complete it. If you’re not sure it’s worth your time, this advice should answer that question. If you want to be informed before you complete the form, this information will most definitely help.

Today, I am debunking some FAFSA myths.

Myth 1: If you can’t qualify for federal aid, there’s no point in filing out the FAFSA.

If you don’t complete the FAFSA, you can’t apply for student and parent loans. Colleges also use these figures when determining financial aid eligibility for grants and scholarships. If you don’t complete the FAFSA, you may be missing out on this type of aid. Plus, many states use your FAFSA data to determine your eligibility for their aid. Fill out the application and find out what you can get!

Myth 2: I make too much money to qualify for financial aid.

Actually, there isn’t an income cutoff to qualify for financial aid. Your eligibility for financial aid is based on a number of factors and not just your or your parents’ income. Families who file the FAFSA automatically receive an asset protection allowance based on the age of the oldest parent. The closer you are to retirement, the larger the allowance.

Myth 3: I have too much home equity to qualify for aid.

Most colleges won’t care if you own a house and won’t count home equity against you if you do. The majority of schools rely on the federal aid application, FAFSA, which doesn’t ask parents if they own a home. If the college requires the CSS Profile, home equity is required, but because of the equity cap, has little impact on the award decision.

Myth 4: I have to wait until I file my taxes to complete the FAFSA.

Under no circumstances should you wait until you file your taxes to complete the FAFSA. The new FAFSA filing date of October 1 makes it easy. With financial aid, the rule is “first come, first served”. File early and update if necessary.

Myth 5: The form is too complicated and since I’m sure I won’t qualify, it’s a waste of my time.

The FAFSA is actually pretty straight and can be completed in one sitting; and filing out the FAFSA is never a waste of your time. Colleges and states use this information when awarding grants and scholarships.

The bottom line: there is no excuse to not complete the FAFSA. It’s free and is well worth your time. Even if you can afford to pay for the entire cost of college, you should complete the FAFSA. Colleges use this data when dispusing merit aid as well.

 

FAFSA, financial aid

Amping Up for the FAFSA

 

amping up for the fiefs

If you have a college-bound teen, the FAFSA is how you celebrate the New Year. Honestly, not many parents celebrate filling out the FAFSA, but you should. The FAFSA is your golden ticket for college money. Without it, your student won’t get a dime (even many scholarships ask if you’ve completed the FAFSA).

This should be your FIRST New Year’s resolution: complete the FAFSA within the first week of the new year. It becomes available online on January 1st and although I can’t picture you waiting by your computer at midnight, you should make it a priority over the next few days. And while you’re waiting during the countdown, you should be amping up for the FAFSA.

I wrote an article for University Parent last year (and it’s been updated for the changes) that should help you prepare: An Easy Guide to the 2016 FAFSA. Here’s an excerpt:

If there’s a piece of advice I give parents over and over again, it’s this: whatever your income, complete the FAFSA. Many parents believe that the FAFSA should only be submitted by financially needy students. Nothing could be further from the truth. Colleges use the FAFSA data to determine all types of financial aid, not just need-based. If your student doesn’t complete the FAFSA, he won’t qualify for any aid from the college or the government, including student and parent loans. You may be able to pay for your son or daughter’s education, but why not complete the form? It’s free and you have nothing to lose.

Take a few minutes to read the entire article which includes information about FAFSA basics, the documents you will need, how to team up with your student to get the form completed, and some technical terms, definitions and changes to the upcoming FAFSA.

It would also be good to read Diane Schwemm’s post: Changes to the FAFSA.

You can’t bury your head in the sand and ignore the FAFSA. Get pumped and start amping up for the FAFSA–your golden ticket to free money for college!

college planning, financial aid

Strategizing Paying for College

 

paying for collegePaying for college is an uphill battle filled with mindboggling FAFSA paperwork and a steady stream of education bills. Stress due to how individuals will pay for college, housing, textbooks, and extra fees can be a continual buzz at the back of the mind. In order to avoid thousands upon thousands of dollars in student loans, college students and their families can strategically make financial and professional decisions that will maximize the amount of federal and company student aid they will receive.

Employer-Provided Educational Assistance

Students, prospective students, and parents can decrease the out of pocket cost of college by pursuing a job at a company that has educational assistance or scholarship programs. Many smaller companies have a long history of providing scholarships for their employees and their employee’s children.

On April sixth of this year, Starbucks led the employer educational program charge by offering to pay for the tuition for all part and full-time employees. Employees can choose any one of the 49 undergraduate programs at Arizona State University online program. Beyond Starbucks, there are dozens of employers who have educational benefits programs. The majority of the programs offer anywhere from $1,000 to $5,250 in educational aid per year.

Students should also look into deducting their education from their taxes as a work-related fringe benefit. Educational fringe benefits help professionals seek the education required when they meet one of the following requirements:

  • They are required to receive the education by their employer or the law to keep their salary, status, or job.
  • The education will help improve or maintain a skills needed for your job.

They also cannot:

  • Allow you the possibility of entering a new field.
  • Allow you to receive minimum educational requirements for your field.

Does it sound like you might qualify? What individuals can deduct is just as expensive. You can dive further into the topic here.

Extended Family Contributions

Your grandma or grandpa planning on helping you pay for college? Before they write you a check, you can strategize how and when the grandparents help you pay for college to minimize what they pay in taxes and maximize how much financial aid you receive.

First off, grandparents can maximize the financial benefits of aiding their grandchildren by sending the tuition money directly to the college. Paying the tuition directly qualifies the educational contribution as a gift tax exclusion. What does this mean? The grandparents will not need to report the contribution to the IRS.

It should be noted that only tuition is considered a gift tax exclusion. If family members want to help students with other educational expenses, the money qualifies as a gift tax expense. The family member should tally the amount given to the student. If the amount is less than $14,000, the amount given does not need to be reported. Anything over the $14,000 must be reported by the individual who gave the gift. No taxes will need to be paid on the gift until the individual has given more than $5.34 million.

Don’t rush off to tell your grandparents the good news yet. Here’s the bad news: If they help you pay for college this year, it will decrease the amount you will receive in financial aid next year. Unfortunately the people at FAFSA assume if they help you this year, they’ll continue to offer the same amount of aid the following year. You can prevent this fatal mistake by advising your grandma or grandpa to wait until the last year or two of college before helping out.

Paying for college can be expensive, but it can be manageable by developing a game plan. Business educational assistance and familial educational gifts utilized at the right time can be the beginning to a successful financial strategy to pay for college.

____________________________________

Today’s guest blogger, Samantha Stauf, was a first generation college student. Since Samantha graduated two years ago, she’s spent her free time writing articles meant to help current students succeed. You can find her on Twitter at the hashtag @samstauf.

financial aid, Guest Posts, student loans

5 Tips to Avoid Debt After Graduation

 

debt after graduationAccording to US News, graduates from the class of 2013 averaged just under $30,000 in student loan debt. This is a lot of money considering the average graduate from that same class had a starting salary of just around $45,000. While it may seem like an impossible task to pay back these loans, if you make smart decisions about your finances you can slay the startling student loan dragon and avoid the student loan money trap. The following tips will help you pay off your student loans and avoid the crippling debt after graduation that many recent graduates deal with.

1. Know Your Loans

If you are like most graduates who have taken out student loans, it is crucial to know the ins and outs of them. You should know your monthly payment, interest rate, and the term of your loan. Knowing this information will ensure that you don’t fall behind on your payments and will allow you to come up with a game plan to pay them back. It is also smart to stay in touch with your student loan servicer. These people can help you if you need more time making a payment, want to change the terms of your loan, or want to explore options that may reduce your interest rate.

2. Refinance

Just like you can refinance your mortgage or car loan, it is also possible to refinance your student loans. You can usually consolidate and refinance your loan or loans into one single loan with a private lender. Because many graduates now have steady jobs and a better financial standing, the private lenders who deal with refinancing may offer much better rates than the initial loan. Refinance rates start as low as 1.90% for those with a very respectable credit score though most borrowers’ rates average around 3-5%. Even if you can lower your loans by a few percentage points, you will save thousands in the long run!

3. Student Loan Forgiveness

Student loan forgiveness is essentially just what it sounds like. After a certain amount of time or under certain circumstances, you are “forgiven” for your loans and are no longer required to make payments on any remaining balance. One of the most popular plans is the Public Service Loan Forgiveness Program from the Department of Education. This plan offers forgiveness for those who work in a public sector job, like the government or a not-for-profit, who have made at least 120 qualifying payments on their student loans. Starting in 2017 you can apply for this program on the Department of Education’s website.

4. Maintain a Budget

Whether you have student loans or not, it is essential to maintain a strict budget. Mapping out all of your essential expenses and sources of income will allow you to have a better understanding of how much you can invest or save and how much extra spending money you have. There are also countless apps to help you easily track your budget and spending. Make sure to keep updating your budget as you gain a better understanding of how much money you are spending.

5. Cut Unnecessary Expenses

There are countless ways to waste money in today’s society. In order to stay debt-free as you enter the “real world” you must identify and eliminate these wasteful habits. Some examples of expenses you can cut include eating out, memberships to entertainment services like Spotify or Netflix, and spending money at bars or clubs. Once you take a look into your budget and spending habits, you should be able to choose which expenses are unnecessary and cut them out.

________________________________

Today’s guest post is from Molly Day, the creator of StudentLoanDiary.com. Molly created her blog to help her stick to her goals and encourage other people to beat their student loan debt! Molly is working to pay off $30,000 in student loan debt over the next two years!

 

financial aid, parenting, Wednesdays parent

Wednesday’s Parent: Saving for College

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college savingsNo matter where you are in the college prep process, saving for college and paying for college is on every parent’s mind. Depending on your situation and the amount of time you have to save, here are some excellent resources that will help you understand college savings plans.

SavingforCollege.com

SavingforCollege.com offers a free Family Guide to College Savings available in either Kindle, Nook, or PDF format. The guide advises parents on when to start saving, how to start saving, and college savings alternatives. It also gives a brief explanation of the tax savings you can expect and how to maximize savings. There are also numerous links on the site itself related to 529 savings plans, college expenses, and a tool to use to view the list of state specific plans. There is also a college cost calculator that helps you determine the cost of college based on your child’s age and the amount you wish to contribute along with a monthly savings estimate.

AffordableCollegesOnline.org

AffordableCollegesOnline.org has created a 529 Savings Plan Guidebook which can be easily printed from your browser. In the guidebook you will gain a better understanding of:

By using this guide, you will gain a better understanding of:

  • How 529 savings plans work and how to establish one
  • Who is eligible to establish and contribute to a 529 savings plan
  • The pros and cons of other types of college savings vehicles
  • How much may be contributed to a 529 plan
  • The tax advantages associated with 529 plans
  • The best time to set up a plan
  • How to take the next step in obtaining some – or all – of the funds that are needed to fulfill the dream of a higher education.

U.S. News Education

On U.S. News Education: Saving for College you can read articles like:

  • 4 Steps to Choosing Age-Based 529 Plans
  • 5 Steps for Utilizing 529 College Savings Plan Funds
  • 12 Questions to Ask Before Investing in a Prepaid College Savings Plan
  • 4 Costly Mistakes Parents Make When Saving Money for College

Fidelty.com

Fidelity offers information you will need to plan your child’s educational future. On this site you can compare your savings options, find a 529 savings plan that meets your needs, learn about financial aid, and how much you will need to save.

University Parent

University Parent, an online resource for parents of college students and college bound teens, recently published an article:  What is a 529 Savings Plan? How it Helps. The article gives an overview of the plans and what you need to know once you have one and how to use it.

If your college-bound teen is young, you have plenty of time to start saving. If you have a student in high school, you should read the information about aggressive portfolios and how to maximize your investment. The above resources should help you decide how much and where to invest your savings.

Read Wendy’s Post: Sense and Cents for College and Retirement Saving

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Wednesday’s child may be full of woe but Wednesday’s Parent can substitute action for anxiety. Each Wednesday Wendy and I will provide parent tips to get and keep your student on the college track. It’s never too late or too early to start!

The bonus is on the fourth Wednesday of each month when Wendy and I will host Twitter chat #CampusChat at 9pm ET/6pm PT. We will feature an expert on a topic of interest for parents of the college-bound.

Wednesday’s Parent will give twice the info and double the blog posts on critical parenting issues by clicking on the link at the end of the article from parentingforcollege to pocsmom.com and vice versa.

college guidance, financial aid, mom approved tips

Mom-Approved Tips: How Will You Make the Final College Choice?

 

final college choiceThe May 1st decision deadline is approaching and families are anguishing over that final college choice. The college your student chooses will be her home for the next four years. It will be her extended family. Her choice should take into consideration those two facts. But how will you make the final college choice?

Make another college visit

It’s time to revisit the colleges. This is by far the most important element of making the final college choice. If the college hosts admitted student events, your student should attend. This visit could have a profound effect on their decision. Spend as much time on campus as needed—talk with students, attend a class, talk with professors, and take your own campus tour.

Compare financial aid awards

After the visit, compare the awards. Who offers the best financial aid package? Will the awards carry your student through all four years of college (are they renewable?). Did the college include loans as part of the package? Was your student “gapped”?

Even if the college is your student’s first choice, the award should factor in to your decision. The last thing you or your student want is to graduate with overwhelming student debt. Trust me—she will thank you in the future for being the voice of reason.

Compare colleges who offered admission

In an article I wrote for University Parent, How Will Your Senior Decide?, I make these suggestions:

Begin by reexamining all the factors your student considered when applying. For each college or university, take a second — and closer — look at location, academics, the size of the student body, and other elements that made your student feel it would be a good fit. Review statistics including the freshman retention and four-year graduation rates.

It’s been months since she submitted her applications. If she got in, is she still in love with her first-choice college? Has she learned anything about the school since she applied that changes the way she views it? Has anything changed for her? Does the school still fit with her long-term academic and personal goals?

This is a good time for your student to gather information from a few trusted sources. She doesn’t need to invite everyone she knows into the decision-making process, but it can really help to consult with older siblings and friends, or teachers, coaches, or counselors.

Based on this research and reflection, make a list of pros and cons for each college and compare them side-by-side. The top two or three should be evident.

Before your student accepts a college’s offer of admission, take all these factors into consideration. You want your student to be happy, but you also want her to graduate with minimal debt.

financial aid

Mom-Approved Tips: Art Imitating Life–The Financial Aid Award Letter

 

What’s more scarier and nerve-racking than waiting for the college decision? Opening the financial aid award letter. Families all across the country have been doing this in the last few weeks. Some with excitement…as in this video:

…and some parents are wringing their hands wondering how they will pay for the college that offered their student admission. Sometimes a little levity helps, but even in the hysterical way The Middle addresses it, there are underlying realities that parents must face.

  1. The college decision is first and foremost a financial one–I’ve said it before and I will say it again: have the “money talk” before you apply to colleges. This avoids any disappointment if the college does not offer enough aid to cover your costs.
  2. Even though a college offers admission, it doesn’t mean you will receive financial aid–Colleges use the money to attract the most desirable students. If they don’t consider that your student is desirable, they won’t offer aid or they will gap you.
  3. Families anguish over the high cost of college–College has become increasingly expensive and it’s clear that the decision to attend college is not based on the education alone.