Ken’s Top Tips

June 18th, 2010 by Ken 8 Comments »

FEDERAL PELL GRANT

– The Pell Grant program is the most widely recognized federal grant in the nation and has a long list of rules and regulations. That’s because if you can qualify for a Pell grant you may also qualify for a host of other Federal grants. The Pell grant is the cornerstone grant that the FSEOG, ACG and SMART grant eligibility is built from. As always grants are free money; they are not loans and do not need to be repaid. The grant amount is need based so you have to document limited income and assets on your FAFSA form in order to qualify.

The Government has again added new Pell regulations. More regulations mean more headaches for financial aid administrators, but there is a big bonus for motivated students that want to finish a degree in four years or less. If you are Pell eligible and able to complete at least 24 credits during the fall and spring semesters and are looking to take additional classes during the summer you may qualify for additional Pell funding for a grand total of $11,100 per year. You must contact your school’s financial aid office to see if you qualify for more Pell grant eligibility based on your pattern of registration. Schools are still changing their procedures to handle this rule change. It’s best if you preemptively contact Financial Aid about this to confirm eligibility.

PARENT PLUS LOAN

– The Parent plus loan is a popular choice for many of the parents of college bound students. With a fixed rate, there is a predictable repayment schedule. Payments are due each month after the loan has been disbursed. If the payments work into your budget then the Parent Plus loan might be the right choice.

If you have more than one child looking to attend college simultaneously then you will need to consider if this loan can be used to finance each child’s education. That is because of the amount of outstanding debt that will have to be weighed on the parent’s credit and the monthly payment that is due.

If a parent is credit denied for the parent plus loan the student can receive an additional unsubsidized stafford loan in the amount of $4,000 as a freshman or sophmore and $5,000 as a junior or senior. This is an effective strategy if the child’s balance is low enough to be covered by the additional loan but the parent cannot get credit approved.

Federal Supplemental Educational Opportunity Grant (FSEOG)

– Financial aid offices are given some flexibility in the awarding of this funding. As a new incoming freshman, don’t be surprised if you get several award letters with different FSEOG amounts. If you notice that your first choice school is awarding you with a lower FSEOG than some other schools you have applied for, then you should try to get it increased. Make a photocopy of the award letters listing a higher FSEOG and attach a brief letter. Through your letter let the first choice school know that you are motivated to attend there, but that you want to be reconsidered for at least as much FSEOG as other competing schools. You have nothing to lose, just send the letter to your choice school as quickly as possible.

If you are a continuing student and you notice that your FSEOG has reduced from prior years, try writing an appeal letter to your financial aid office. Federal need based funding can change year to year based on your FAFSA information, however a school is able to amend an FSEOG award to some extent. It is worth a try.

Sending in appeals for FSEOG is the nitty-gritty business of the financial aid office. Some schools will basically ignore your request; others will award you with a substantial amount. It’s all based on the school’s policy and procedures and the amount of extra FSEOG funding available. There are four things you can do to try and get the increase. First you need to know and trust an administrator that will seriously consider your request. Second, if possible email the request to cut down on paper. Financial Aid admins are already swamped with paper, they don’t need more. Third, follow up to make sure the appeal was received about 5 days after you send it. And finally, the earlier the better, so send it in as soon as you can.

THE STAFFORD LOAN

– If you need a loan for college, the Stafford loan will be your first and foremost option. Just file your FAFSA, complete the Master Promissory note and Entrance interview with Direct loans and make sure you have accepted the loan as part of your college’s financial aid award letter. Not completing the paperwork will cause delays in your disbursal and could lead to missed registration and non-admittance to your dorm due to delinquent payment of your college bill. To get ahead, go online and complete your master promissory note and entrance interview online ASAP.

DIRECT LOANS

– The Direct Loan program is the only source for any federal Stafford loans or Plus loans. Recent changes to federal law have eliminated all private lenders from participating in what was known as the Federal Family Education Loan Program or FFELP. Lenders like Sallie Mae and Citibank were major providers for the federal loan program and would facilitate and fund Stafford and Parent Plus requests, but that is no longer the case. See this article at Fast Web for more details.

From now on direct loans will be the only source for federal Stafford loans and Plus loans. If you are a new or continuing student looking to use one of these loans to help pay tuition, make sure you register online and complete the required documentation so the funding can be sent to your school when tuition is due. Failure to complete the requirements will result in no disbursal of your loan.

Go to the Direct loan website for further resources.

THE MASTER PROMISSORY NOTE AND ENTRANCE INTERVIEW

– Make sure you register the master promissory note and entrance interview forms before you start college. Don’t get held up because they are incomplete and you will save yourself some headaches. When you go through the direct loan process you will be prompted to get a personal identification number (PIN). Make sure you remember your PIN. In my experience at least 25% of students every year fumble this process and end up wasting time later in the semester trying to get it resolved. By staying on top of this you can avoid missing registration deadlines, and expedite any refunds due to you if applicable.

STAFFORD LOAN LIMITS

– Always max out your Stafford loan eligibility each year before using any private loans. Also keep in mind that if you end up going into a fifth year of undergraduate studies you may run out of eligibility because you reached your aggregate limit.

STUDENT LOAN DEFAULT

–Whatever you do, don’t default on your student loan. If you do, then do not ignore the situation. Contact your lender/servicer and explain to them your situation. You may be able to work out a new payment plan on the loan. If you are able to make a certain number of timely payments you can get yourself out of default status and commence repair on your credit rating. Check out the Federal office of the Ombudsman for more info on how to rehabilitate a defaulted loan.

Tags: acg, cornerstone, fafsa form, federal grant, federal grants, federal pell grant, financial aid administrators, financial aid office, fixed rate, free money, grand total, headaches, parent plus loan, pell grant eligibility, pell grant program, repayment schedule, right choice, s education, schedule payments, spring semesters

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