How liable are parents of college bound students for tuition costs? It depends on the answers to some specific FAFSA questions. According to the Free Application for Federal Student Aid (FAFSA), the parents of new undergraduates are accountable for college costs considering household income and assets. However, according to some parents opinion, the costs are supposed to be carried by the student entirely. There are cases of well-to-do families that offer little to no financial support for college, instead encouraging the student to figure it out themselves. This is a blessing in the disguise of hard work for some students, but for others it could be a misguided disaster.
In the world of financial aid, most students coming out of high school and living with their parents are considered a dependent and any student that is 24 years of age or older is independent. If a student is a dependent they must include their parent income as part of household income on the FAFSA. An independent student no longer includes parent income, but would include the income of their spouse if married.
There are other qualifying questions on the FAFSA that can determine if a student can be classified independent, leading some inquisitive students to try and figure out ways to qualify for increased financial aid as a result of their answers. They realize that financial aid could be greatly increased if parent income were removed, but are unhappy when they realize that they will not qualify unless they meet the requirements. I had a lot of experience in dealing with this issue while working at a financial aid office.
“But my parents don’t help me with school!” is what I would hear from some students when I would explain financial aid methodology and why family income had to be counted. They had a point really. How fair is it to count the income of parents for financial aid eligibility if the parents do not offer any support?
While my sympathies were with the student, the policies of the Federal Department of Education offer no wiggle room. A student will have to answer Yes to one of the following questions in order to be considered an independent student.
- 1. Are you at least 24 years old?
- 2. As of today, are you married?
- 3. At the beginning of the 2013-2014 school year, will you be working on a master’s or doctorate program (such as an MA, MBA, MD, JD, PhD, EdD, or graduate certificate, etc.)?
- 4. Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training?
- 5. Are you a veteran of the U.S. Armed Forces?
- 6. Do you have children who will receive more than half of their support from you between July 1, 2013, and June 30, 2014?
- 7. Do you have dependents (other than your children or spouse) who live with you and who receive more than half of their support from you, now and through June 30, 2014?
- 8. At any time since you turned age 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court?
- 9. Are you, or were you an emancipated minor as determined by a court in your state of legal residence?
- 10. Are you, or were you in legal guardianship as determined by a court in your state of legal residence?
- 11. At any time on or after July 1, 2012, were you homeless or were you at risk of being homeless.
Furthermore, if you do answer yes to any of these questions you will probably have to document the circumstances. For example, if declared an emancipated minor there will be court documentation confirming this. It will need to be submitted to your financial aid office if you are selected for verification review.
Generally, students that are young and declared independent qualify for more financial aid because parent income is no longer counted. There are a number of students that have persevered through harsh circumstances leading to federal aid entitlements. The federal aid program was designed to create college accessibility for exactly these students, whose parents were perhaps incarcerated or otherwise separated from their children by court order. This is a far cry from the circumstances of students who have had a stable and safe home life, but are suddenly thrust into a college choice conundrum.
Students: You should be aware of your circumstances and what options are available. If including parent income as part of your FAFSA puts you out of eligibility for financial aid, this is the reality you will have to deal with. As always, be prepared to decide on what school you will attend, accounting for what the costs are and what the benefits are. Consider other funding options, like getting a job and working your way through school with some elbow grease. It could teach you an even bigger and better lesson about life.
Parents: In my experience, the wisest path is through the middle ground between two extremes. On one side, parents who do everything and pay for everything “college”, leaving the student only responsible for showing up. On the other side, parents that are neglectful and careless, assuming that telling the kid to figure it out themselves is the best option. Neither extreme is the best way to handle such circumstances. Parents should recognize that a student must assume as much responsibility as possible over college selection and funding process within reason. Parents should play a supportive role to assist the student in this process, stepping in much like a life guard when trouble arises. The effort towards independence is valuable for a young person to harness lest it be wasted by parents that are no-shows or helicopters.
As Lynn O’Shaughnessy from “The College Solution” puts it, “If you’re a parent contemplating making your child pay for college on his or her own, please give it more thought.”
The skill of debt management has grown into a necessity for anyone completing college using student loans. Are student’s getting the help they need to deal with debt?
With about 2/3rds of all students finishing college with some kind of debt and
$25,000 $26,600 in student loans an average amount outstanding, it has become a common topic on personal finance websites, news media outlets, and blogs written by graduated students trying to pay it all back.
While student loans have assisted millions of students in gaining college access, after graduation those loans begrudgingly become another monthly payment due amongst other bills. For many, student loans have become a necessity equivalent to car insurance. Sure, no one wants to actually pay for car insurance, but it’s a necessity to owning a car just like no one wants to take a student loan, but many people want to attend college. The difference? Planning! College takes 4+ years to graduate before transitioning to the workforce while with car insurance no one “plans” for a car accident.
What can financial aid administrators, teachers, concerned parents and campus leaders do to raise awareness about this topic with students before they incur overburdening debt?
Facing the fact: College is a wholly unique experience from any other product or service because of the extended time involved and the unique nature of the ending result; a learned individual. With the time and options involved in higher education, the greatest challenge students face is reaping the benefits of the experience. It takes a combination of planning, patience, vision and reflection to make it work. Now more than ever this includes financial planning.
When we acknowledge the uniqueness of the situation, specific solutions can begin to be revealed. Fundamental debt repayment strategies are simple, reviewing the borrower loan statement is not complex, but these things take effort and students need a guide to get them started. Let’s take a look at what can be done on campus to help students learn about this subject.
The financial aid administrator has the power!: As financial aid has become more common, the role of the financial aid administrator has expanded. In order to deal with the ever increasing cost of college, schools have delivered funding options in the forms of grants, scholarships and of course student loans to help enable college attendance. The financial aid office has taken the lead in this role, and closely works with admissions each year to help students start at the college.
But after the student begins attending, how often is the subject of student loan debt readdressed? During the years between required entrance and exit counseling it’s a subject hardly considered, but all the while interest is accumulating on the loans outstanding.
Now student loans have become a hot topic, and students are learning more about it from any source they find, be it from the internet, Twitter, Face Book, Google image search or their friends. How can we know if the second hand knowledge gained about debt management is helpful and factually correct? As authorities on student funding, financial aid administrators should be concerned about the quality of information made available.
How can school leaders engage this topic with students?
Encourage repayment while in school: Start at the point of contact. When students ask about loan options, let them know about the benefits of beginning loan repayment while in school. Making payments on a student loan while still attending is truly an anti-debt weapon of choice. Nothing beats debt like making payments now, but it’s not so easy with many more fun ways to spend money while in college. Students must use critical thinking to consider the concept of delayed gratification to achieve debt elimination, an uncommon but valuable trait worth developing while in college. This healthy financial habit sets a strong precedence for the student’s future as they now associate incurred debts with immediate repayment instead of allowing it to grow uncontrolled.
Get active with student loan seminars: Get out in front of the subject and start talking to students directly about it. It’s a topic already on the minds of students everywhere, so this is an opportunity to reach out and make an impact on fresh minds. Ignoring it altogether leads to ignorance and a lack of focus on the importance of the issue. If student’s are being told to use student loans to attend college so they can learn, they should have the opportunity to learn about how to practically manage their debts. Extend seminars about financial aid and loans to high schools by coordinating with guidance counselors to connect to high school students before they start college.
Feature seminars in prominent areas: Take a look at your campus and figure out where the high traffic zones are and at what time they get busy. Areas like the student union building, cafeterias, and buildings with lots of classrooms in centralized locations are the way to go. Setting up the seminar in a hidden room, at a far walking distance at 9AM on a Friday means that zero students will show up. Prime time would probably be between 12 and 2pm on Monday or Tuesday, when the campus is flush with students.
“Your degree should help build a career that can enable loan repayment”: It’s the new and necessary mantra on campus. Students are easily distracted by the internet, smart phones, their friends, their families, boyfriends/girlfriends, spring break, video games, parties, concerts, and oh yeah…going to class. Getting caught up with the lifestyle associated with attending college becomes a predominant interest, as mentioned in an earlier article. Without a focus on why they are in school, students graduate without the tools to actually handle the debts they incurred. The message is clear; it’s all about debt suitability. Students need to connect debt to their outcomes, and need to consider what real income and employment prospects exist. For example, consider the student pursuing a career in social services that will complete a Master’s degree and will have about $72,000 in outstanding federal student loans. They should be aware of the federal income based repayment plan (IBR) combined with public service loan forgiveness where employment at a non-profit for 10 years can lead to the remaining Stafford loans being discharged. Is this what the student wants and does it fit with their life goals? Do they realize what kind of salary potential they have versus the debts incurred? They need to be thinking and talking about these things during the years before graduation, as matching up student loan debt to career opportunities is the new rule for student borrowers.
Talk about student loan refund management: Using refund money from student loans to pay for expenses is commonplace. The problem for students is when they go hog wild with the money, spending it on unnecessary items, luxuries or otherwise wasteful means. These students are even more likely to be shocked when their final loan balance is revealed. Take time to express the importance of proper refund check usage so students are spending their money wisely.
Don’t assume the students understand debt: Debt is now a pressing topic, but students will not learn what they are not taught until they are forced to learn it on their own. With debt so commonplace in and out of college, having even a basic grasp of the subject is important. If schools are admitting all types of students for all types of different majors, but rely on complex financial instruments like loans to pay their bill, they deserve a lesson on how to manage the debt appropriately. It should not be just finance and economics majors that “get it“.
Get athletes, club leaders, and social butterflies involved: To get something popular on campus, it needs to be popular with campus leaders. Gain influence by approaching these leaders about the topic and the far reaching impact it has. It will not take long for them to recognize the importance of the issue when many of them have student loans themselves. By building the relationship with campus leaders, the message will reach more students.
Combine instant gratification with worth while knowledge: Debt repayment used to be a dull topic. However, it’s become increasingly interesting as a result of necessity. Students need to know about how to manage debt because so many have it. As an added motivator, it is fun to offer a quiz for a chance at a prize. Pens, stress balls, T-shirts and flash drives can be awarded based on test scores, and are surprisingly effective at motivating students to excel on the test. If knick-knacks, and do-dads are not in the budget, find a creative way to recognize a student for doing something right. This is where good student counseling skills become so important.
Make sure students know about consolidation: While still in school, remind students about consolidation for federal and private loans. Consolidation is a great way to simplify repayment and predictably manage debt elimination. Furthermore, with interest rates low, it can be a huge money saver.
In college, students are confronted with a lot of new information. Trying to make sense of it all can be very challenging.
With today’s high costs of college, there is a very important area of information that students cannot afford to be ignorant about.
It’s financial aid terminology.
Are you a student wondering why you did not qualify for a specific grant? Ever wonder why the cost of tuition and the cost of attendance are two different things? Read on and impress your financial aid administrator by being conversationally competent with these key terms.
1. COA: In financial aid, you will run across a lot of acronyms. One of them is COA or the Cost of Attendance. This term is used to describe the maximum cost associated with attending a particular institution. This accounts for more than just the costs listed on a billing statement. It actually includes tuition, room, board, transportation, books and miscellaneous expenses. The total COA always exceeds the actual costs listed on a billing statement, and it represents the maximum amount of financial aid a student may be awarded during an academic year. Example: Tuition, room, board and fees at XYZ University is $35,000 per year. When including the additional costs of transportation, books and miscellaneous expenses the total COA is $39,000. This gap between the actual cost on the billing statement and the proscribed COA allows for students to apply for enough financial aid and student loans to receive a refund check. In this case $39,000 – $35,000 = $4,000. If the student’s total financial aid and loans add to $39,000, the student will receive $4,000 in refund checks from the school. I have a complete article about the cost of attendance here.
2. EFC: The Expected Family Contribution or EFC is the number given to students after they complete the Free application for federal student aid (FAFSA). It is used to gauge the students ability to pay for college costs out of pocket. The number takes into account family income and assets during calculation. Families with high income and assets have a higher EFC while families with lower income and assets have a lower EFC. The EFC is used in conjunction with need based grant programs like Pell to determine exact eligibility. It is important to know that the EFC is an amount of money the government believes you have available to put towards college expenses, but this does not necessarily mean that the cash is readily available to you sitting in a savings account. EFC is essentially a scale established to figure out how much financial aid can be awarded to a student with low EFCs qualifying for the most financial aid and high EFC’s qualifying for the least.
3. Financial need: Financial need is a number determined by the following; COA – EFC – any outside aid awarded = financial need. For example; student attends ABC college with a COA of $41,000. Student has an EFC of $16,500 and was awarded a $2,000 community service grant. $41,000 – $16,500 – $2,000 = a financial need of $22,500. Financial need is important because schools use it to determine eligibility for school originated need based grants. Schools recognize that many students may have an EFC too large to be eligible for federal or state based education grants, so they use financial need to determine eligibility for grant money from the school itself. It’s further reason why everyone should file the FAFSA even if they do not think they will qualify for aid. In fact, a student will have a different financial need for each school due to the varying costs of attendance. If a school has a very high cost of attendance, then the financial need for a student would be much greater than school carrying a lower cost of attendance. Financial need is also used to determine eligibility for subsidized Stafford loans and the Perkins loan. A student may have a high EFC but still qualify for these subsidized loans because the cost of attendance for their school is high.
4. Verification: If you have been selected for this procedure, you may be very well familiar with it. Verification is when the school requests copies of family tax and asset information to confirm that it is the same as what was put on the FAFSA. If there are discrepancies, the school adjusts the FAFSA info to reflect exactly what the taxes say. If you completed the FAFSA correctly, this should not be a problem. However, if there are radical differences, a student could lose financial aid eligibility.
5. SAP: SAP is satisfactory academic progress. At least once during every academic year, usually after the end of the spring semester, the school’s financial aid office checks over the grades of students to confirm the GPA and total credits completed. A student must maintain at least a 2.0 GPA to stay eligible for virtually all financial aid and must complete a certain number of credits on-time to maintain pace towards a timely graduation. If the student falls behind, they are deemed “Not making Satisfactory Academic Progress” and are no longer eligible for financial aid. Students are allowed to appeal this through a written/typed letter explaining what academic challenges they had and a plan of action for improvement in the next semester. If approved, the student is deemed eligible to receive financial aid again, but if they continue to fall behind the required standard the financial aid will again be revoked, leaving the student to pay for college out of pocket. If deemed not SAP and an appeal is not approved, students generally drop out of their college because they have no way of paying for it. Student loan providers generally do not provide loans where the student is not SAP as well.
There are a lot of terms that need explaining in financial aid. If you run across something you do not understand, email me at Ken@LendKey.com and I will get an answer for you!
If you work in certain government jobs or qualified non-profit organizations you may qualify for Public Service Loan Forgiveness or PSLF.
From the Department of Education: “The Public Service Loan Forgiveness (PSLF) Program was established to encourage individuals to enter and continue in full-time public service employment by forgiving the remaining balance of their William D. Ford Federal Direct Loan Program loans (Direct Loans) after the borrower has made 120 qualifying monthly payments (beginning anytime after October 1, 2007) while employed full-time by a public service organization.”
This presents a debt elimination opportunity for students that have large amounts of federal Stafford loans outstanding while entering a tough job market.
This adds a bonus to working for otherwise lower pay in government or non-profit organizations in exchange for a way to eliminate debt.
The trick to making this program work is the Income Based repayment option, or IBR. In IBR, a larger required monthly loan payment is reduced to a smaller payment to better match a reduced monthly income. This is a major benefit for students in heavy debt but with limited income prospects available.
The reason for this benefit is to help alleviate the stress that debt can put on a monthly budget. Because many public service jobs and non-profit organizations offer low starting salaries, recently graduated students with high debt would not be able to afford working there while making full payments on their debts. Public Service Loan Forgiveness combined with Income Based Repayment allows the student to manage a lower monthly payment, and at the end of 10 years, the remainder of unpaid federal loans are discharged. Yes you read that right.
Here is a scenario directly from The Project on Student Loan Debt:
- Public school teacher, qualified for Public Service Loan Forgiveness (PSLF)
- Owes $60,000 in student loans from undergraduate and graduate school
- Earns $36,000 as a public school teacher
Under a standard 10 year repayment plan, the student would have a $690 monthly payment due, adding up to $82,858 in total payments until debt freedom, costing $22,858 in interest.
Under an extended 25 year repayment plan, the monthly payment would be $416, adding up to $124,935 in total payments until debt freedom, costing $64,935 in interest.
Using IBR combined with the debt forgiveness in PSLF, payments would progress from $247 to $322 as income gradually increased over 10 years, ending with just $33,970 being re-payed, and the remainder of the loan balance being forgiven!
Just remember, this option is only available for federal loans, and requires specific employment at an approved organization, and requires 10 years of on time payments. Restrictions may apply.
If you have private student loans outstanding, make sure you get a consolidation to help eliminate the debt. They do not qualify for loan forgiveness programs as mentioned.
With Obama’s signing of the recent budget deal, members of congress that rushed deal-making over the past weekend were relieved.
Even more relieved; the millions of Pell grant recipients around the country that will retain their funding in the upcoming academic year.
The Pell grant was one of many government backed initiatives that was on the chopping block, with some politicians demanding cuts in the flagship federal school funding program to reign in government spending in light of the budget deficit.
Much of the debate on the Pell program has centered around the massive expenditure increases seen in recent years. Consider these statistics:
In the 2008-2009 academic year, Pell grants accounted for $16.1 billion in government spending. In just three years, Pell expenditures have more than doubled with the 2011-2012 academic year budget estimate at $34.4 billion.
In 2008-2009 there were about 6.2 million Pell grant recipients. In 2011 there will be an estimated 9.4 million students receiving Pell, a 52% increase over three years.
The increase in Pell expenditures comes from several factors, including;
A continued increase of students pursuing higher education has led to greater college enrollment than ever before.
Poor economic conditions have led to reduced household wages, increasing the eligibility of Pell for many students.
The summer/year round Pell program enacted in 2009-2010 allowed students to access up to 200% of their normal Pell grant eligibility during an academic year as long as they completed the required number of credits. This program was later canceled after the run up in Pell expenditures was too massive to manage.
The good news and bad news; it’s undergraduates vs graduates:
The Pell grant program is reserved for undergraduates only and does not apply to graduate students. For years graduate level students have had to rely on federal Stafford loans, basically the only federal financial aid available for advanced degree programs. For most grad students, Stafford loans are made available for a grand total of $20,500 per year, (except medical, dental and veterinarian students, they qualify for $40,500) with a maximum of $8,500 being subsidized. A subsidized Stafford loan is where the interest is paid for by the government on behalf of the student while they remain in school. The unsubsidized Stafford loan does not have this benefit, instead accruing interest normally while the student remained in school.
But now the subsidized Stafford loan for grad students will be eliminated. Beginning July 1, 2012, all Stafford loans for graduate students will be considered unsubsidized.
It’s been described as a choice between the lesser of two evils, but in order to preserve Pell, the benefit of subsidized Stafford loans for grad students has been eliminated.
This will be especially costly for students pursuing Medical, dental and veterinarian degrees, as they would most likely qualify for $8,500 in subsidized Stafford loans to pay for the high tuition. Now, all $40,500 will be unsubsidized. Considering that these advanced degrees require years of schooling, the removal of this subsidy will generate even more interest to be repaid by students.
A recent post from Lynn O’Shaughnessy at The College Solution focused entirely on salary levels for particular occupations and surprise! Engineers of many varieties are on top.
It should be no mystery that engineers earn their pay, as they work in highly focused fields that require high level problem solving abilities. Engineers are able to apply powerful mathematical concepts and theories directly to their work. Yes, all those high level math courses, physics and chemistry classes in college are actually very applicable to a future career.
The following is a list of college degrees and associated average mid career salary level:
- 1. Petroleum engineering $155,000
- 2. Chemical engineering $109,000
- 3. Electrical engineering $103,000
- 4. Material science & engineering $103,000
- 5. Aerospace engineering $102,000
- 6. Physics $101,000
- 7. Applied mathematics $98,600
- 8. Computer engineering $101,000
- 9. Nuclear engineering $97,800
- 10. Biomedical engineering $97,800
- 11. Economics $94,700
- 12. Mechanical engineering $94,500
- 13. Statistics $93,800
- 14. Industrial engineering $93,100
- 15. Civil engineering $90,200
- 16. Mathematics $89,900
- 17. Environmental engineering $88,600
- 18. Management Info. Systems $88,200
- 19. Software engineering $87,800
- 20. Finance $87,300
However, high average salaries should not be the only determining factor in a career choice. Careers in engineering can be very demanding. Are you up to the challenge? Here are some pros and cons that most students think about when they consider this path.
- You could always be in demand for work if you learn your craft well
- This career can offer continual steady income
- You build a base of scientific and logical knowledge that can help you outside of work, like hooking up your house with money saving technological devices for example
- Challenging and rigorous study requirements
- Hectic and demanding work responsibilities depending on your field
- Changing technologies can suddenly lead to mass layoffs in your field
Long term success in engineering, like in many fields, appears to come from the individuals ability to branch out into other areas using the core knowledge they posses. Being incredibly focused on one type of product or technology can be highly lucrative for several years, but over time new technologies progress, making old technology and the experts that manufacture them antiquated.
People with engineering background may do well to expand their horizons into business areas like marketing, sales and product development as their careers progress. This way they can stay tuned into market trends and know exactly what people are looking for. A competent engineer can bring real working knowledge to business development initiatives due to their technical insights, and can make all the difference when assisting clients.
Lifetime earnings will be connected to lifetime learning, so if you are considering this field based only on salaries you are missing the point. The salaries listed are mid career level, and come after some years of experience.
To learn more about career options on engineering check out some online resources:
A student’s journey through college can come with a lot of expenses. That’s why students are allowed to access refund checks to pay for some of these expenses.
As a result, getting hands on a loan refund check becomes very important for many students as the semester begins. Here are some things you should know about when it comes to getting a refund check.
1. What is a refund check from a college? A refund from a college is a result of having more total funding on your account than the actual balance due. Funding on your account comes from a combination of sources including, financial aid, scholarships, student loans, and cash payments.
2. How do they get processed?
Getting a student loan refund check follows specific steps:
First: The office of financial aid must award all of the student’s financial aid and student loans. While awarding this funding, it is the financial aid department’s responsibility to make sure they meet the federal regulations for the cost of attendance (full article on cost of attendance). A normal cost of attendance for college includes the cost of tuition, room, board, transportation, books and miscellaneous expenses. When added together, the cost of attendance is always greater than the actual charges on the tuition statement. The cost of attendance is established as a maximum amount of total funding that can pay to a student account during any academic period, and is meant to prevent students from borrowing far more than they actually need for reasonable living expenses.
Second: The student must make sure they complete all required paperwork for their financial aid to pay correctly. This includes the award letter, any loan promissory notes required, and any financial aid verification documentation if required. If you are trying to secure your refund check, but are still missing key documents, the refund check will not be released to you.
Third: For most students looking to get a refund check, there is a supplemental student loan that must first pay to the account. When regular financial aid is not enough to cover the entire bill, students turn to an alternative loan or a parent plus loan to cover it. Many times the refund check can only be made available after this additional loan pays out. There is a specific procedure followed to make this happen.
A. The student successfully applies for the additional loan by completing the application correctly. They are approved.
B. The school acknowledges the additional loan by certification. During loan certification, the financial aid office confirms the correct loan amount and that the student indeed attends the school. The school is free to reduce the loan amount to fit within the cost of attendance. So if a student applies for a $20,000 student loan, but can only fit $10,000 within the cost of attendance, then the loan is reduced.
C. The lender receives the certification and sends money to the school either electronically, or by paper check.
D. The school receives the loan funding and pays it to the student’s account along with other financial aid sources. All of the student accounts showing an excess of funding are put to a review called a “mismatch.” This is done to ensure that each student is receiving the correct amount of refund money and has not exceeded the cost of attendance with their total funding.
E. A refund check is sent to the student. This is done either electronically, or by paper check depending on the school. If done electronically, the student needs to complete a registration with the school for electronic funds transfer (EFT) with their checking account.
Common problems and resolutions:
All your paperwork is late: If you waited until the last minute to file your FAFSA and/or apply for student loans, anticipate that your refund check will not be available until later in the semester. Talk to your financial aid office to find out the turn around time. If they cannot give you a specific date, try to find a range, like sometime during the month of October. If you are really late, the refund may take until November, or possibly until the end of the semester.
You submitted paperwork, but something was wrong: Maybe you forgot to sign something, or forgot to submit a very important form. You may think everything is complete, but it turns out you missed something. Make sure you review all documents, and follow up with your financial aid office early in the semester to make sure things are in order.
Lesson learned: If you are looking for a refund check, submit all required info early, and follow up often to make sure everything is in order. If you are late this year, patiently work with your financial aid office so that everything is done and you know a refund is on the way.
UPDATE: Check out this handy info-graph on our Pinterest page to track down the status of your funding: http://pinterest.com/pin/537617274237291108/
If you are one of the millions of students attending college this fall with parents that have been hit with unemployment, the summer can be a jittery time.
That’s because many students must submit appeals to increase financial aid during the summer in the hopes of securing enough aid to get through the academic year.
This is make or break time for potential incoming freshman, and a gut-wrenching experience for students that are continuing into their sophomore, junior or senior years.
I know this from my own experience. During my final year working as a financial aid counselor, I processed more appeals for unemployment than during all the other years combined. When the economy took a nosedive, students had no recourse but to rely on financial aid to help pay tuition.
The financial aid office has the ability to review and process appeals for increased funding due to special circumstances on a case by case basis. Financial aid counselors can use “professional judgment” in conjunction with financial aid methodology to account for the drop in income that accompanies unemployment. Professional judgment, or PJ as it is commonly referred to, gives a great deal of flexibility to financial aid counselors to provide extra funding like need based grants, but can also unlock eligibility for subsidized Stafford loans, Perkins loans and work study. It’s a great boon for students that are otherwise in a tough spot.
However, appeals do not always go the way the student wants them to, and sometimes they take a long time for a response. Here are some points to help you navigate this process and keep yourself in good position no matter what the outcome.
1. Are you sure your circumstances are “special”? I had a student come to my office one day very upset about her mother being laid off from a certain company. She explained that this would be a major hit to family finances as Mom’s income helped to pay for a lot of expenses. I let her know that the financial aid office can take an appeal, but before sending her on her merry way to begin writing the letter, I started asking more questions. It turns out that Dad was still fully employed with the same job claimed on last year’s FAFSA, earning $175,000 a year. Even with a household of four with two in college, that income alone puts them well out of eligibility for increased financial aid. Lesson learned, household income must be substantially reduced for an appeal to garner increased funding. If one parent loses their job and the other parent still has high income, it may not make a difference. Before submitting an appeal, review info with your financial aid counselor for ball park estimates of potential funding.
2. Is the financial aid office slow, or are you impatient? I will never forget the frantic parent/student that leaves 4-6 voice mails within 24 hours of submitting the appeal, expecting their issue to be settled instantly with a large amount of financial aid being awarded.
I hate to disappoint
overly zealous concerned students and parents, but with hundreds of families submitting such appeals they must be reviewed in the order in which they were received. In order to get a 24 hour response to something like this, there has to be zero projects on the reviewing councilors plate, or they don’t mind putting your file ahead of people that have patiently submitted documentation before you. A window of about 7-10 business days for an appeal review is normally acceptable. It could take as long as one month. Any longer than that, yes it is very slow. However, hounding the financial aid office for the next three days after submitting an appeal is a waste of time. If there is great concern over the process, simply have the student stop by the office in person about 4-5 days after submitting.
3. I submitted an appeal long ago with no response, what do I do? Have you been waiting a month for a response? Starting to lose sleep, and getting anxious? Maybe you are justified with being nervous, because one month should be the maximum amount of time it should take for an appeal to process. However, the processing time amongst all financial aid offices will vary and can change year to year. It’s possible, no matter how uncomfortable it may be for the student body, that a month will pass before an appeal is reviewed. Here is what to expect from the three major ways to contact the financial aid office.
- Effective phone calls
- Directed Emails
- Personal Visits
Phone conversations with financial aid offices are a mixed bag depending on who you are talking to. The person that first answers the phone usually has little knowledge of what is going on with the appeal. You need to have direct contact with the counselor if you have more detailed questions, so make sure you get the number of the financial aid counselor actually reviewing the appeal. This way you can get a status report, and hold someone accountable for a resolution. If not getting the service you want by phone, avoid leaving excessive voice mails and move to emails, or a personal visit.
Communicating by phone to a financial aid office is quickly becoming antiquated as it takes to long to deal with so many student inquiries. Today we see more effective service through email because it keeps questions in an organized format, and forces the student to articulate their concerns thoroughly. Communicate your concerns about your appeal through a brief but clear email submitted to the counselor reviewing the account. Additionally, find the email of their supervisor and CC them on the email to help facilitate processing. A well placed email to the right person may quickly resolve an appeal issue that has lingered too long.
Making a random stop at the financial aid office will yield random results, with the best being on the spot personalized service, and the worst being no help at all. However, the drop-in visit can be very effective as long as you are leaving a good impression. So before walking into the office, collect your composure. If this is your first time dealing with the staff, make your concerns clear while refraining from frustration. Financial aid officers are exposed to frustration so regularly that heaping on more only makes them numb to your needs. Ask them questions about the appeal process, find out how many others are appealing just like you. Establish a time frame for expectations. Gather emails and phone numbers of key people and let them know you will contact them in a set number of days for a progress report. If you are on the mind of the counselor, it tends to be more likely that you will get faster service.
Christian Lopez, the generous and kind hearted Yankee fan that returned Derek Jeter’s 3,000th hit baseball has even more good things coming his way.
It turns out that “doing the right thing” can pay off when big companies take an interest in marketing the story.
USA Today reported that companies like Miller brewing, Modell’s sporting goods, Steiner Sports Marketing and JCPR press relations are all working with Christian, providing him with money, gifts and placement for more opportunities. Even Topps will “immortalize” him with his very own special edition baseball card to be released this November.
If you have not seen the Video, it’s easy to tell that Christian is a good guy, and feels that returning the ball is the right thing to do.
Hopefully, these additional rewards off-set the lost opportunity of actually auctioning off Jeter’s ball for an estimated $250,000. When I looked at the comment sections of many of the related articles, fans have been blasting on Christian for letting this opportunity slip between his fingers. Here’s hoping his good nature and honesty is rewarded in ways that money cannot buy.
However money is a weighty issue, and when it was revealed that Christian is sitting on about $150,000 in student loan debt, this story took a new turn.
Christian attended St. Lawrence University, a fine liberal arts institution, and completed studies in Government in 2010. Located in Canton upstate New York, it is near the Canadian border, and boasts their North Country community as a major part of the experience there. The place is gorgeous, check out the promo video on the St. Lawrence website.
The cost of attendance at St. Lawrence University for full time undergraduate studies including dorm, meal plan and fees is $53,740. While scholarships and financial aid can off set these costs, it’s easy to see how Christian can be in high debt.
Interestingly, while sporting goods companies and promoters have pledged a combined $50,000 in cash and even a World Series ring, student loan providers have remained in the back dugout, avoiding any kind of publicity on the subject. Considering the sheer volume of debt Christian has, he must have maxed out on his federal Stafford loan eligibility of $31,000, and turned to private student loans to fund the rest of tuition.
Instead of throwing prizes at Christian, and parading him around in the carnival world of mass marketing, what he really needs is financial literacy, especially with new money coming his way.
My question; Has he undertaken student loan consolidation yet? He’s a perfect example of someone that could really use it, and he fits the mold. While he did study government, but ended up selling cell phones, it’s good to hear that he is working. It’s a sign that he is at least out there getting it done, and is not discouraged about the degree-to-employment mismatch so common today. As long as he is earning income and finished his degree, he can apply for private student loan consolidation, and the federal loan program will take a consolidation pretty much every time.
People can make a decent living selling cell phones, and it is certainly a valuable service, but I don’t imagine that Christian’s income could possibly be very high at this career point. One thing for sure, being the honest guy that he is, I’d sure as heck trust him enough to buy a cell phone from him. But realistically speaking, he is in a career-to-debt mismatch, a topic I have written on before. Christian is a very lucky guy under the circumstances, as he can probably overcome this mismatch by leveling off his debts and using his notoriety for easy pay-days. All things equal, wouldn’t you buy a cell phone from him too?
Christian has some new things going for him now. Giving the ball back has now earned him a place in baseball history. Be it as brief as it is, it’s still enough to propel his life in a positive direction. As noted on the Josh Blackman blog; “What he earned, is priceless–reputation.”
2012-2013 Update! Maximize financial aid while keeping your summer job: The FAFSA income protection allowance
Students from high need families face obstacles when it comes to college. Increasingly, one of those challenges is managing an actual work schedule while attending. For some students, getting work can be as important as school itself. Earning critical income can take as much time out of a week as attending classes.
Today, we see hard working students taking every opportunity they can to move their lives forward. They might work multiple jobs to help out with household expenses. Perhaps parents have gone unemployed or have had hours cut, leaving the student without any extra resources to fall back on. There are no easy answers for anyone, especially when the answer is “get a job, any job…”
However, income does factor into financial aid eligibility. Most students are completely unaware that their personal income and assets are weighed more heavily than parents income and assets on the free application for federal student aid (The FAFSA).
As a result, students could unknowingly sabotage their own financial aid eligibility by earning income from a part time job. The following info can help clarify student’s concerns about income and financial aid eligibility.
Student income counts on the FAFSA: This is a tough fact to deal with, especially when students are looking to earn extra money. The FAFSA already accounts for parent income substantially, but it also weighs student income as high as 50% towards the estimated family contribution.
If parents have low income, student earnings can have a major impact on financial aid: As crazy as it sounds, earning money can hurt a student’s chances of receiving financial aid. However, if the parents have income high enough to eliminate financial aid eligibility, it will not make a difference if the student works or not. This article is not meant to discourage anyone from work, but rather to understand how student income can affect financial aid eligibility. Students from low income households need to know how best to manage the limited financial aid made available, especially during tough economic times.
Know the “income protection” cutoff: The Department of Education recognizes the dilemma facing students from low income households. If they work and earn income, it could be disproportionately weighed against financial aid eligibility. As a result, the FAFSA has set up an “income protection allowance”. This allowance shields a portion of income from the financial needs analysis, and is not counted towards the expected family contribution or EFC. However, any income earned beyond the income protection threshold is counted towards the EFC at a substantial percentage.
For the 2012-2013 academic year, the FAFSA’s income protection for dependent undergraduate students is $6,000, from 2011 earnings.
So if you are starting college this fall, it’s too late to adjust any earnings from the 2011 tax year, however Summer 2012 earnings will impact the 2013-2014 academic year FAFSA, and this number is expected to be slightly more than $6,000.
Here is a link to the 2012-2013 EFC Formula Guide, with the equations used by financial aid administrators to determine the Expected Family Contribution (EFC). It clearly states on page 14 that the dependent student income protection allowance is $6,000, meaning that earnings below this number will not harm financial aid eligibility, but any earnings above that amount may weigh heavily against financial aid eligibility.
An ideal summer job situation would earn income just to meet the $6,000 income allowance benefit and no more. Students need to be aware of their earnings and plan accordingly. As long as earnings remain below the cutoff, the student is safe.
Work+Study = Work-study at college! Work-study, aka The FWS Program, provides funding to colleges to provide part-time campus based employment opportunities for students. Financial aid administrators have substantial flexibility in determining the amount of FWS to award to students, with awards ranging from $1,000 to as high as $4,000 per academic year. Hourly wages must not be less than the current federal minimum wage of $7.25 per hour and students work no more than 20 hours per week. Best part is, the earnings from federal work study jobs are not counted in financial aid methodology, meaning that any money made is not “counted against you” for financial aid eligibility during the next academic year. This is unlike earnings from regular non-workstudy jobs that are counted as part of income on the FAFSA.
The wise working path maximizes benefits of both: Students can feel stuck in the middle, wanting to make money, but also wanting to attend school with the best financial aid eligibility. For a student to find their own solution they must manage a combination of opportunities and recognize the limitations of both.
Summer jobs have a long tradition for college students, from waiting tables, to life guarding, to taking care of children. They are a good experience for the student along with extra income needed for expenses. For some students, part time summer work leads toward full time working opportunities as well. However, the parameters of financial aid force students to limit their earnings to retain financial aid eligibility. As stated earlier, students need to earn income up to the “income protection” limit, but no more as to avoid losing financial aid.
Work-study jobs are different because they are campus based. They are always affiliated with school, making it convenient to fit with a student schedule. The downside is that the options are pretty limited, mostly involving filing and organizing office materials, not the most exciting of work. The jobs can become repetitive and stagnant over time, so the real benefits of work study come from who you are working for and with. A work study position in a busy academic department is a great opportunity to meet lots of people in a particular area of study and can lead to further networking opportunities. Certain work study jobs can even be done off campus, usually assisting non-profit community groups depending on where you attend school, but this is less common.
Work-study earnings may be lower than other job earnings, but because they are not weighed against financial aid eligibility, the dollars are worth more than they seem. Students must stay patient during work study employment, but that patience can pay of by retaining financial aid eligibility. Also work-study hours are much more forgiving, with supervisors often allowing students a lot of flexibility for class and studying.
Combine the best of both worlds by accessing both summer work and work-study. Use summer jobs to gain experience outside the classroom, and keep earnings within the income threshold to retain financial aid eligibility. Use work-study during the semester to maintain some income without losing financial aid. Savvy students only need to rely on this for a few years, as they will grow up into new job opportunities, but during these important early years a bit of planning can really go a long way.