Monday, March 26, 2012

ATB Test

"I've heard about an ATB Test. What is it?"

An ATB Test stands for Ability-to-Benefit Test. Not all colleges accept ATB Tests, but some do, and what it allows you to do is to attend college without a high school diploma or GED. Not only does it allow you entry into the school, it allows you to obtain FA.

The tests themselves are made by publishers, and are administered by (according the the FSA Handbook) a certified official which may include "high school guidance counselors, test and measurement experts, human resource development professionals, qualified professional educators, or regional Armed Forces Command staff who are experts in education, training, and human resource development." The test itself must be administered properly for it to be used. For an administrator of the test to be certified, they must be certified by the state or by the publisher of the test used.

If a school or its employee(s) affect the outcome of test scores in any way, or if the test wasn't administered independently of the school, then the school is responsible for returning any FA funds. So, basically, if anything is out of the ordinary, then the student isn't eligible for FA funds.

However, a new change is on the horizon beginning July 1, 2012. The ATB Test can still be used as an entrance into college, but the student will not be eligible to receive any FA funds. In order to be eligible for FA funds, the student will have to have a high school diploma, a GED, or pass a state-recognized home school program.

So, the short answer is go ahead and get your diploma, GED, or finish home schooling. You won't get FA without one of them!

For more information about ATB Tests, check out the 2011-12 FSA Handbook (available online only at this point), Volume 1, Chapter 1, pages 8-11.

Monday, March 19, 2012

Claiborne Pell

The Pell Grant has been called the foundation for a student's entire financial aid package, and rightfully so since all other higher education financial aid is dependent on the Pell Grant. You can still qualify for other grants and loans without a Pell Grant, but you have to apply for the Pell Grant to even have the option of qualifying for the other FA. But where did this come from? It certainly hasn't always been around. The Pell Grant is one of those things that seems to have been around as long as anyone can remember, but if they think about the 1950's, it's not there.

So where did this come from? It came from a man named (oddly enough) Claiborne Pell. He was a senator from Rhode Island. He served six terms from 1961-97 and was most known for his work with education. He was largely responsible for creating the Basic Educational Opportunity Grant in 1973. This grant was created specifically for prison inmates to get an education. Pell and others believed that prisoners who received an education were less likely to return to jail and would ultimately create a safer public. The funding for this grant was never a problem in that there was always more money available than what was paid out. The odd thing was that people on the outside of prison weren't usually turned down for the grant. The Basic Educational Opportunity Grant was dubbed Pell Grant and soon the official name of the grant changed to it.

Claiborne Pell died at the age of 90 in 2009, and without his support, there would be no Pell Grant serving the needs to students in higher education since 1973.

Monday, March 12, 2012

2012-13 FAFSA Update

As it looks today, there is another change to the 2012-13 FAFSA, which takes effect beginning July 1. The FAFSA itself has remained relatively unscathed (the maximum amounts haven't changed, but the way it's figured has been). In a previous post, I mentioned that the new rules each year have an effect on FA similar to the way car designers have an effect on a car model. This year is no different.

The biggest change is how the FAFSA is to be entered and verification. There is an IRS data retrieval function that was added a couple years ago, and what this does is it allows the student to import information from the IRS into their FAFSA, so the information is correct. However, if you want the FA person to enter the information for you, this most likely won't happen. The Dept of Ed wants students to take control of their paperwork, so they want to have the student do this by themself. We are still working on how to work this out at our school (some schools have been doing this for years).

As far as verification, the Dept of Ed will no longer accept tax forms as proper verification materials. If a FAFSA is verified, then the student must request a tax transcript from the IRS, which takes a couple of weeks to come in. It was assumed that eventually the FAFSA would have to be done online, but the fact that a 1040 wouldn't be acceptable as a valid form of verification is a huge change.

It is unclear if the number of FAFSAs that have to be verified will increase or decrease. Errors due to incorrect tax information should be down, but errors due to everything else should be way up. We'll just have to see how this whole thing works out. Currently, there are more questions than answers.

Monday, March 5, 2012

July 1, 2012 Interest Rates

Back in 2006, Subsidized and Unsubsidized Stafford loans both had an interest rate of 6.8%. The only real difference between the two loans back then was how the interest accrued (Unsubsidized accrues while a student is in school, and a Subsidized does not).

And then came the College Cost Reduction and Access Act of 2007. This act made it possible for students to get a break on their Subsidized loan interest rates. Each award year afterward, the interest rates were reducing. Even though the interest didn't accrue while the student was in school, the interest after a student left school would reduce, and any reduction in interest is very beneficial.

This act created interest rates on a schedule as follows:
  • 6.0% in 2008-09
  • 5.6% in 2009-10
  • 4.5% in 2010-11
  • 3.4% in 2011-12
So, what happens beginning July 1, 2012? The Subsidized interest rates will revert back to the level they were before the act took effect. So, beginning July 1, any Subsidized loan that is originated after that point will have a 6.8% interest rate. This means that the interest is essentially doubling from the 2011-12 award year to the 2012-13 award year.

Although there has been talk that the government won't change the rate until next year (because this is an election year), this is something that is unlikely to change. The government is strapped for cash, so they will be looking for any place they can get a little extra money. So, be aware that this is a change coming up, and start now budgeting yourself for an increase of interest when you are finished with your program.