Monday, April 30, 2012

Hope for the Subsidized Loans?

On Friday, the House of Representatives passed a bill that included as part of it the ability to keep Subsidized Stafford loan interest rates at 3.4% for one more year. This would assist students for one more year in keeping their interest rates at a lower rate than the 6.8% (double what it currently is) that it is scheduled to go up to on July 1.

We will see what happens with this bill as it goes up the pipeline. First it has to pass the Senate, and if it changes in the Senate, then it goes back to the House. Once the House and Senate approve, then it goes to the President to be signed into law. The fear is that he will veto the bill, and so far the news from the White House is that Obama will veto the bill.

But have you been keeping track of this debate? Here's a small lesson in politics, which will be a great example of how FA laws seem to go through half the time.

As stated above, there benefits to students who have a lower interest loan. And Obama was saying a week ago that he is going to stand by students and was willing to help them by keeping the Subsidized loan at 3.4%. His opponent didn't specifically say one way or the other what his plans were, but his comments haven't been viewed as being favorable toward it.

So, why the sudden change in tone from he Administration? It's all politics, friends. You see, when a Republican led House passes a bill, and when that bill goes to a Democrat President, it suddenly is evil and must be killed. And even though he supported it a week ago, it is from the Republicans, so therefore it is bad.

One must keep in mind, however, that the news is early, and there may be more to the bill that is unsavory for the Democrats, but it's also early in the sense that it still has to pass the Senate. And rest assured that changes will be made in the Senate! However, it became painfully obvious today that the simple act of ensuring a low interest rate for student loans (and only Subsidized loans) is nothing more than a political tool of being elected or re-elected rather than helping the constituents it is meant for.

Now this isn't meant to cause anyone to get into an uproar one way or the other. It is more often than not typical politics. Nothing new. With FA, most rules are created as either political tools (as in this case), or they are created by people who don't know what the ramifications of their rules will do (such as the gainful employment rules). All we in the industry can say is: "it is what it is."

Welcome to the fun of studying the political side of FA, friends!

Monday, April 23, 2012

"I have questions about servicers..."

"...Where do I find out more?"

That would depend on what information you are looking for. If you are looking for direct information about your individual servicer, then you'll need to research them on their website or give them a call. Your specific situation is unique to you and will be unlikely to be answered by someone other than them.

However, if you have questions about servicers in general, then there are many places to find out some information. It's understandable that if your servicer changes, you may wonder why, and you may not really get an answer from your servicer.

The one site that is a good resource for many things is called Mapping Your Future. They are a non-biased site that offers information in financial aid, careers, college, and money management. For the purpose of this posting, I'm going to share a specific link of theirs: http://mappingyourfuture.org/paying/loanservicers.htm  This has answers to questions about Direct Loan servicers that you may find useful.

Monday, April 16, 2012

Grace Period

What is a grace period?

A grace period deals with your student loans, and it's the time during which you don't have to make any payments on those loans. For federal Stafford loans, the grace period is six months. At Metro Business College, the Central Finance Loan is only three months. For the federal PLUS loan, the grace period is sixty days from the last date of disbursement. This is the short answer, and like with everything dealing with FA, there are no real short answers. There are different scenarios.

One possible scenario is where you delay your grace period. If you complete a program then go directly into another program or another school, then you can fill out an in-school deferment. This will save your grace period for when you make it out your second time.

Another possible scenario is where you've already used your grace period. This would happen if you go to school, then you are out for over six months, and then go back to school. You've essentially used your grace period. On your new loans, you will still have the grace period, but your old loans may not. In the past, once it's used, then you don't get it again.

The only way to know exactly how your grace period will affect you is to contact your servicer. They will be able to give you an exact answer as to how it affects you personally, as opposed to how it works for most people.

And remember: for any new federal Stafford loan you qualify for and take out, you have a right to a six month grace period.

Monday, April 9, 2012

2012-13 FAFSA Question

Here's a good question that was asked recently: "If my FAFSA is verified and I am widowed, how do I verify just my income since 1040s are no longer acceptable?"

This question deals with a few elements. Remember that if you are divorced, widowed, or separated, you don't have to use your spouse's income on the FAFSA (this goes for students and parents of students). You should also be aware that this means that you can't count them as a member of the household either. So, because you don't have to include the spouse's income and you are only counting your own, where do you get this information?

The way the rules currently are is different than the way the rules are for July 1. Currently, if you are verified, you have to submit a copy of your 1040 tax return, and if you fall into the category of being separated, widowed, or divorced, then you could submit your W-2 or state 1040. In Missouri, income is separated into how much was earned by each member (filer and spouse). The Missouri return was perfect for this since most people keep their state and federal returns together. Unfortunately, in July the state return is no longer acceptable, and this is what the question deals with.

The answer is the W-2. Copies of the W-2s are still acceptable, so you will need to present these to the FA office when you are widowed, divorced, or separated in order to more accurately report your income on the FAFSA. Also, remember that the FAFSA has the line "as of today", meaning that you are divorced, widowed, or separated as of the day you fill it out.

Monday, April 2, 2012

FSA Handbook

What is the number one place Financial Aid personnel are told to look for more guidance regarding FA rules and regulations? The FSA Handbook. Published every year, the Federal Student Aid is a very complete answer guide to most of the rules and regulations concerning financial aid. It is a thick book containing a total of six volumes, and comes to the school hole punched for a binder. FA offices should have a copy of the handbook somewhere to refer to. The entire handbook is online on the IFAP website so it's easier to search for certain topics than it is in book form. The website is http://ifap.ed.gov/. The language in the FSA Handbook isn't entirely in government jargon, so it's easier to understand than most government written publications. The website doesn't require a login so FA professionals as well as students can check it out. It covers rules and regulations for every possible higher educational institution, so semesters, quarters, trimesters, and modules are covered as well as standard and nonstandard terms and clock hours.

Cover of the current FSA Handbook