Monday, November 25, 2013

FSA's New Campaigns to Help Students

Beginning this month and running through mid-December, the Dept of Ed's Office of Financial Student Aid (FSA) is beginning a campaign to assist students with repayment information.

The campaign will be targeted emails to borrowers whose grace periods are ending, borrowers who have falling behind in their payments, borrowers with higher than average debts, and borrowers who are in deferment or forbearance because of financial hardship or unemployment.

These emails should also be including a link to FSA's repayment calculator and a link to FSA's Income-Based Repayment (IBR) calculator. The emails will encourage borrowers to get in touch with their loan servicer and update their account.

Along with the email campaign, a social media campaign for all recent grad borrowers will include Facebook, Twitter, and Youtube. These messages will include information about student loan repayment options, common mistakes, and general student loan advice.

For more information, click here to see the Dept of Ed's press release announcing the campaigns.

Another helpful post from your friends at Metro Business College!

Monday, November 4, 2013

HEA Reauthorization.. What Is It?

The Higher Education Act was originally signed into law in 1965 as part of President Johnson's Great Society agenda of domestic programs. The HEA is the law that governs how federal financial aid is appropriated to schools and students as well as many rules on how financial aid works. The one thing that the HEA does not do is finance the financial aid programs; that process is left to appropriations bills in Congress.

The HEA is up for reauthorization again, and that means that committees are being held in order to discuss what the new version of the HEA should be. Since 1965, the HEA has been reauthorized nine times, some times taking years for each reauthorization. With more disagreements over higher education now than ever before, why does it matter that people keep a watch on the process?

Many people like to think that the HEA reauthorization isn't as big of a deal as it used to be. This feeling mainly comes from the notion that nowadays, many rules in higher education are made outside of the act itself. Congress, Dept of Education, Consumer Financial Protection Bureau, IRS, Veteran Affairs, and even the President himself will create rules that schools have to follow, and these rules may come at any time. Since these rules usually have more of an effect than HEA would seem, then most people assume that HEA isn't a big deal.

However, you should keep in mind that there are all sorts of different people involved in the HEA process, from Congress members to members of schools and accreditation agencies. Many people involved have their own agendas that help their cause. A couple years ago, the Dept of Education enacted gainful employment rules that jeopardized the ability of colleges and universities to offer choice to students who didn't want to go to a public school. After some legal battles, it was ruled that most of the GE rules were not based on any concrete evidence and the Dept of Ed couldn't explain where they obtained their figures. The rules were struck down. There is a GE II in the discussions for the HEA reauthorization which has many schools on edge. In the little that's been explained so far, the GE II is expected to be more intense than the first attempt.

It is important that schools monitor the progress of the HEA reauthorization so if there are extensive changes, then they can adapt accordingly. It is expected that this reauthorization will go on for a long time, just as most of the others have. But in the political climate that has been going on for over seven years at this point, it's clear that several of the agendas behind most of the HEA reauthorization are geared for political agendas rather than helping the students. As more develops, we will share more results.

Monday, October 14, 2013

New Sequestration Changes Coming to Financial Aid

Announced on Friday, October 11, the Department of Education announced changes from the sequestration. There are some important things to note that have changed and some that haven't changed.

Firstly, Pell Grants are exempted from the sequestration changes for the remainder of the award year. No award amounts have been decided upon for the 2014-15 year yet, and they won't be until a bill providing an appropriation is enacted.

Secondly, campus-based programs (such as FSEOG) are not affected by the new changes either. As far as the 2014-15 award year's allocations are concerned, there is no information yet similar to the information regarding the Pell Grants.

Thirdly, there will be changes to the Iraq-Afghanistan Service Grant. According the letter from the Dept of Education, grant awards where the first disbursement is made on or after October 1, 2013, must be reduced by 7.2% from the original statutory amounts. Grant awards where the first disbursement was made after March 1, 2013, and before October 1, 2013, continue to be covered under the prior sequester and must be reduced by 10% from the original statutory award regardless of when any subsequent disbursement was made.

Fourthly, as of October 1, 2013, the sequester increases the origination fees for Direct Loans. Currently, the loan fees are set at 1.051% for Subsidized and Unsubsidized loans, and 4.204% for PLUS loans. The new loan fees will be 1.072% for Subsidized and Unsubsidized loans, and 4.288% for PLUS loans. These changes are more difficult to implement, so these changes will affect any new loans whose first disbursement is on or after December 1, 2013. Any new loans whose first disbursement was between July 1, 2013, and prior to December 1, 2013, will remain at 1.051% and 4.204%.

Another informative post from your friends at Metro Business College!

Monday, October 7, 2013

Why Should I Put my Email on My MPN?

On your Master Promissory Note (MPN), there is an optional line for you to enter your email address. Sometimes, students ask why they should enter it if it's optional. This is an option that is highly recommended you fill in.

Loan servicers are switching over to electronic services and messaging. You can pay your student loan bill online and manage your student loan account online. Email is just the next step in that. Loan servicers are trying to cut down on costs, and mailing out statements costs money in postage and paper, not to mention the ink to print them. Although they will mail you statements, they actually prefer to email statements which keeps their costs down.

Also, it's an attempt to meet the newest generation of student loan borrowers on their own terms. As technology continues to grow and the face to face conversations (and even voice to voice conversations) are going down, the student loan servicers are trying to converse with the borrowers in an impersonal manner such as email. So for those that have developed a phone phobia, the servicers are willing to accommodate for that, leaving no excuse not to get in touch with them. The servicers  want to hear from the borrowers, and email is just another way for that to happen.

Monday, September 23, 2013

Forgiveness vs. Discharge

Two terms that are used with student loans are the terms 'forgiveness' and 'discharge'. In either case, you can be released from your obligation (in part or in whole) to repay your student loan if your loan is forgiven or discharged. But what's the difference between the two? It depends on what you do or what happens to you.

For discharging your student loan, it has to be a circumstance that was not your choice. Two common ways of discharging a loan is if you are considered 'total and permanent disability' and 'death'. In these two circumstances, it obviously not be your choice to be totally and permanently disabled or to die. Since you are not able to use your education in the strictest way, you may have your loans discharged. Another way to get your loans discharged may occur if your schools closes before you are able to complete your educational program. The key is 'before you complete your program' though. This is a rare scenario, and neither of the previous two are good situations either.

For forgiving your student loan, it has to be a circumstance in which you made a choice to devote your time to something in exchange for part or all of your student loans. Usually, the forgiving party in this case is the government. For high demand, important jobs such as teaching, public service, or government work, the federal government may actually forgive part or all of your student loans depending on the job and length of service. Some organizations and state governments will do this as well.

Although these are options available, most students won't or aren't able to give back to the community in the specified ways that qualify for student loan forgiveness. And although student loan discharge is available for those who can't physically complete the work their education prepared them for, they are only options in the extreme cases. The most common method of handling student loans is repaying them. With several repayment options available (and some even acting almost like forgiveness programs themselves), it's recommended that you go into repayment with a plan. If you have trouble with any aspect of repayment, talk to your loan servicer for more information.

Monday, September 16, 2013

10 Things You Should Know as a Student Loan Borrower

As a student loan borrower, there are some things you are expected to know and understand. Here are ten things you should know as a loan borrower.

1. Borrow as little as possible.
Sometimes people forget that they will owe loans back with interest. The less you have borrowed, the less you owe back. Seems common sense, but sometimes people forget how much they borrow, and they get into financial trouble when they graduate. Always use loans as a last resort, and if you don't absolutely need to borrow loans, then don't.

2. Have a financial plan while you're in school.
Don't wait, start now! It's a good idea to know how much your schooling will cost. Map out how much gas you'll use going to school, school activities, etc. Go here for some helpful tools on how to do this.

3. Create and follow a budget.
Don't wait on this either! This will be critical when you graduate. You will need to pay attention to how you spend your money because you will likely owe back loans. For help with budgets and some helpful tools, go here.

4. Understand your loans.
If you don't understand what kinds of loans you have, you won't be able to deal with them very well. You should know what types of loans you have (subsidized or unsubsidized, federal or private) and how your interest works (fixed rate or variable rate).

5. Know your loan servicer.
You should know who is servicing your loan in case you have any issues and need to contact them. The easiest way to find out is to go to the NSLDS website. (You will need your FAFSA PIN to access your information.)

6. Setup an online account with your servicer.
This is a good idea because you will be able to receive messages from your servicer quickly. Also, you will be able to keep your contact information up to date and communicate with them easily.

7. Make payments while in school.
Even if it's only $5 a month, it will help. You will be keeping your principal/interest lower which will save you money in the future. If you skip one coffee a month or five song downloads a month, that can add up over the length of a program.

8. Understand there are other repayment plans.
If you are having trouble making payments on your loans, look into maybe switching to a different repayment plan. Servicers won't suggest you try a different one; you will have to ask. You may qualify for a different plan that fits your situation better. Don't be afraid to ask.

9. Repayment is easier when your overall debt is lower.
Try to avoid credit cards and large items that require installment payments. This is helpful for when you go into repayment because then you have less to worry about paying back. It's better to just worry about rent/utilities and your student loan payment, rather than rent/utilities, car payment, the big screen TV, credit card debt, vacation, and student loan payment.

10. Keep in touch.
Don't be a stranger when you have issues! Call someone and ask questions. Your best option is to call the servicer directly. If you don't have their number, the NSLDS website will provide a contact number to call. Nobody can help if they you don't ask for help.

Another friendly post from your friends at Metro Business College!

Monday, September 2, 2013

What Does 'SULA Eligible' Mean?

If you've looked on your NSLDS and you're a new student, you will probably have seen the phrase 'SULA ELIGIBLE'. But what is SULA? And how are you eligible?

SULA is another wonderful acronym that stands for 'Subsidized Usage Limit Applies'. This is in reference to the Dept of Ed's new 150% rule for Subsidized loans. For any new student who had no prior student loan indebtedness on July 1, then you will fall into this category. If you had no loan indebtedness, then you will be tracked by the Dept of Ed for as long as you are enrolled to make sure you complete your program in 150% of the published length of the program. If you do not complete in this timeframe, then you will lose the interest subsidies on your Subsidized loan and your interest will accrue as though it were an Unsubsidized loan.

Since this only affects students with no prior student loan indebtedness on July 1, students with prior student loan indebtedness won't be tracked. If in the future you pay off your loans completely, then return to school, then you will be tracked.

So, being SULA eligible doesn't mean you are eligible for anything cool or helpful: it just means you are being tracked to make sure you complete in 150% of the normal length of the program. And really, for your own benefit, you should complete in that timeframe. If you are fulltime the entire time, and you go beyond the 150%, then you aren't meeting Satisfactory Academic Progress. Also, financially, if you lose your interest subsidies, then you are only hurting your pocket and will be owing money that you could've avoided had you completed earlier.

Another friendly post from your friends at Metro Business College!

Monday, August 26, 2013

What Is a C-Code?

Hopefully, you've never seen a C-Code, but if you have, then you most likely already know what it is. These codes can be (and usually are) very problematic. When you complete a FAFSA, you will receive a SAR (Student Aid Report), and the school will receive a similar report called an ISIR (Institutional Student Information Record). On both of these, your EFC will be listed. If there is a "C" next to the EFC number, or even in place of a number, then you have what's called a C-Code.

C-Codes occur when there is something dramatically wrong with the information you reported on the FAFSA. Think of the C-Code as an error message: the information has to be fixed in order for you to get any financial aid. Depending on what the C-Code is for, you may be able to just make a correction to fix the problem, but sometimes it takes much more than that.

What are somet things that would cause a C-Code?
  • Males having not registered with Selective Service
  • Being in default on at least one student loan
  • Name and social security number not matching
  • Unusual Enrollment History
Fixing a C-Code is a case by case affair. If you have defaulted on a student loan, then you'll have to obtain a letter from your lender/servicer stating you are out of default (obviously, this only applies if you are indeed out of default but it hasn't shown up in the system yet). If you have not registered with Selective Service, then simply register. If you are 26 or older, however, you cannot register anymore and will need to provide documentation stating why you didn't register. If your name and social security number don't match, then you simply fix the error.

C-Codes typically give a sense of fear in the minds of FA administrators because sometimes resolving the C-Code can be difficult. However, you must keep in mind that in order for financial aid to be processed, the C-Code has to be resolved. So don't be surprised if the process takes some time.

Another friendly post from your friends at Metro Business College!

Monday, August 19, 2013

Financial Aid Lifetime Limits

The federal government has been working on lifetime limits for different types of financial aid. Some of the rules have been changing as far as how much FA you can receive in your lifetime. Hopefully, you don't borrow enough loans to reach your lifetime loan limits.

Currently, Subsidized loans have a lifetime limit of $23,000, and Unsubsidized loans have a lifetime limit of $36,500. However, remember that the max amount a dependent student can receive their first year is $5500, and the maximum an independent student can receive their first year is $9500. Typically, this breaks down to up to $3500 of either can be Subsidized. 

Also keep in mind that students are broken down into years by the length of their program. If you are in a 1 year program (or less) then the max Subsidized loan you can get is $3500. If you are in a program more than 1 year up to 2 years, then your 2nd year can qualify you up to $4500 in Subsidized loans. It is possible to have a $5500 and $6500 Subsidized loan, but you'd have to be a 3rd and 4th year student to qualify for those (and by 3rd and 4th year student, I mean in a 3 or 4 year program, like a bachelor's program). If you are an independent student, then you have a greater chance of hitting your lifetime eligibility if you keep going to school. This is because you can receive up to $6000 of Unsubsidized loans a year. It only takes six years to end up around your maximum, so make sure you make wise decisions!

Don't forget that Pell Grants have a lifetime eligibility too. New for the previous award year, the lifetime eligibility for Pell Grants was lowered from 900% down to 600%. Each 100% is a full academic year, no matter of the amounts. This means two things. Firstly, the lifetime limit was lowered from a total of nine academic years down to six academic years. Secondly, amounts don't matter, so if one year you qualified for $5000 and earned all $5000, then that was your 100% that year. If you qualified the next year for $2000 and earned all $2000, then that also was 100%, making you have a total of 200% at $7000. If you have two people and one gets $1000 and the second receives $5500, then if they both stay the whole year, then they both have 100% earned, even though they aren't close to the same amount. 

Hopefully you don't use your entire limits of FA eligibility. The federal government wants students to get into college, earn their degrees, and graduate without going back over and over or not finishing and going from school to school. They want people to be completers and entering the job market. Keep that in mind if you decide to change your mind!

Monday, August 12, 2013

Know Your Student Loan

"Why is it important to know which kind of student loan I have? Aren't student loans just student loans?" Not at all! There are many several different kinds of student loans, and depending on which kind you have will determine the rules associated with your loan.

We are fortunate that we only deal with Direct Stafford Loans that are Subsidized or Unsubsidized for students and PLUS loans for parents. But even then, you should understand which of these you have since they are different. If you have issues with your loans or repayment, you are expected to understand what you are responsible for.

But what else is there? Aren't these the extent of student loans? Not at all! We do not have these, but there are also Federal Perkins loans, PLUS loans for graduate students, health professions student loans, nursing student loans, and private student loans. There are also consolidated loans that occur if you consolidate your loans together. These may have new terms or slightly different terms than your old loans.

Either way, you should be away of what your student loans are and how you should handle them. For some more information on student loan repayment terms, CLICK HERE. This link will take you to a page on Mapping Your Future's website that discusses repayment terms for several different types of student loans.

Monday, August 5, 2013

What to Do if You're Having Trouble Repaying Your Student Loan

This is a video that I found and thought would be helpful. There is some really good advice in here. This video is from 2010, but the information is very relevant. As a reminder, if you are having trouble making any payments for your student loan, you should contact your loan servicer immediately. Often, they can work out something to help you out, whether that be a new payment plan or a deferment or forbearance.

As a reminder, the worst thing you can do is nothing. You should always check your mail and answer the phone when they call. When you are delinquent, the servicers will not go away. When they stop contacting you is when you have to worry the most, because you have more than likely defaulted, and things get much worse at that point.

Monday, July 29, 2013

Are Scholarship Search Companies Worth It?

No. No no no. No no no no no no...! I had a post some time ago about how to tell whether a scholarship is a scam or not. This is one of the top indicators of a scam. Scholarship searches are not something that you pay for. Scholarships themselves are free, and the means to find them are free also.

One common phrase says something like this: "thousands of dollars in unclaimed scholarships -- we can help you find it!" This is a big warning sign. No legitimate place will proclaim that there is money in unclaimed scholarships. Instead, they will just give the name of the scholarship and the info you need to obtain it, whether that be an essay or some special information you have to submit.

If you need to find scholarships, probably the best place to start is at, which is a free financial aid information website that specializes in scholarships and has a terrific scholarship search. Also, don't forget, it's never too early to start searching for scholarships. Remember, many scholarships are only active for parts of the year. Might as well start today! Just don't pay for the scholarships or information about them.

Monday, July 22, 2013

New 150% Rule for Subsidized Loans

Beginning July 1, 2013, the Department of Education is beginning a new rule for students with Subsidized Stafford Loans. This rule (called the 150% rule) deals exclusively with what are called "new borrowers". A new borrower is defined in this rule as anyone who does not have student loan debt on or after July 1, 2013. By that definition, you could become a new borrower three years down the line if you pay off your student loans then.

This rule only applies to Subsidized Loans, not Unsubsidized Loans. The Dept of Ed will keep track of the amount of Subsidized Loans so schools won't have to. It is unlikely that many will be affected by this rule until the 2014-15 award year next July.

What will happen is if a student goes beyond the 150% of a program's published length of time, then the student will lose the interest subsidies on the Subsidized Loan, which means interest will accrue on the loan as though it is an Unsubsidized Loan. If you are getting close or if you have gone over the 150%, then it should show up in NSLDS as well as on the student's SAR and ISIR.

There three things that student's need to keep in mind with this new rule:

  1. If a student switches programs, that will affect their 150%. If you are in an 18 month program, and at the end of the 18 months you are not finished, you will only have another 9 months to finish that program before losing the interest subsidies. But if you switch to a 12 month program then, you've already been enrolled for 18 months, so you'll lose your interest subsidies on the new 12 month program.
  2. This rule is not school specific. If you enroll at School A in a 12 month program, and switch to School B after 6 months, you've already used 6 months of eligibility. So if School B's program is 12 months, you have 12 months of eligibility, so hopefully you finish it on time.
  3. This rule does not take into account the number of credits you are taking or Leaves of Absence. It goes by the length of time that the program is published for, so if you take a term off, that's one less term of eligibility you will have. If you are taking 6 credits a term (instead of full time's 12 credits minimum) for a 12 month program, most likely it will take you 24 months to complete the program. At 18 months, you will lose the interest subsidies.
Most Satisfactory Academic Progress policies require students to complete the program in 150% of the length of program. Where this differs from the 150% rule is that Leaves of Absence and number of credits matter in the SAP calculation. 

Monday, July 8, 2013

What's the Skinny on Grants?

A grant is different from a loan in a very big reason: repayment. A loan requires you to pay the money back with interest, but a grant works much differently. By its very definition, grants are not repaid. So, obviously you want to receive as much and as many grants as you can. The problem with grants though is that usually they are very specific to which school they can be used at. The most known and used grant is the Pell Grant, which is a federal grant that is managed by Office of Federal Student Aid and overseen by the Department of Education. Since it is a federal grant, keep in mind that the funds used to pay for it comes from taxpayer dollars. The goal of it is to assist students in fulfilling their educational goals by receiving education and obtaining a job afterward. It's as if the American public is helping you to pay for your education, so make sure you make them proud!

Is there ever a time when a Pell Grant has to be repaid? Not directly. If you drop from your classes and you haven't completed enough of the term to earn the whole disbursement, then the school may have to refund part of your Pell Grant. This can cause a balance on your account that must be paid. In these circumstances, you are required to pay the school the difference of your remaining charges and the Pell Grant refund. This is a situation that is very much a case by case basis. Your best option is to not drop from your classes. But if you have to drop from your classes, try to make sure it's after a term is completed. And don't forget: if you have any questions, always be sure to talk to your financial aid office. In cases of drops, the school has 30 days to make the appropriate refunds. You'll get something in the mail, but it might take some time.

Grants are always the best bet for students since they don't have to pay them back. Unfortunately, you have to qualify for grants. Since it is federal dollars paying for your education, the government wants to make sure you jump through a few hoops to make sure you qualify. Currently, the FAFSA is the easiest it's ever been, and they want everyone to complete one, so give it a shot! It's free to complete! To complete one, go to

Monday, June 24, 2013

Should It Stay or Should It Go?

Today, we're talking about FA paperwork. Should you keep it or should you toss it? Once upon a time, I was told "If you're not sure if what you're about to do something right or wrong, then you should probably just assume it's wrong." The same thing applies to FA paperwork: if you're not sure if you should hang onto it or not, just hang onto it. Why? It's hard to get a copy of something you need if you got rid of it. Worst case scenario, you have papers you don't need or duplicates of papers you already have. But, it's better to have and not need, than to need and not have.

Second point on this is to remember to keep your FA paperwork in a safe and organized place. You don't want to just throw everything in a box and forget it until you have more paperwork. It's best to organize neatly your paperwork, such as keep loan, grant, scholarship, and other FA paperwork separate. Also be sure to arrange them by date, usually the newest in the front is a good idea. Also, don't forget that paperwork from your school and from your loan servicer should be separate also, that way they are easier to find if you need to talk to either.

Third point that should be made is if you are indeed positive that it's ok to get rid of something, then you shouldn't just throw it away. If you just throw something in the trash, you could run the risk of having your identity stolen. Remember, paperwork often has your name, date of birth, and social security number which is all someone needs to ruin your credit. Instead, paperwork should be shredded, and if you don't have access to a shredder, then at least tear the paperwork enough to make it difficult someone to piece together your personal information.

Don't forget that you will be getting a lot of paperwork over the course of your school term and repayment term. It will start off with confirmations (such as PIN and FAFSA confirmations) and end with your repayment statements. If you're expecting paperwork that doesn't arrive, make sure you contact someone to ask where it is. And as always, when in doubt, call your campus to ask what to do. The worst thing anyone can do is ignore the situation, because ignoring always makes things worse.

Monday, June 17, 2013

Are My Student Loans My Responsibility or My Parent's?

Sometimes this question will come up. Answer seems simple, right? You fill out a loan, then it's in your name. Since it's in your name, then it's your responsibility. But the question most often comes up because of type of loan as well as the age of the student.

First, the type of loan. If a student fills out a Master Promissory Note (MPN) and loan request for a Subsidized and/or Unsubsidized Direct Loan, then it is the responsibility of the student. If a PLUS Loan is completed, that is the responsibility of the parent. The easiest way to remember that is to remember who actually completed the MPN for each loan. The student completes the Direct Loan MPN, whereas the parent completes the PLUS Loan MPN. Remember that federal Direct Loans do not ask for cosigners, so only the student completes any part of it. Also remember that just because the loan is in the student's name, it doesn't mean that the parent can't help with payment or even pay the whole thing. It just means that the student will be held accountable if it isn't paid back.

Second, the age of the student. The Higher Education Act makes an exception for students under the age of 18 to take on a federal student loan without needing a cosigner even though it is a contract. Why is this relevant? Because of their age. It is legal for a business in most states to enter into a contract with a minor, but it's a dumb thing for the business to do so. Why? Because the minor has the right to back out of the contract and not be held liable. (The exception is if they committed some type of fraud, then most likely they will have to pay restitution.) If the minor had a cosigner, like a parent, then the contract is legally binding for that minor. But with the exception in the HEA, students are responsible for their student loans, even if they are not 18.

Students should always read and study as much as they can about their student loans, especially if they are private loans from a bank. They don't always work the same as the federal loans and usually have a lot more fine print. When in doubt, your best action is to ask questions, either to your loan servicer or your FA office.

Monday, June 10, 2013

Why Do I Have to Reapply for FA Each Year?

Many students come into the FA office and wonder why they can't just fill out the necessary paperwork once and have it done. But as with many things in FA, things aren't that simple.

The main reason you have to reapply is because the foundation of your FA (you FAFSA) is based on income, and income may change from year to year. The FAFSA has to be filed every award year (the period between July 1 and June 30). Your Direct Stafford loan eligibility is dependent on your FAFSA results, so without a FAFSA, there are no Direct Stafford loans.

As far as Direct Stafford loans are concerned, some schools are able to allow students to sign a two-year prom note and some only allow a one-year prom note. Master Promissory Notes (MPNs) are only good for a certain amount of time before they have to be completed again. Some schools are only allowed to use one-year prom note, which means you'd have to complete new loan paperwork each year.

Another reason you have to complete new paperwork each year is because of of your Satisfactory Academic Progress (SAP) calculation. Colleges have to monitor your SAP and make sure that you are successfully completing the courses in a manner that is leading you to completion of your program with good enough grades and in a timely fashion. Most often, you should finish with no less than a C average and finish in no more than 150% of the program's published length (so for a 2 year program, no more than 3 years). When this calculation is completed depends on the school, but before you can take out your next year's FA, your calculation will have to be completed. If you are not meeting SAP, that may affect your FA eligibility.

Even though many students would rather just fill out their FA once, it's actually a good thing to stop into the FA office to refill out your paperwork. This way, you will become more familiar with your own FA and terminology. It's a great time and place to ask questions, and a great time to understand your situation.

Monday, June 3, 2013

Unusual Enrollment History (UEH) Flag

New for the 2013-14 FAFSA is the UEH error flag. Normally when a student completes a FAFSA, they receive a Student Aid Report (SAR) that contains their Expected Family Contribution (EFC) which helps the FA office determine their FA awards. This EFC can come back with an asterisk (*) by it which means their FAFSA information needs to be verified. Sometimes, there will be a "C" next to the EFC. A C code means that there is some problem that needs to be resolved before anything can be done. As long as the information gathered isn't conflicting, a verified SAR isn't a big deal. But a C code is much more serious and usually requires more care.

This is the case with the UEH. If a UEH flag comes up on your SAR, you will have a C code. The school receives a similar report called an ISIR, and on the ISIR, it will give either an error code of 359 or 360. Depending on your enrollment history, you will probably have to provide school records from previous schools and explain what your situation was in your previous enrollments. One example of what might cause a UEH flag is if you attended 3 or more schools in the past 2 years. The Dept of Ed doesn't understand why you are going to multiple schools in a short amount of time. They also don't understand if you went just long enough to get a refund check.

The goal of the UEH flag is to point out the students who have odd patterns of enrollment at schools and make that student be accountable as to why they feel they should have another chance. This is still new and there will be more information as we get closer to July 1 when the award year begins. But in the meantime, there may be some students who are fine this year who will lose eligibility for next year. Should be interesting how it turns out!

Monday, May 27, 2013

New Direct Subsidized Loan Limits for 2013

Beginning July 1, 2013, some changes are coming to the Direct Subsidized loans. A new law called Public Law 112-141 has established loan limits for the Direct Subsidized loans. This law affects new borrowers after July 1, 2013, and a new borrower is defined as a person who does not have any balance due on any outstanding loans on or after July 1, 2013.

The new new limitation puts a 150% cap for loans of a program. So, if you are in a 2 year program, then you are only allowed to receive Subsidized loans for 3 years. If you go over that, then you can only receive Unsubsidized loans. Since Satisfactory Academic Progress states you must complete in 150% of the program's length, it doesn't sound like that big of a deal, right? Think again.

The hardest part of this seems to be switching programs. If you are in a one year program, and switch to a two year program, then you are fine: you basically went from two years or eligibility to three years. But let's say you spend three years in a two year program, and you decide to go to a lesser program. This lesser program has few of the same classes, and will take you a year to complete. You've already used 3 years of eligibility even though you switched programs, and your new program has a max of two years of eligibility. You've already used it up, so you are not eligible for more Subsidized loans.

Confusing? Yes. The only way to get around this is if you start in a program and finish in that program, and you do it in the amount of time it's supposed to take you. And that is what the government is trying to get more students to do.

Keep in mind that as long as you have enough lifetime Unsubsidized loan eligibility, then any part of the Subsidized loans you don't qualify for, you can receive in Unsubsidized loans. However, also remember that Subsidized is better for you since interest doesn't build on the Subsidized loans while you're in school. The less Unsubsidized loans you have, the less interest you will owe, which will help your financial future.

Monday, May 20, 2013

New Loan Fees Announced, Starting July

As is common with a new award year, loan fees are changing for the Direct Subsidized, Direct Unsubsidized, and PLUS loans. Currently, there is a fee on these loans of 1.0% for the Subsidized and Unsubsidized loans, and 4.0% for PLUS loans.

The rates are going up to 1.051% for Subsidized and Unsubsidized loans, and 4.204% for PLUS loans. Just like with the fees currently, this is the amount of your federal loan that will not come in to the school.

The sequester took effect in March 2013, and the requirements it calls for were to take effect then. However, this fee is not included in the necessary items to take effect immediately. Dept of Ed announced that this fee would not be enforced until they had released more guidance. The announced in April that it would be enforced beginning on July 1.

The other thing you should know about this is that it affects new loans on or after July 1. If at least one disbursement was made before July 1, then your remaining disbursements on that loan will be at the lower rate. But if your loan's first disbursement is any day after July 1, then it will be at the higher rate.

Monday, May 13, 2013

What Is a Federal Direct Loan Servicer?

Back in 2010 as part of the Healthcare legislation, a small part of it actually dealt with federal student loans. At the time, there were two federal student loan programs that were very similar: Direct Loans and FFELP loans. FFELP loans were federal student loans that were serviced by a bank or a student loan company, both of which received federal subsidies to participate in the program. The Healthcare legislation ended the FFELP loans, which meant the only federal student loans of this type could be Direct Loans.

The way the Direct Loan program works is you complete a Master Promissory Note (MPN) that says 'Direct Loan' on it. But once you have your loan originated and disbursed, your correspondence probably won't have 'Direct Loan' on it. Instead, it will have other names on it. The Direct Loan program will transfer your loan to a student loan company that it selects to handle your loan needs. Your contact for information on your loan will become the company assigned to your loan. Who will it be? It's not up to the student or the school. The Direct Loan program picks it out for the student.

When the switch over in 2010 began, there were just a handful of servicers, but the number has grown to meet demand. The Dept of Ed picks who these servicers are, and these servicers must continue to meet the expectations of the Dept of Ed in order to continue to be a servicer.

So, who are these companies that you may be working with? Below is the list of servicers:

  • Aspire Resources, Inc.
  • Cornerstone
  • Direct Loan Servicing Center
  • EDGEucation Loans
  • EdManage
  • Educational Services of America, Inc. (Edsouth Services)
  • FedLoan Servicing (PHEAA)
  • Granite State
  • Great Lakes
  • KSA Servicing
  • Missouri Higher Education Loan Authority (MOHELA)
  • National Education Loan Network (Nelnet)
  • OSLA Servicing (OSLA)
  • Student Loan Marketing Association (SLMA or Sallie Mae)
  • VSAC Federal Loans
As I tell all students, when you receive mail or emails, make sure to check it out. Just because you don't recognize it, doesn't mean it isn't important. Also, the most important advice I can give is if you are not sure if it's important or not, be sure to ask your financial aid office about it. They will be able to tell you for sure if it's something you should worry about or not.

Monday, May 6, 2013

New Proposed Changes for 2014-15 FAFSA Announced

Is it too early to think about the 2014-15 FAFSA? The Dept of Ed is hard at work already trying to determine their new changes for the FAFSA that will take effect July 1, 1014. Announced last week, the two changes will be published in the Federal Register for public comment. The changes deal with dependent students only. The two changes are adding a parent's marital situation of "unmarried but both parents living together" and replacing gender-specific terms like father/stepfather and mother/stepmother with the terms 'Parent 1' and 'Parent 2'. These seem like small changes, so what's the big deal? Actually a lot.

Firstly, the 'unmarried but both parents living together'. Currently, in order to figure out a student's EFC, a dependent student must use their parent's financial information. If both of their parents are not married but they live together, then the student only has to use one parent's information. With this new choice, then a dependent student will have to use both parents' information even though they are not married. As the rule has been proposed, this does not supersede the choice of 'divorced', which will still be the same manner of compiling financial information as it is currently.

Secondly, the gender-specific term replacement. Currently, the FAFSA refers to parents as being father/stepfather and mother/stepmother, and uses the term 'spouse'. When reviewing the Higher Education Act, it actually refers more to 'parent' and 'parents' than the other terms. So, it was decided that going to 'Parent 1' and 'Parent 2' doesn't break the Higher Education Act.

For states who allow same-sex marriages, the 2014-15 FAFSA is the first time in FSA that their union is accepted. The federal government does not recognize same-sex marriages, and since the FAFSA is goes through the federal government, neither does the FAFSA. But according to the FAFSA, same-sex marriages can use the choice of 'unmarried but both parents living together', and then use Parent 1 and Parent 2 for their income information.

Some of the details have to be worked out for the FAFSA on the Web (FOTW). It is believed that if a dependent student checks that their parents are 'unmarried but both parents living together', then it will essentially work similar to how the system currently treats 'married but filing separately'. It is believed that the system will instruct students on how to complete the rest of the FAFSA just like it does for the 'married but filing separately' for this year.

It is estimated that few students will actually have to deal with this. According to a letter from the Dept of Ed, 60% of FAFSA filers are independent students, so they won't have to deal with it. 20% of FAFSA filers are dependent, but their parents are married which means they have to include both incomes anyway. The vast majority of the rest of the 20% don't have unmarried parents living together. So, as of right now, the estimated impact is small. However, for the dependent students that this does affect, it will be a big change in more ways than one.

Monday, April 29, 2013

College Payment Plans

Payment plans are good for students who wish to pay for their tuition balance but don't want to take out loans. But how do they work? Like many elements of financial aid, the answer varies based on the school.

The way a payment plan works is whatever amount of schooling you wish to pay for out of pocket, you may. Typically, any aid that you can receive that you will not owe back (such as grants and scholarships) is applied to your tuition first. If there is a remaining balance, then that is the amount you pay.

Many schools have a fee for using this service. These same schools will often use an office for you to pay or even allow electronic payments. At Metro Business College, we do not have any electronic service for this, but we will also not charge any fee for any payment made to the school while you are enrolled. Many schools will put you on a term-based payment schedule (such as make a payment every semester). We allow the flexibility to suit your needs by allowing you to have a weekly, biweekly, monthly, quarterly, or even the whole lump sum payment.

If your amount at Metro Business College hasn't been paid off by the time you graduate, then you will either have to take out a federal loan (if possible) or take out a Central Finance Loan. The Central Finance Loan is considered an institutional loan that you make arrangements for when you are in your last quarter. There is a 3.5% interest rate with this (which is less than the federal loan rates).

Some schools require these payments to be made in whole before you graduate. Remember to always check with your Financial Aid office to ask questions about a payment plan for you if you are interested. It may not always be possible for you to make payments, but after the grants and scholarships, self-payments are the best way of helping your financial future by avoiding unnecessary debt.

Monday, April 22, 2013

2013-14 Verification Worksheets

Remember that the 2013-14 Pell Grant Verification will be broken into five categories (V1-V5), with each one requiring a different number of items to verify? Over the last few months, the question has been how will the worksheets work? Do you have one worksheet for independent students and one for dependent students, with each section that has to be completed marked? Or do you have five for independent students and five for dependent students?

We finally have the Department of Education's response as to their recommendations. They are not releasing a template this year for the verification worksheets, which they have done in years past (up the current year). The templates for verification worksheets were optional as long as the school required the same information on their worksheets. But without a template for at least some guidance, what does a school do?

The Dept's recommendation is to have five different verification forms for independent students and five different forms for dependent students. The reason for this is actually a simple, logical reason. If a school has one form with all five categories listed on it, and the FA Administrator marks two sections that the student has to fill out, and the student fills out all five, then those extra items have to be verified. With verification, the rules read that if information is volunteered by the student, then the FA Administrator has to verify it, even if it wasn't initially asked for.

To avoid this, it's better to just have five forms that only ask for specific information that won't end up giving too much information. Another reason for this is sometimes when the student gives too much information, it can possibly open the door for conflicting information, which has to be resolved before any FA funds can go through.

So, hopefully soon, we will have our ten worksheets ready (five for independent, five for dependent). Should make for an interesting verification year!

Monday, April 15, 2013

Why Should I Complete a Fafsa?

This is a question that comes up sometimes. Remember that the Fafsa is heavily based on income, so if you have a higher income, there's it's quite likely that you won't qualify. So why should you fill it out? There are several reasons:

  1. You don't know you won't qualify until you complete it. There are many elements of the Fafsa that impact your Pell Grant eligibility. Some examples would be if you're married, have dependents, or earn income other than from work (such as certain types of government assistance). 
  2. You have to complete a Fafsa, even if you know you won't qualify for any Pell Grant, in order to fill out federal loan paperwork. So if you want a subsidized or unsubsidized Stafford loan, then a Fafsa must be completed.
  3. There are times when your FA administrator can work with your income to help you Pell Grant eligibility. The Department of Education stipulates that the Fafsa is dependent on your most recently completed year's income, but if it's not an accurate representation of your present situation, there are times when that can be taken into account. Some of the rules for Fafsa can bend, and some can't. Be sure to talk to your FA administrator about any situation that might impact your Fafsa. (Remember: you must fill out your Fafsa 100% accurate the first time, and only the FA administrator will know how or if your Fafsa can be worked with.)
In the end, you should always fill out the Fafsa for the above reasons. Even if you qualify for the minimum amount, that's still going to be a small amount that you won't have to worry about paying back. Since it's a grant, your Pell Grant will help you take some of the burden from figuring out how to pay for your tuition. Why not try for it? The worst thing that will happen is you won't get any. It costs nothing to complete the Fafsa, so go for it!

Monday, April 8, 2013

What if I Don't Remember my PIN?

Time is ticking to complete your new 2013-14 FAFSA. I'm sure that by now you've received your email notification that it's time to re-apply for your FAFSA. Obviously, your best bet is to use the IRS data retrieval tool in order to make sure your tax information is correct. But what if you lost or forgot your PIN?

That's where the PIN website comes in. All you have to do is go to and on the left side, request a duplicate PIN.

On that same list of options, there are other things you can do also. If you need to, you could change your PIN. You can update your personal information if you need to. You can also reestablish your PIN, or even disable it.

If you don't have a PIN, then the PIN website is the place to go to obtain one.

Monday, April 1, 2013

Should I Put More Than One School Code on the FAFSA?

This is a question that has come up sometimes in the Financial Aid office. Like everything else in the world of financial aid, the answer is simply "that depends". It depends on a few different things, but to help you think about the answer, here's what happens when you enter a school code on the FAFSA.

By entering a school code on the FAFSA, you are literally authorizing that school to be able to access your FAFSA information. It's a simple and easy way of sending your FAFSA information to a college that you are considering without having to complete the form again or bring/send copies of your FAFSA information to the school. When you enter the school code, then your information will become accessible to that school shortly (sometimes a day, sometimes a couple days).

This is especially helpful for students who are undecided about which school they should attend. If you are considering multiple schools, then there's no harm in entering the school codes for all the schools you are considering. By entering all those codes, you will make it easier for you to ask questions about your possible financial aid package for that school.

You are allowed up to ten school codes when you first complete a FAFSA, which means you can send your information to up to ten different schools. If you are shopping schools, then it's a good idea for you. Keep in mind that the schools you send your information to can also see the other schools you've sent your information to. If you've forgotten to add a school code that you wanted to, once your SAR had been produced, you can go back to the FAFSA website to add more school codes.

There's no harm in sending your FAFSA information to multiple schools, so if you're shopping for the best options, then send away!

Monday, March 25, 2013

After the FAFSA: What Happens Next

So, you've filled out your FAFSA. Then what? Here is a short video from Federal Student Aid (FSA) that manages financial aid that helps students pay for tuition. It explains what happens after you have completed your FAFSA. The FAFSA is probably the most important piece of FA that you will complete.

If you have any questions about the process of obtaining FA or the process of filling out the FAFSA, contact your FA office at your school.

Monday, March 18, 2013

How to Fill Out the FAFSA

Below is a video made by Federal Student Aid (FSA) which is in control of the federal financial aid funds that students receive to pay tuition. The FAFSA is often the most talked about document that students have to deal with, and with good reason too. The first time you fill out a FAFSA, it may not be the simplest form to complete, but it's essential. In order to be considered for any other federal financial aid, you have to have a FAFSA completed. The FAFSA is without a doubt the most important element of the financial aid process.

Hopefully the video helped you understand the FAFSA a little more. You can always call the FAFSA help or your FA office if you need more information.

Monday, March 11, 2013

What to Expect in Student Loan Repayment

Say you're getting out of school and you have student loans. What are you to expect? Below is a great video explaining what to expect when you are approaching graduation.

In most cases, Stafford Loans have six months of grace period before you have to go into repayment. However, there are situations where you might have already used your six month grace period. If you are not sure, you should always contact your servicer. While the school can assist you with many FA related questions, once you have graduated your best contact will be your loan servicer. They will have the most current and most specific answers to your individual needs.

The best advice anyone in financial aid can give you is if you have any problems or questions, contact your loan servicer as soon as possible. The worst thing you can do is put things off because often the problems will compound quickly, and usually the problems could've been avoided with a phone call.

Monday, March 4, 2013

Taxes and the FAFSA

Each year, the FAFSA has to be completed for any time that a student will be enrolled in a college. The FAFSA is like the gateway to financial aid since you have to complete the FAFSA in order to obtain other grants, scholarships, and loans. Because of this, the FAFSA needs to be correct. Fortunately, students have the ability to correct it.

That being said, when it comes time to fill out the FAFSA, should you wait to fill out your FAFSA until you have your taxes? That will depend on your school. Schools with enrollment beginning in the fall usually require the FAFSA to be required a couple months earlier than July 1 (depending on the state). Schools with open enrollment through the year will allow you to fill out your FAFSA anytime before you start.

The problem is what happens when your school requires you to fill out the FAFSA no later than April 1, but taxes aren't required to be done until April 15. What do you do?

You have to perform an educated guess, or the best guess as to your tax information as you can. Think of how many exemptions you will have, use your W-2 information, estimate the tax. If you do this, however, you should go back and update your FAFSA to match what the tax information came out to be. Some people will put in the previous year's tax information as a guess, but the problem with this is there could be big differences that you aren't aware of or have forgotten about which can change your eligibility very quickly. So, it's best to guess as closely as you can. If you're at the open enrollment school, then you probably should wait to fill it out until you have your taxes completed. The exception to this is if you don't have your taxes done later than April 15; in that case, estimate but also complete your taxes as soon as possible.

The key is to have the correct information, so make sure you go back and double check.

Monday, February 25, 2013

"So Once I Heard..."

"...That if I didn't like my financial aid package, I could negotiate for a better one. Is this true?"

This is a question that I've only heard a couple times. More often, instead of asking that question, the student or the parent just tries to negotiate. Unfortunately, it's not that simple. Financial aid isn't like haggling in a pawn shop for a good price on a night stand that has some scratches and duct tape.

Financial aid amounts are determined by strict sets of guidelines given to the financial aid offices by the federal government. There is very little wiggle room as far as if the financial aid administrator is able to change the amounts of aid a student can receive.

The same goes for interest rates. The federal government determines the interest rates for their student loans, and there is nothing a school can do to change those. I once had a parent try to talk me into matching the Unsubsidized loan's interest rate in the PLUS loan. It's not possible. They are set amounts. Unlike home loans, car loans, and personal loans, there is no qualifying for a better interest rate since there is no credit taken into account. It is what it is.

When you are applying for a school, the school will try to give you the best financial aid package that they can. Remember that schools have different rules and different sources of financial aid, but also remember that your entry to the school will have them getting you the best package available to you for that school. They won't give you a bad one on purpose for two reasons: 1. they want to give you the best so you'll attend their school, and 2. the best they can give you is what their job is. They are only packaging you for what you qualify for that school.

It may not be what you want, but it's their best offer. Your only option is to check other school's financial aid packages. Some schools, you will find, will have different amounts. The other thing you have to consider is the degree you are going for and what you want to invest in it.

Monday, February 18, 2013

FAFSA vs. Renewal FAFSA

"I got this notice in my emails to renew my FAFSA. What's a Renewal FAFSA? Is it different than a regular FAFSA?"

These are questions I heard every year. But to answer them, you have to remember how a FAFSA works. The FAFSA is only good for a certain period of time. It isn't good for your first year, but rather from July 1 of one year to June 30 of the next year. If your school year is during this time, then it's more coincidence than anything. Some schools don't start in August or September. Let's say you start in January. Then your FAFSA will still only be good until June 30 of that same year.

If you will still be enrolled after June 30, then you will need to complete the FAFSA that picks up July 1. You will receive renewal notices about this as early as January.

Actually, there is no difference between a FAFSA and a Renewal FAFSA. The only thing different is how much easier it is the second time. Not only will you have more experience filling out your second one, but because of your PIN, you'll probably have some of the information already completed for you. You will just have to update any out of date information and enter the new income information based on the new year's taxes.

But unless you are enrolled in a short program (typically a certificate), and are only enrolled in a period of time that begins no earlier than July 1 of one year and ends no later than June 30 of the next year, then you will have to fill out a minimum of two FAFSAs. And if you're in a longer program (like a bachelor's degree), prepare to fill it out four or five times. One easy assumption is that you will fill it out the same number of years you will be enrolled.

For more information about how many times you will have to complete a FAFSA, talk to your Financial Aid administrator. Also, keep in mind that any alteration in your length of program can result in the number of times you'll have to complete the FAFSA.

Monday, February 11, 2013

New 2013-14 FAFSA Award Amounts Announced

Just released recently was information about the new 2013-14 FAFSA. Must to the surprise of many an FA person, the Pell Grant will actually be going up. Originally, there had been talk of trying to find ways of keeping the Pell Grant maximum at the $5550 per award year. Now, it will raise $95 to a maximum of $5645.

However, keep in mind, this will be interesting in that seemingly almost any way you divide this new Pell Grant, almost none of it comes out exact. What I mean is splitting it into semesters and quarters and splitting into the less than full-time amounts.

For two full-time semesters, it's going to be $2823 for one and $2822 for the other. For three quarters, it'll split into $1882, $1882, and $1881. It's been quite a while since the Pell Grant wasn't split into even disbursements for full-time students (and for that matter, the less than full-time students).

You should also remember that until the award year starts, they can change things. It isn't likely, but a couple years ago, the Dept of Ed released the Pell Grant charts in January, then in April changed what some of the EFC's correlated to.

Speaking of EFC's, the other news is that the maximum EFC to still qualify for any Pell Grant funds went up for the 2013-14 FAFSA. This is good news for the borderline students. The 2011-12 FAFSA allowed an EFC to be slightly over 5000 in order to qualify for Pell Grant funds. The current 2012-13 FAFSA has an EFC cutoff of 4995, but the 2013-14 FAFSA will have an EFC cutoff of 5081.

Monday, February 4, 2013

How Do I Increase My Odds of Winning a Scholarship?

This is a question that has come up a few times in the Financial Aid Office that I thought you might be interested in.

Remember that scholarships are awarded based off of some form of merit, ethnicity, talent, or need. Basically, you have to do or be something to be awarded a scholarship. Some examples would be your writing an essay, your living in a specific location, your being a member of a specific ethnic background, or your grades. Obviously you have control over your grades, but you can't change most of the other elements. So, how do you get ahead of the competition?

The simplest way of helping yourself out is by trying to obtain scholarships with the smallest opposition. What does that mean?

Think of it this way. If you are a female, and you enter a scholarship contest that is open to women, then you will have a lot of competition: women of all ages across the country and maybe the world. But if you enter a contest that is open for women, age 18-22, in the Santa Fe region, for Native Americans, then you will have much less competition just because there will be fewer that will be eligible. Any of those specifics will eliminate a number of applicants, which will raise your odds.

You definitely will want to enter both competitions in the examples above, but your odds of winning the first is much less than that second, so don't be surprised if you don't win the first. Also, typically, unless there's a special competition, the second scholarship example will dole out more money since fewer applicants can be awarded for it.

However, when in doubt, apply for every scholarship you can. The worst that will happen is that you won't get it. They cost nothing, and they cost nothing to enter, so you're losing nothing by trying. Also, the hard work and the researching will be good practice for college. So good luck in your searches!

Monday, January 28, 2013

How Do I Know What Lender to Use?

This is a common question in the Financial Aid Office. When a student has exhausted all resources that don't typically require repayment (scholarships, grants, etc.), then the loan questions come out. And one of the most common makes sense. After all, there are how many lenders out there?

The answer to this question depends on what type of loan you are referring to. If you are able to take out a Federal loan, specifically a Direct Loan, then you don't have to choose a lender. What happens is you take out your loan from the Federal government. Then your loan is sent to and serviced by a government-approved loan servicer. Sallie Mae, Great Lakes, and Nelnet are a few of these. So, in a sense, your lender is chosen for you with these loans. The only bad part about the servicers is the possibility that your loan could change to a different servicer. It doesn't happen often anymore, but it's always possible. There are some borrowers who ended up with more than one servicer in the last couple years, and the servicers are trying to get all the borrowers' loans together. What better way than trade a couple loans?

If you are looking at a private loan, then your question on which lender to use becomes a valid one. Most schools that use private loans (which should only be considered after you've exhausted the Federal loan options) will have a preferred lending list. These lenders are the ones that the school uses the most, so your FA administrator should know a little something about each one. The best advice anyone can give when considering these types of loans is to ask questions. Ask about length of repayment, interest rates, credit checks, and so on. Do your research on these lenders' websites, and even call them yourself. One of the best  things you can do is ask someone who's had loans before with the lenders or people who've had a lot of private loan experience. Typically, parents are a great resource since they've had home loans, car loans, etc., and this loan will be similar.

As a reminder, you should only look at private student loans after you've received as much scholarships, grants, other free money, and federal loans as you can get. If you don't need a private loan, then don't get it. There are strict limits on federal loans, but private loans work differently. The horror stories you will read on the internet about student loan repayments being out of control are mostly from the private loan debt. But in the end, someone once said "There's no such thing as a stupid question," and if you ask questions about your lenders, then you'll find out who to use.

Monday, January 21, 2013

Beware of Scholarship Scams

“Billions of dollars worth of scholarships went unclaimed last year. Send us $79.95, and we’ll send you a scholarship of at least $1000 or we’ll send your money back!”

Does this sound familiar? Have you seen emails, online ads, or even postcards with phrases like this? You’re not alone. Thousands of statements like this are posted all over the internet. Today, families are struggling to pay for education and sometimes they turn to outside sources for help without researching them out. Are statements like this one legit?

The old saying “if it sounds too good to be true, it probably is” definitely applies to scholarships. There are few things to keep in mind with scholarships.

  1. If you are guaranteed a scholarship before filling anything out, then don’t trust it.
  2. Scholarships are free, so if you have to pay for information, help, or the scholarship itself, then it’s a scam. Application fees are also included. You shouldn't pay for any fees either.
  3. If you “won” a scholarship you didn’t enter, it’s a scam.
  4. Scholarship organizations don’t contact you unless you’ve contacted them first.
  5. If they use phrases like “everyone’s eligible” or “60% of all applicants win”, it’s a scam because usually few people win scholarships. Also, most scholarships are open for a select group of people. For example, a scholarship for left-handed people won't work for people who are right-handed.
  6. There's no contact information for the organization giving the scholarship. Phone numbers and addresses should be somewhere.
  7. Be wary of P.O. Boxes. Some legitimate places use P.O. Boxes, but most won't. Most organizations giving out scholarships will use an actual business address.
  8. Be wary of California and Florida addresses. There are some legitimate scholarship organizations from California and Florida, but it seems many of the scams have addresses from those two states.
  9. Be wary of organizations that notify you by phone. Legitimate places use snail mail almost exclusively with their notifications.
  10. If you contact the organization and they treat you badly when you ask questions, then it's probably a scam. Real organizations want to help students, but scammers just want your money.
  11. Beware of endorsements. Government entities such as the US Dept of Ed or the US Chamber of Commerce don't sponsor or endorse any private businesses. Also if a college or the Better Business Bureau supposedly sponsors or endorses these organizations, then call the Better Business Bureau and the college and see if that's true.
  12. Look out for phrases like "guaranteed to win!" With these claims, they are either a scam or there is a lot of fine print. You may be guaranteed to win if you jump through an obscene amount of hoops.
  13. Beware of the places asking for your personal information. If they get information like your name, date of birth, social security number, bank accounts, or credit card numbers, they will be easily able to commit identity theft.
  14. Make sure the federal agencies mentioned are real agencies. Just because it sounds official and has a Washington DC address doesn't mean it's legitimate.
  15. Don't let any organization apply for you. Scams like to use this method as well as have you pay for that service to get you twice.
  16. This may be strange, but make sure the scholarship information has good spelling and grammar.
  17. If they use a phrase about how much money went unearned or uncollected in a year, then it's a good idea to steer clear. 
  18. Just because the organization uses the term "fund" or "foundation" doesn't necessarily mean it's a non-profit scholarship group.
In the end, your best bet is to do your research, and when in doubt, consult with the Financial Aid administrator at your school.

If you want to learn more about scholarships, go to Education Planner. If you want a legitimate scholarship search website, check out FastWeb or College Board.

Wednesday, January 16, 2013

Sympathy for Greg at SIBA

Yesterday around 2 pm, a financial aid colleague, Greg Elsenrath, was shot in his office by a disgruntled student. I was following the events yesterday as best as I could, and I didn't want to post anything until I knew more.

The student was known at the school, and he made his way up to the 4th floor where Greg's office is. The student then shot Greg once. The student soon shot himself. Apparently, the student was upset that his financial aid was cut off, which sounds to me that he'd reached his lifetime eligibility limit, which is nothing in Greg's control. But the student snapped and took it out on Greg.

Last report was that Greg was rushed to surgery and made it through doing well. He is expected to make a recovery. SIBA, Stevens Institute for Business and the Arts, will be closed until next Tuesday.

As part of the financial aid community, you don't expect such things to happen. Greg is a colleague of mine. We go to conferences twice a year and meet up in the peer group session as well as other conference activities. When I told someone last night about it they asked when was the last time you talked to him. I remembered to November at the last conference. There was a peer group session, but he and I were the only two in the session. So we talked for about a half hour. One of the topics was campus safety/security. Irony has a strange way of playing with one's mind sometimes.

So, as we move forward from random school shootings of students and faculty, to targeted shootings of students and faculty, to now targeted shootings of specific administrators, we should remember to be ever-watching of the students that we serve. Our jobs are to help students afford and pay for their education, but we should not forget that sometimes students may not understand FA situations and may take out their frustrations.

I hope that Greg makes a fast recovery. Keep him and your family in your thoughts!

Monday, January 14, 2013

Paying Interest While in School

Often, a student will ask "Should I pay interest on my student loans while I'm in school?" And without hesitation, I always say "If you can afford it, you definitely should at least pay the interest." Why? First you have to look at where the interest is building.

The Subsidized and Unsubsidized loans are similar in many aspects, but the biggest difference is the way interest accrues while you're in school. The interest on the Subsidized loan is subsidized by the government during your enrollment (hence the name of the loan). The Unsubsidized loan is not subsidized by the government, so as soon as your loan is disbursed, interest will begin accruing on it. These loans usually have a 6-month grace period before you are required to make payments; however, interest will be accruing on both the Subsidized loan and the Unsubsidized loan during this time. Once you graduate, your Subsidized loan will begin accruing interest.

Next, let's look at a specific example. Let's say you are enrolled for a 12-month period of time while payments are not required, and you have a total of $15,000 of Unsubsidized loans. This means your interest rate will be 6.8%. If you pay your interest along the way, then you will pay a total of $1,020 in interest for that 12 months. When you finish your 12-month period, then you will owe just $15,000. Sound like a lot? Compare to if you pay nothing. That same $1,020 will be added to your existing $15,000, so you will owe $16,020 when you finish. You may say that you're still paying the same amount so it doesn't matter. Where it does matter is in repayment. There's a big difference in going into repayment owing only $15,000 as compared to $16,020. How big?

You have 10 years to pay off these student loans, which comes out to 120 monthly payments. If you'd been paying your interest, then your monthly payment on a standard repayment plan would be $173; whereas, if you hadn't been paying, then your monthly payment will be $184. Also, the total amount repaid over the entire repayment period (without anything changing such as payment plan or deferments/forbearances/delinquencies) if you've been repaying your interest would be a total of $21,734. But if you hadn't been paying your interest, then that total would be $22,123.

So in this example, you could be saving $11 a month, or $389 over the life of the loan. There are other benefits to paying interest while in school such as becoming familiar with the process early and becoming comfortable with it. Another great thing is it will help to give you good habits.

Don't forget: pre-payment on your loan itself is allowed also. You don't have to stay at just paying the interest; the more you pay early, the more you'll save in the end!

Thursday, January 10, 2013

Congratulations to Nathan!

Congratulations to Nathan Chirban, Massage Therapy instructor at our Rolla campus, who was Voted #1 Best Massage Therapist in Rolla, Mo, for the Rolla Daily News Reader's Annual Choice Award for 2012!

Monday, January 7, 2013

New Total and Permanent Disability Discharge Rules

This rule applies to any student loan borrower in the Title IV branch of financial aid, which means Direct Loans, FFELP loans, and Perkins loans.

The first change is that starting July 2013, all borrowers will apply for Total and Permanent Disability (TPD) directly to the Department of Education, rather than to the school or the lender/guarantor.

Borrowers may also apply using certain types of disability determinations from the Social Security Administration (SSA). Borrowers wholse disability status is confirmed by SSA and who are subject to a status review in five to seven years may submit that documentation rather than undergoing the usual TPD loan discharge application under the Title IV loan programs.

There are three aspects that are not changing though. 1. Borrowers will still be subject to a three-year post discharge monitoring period. 2. And increase in income or receipt of Title IV loan funds or a Teacher Education Assistance for College and Higher Education Grant may result in the reinstatement of the previously discharged loans. 3. The Department of Education may request documentation from the borrower and the borrower has to comply.

So this should make things a little easier for the borrowers to go through the TPD, but on the other hand, they are still keeping the rules tough for those who don't deserve a TPD loan discharge.