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!