New Interest Rate Projections for the 2014-15 AY

Yesterday, the Consumer Financial Protection Bureau (CFPB) updated their Paying for College tool. This tool gives students and prospective students the ability to get an idea of how to pay for college by understanding the different repayment options as well as other information that can help students make informed financial decisions regarding their education. 

What makes this of note is the CFPB has issued their projections for interest rates after July 1. These interest rates are based on the ten year note from the Treasury Dept. Next month, the Treasury Dept's bond auction will take place, setting the interest rates officially.

But in the meantime, here are the projections from the CFPB:

For Direct Sub and Unsub Loans (undergraduates), the current rate is 3.86%, and is projected to rise to 5.09%.

For Direct Sub and Unsub (grad), the current rate is 5.41%, and is projected to rise to 6.64%.

For Direct PLUS (parent/grad), the current rate is 6.41%, and is projected to rise to 7.64%.

This isn't the highest jump historically, but a jump nonetheless. Even though these are projections, the expectation is even if they are not quite accurate, the rates will be rising regardless. Be sure to stay informed on your student loans and keep track of them to understand your interest rate and how any change in them will change your payment. As far as this increase is concerned, if you had a $5000 loan, your interest would be just over $3 more a month in your monthly payment, and for an undergrad loan, the overall increase over ten years would be around $355 total.

When the actual numbers are released, we will post them. It'll be interesting to see how close the rates that have been projected actually come to the real numbers.

This has been another helpful post from your friends at Metro Business College.

New Tax Transcript Option from the IRS

If you have your FAFSA verified, and if you didn't use the IRS Data Retrieval Tool, then you probably know that you'll have to most likely obtain a tax return transcript to submit with your paperwork. If you live close enough to an IRS office, then you can go there to pick one up, but sometimes, this takes time. I've heard stories of people who could quickly walk in and walk out a short time later with their transcript, but I've also heard stories of people who had to wait and others who couldn't actually pick it up that day.

If you need to obtain a tax transcript, one easy way of obtaining it is to call 1-800-908-9946 and request it be sent to you. Another easy way is to request one from the IRS through their website. Click here to be taken to that page.

But the quickest way of obtaining a tax transcript is the new option to download a pdf of the transcript. If you click here, you will be taken to the IRS website where you immediately download your tax transcript pdf. This is helpful because if you call in or if you request online, it can take up to a couple of weeks to receive your transcript in the mail.

Remember, the best way of avoiding being verified is to use the IRS Data Retrieval Tool and making sure everything on the FAFSA is accurate. But if you are selected for verification anyway and need a tax transcript, be sure to check out the new transcript request option on the IRS website.

This has been another helpful posting from your friends at Metro Business College.

Documentation Is the Name of the Game

The one thing that a student and a financial aid officer has in common is the need to document your information. Without documentation, how can you prove things when asked?

As far as the student is concerned, you should document everything you receive from the school, from the government, and from your loan servicer (or bank if applicable). This is important so you can keep track of everything you may need for future reference. While you're in school, you may receive a 1098-T which you may be able to use when you figure your taxes, which could help you out. In addition to that, if you end up with discrepancies, you will have your information from before that you can use to help resolve the issue. It's also good to have items so you have contact information, account numbers/information, and a running balance total. 

As far as the financial aid officer is concerned, there are many reasons they need to document (everything from government regulations, accrediting agency requirements, campus policies, etc.), but one of the biggest reasons is justification. If the Dept of Ed or the accrediting agency walk in the door one day and ask to see a file, then it has to tell the story without any explanation from the financial aid officer. This means that all the paperwork has to be present and explain why that student deserved the financial aid they received.

An example of this is if a student has an unusual circumstance, then they have to provide documentation of that unusual circumstance. Let's say there is a student who is considered to be a dependent student who applies for financial aid, this means they need their parent's information. Unfortunately, this student had been living with friends and family their senior year of high school because of a domestic issue in that student's home. In order to help that student, the financial aid officer needs to document this situation so that if questioned, the questioning party would agree with the conclusion. All too often, the student will get family members and friend's parents to contribute letters of explanation and these letters are lacking in information. Many times, these letters will say things like "The student has been staying with us off and on", "She's a good person", "She deserves a chance", etc. The problem is usually, they don't contain any information to make a decision. They play on emotions and don't actually say the cause of why the school should do anything out of the ordinary.

On one hand, it's fortunate that schools are left on their own to decide what is good enough documentation. Unfortunately, sometimes what the school decides is enough might not actually be enough. Every one of these situations is different, and the Dept of Ed understands that, which is why they leave it open to the school. But if they check your file, and they do not agree that what you've provided is enough, then they will force the school to return your financial aid that you've received down to amount that you were eligible for to begin with. This means that you will most likely then owe the school a balance.

So, when in doubt, document everything. It's much better to have too much than not enough. And always, when in doubt, ask questions.

This has been another helpful posting from your friends at Metro Business College.