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 fastweb.com, 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.

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. 

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 www.fafsa.gov.

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.

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.

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.

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!