Archive for July, 2009

The California Student Aid Commission runs CalGrants.org, a great website that offers financial aid and grant information about, well, California Grants! Funded by the State of California, this type of college grant awards up to $9,700 a year* to pay for tuition, student housing, and books at any California community college, Cal State University, University of California, private college, and most career technical or vocational schools. Oh, and did I mention that this is free money that you don’t have to pay back?

There are a few available Cal Grants that you can apply for:

  • Cal Grant A – you may use this entitlement award for college or school tuition fees for public or private colleges and also for some private career colleges.
  • Cal Grant B – this entitlement award helps low-income students, by providing a living allowance as well as grants for school or college.
  • Cal Grant C – this entitlement award helps students in paying the tuition and training costs at career colleges.

As with most scholarships or education grants, there are some academic and income requirements. Awards are given primarily to high school seniors and recent graduates, but for older students who have been out of high school for long time, there is an opportunity for you to get your hands on some of this money, too. If your GPA is unavailable you must submit a recent SAT, ACT, or GED test score instead.

If you want some assistance in applying for your Cal Grant, find a Cash for College workshop in your area. Each winter, financial aid experts team up to offer Cash for College workshops throughout the state where students can get help in filling out the FAFSA and GPA Verification forms. The mission is to help low-income and first-generation college students complete the application process so that they have the financial means to pursue higher education. While you’re there, ask them about the Cash for College Performance Based Scholarship that you might be eligible for.

*The fine print: in the last month or so, Governor Arnold Schwarzenegger proposed some budget revisions that could affect the Cal Grant program, and unfortunately, I’m not talking about an increase in award money. Awards will be subject to approval of the final 2009-10 state budget, so keep yourself informed by checking in with the financial aid office at the school you plan to attend.

**Update (08/03/09): The California Student Aid Commission informed California State University campuses on July 31st that Cal Grant awards will be adjusted to cover the CSU’s recent student fee increase of $672 per year. For more information, click here.

The Post-9/11 GI Bill, the new addition to the military tuition assistance programs offered by the Veterans Affairs Department, officially kicks in on August 1st. The new GI Bill offers a timely alternative to job-hunting in a rocky economy: use your military tuition assistance benefits to go back to school instead.

USAToday: New GI Bill Could Open Education Doors for More Vets

The American Council on Education provides a “plain language Q&A” of the Post-9/11 GI Bill, which will pay up to 100% tuition and fees at any state-operated college or university for veterans with at least 90 days of active military duty since 9/11/2001. The new GI Bill also provides a monthly housing stipend and up to $1,000 a year for books and school supplies. If you have to move to be near your campus, the bill gives you a one-time stipend for those costs, or, if you enroll in an accredited distance learning program, that’s also covered by this military tuition assistance plan.

Eligible service members honorably discharged with 36 or more months of active duty will get 100% of the Post-9/11 Bill’s benefits; those with less than 36 months of active service get a prorated percentage. The benefits increase with your amount of active service.

One of the appeals of the new GI Bill is the transferability of military tuition assistance benefits to your spouse or children, an option long desired by service members. A June Stars and Stripes article provides an overview of the transferability process so far.

Another appeal of the Post-9/11 GI Bill is the opportunity to attend a private college, regardless of cost. Under the Post-9/11 GI Bill Yellow Ribbon Program, participating private universities will waive or offset up to 50% of whatever their tuition is above the highest state-operated tuition, and VA will match that same amount. For example, if the tuition bill at a participating Yellow Ribbon university is $30,000 and the Post-9/11 GI Bill will only cover $15,000 (the highest public university in-state undergraduate tuition), the university and VA will split the $15,000 difference.

A new feature that may have temporarily backfired is the extension of GI Bill benefits to National Guardsmen and reservists. Extending benefits to Guardsmen and reservists with at least 90 days of active service was another long overdue policy change, but one loophole got by: it applies only to Guardsmen and reservists who served overseas. This oversight will no doubt be rectified at some point, but probably not this year.

The Post-9/11 GI Bill does not replace the Montgomery GI Bill, it is an alternative program offering a different arrangement for dispensing tuition assistance funding. The primary difference between the Montgomery GI Bill and the Post-9/11 GI Bill is that the first provides a consistent monthly stipend intended to cover all your living and school costs (including tuition and books) and the second provides you with separate payments for tuition and fees, housing, and books. The Post-9/11 GI Bill gives you 15 years to use up your benefits; the MGIB, only 10 years.

While the post-9/11 GI Bill has some welcome new features, it may not be right for everyone. You’ll have to evaluate the benefits offered in each GI Bill program and decide which plan offers you the greatest advantages and the most money. But whether you stick with the Montgomery GI Bill or transfer to the Post-9/11 GI Bill program, this is a good time to make sure you’ve done everything you need to do to maximize your military assistance benefits. After the sacrifices you and your family have made for your country, you deserve the lifelong advantages that evolve through higher education.

Pay for College Blog: Cost Cutter: Textbooks You Can Rent!

Textbook prices have been increasing at twice the rate of inflation for the past 20 years, and students have always felt some anxiety when it comes to shelling out hundreds of dollars each semester for their course materials. Deborah Fox at the Pay for College Blog tells us more about Book Renter, www.bookrenter.com, a website that allows students to rent their textbooks instead of buy them!  Also, check out sites like Amazon and eCampus.com, which offer great deals on new & used textbooks. These sites also can help you sell your textbooks when you’re done with them.

Associated Press: Economy sending students back home to college

A recent study found that an unusually high number of students are leaving expensive private colleges and transferring to affordable public colleges closer to home. Transfer applications are up 30% at some schools. There are a million reasons why students might want to switch schools, but according to the study, money for tuition was a prominent issue.

Keep in mind that transferring could lead to extra costs, since all credits are not made equal. If your current college costs too much, or if you’re facing a significant amount of debt after graduation, transferring elsewhere is something you might want to look into.

Another route you should consider is taking your core requirement courses at your local community college or through an online program, where tuition costs are much lower, and then transferring to your college of choice. To find a campus or online program that suits your education goals, click here.

FAFSAOnline: FAFSA and Your EFC

Lee Anne Hannula offers some clarification into the FAFSA’s EFC (Estimated family contribution) and how this number isn’t always what you should expect to pay.

The debate over simplifying student loans is back in the news again, with the expected counter-proposal to the Obama administration’s plan to eliminate the FFEL guaranteed loan program.

On July 7, a coalition of 32 private and nonprofit lenders, loan servicers, and guaranty agencies released their recommendation for simplifying the federal student loan process. Predictably, the alternative plan includes suggestions that attempt to meet the administration halfway, such as financing all federal student loans with U.S. Treasury money, but also tries to retain the opportunity for non-federal-government lenders and loan servicers to originate the loans. The alternative plan coalition argues that this combination of ideas will stabilize student loan funding but also preserve consumer freedom by giving schools and students a range of competing lender and servicers to choose from.

Unless I am not understanding the proposal correctly, it sounds as though this coalition is fine with having the federal government supply all the money for student loans as long as any lender or loan servicer who wants to stay in the student loan business can get paid for originating and servicing the loan. So the funding piece is the same as the Obama administration’s — the federal government is the wallet — but the number of loan originators and servicers is dictated by whatever the student loan market can bear, rather than being limited to a chosen few selected by the Department of Education.

The alternative plan coalition concedes that eliminating subsidies to private lenders is essential for the process of simplifying student loans. Beyond this inevitability, however, the coalition suggests that there are benefits to maintaining an unlimited number of loan servicers, including a free-market approach to choosing a servicer, minimizing screw-ups that may result from the transition in process, and avoiding regional lay-offs of workers in the loan servicing industry.

Doug Lederman at Inside Higher Ed describes the alternative proposal and the surrounding issues in more detail.

Legislators’ immediate response to the alternative plan was not exactly an enthusiastic embrace of a happy compromise.

The communications director for House Education Committee released a statement saying, “Thus far, President Obama’s proposal is the only plan that will meet both our goals of generating tens of billions of dollars in savings to help students pay for college while creating a reliable, effective and cost-efficient federal student loan program for families and taxpayers.”

It will be interesting to see what happens in this debate over the coming months. Everyone agrees that simplifying student loans is a project whose time has come. But overhauling a system as entrenched and extensive as the federal student loan process requires big changes, and not everyone will agree on who should have to do the changing.

The Mississippi Institute of Higher Learning offers a one-stop-shop website for resident students looking for information on student loans, scholarships and other Mississippi financial aid.

The good news is that state money for tuition is available for traditional students, transfer students, adult learners and graduate students. The great news is that only one application is needed to apply for all types of state financial aid (minus the Nissan Scholarship and the Mississippi Teacher Loan Repayment Program).

Be prepared to fork over 2 of the following 3 items: a photocopy of your Mississippi driver license, a signed copy of pages 1 & 2 of your latest tax return, or the results of your FAFSA application.

Upcoming Deadlines – September 15:

Several community colleges in Mississippi also participate in tuition guarantee programs, a project spearheaded by the CREATE Foundation, which guarantees two years of college education for high school graduates in the state. This is a great opportunity for students who aren’t ready to commit to a four-year program or have limited money for tuition.

Finally, the Clarion Ledger offers a full searchable scholarship database offered at the state’s eight universities (heads up though, this database boasts “new features for 2002″, so some information may not be up to date, though the site is still fully functional).

After you’ve done a lot of research on college financial aid options, two things become apparent: one, there’s confusion about the difference between scholarships and education grants, and two, there are countless websites offering fantastically easy access to “government grants.” These “government grant” sites are usually loud and flashy with screaming headlines in large type about the millions of dollars the government must give away every year — and most are scams. There are many legitimate scholarship databases out there, but there are far more shady grant advertisements. Getting familiar with both kinds of websites, and with the differences between scholarships and education grants, can help you find the financial aid information you need more quickly.

Government Grants and Foundation Grants

A grant is funding that does not need to be repaid. It is a gift of money awarded to recipients who demonstrate with their application that they are in financial need or that they will meet the non-financial conditions placed on getting the money.

Government grants, the most widely available and most familiar type of grant, are available to qualifying citizens or organizations for a broad range of purposes, including community services, starting a small business, employment and training programs, legal services, humanities and arts programs, environment initiatives, and research and development in fields from agriculture to zoology.

Foundation grants — grants offered by private nonprofit foundations — are similar to government grants in that do not have to be repaid. But foundation grants usually have narrow, targeted guidelines for and restrictions on how the grant money can be spent, and a comprehensive application process to make sure the grant money goes to recipients who will make the best use of it.

Generally, neither government grants nor foundation grants are available to individuals for such personal services as paying your bills, buying a personal car, paying your college tuition, or clearing your credit card debt. There are numerous federal and state “safety net,” medical support, and other financial assistance programs available to help citizens and families in financial need.

Foundation grants and government grants, including federal and state grants, are intended for development or support of projects that will benefit the community at large, whether it is medical research, a local arts center, or a regional emergency preparedness program. The exception is a small business grant for individuals, and even in this case, you will probably need to demonstrate that your small business will provide a necessary service or benefit to the community. (Otherwise, you will probably need to obtain a small business loan.)

Contrary to what all the flashy “get your government grant right here” sites tell you, the only place you can apply for federal government grants is at the federal government grant site, www.grants.gov.

Education Grants

The term “education grant” can be a little confusing, because it can be used to refer a couple of different types of grants for education.

Education Grants for States and Communities Developing New Education Programs

One type of education grant is a government grant or foundation grant awarded to communities for the development of higher education or career training programs. A community may be national, a state, a county, or even a township. The best-publicized education grants being awarded right now are going to U.S. states, who are applying for and receiving several-million-dollar grants from the American Recovery and Reinvestment Act ($787 billion “Stimulus Bill”). States are using these ARRA education grants to develop new college and career training programs, particularly to help workers who have lost their jobs in the current recession to transition to new industries and employment.

Examples of government and foundation education grants include $7 million of ARRA funds offered to the auto industry states for displaced worker education and $2 million in grants the Alfred P. Sloan Foundation is offering regional public universities to develop online education programs for local students.

Education grants of this type are not available to individual students looking for financial aid for college. This is one difference between scholarships and certain education grants. Scholarships are intended for individual students, but institutional education grants are awarded to organizations that develop education programs for students. As a student, you cannot apply for this type of education grant at any grants website, even the federal grants.gov site.

Education Grants for Individual Students

The second type of education grant is a government grant awarded to individual students for the sole purpose of paying for college or career training. There are only a few of these education grants at the federal level, although individual states may also offer a limited number of student-recipient education grants. Education grants for individual students are almost always awarded according to financial need.

Federal education grants for students include the well-known Pell Grant, the Federal Supplemental Educational Opportunity Grant (FSEOG), the Teacher Education Assistance for College and Higher Education (TEACH) Grant, the Academic Competitiveness Grant (ACG), and the National Science & Mathematics Access to Retain Talent Grant (National SMART Grant). Eligibility for the Pell Grant, FSEOG, ACG, and SMART Grant, and the amount awarded per student, is based on financial need. Eligibility for the TEACH Grant is not need-based, but requires an agreement to teach in high-need schools for a certain period of time after graduation. Eligibility for all federal and state education grants for individual students requires submitting a Free Application for Federal Student Aid (FAFSA) every year of school.

Scholarships: Individual Student Education Grants By Another Name

William Shakespeare famously said, “A rose by any other name would smell as sweet.” That may be true of a rose, but in higher education, a scholarship by any other name is just plain confusing. Nevertheless, the U.S. Department of Education is not likely to change the names of its student education grants to the Pell, FSEO, TEACH, Academic Competitiveness, and SMART Scholarships. So, it is up to us to remember that some education grants for individual students may be called grants, but the vast majority of these college grants are known as scholarships.

So Is There Any Difference Between Scholarships and Grants?

Well, in this use of the term “education grant,” there is often no difference between scholarships and student grants when it comes to the purpose of the money: both are intended to pay college costs. But the reasons for awarding the two types of aid can be different, and this may explain why both terms are still used.

Federal education grants for individual students are provided according to financial need, with the goal of helping more students get to college who might not otherwise have the opportunity. A Pell Grant is “need-based” financial aid. Scholarships, however, are often awarded to students based on their academic achievement, because achievement implies future success. Many scholarships are “merit-based” financial aid, and can be competitive.

Today, with the price of college so high, the separation between need-based and merit-based financial aid is not so clear-cut. The Department of Education still provides need-based education grants, but thousands of foundations, organizations, corporations, trade associations, and schools offer need-based scholarships, merit-based scholarships, and a broad array of scholarships that combine financial need with merit award. In addition to the familiar scholarships for athletes, there are scholarships for musicians, for minorities, for students in specific fields of study, for first-generation college students, for adult learners returning to school after years in the workforce, for single mothers, for students willing to go into challenging or high-demand professions, for workers laid off from businesses that have closed.

Scholarships that can cover all 4 years of college may no longer exist, but many students piece together the money they need by applying for several different scholarships on top of their federal education grants. As long as you know which education grants are for meant for states and communities, and which are meant for individual students, the difference between scholarships and grants should not matter — all you need to confirm is that you meet all the eligibility criteria. As always, read all the fine print.

July 1, 2009 — The student loan interest rate on new Subsidized Stafford Loans for undergraduates drops to 5.6% today, a new low intended to make federal loans more palatable for students considering higher education. If you’re a laid-off worker thinking about going back to school for new education or training, this applies to you, too. Subsidized Stafford loans for undergrads are based on financial need; there is no age restriction for eligibility.

The interest rate for new Subsidized Stafford loans for graduate students, new Unsubsidized Stafford loans (not need-based), and new PLUS loans are unchanged from the 2008-2009 financial aid year: 6.8% for Graduate Subsidized Stafford loans and all Unsubsidized Stafford loans, 8.5% for PLUS loans taken out through the FFEL program, and 7.9% for PLUS loans taken out through the Direct Loan program.

However, interest rates also drop on variable-rate Stafford loans and PLUS loans issued between 1998 and 2006. For a student still in school, or whose loans are already in repayment, grace period, deferment, or forbearance, the rates on these loans now range from 1.8% to 3.28%. A table on the Department of Education’s website lists all the Stafford and PLUS loan interest rates effective today. You may be able to consolidate your existing student loans issued before 2006 at one of these rates.

While federal student loan interest rates go down, the upper limit on Pell Grants goes up: the maximum amount for Pell Grants for the 2009-2010 school year is now $5,350. Pell grants are awarded to students whose FAFSA, the Free application for Federal Student Aid, calculates Pell grant eligibility.

To qualify for Pell grants and the low interest rates on federal student loans, you must fill out a FAFSA every year.

The Wall Street Journal outlines the intricacies of federal loan interest rates and fees.

Financial aid definition for the day: the difference between “Lender” and “Loan Servicer.” A student loan lender and a student loan servicer are two different roles, although some financial institutions may be both (for example, Sallie Mae). A student loan Lender is a financial institution, bank, or lending organization that actually loans you the money for your student loan. A Loan Servicer is an organization that monitors the loan transactions and collects the money for the lender, but is not necessarily the organization providing the loan funds.

If the Obama administration succeeds in its proposal to eliminate the FFEL program and handle all federal student loans through the Direct Loan program, then the U.S. Treasury will be the Lender and the four financial institutions recently selected by the Department of Education will be the Loan Servicers handling future federal loans.

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