Archive for January, 2010

maximum pell grant awardOn Wednesday, President Obama proposed more money for Pell Grants that help qualified low-income students afford college. Starting in 2011, the maximum award will automatically increase alongside the rising cost-of-living, which would increase the maximum federal Pell Grant to $6,900 by 2019.

In the 2005-06 school year, the number of Pell Grant recipients grew to 6.2 million from 4.7 million. The average Pell Grant awarded also grew to $2,223 from $1,885. So, the proposed increase that President Obama mentioned on Wednesday would mean even more Pell grant money for even more qualified students!

So what does it take to meet pell grant qualifications?

Well, there is no “one size fits all” recipient.

Keep in mind, the Pell Grant is awarded to undergraduates with a high degree of unmet financial need; most Pell money goes to students with a total family income around or below $20,000. But, students whose families have a total income of up to $50,000 may be eligible too. In 2005-2006, students with family incomes of less than $20,000 accounted for 57% of Pell Grant recipients.

Your eligibility is determined by the FAFSA, and in order to meet Pell grant qualifications for the 2010-2011 school year, the highest your EFC should be around 4617, per Vicki Klinowski, of College Loan Consultant, who also provided the graph below. An EFC is the amount you or your family can be expected to contribute toward your college tuition.

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2007-2008 Pell Grant Recipients by Income Level

Pell Grant qualifications can be affected by a student’s enrollment status as well as income earned through employment, too. Think about it – if you are enrolled half-time, your tuition is less and therefore you will require less aid. Undergraduates who work while they are enrolled are more likely to have incomes that decrease their eligibility for federal need-based aid (ahh, didn’t think of that, did you?). Some low-income students may even find themselves ineligible for Pell Grants because they are enrolled part time at very low cost colleges, or they work while they are enrolled, or do both.

In the 2003-2004 school year, more than 1.5 million college students who likely were eligible to receive Pell Grants didn’t bother applying for them because they found the FAFSA form too confusing. Don’t count yourself out! A number of changes have been made to the new FAFSA for the 2010-2011 school year which include simplifying the form.

President Barack Obama unveiled some new ideas meant to help our country’s struggling middle-class pay their bills and care for their families. This week, he proposed expanding a popular program that puts a cap on monthly student loan payments for college graduates with low or moderate incomes in an effort to ease the debt burden for many young adults. The details of the president’s proposal are slim right now, but Nick Anderson of the Washington Post offers this insight:

Under the proposal, monthly payments on federal loans would be limited to 10% of discretionary income — above a “basic living allowance” — for qualified borrowers. That would be lower than the current cap of 15% in the income-based repayment program that began last summer. In addition, the administration said, certain borrowers could be eligible for loan forgiveness after 10 years in public service or 20 years in other fields of work.

There are many questions that are still left unanswered about this proposal: Does this include both private and federal education loans?  What is a “basic living allowance”? Can we look forward to capped interest rates? Will everyone, regardless of industry, be allowed to stop making payments after 20 years? Does this include grad school?

obama student loansIn the meantime, we can make some approximations. Say you make $30,000 a year but owe $20,000 in student loans – your monthly student loan payment would be $115 a month under this proposal, rather than the $228 a month it would be under a standard 10-year repayment plan.

Millions of students are suffering increasing debt levels. About two-thirds of graduates took out loans to pay for college over the past three decades, and their average student debt is over $23,000! To calculate what your monthly payments would be under President Obama’s proposal, visit Forbes’ student loan calculator, located halfway down the page. Note that this calculator is for a single filer without children.

The additional flexibility in repaying student loans will complement the Administration’s agenda to make higher education more affordable. Other proposals have included increasing Pell grants, reforming the student loan program, making permanent the new $2,500 American Opportunity Tax Credit for college costs, expanding low-cost Perkins loans, strengthening community colleges and increasing graduation rates at both two- and four-year institutions.

Last week, A.R. wrote in asking:

Is it impossible for a U.S. citizen studying abroad to receive Pell or SMART grants?

In fact, it is not impossible. Universities and colleges are required by federal law to continue to disburse funds to eligible students participating in approved programs. Study abroad financial aid is widely available for U.S. citizens who want to expand their horizons and immerse themselves in other cultures. Financial aid for undergraduates who want to study abroad consists mostly of federal grants such as the Pell Grant and the FSEOG Grant, and federal and private loans:

study aborad financial aidScholarships are also available from private organizations and sponsor companies.

David L. Boren Undergraduate Scholarships for Study Abroad provide scholarships to undergraduate students who wish to study languages and cultures considered to be important to U.S. national security and are underrepresented in study abroad. Students are not eligible to receive the Boren scholarship if they are studying in countries in Western Europe, Canada, Australia, and New Zealand. Deadline: February 10, 2010

The Benjamin A. Gilman International Scholarship Program provides awards for U.S. undergraduate students who are receiving Federal Pell Grant funding at a two-year or four-year college or university to participate in study abroad programs worldwide. Deadline: April 6, 2010 for Fall 2010 Semester

Phi Kappa Phi Study Abroad Grants are designed to help support undergraduates as they seek knowledge and experience in their academic fields by studying abroad. Deadline: February 24, 2010

The Global Studies Foundation provides funding for American students who are already studying abroad under the direction of an official study abroad program from an accredited university. Deadline: July 1, 2010

Every school and study abroad program varies though, so be sure to speak with your school’s financial aid adviser or study abroad faculty to understand the specific funding options available at your school. The cost of any study abroad program depends on many factors – your destination country and the length of your program, not to mention all the additional travel costs such as your passport, visa, airfare, immunizations, local transportation, meals, and books.

Perhaps most importantly, don’t forget that exchange rates fluctuate all the time, so your dollars may not have the purchasing power you think. A general rule of thumb is that the more expensive the school’s tuition, the more costly the study-abroad program. Also, the student who spends a lot of money on campus is likely to spend a lot more money overseas.

For more information, visit NAFSA, the Association of International Educators.

Are you nervous about your ability to afford your college education? If the recent survey by UCLA is a benchmark for a growing trend, it’s safe to say that two-thirds of you are concerned about affording college.

UCLA conducts a survey every year about the perceptions and mind-set of the country’s incoming freshmen classes. This year’s survey found that two-thirds of freshmen said they were either somewhat or very worried about their ability to finance their college educations. With tuition and fees up and employment down, the effects of the economic downturn seem to be hitting even the most starry-eyed and optimistic college student.

Concerns surfaced from family finances to the cost of tuition:

  • 78% plan to pay for their first year of college at least in part from family resources
  • 42% said cost was a “very important” factor in choosing which college to attend
  • Nearly 67% of freshmen at four-year schools said they had at least some concerns about paying their tuition bills, more than any other freshmen class in the last 12 years.
  • Financial aid played an important role in a college choice for nearly 45% of the freshmen

I think the the survey’s findings could actually be a good thing! Maybe these stats will shed some light on the need for students to consider the value they get out of their college education, and not just the brand name of the university or the obligation to attend a 4-year college when their career goals only require an Associate’s degree.

If two-thirds of students are worried, it could mean that they’re considering graduating in 3 years to save money. They could be applying for more scholarships. They could be going to community college. The other third could be setting themselves up for a lot of student loan debt.

Are you worried about affording college? What are you doing about it?

FAFSA.com or FAFSA.gov?

Competition is high for the $168 billion set aside for financial aid this year. The cost of college has increased dramatically in the past 10 years – tuition, fees, and room and board at four-year public schools jumped 46% to $15,210 last year, according to College Board. Students are feeling the financial pinch and many are willing to do whatever it takes to make their dream affordable, including enlisting the help of professionals to squeeze every last penny they can from financial aid.

There’s been a lot of discussion about the difference between FAFSA.com and FAFSA.gov. FAFSA.gov is the U.S. Department of Education’s website where you complete the aid application yourself and file it for free. FAFSA.com is a fee-based FAFSA preparation service that helps you apply for federal financial aid. They offer one-on-one counseling, manage student aid deadlines, answer difficult or confusing questions, provide estimates of the amount of federal and state aid you can expect to receive, and check for errors to ensure that your FAFSA is accurate and you’re eligible for the most aid possible.

In the spirit of full disclosure, EducationGrant’s parent company partners with Student Financial Aid Services, the company behind FAFSA.com. However, I would never personally vouch for a company whose services I didn’t believe in, and there are a number of reasons why I feel a FAFSA preparation service like this could be a good option for many people:

  1. It’s similar to having an accountant prepare your income taxes each year – it’s something you can do on your own for free, but if you want to make sure all your ducks are in a row and that you haven’t made any mistakes, you might want to pay a professional to do it for you. The 130 questions on the FAFSA application can be confusing and if you make errors, you could be depriving yourself of money for college.
  2. The company is 100% up front about the fact that it is a fee-based alternative to preparing the FAFSA on your own. They don’t make any attempt to hide that fact.
  3. Their student aid advisers are fully trained so customers can rest assured that the advice and service they get is of the highest value.
  4. The company’s goal is to help students and families get the maximum amount of aid they are eligible to receive. They offer peace of mind for families that truly need financial assistance to go to college.

However, not everyone agrees with me. You’ll notice that if you Google “FAFSA.com” and the drop down menu is less than flattering:fafsa.com search results

The reason some people may think FAFSA.com is a scam is because Student Financial Aid Services charges you to prepare your FAFSA ($79.99 – $99.99 depending on the service). The company’s website clearly states that they are a private company and there is a fee, but some people still think they are filing the FAFSA through the government’s federal financial aid website, FAFSA.gov. If they suddenly find themselves being asked for payment information when they aren’t expecting it, they believe they’ve been duped.

Many students don’t even apply for aid because they are intimidated by the FAFSA form. For those students who may be overwhelmed by the process, working with a service like FAFSA.com could be incredibly beneficial. Errors on the FAFSA not only delay the process but they could negatively impact the amount of financial aid you receive.

Have you opted to use FAFSA.com? What was your experience?

Video contest scholarships are gaining momentum these days. As more and more students create and post video content online, and with companies and associations wanting to interact with students on sites like YouTube and Facebook, video scholarships are a great way to add some variety to your scholarship search. Even the U.S Department of Education got in on the action last fall.

video_contest_scholarshipsThis semester, keep video scholarships in mind. These opportunities challenge you to be creative, give you the opportunity to win decent sums of money for college, and best of all, do not require a written essay! Here are three upcoming scholarships for this semester:

  1. The Credit Union Foundation of Maryland and D.C. is offering their college-bound credit union members the opportunity to apply for their $1,000 video-based scholarship by creating a 60-second advertisement promoting credit union membership. The Foundation’s Chairman believes the video topics will provoke innovative and useful responses to help them better serve their college-aged members.
    Deadline: March 31, 2010
  2. Texas residents or lawyers licensed to practice in Texas might be interested in a YouTube contest sponsored by the State Bar of Texas offering cash prizes and scholarships for the best 30-second video answering either “Why are lawyers important to our society?” or “How is the court system important to our society?” The cash prize is $500 (ahem, a drop in the law school tuition bucket), but two will be awarded, as will one videographer under 18 years old who will win a $500 scholarship. All three winners get a trip to Austin to celebrate Law Day with the Bar. Submissions will be posted to the bar’s YouTube group.
    Deadline: April 1, 2010
  3. Undergraduate and graduate students enrolled at accredited colleges and universities are invited to create a short 5-minute film or video that interprets the message and mission of the Christophers, a nonprofit organization that believes one person can make a difference, and that God has given each individual a special task in life which belongs to no one else. First prize will receive $2,000.
    Deadline: June 11, 2010

Have you ever submitted a video for a scholarship? How did it come out? Share the link in the comments!

portrait of architect girl at workWomen have been and still are underrepresented in fields related to the sciences, technology, engineering and math. Many college and university departments relative to these fields offer scholarships to attract women to diversify their classes and encourage women to make their own contributions to such disciplines.

In addition to engineering scholarships, such as the five below, some women engineering students invested in research could win lucrative graduate fellowships, which not only provide them with second-to-none experience, but help establish themselves and showcase their work in what is traditionally a male-dominated field.

  1. American Nuclear Society – John and Muriel Landis Scholarships award eight scholarships to undergraduate and graduate students who have greater than average financial need. One of these scholarships, the Delayed Education Scholarship for Women, is awarded to a mature woman whose undergraduate studies in nuclear science, nuclear engineering, or a nuclear-related field have been delayed.
    Deadline: February 1, 2010
  2. The Society of Women Engineers – The SWE Scholarship Program provides financial assistance to women admitted to accredited baccalaureate or graduate programs, in preparation for careers in engineering, engineering technology and computer science.
    Award Amount: between $1,000 – 10,000
    Deadline: February 15, 2010
  3. AAUW (American Association of University Women) – AAUW Branch and State Local Scholarship Clearinghouse Pilot Program allows women in engineering and other sciences to submit a scholarship application which will then be directed to its local branch or state for consideration. Award amounts, degree or field of study, and other eligibility criteria vary per state.
    Award Amounts: Varies; most are between $100 – 5,000
    Deadline: March 1, 2010
  4. The Society of Women Engineers – Reentry scholarships were established to assist women in reentering the workforce as engineers. These scholarships are for a non-traditional student, in any year of engineering school, including graduate school. These scholarships include the BK Krenzer Memorial Reentry Scholarship and the Olive Lynn Salembier Memorial Reentry Scholarship.
    Award Amount: $2,000 each
    Deadline: May 15, 2010
  5. The Society of Women Engineers – some SWE chapters offer scholarship assistance to students on a local level.  If you reside or attend school within certain geographical areas, you may be eligible for additional scholarship assistance.
    Award Amounts: Varies; most are between $250 – 1,500
    Deadline: Varies by state

What’s New: 2010 Pell Grant

2010_pell_grantThe 2010 Pell Grant is the most widely available grant program for undergraduate students. The 2010 Pell Grant maximum amount was raised to $5,500 for students enrolling for the 2010-2011 school year – that’s $150 more than last year’s maximum, meaning more good news for cash-strapped students!

Now, not all students will receive the full $5,500 amount; some will qualify for a percentage. The amount you receive is directly affected by your Expected Family Contribution (EFC), the cost of attending your school of choice, your enrollment status (full time, part time, etc.), and whether or not you are attending for a full academic year.

To apply for a Pell Grant, you must complete a FAFSA form. Completing your FAFSA will determine your eligibility not only for the 2010 Pell Grant but also for other loan and aid programs. One of the latest changes made to the process this year is the ability to get an initial estimate of your financial aid eligibility immediately after you’ve electronically signed and submitted your FAFSA. This Student Aid Report (SAR) indicates which federal grants you can expect to receive, as well as what student loans you are eligible for. In the past, you would’ve had to wait at least three weeks for this information.

If you do qualify for a Pell Grant, your SAR will say something along the lines of:

Based on your EFC of [amount], you appear to be eligible for the following:

  • A federal Pell Grant of up to $5350
  • Other federal grants, low-interest student loans and work study

For more information on Pell Grants including eligibility and applying, check out:

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The key to filling out the FAFSA is to be prepared. How do you prepare for a long, detailed form like the FAFSA? You gather all the personal identification information and financial documents the FAFSA will ask you for and you apply for a FAFSA P.I.N. so you can fill out your official FAFSA online (FAFSA-on-the-Web).

Here’s a step-by-step explanation of how to do the FAFSA. (For a few important FAFSA Facts first, see EducationGrant’s FAFSA page).

Before We Start: Understanding FAFSA Application Periods

Each FAFSA application period runs from January 1st of any given year to June 30th of the following year. This 18-month period provides financial aid coverage for the traditional September–to–May school year and a short summer school session at either end.

For example, as of January 2010:

  • If the education program you want to enroll in starts between now and June 30th, 2010, fill out the 2009-2010 FAFSA.
  • If the education program you want to enroll in starts between July 1st, 2010 and June 30th, 2011, fill out the 2010-2011 FAFSA.

Key to Filling Out the FAFSA: A Step-By-Step Plan

Step 1: Collect the documents you’ll need for the FAFSA and use them to do the Practice Worksheet

Required personal identification information and financial documents:

  • Your Social Security Number (SSN)—or your alien registration number if you’re not a U.S. citizen
  • SSN of your parent(s) if you meet the FAFSA criteria for a Dependent Student
  • Your driver’s license if you have one
  • Your most recent bank statements
  • Your W-2 Forms and other records of money earned
  • Your Federal Income Tax Return (and your spouse’s, if you are married): IRS Form 1040, 1040A, 1040EZ, foreign tax return, or tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia or Palau
  • Your parents’ Federal Income Tax Return, if you meet the FAFSA criteria for a dependent student
  • Records of your untaxed income such as Social Security, Temporary Assistance to Needy Families, welfare, or veterans’ benefits
  • Your most recent business and investment mortgage information, business and farm records, and records of stocks, bonds, and other investments

Step 2: Get a PIN for FAFSA-on-the-Web OR download a paper application

The Department of Education strongly recommends that you use FAFSA-on-the-Web. Filing online is shorter, easier, and faster, and you get an answer back more quickly, too. (Read more about FAFSA-on-the-Web in Step 3.)

FAFSA-On-the-Web (FAFSA Online)

  • Apply for your PIN online at www.pin.ed.gov.
  • Your PIN allows you to “sign” your Online FAFSA, and to access your FAFSA file every year that you apply.
  • Apply for your PIN ASAP because processing your request will take at least 2-5 business days.
  • Your parent(s) must have a PIN too if you meet the FAFSA definition of a Dependent Student
  • Providing an email address will speed up the PIN process.

Downloadable Paper FAFSA to Submit by Mail

  • Download a PDF copy of the FAFSA from the Student Aid Website or call the Federal Student Aid Center at 1-800-4-FED-AID.
  • Check the federal school code page to find the code for each school you plan to apply to.
  • Throughout January and February 2010, volunteers across the country are holding events where they are providing in-person help to students filling out the FAFSA. If you could use some help, see if there is a FAFSA event in your area.

Step 3: Set aside some time to do the FAFSA

Block out a couple of hours on your calendar to sit down and just get the FAFSA done. The Department of Education recommends using FAFSA-on-the-Web for several reasons:

  • Online instructions are provided for each question and live online help with a customer service representative is available if you get really stuck.
  • FAFSA-on-the-Web is designed to find mistakes and prompt you to correct them.
  • You can get the federal school code while you’re right there in the form.
  • You can fill out all the questions at once or save your application for later changes and updates. This is a great feature for submitting all the information you have other than your tax return. You have 45 days from when you first submit information, or until the application deadline passes.
  • Once you click “Submit My FAFSA Now” your information is immediately sent to the Department of Education.
  • Your application is processed more quickly.

Tips from FAFSA Experts

  • Do a dry run. Print out a FAFSA Practice Worksheet and fill in as much of the information as you can. This way you’ll have all your data in one place and can easily transfer it to your official FAFSA-on-the-Web.
  • About taxes. You can do your FAFSA-on-the-Web before filing your tax return. Estimate your tax information on your FAFSA, then submit a FAFSA follow-up with any corrections after you’ve completed your tax return. (You have 45 days.)
  • Dependency status. If the FAFSA defines you as a Dependent Student but you have no contact with either parent, make an appointment with a financial aid officer at your school. The financial aid administrator will work with you to determine if you qualify for Independency status in spite of meeting the Dependent Student criteria, and then will submit your FAFSA-on-the-Web with a Dependency Override. Another option is to submit the FAFSA-on-the-Web without parent information, which will qualify you only for an unsubsidized student loan. In this case, you will get an incomplete Student Aid Report (SAR), and if the financial aid office of the school you want to attend agrees to give you Independency status later on, they can do the dependency override then.

Ok, it’s a lot— but it isn’t that different from doing your taxes, another process that benefits from having all your ducks in a row before you begin. For the 2007–2008 academic year, the federal government provided over $14 billion in Pell Grants to more than 5.4 million undergraduate students. Start collecting all your documents as soon as you finish reading this post. The key to filling out the FAFSA is just a little preparation.

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Here’s a treat for a Monday: a chance to share good news about the challenging FAFSA. This month and next, volunteers are standing by to help you fill out a FAFSA, in person, so you can get federal financial aid for college.

Kim Clark, who is always on top of financial aid news at U.S. News & World Report, just alerted her readers about the free FAFSA assistance in her article, Applying for Financial Aid Will Be Easier in 2010. Apparently, some of the volunteers will be tax professionals who will help students with both the FAFSA and their tax returns.

Since the FAFSA is the application you have to fill out in order to get a Pell Grant (and maybe other federal grants for college), getting free help with both the FAFSA and the 1040 sounds like a well-spent afternoon.

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