Tag: financial aid letters

Kristi, an EducationGrant reader, wrote in with an excellent question: what’s the secret to getting more financial aid when your personal finances get hit by the recession? More specifically: since the FAFSA bases your ability to pay for college on the previous year’s tax return — the one before you lost your job and your income — how can it help you get the amount of financial aid you actually need?

FAFSA OnlineWell, it’s true, the FAFSA seems a little screwy in the way it calculates your ability to contribute to your college education from your prior year’s tax return rather than on your current financial circumstances. Believe it or not, there is a reason for this, but unfortunately, it only holds true in a stable, prosperous economy. When students try to make the most out of their job loss by returning to school, however, their need for any financial aid at all is probably because they don’t have an income any more. In 2009, many students are in this boat.

The secret to getting a more realistic amount of financial aid

Is there a way to overcome your FAFSA’s inaccuracy? How do you tell schools that you don’t really have the income that your earlier tax return says you do?

Karen Stabiner, author of The College Insider column at The Huffington Post, says:

“So here’s a secret right up front, from a long-time financial aid officer: The letter of special circumstance. When you’re done with bubble grids, write a letter that says whatever you think a college needs to know: That the money you have is earmarked for seven dependent relatives, that the money you don’t have is due to altruism and not misguided greed, that you’re willing to sell your second car but you’re too young to cash in the IRA without a penalty.

“It is your one opportunity to be a human being and not a set of numbers. If you need money, don’t be shy. Write the letter.”

What’s a letter of special circumstance?

Another name for the “letter of special circumstance” is “letter of appeal.” By either name, it’s an opportunity for you to explain to the school(s) you’re applying to how your personal finances have changed since the tax return information reflected on your FAFSA, and the reasons you need more financial aid than your FAFSA indicates.

A financial aid appeal is a letter of special circumstance plus a little more, including:

  • Call the school financial aid office first to see if there’s an appeal form they require in addition to your letter of special circumstance.
  • You’ll need to provide proof of your current circumstances— a copy of an unemployment benefits stub, for example.
  • Be as thorough and detailed as you can about any sources of income you have and all the expenditures in your budget, such as a mortgage, rent, and car payments.
  • If you’re a custodial parent or a parent paying child support, say so.
  • Share the education goal you hope to achieve and why you think their school’s program can help you meet it.
  • If additional financial aid will make or break your ability to enroll, say that, too (but be careful to sound grateful for their consideration, not demanding!).

Where do you send your letter of special circumstance?

You don’t send your letter of special circumstance in with your FAFSA. You send it to the school you’re applying to because it’s your school’s financial aid office that will handle your request for more aid. Your school may have its own grants for students who experience a change in circumstances, or it will work with the Department of Education to get you more federal financial aid. Your financial aid office may recommend that you take out a subsidized or unsubsidized federal Stafford loan if there is no more grant money available.

Filing a FAFSA is still Step One

With regard to the FAFSA, Ms. Stabiner recommends: “Get your finances in order as though the IRS deadline were January 15 instead of April, because you can download the FAFSA forms at 12:01 a.m. on January first — and in this economy, there’s something to be said for the sooner the better.”

If the education program you want to enroll in begins between now and June 30th, 2010 (spring 2010 semester and early summer), you’ll use the 2009-2010 FAFSA, which is available now. If the program you want to enroll in begins AFTER June 30th, 2010, you’ll need to use the 2010-2011 FAFSA, which will not be available until January 1, 2010. Either way, plan to file online, which is much faster.

One thing to look forward to with the 2010-2011 FAFSA: no more filling in all your tax return information yourself. With the click of a button, you’ll be able to transfer it over electronically from the IRS. The 2010-2011 FAFSA, of course, will use your 2009 tax return, which may be a more accurate reflection of your current circumstances.

But for the years when your FAFSA doesn’t tell the whole story, there’s the secret to getting the financial aid you really need: a letter of special circumstance that supplies the latest chapters.

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There have been a lot of stories in the news lately about the large number of states having to cut state financial aid out of their budgets, affecting millions of college students. If you were counting on, or awarded, a state education grant to help you with your education expenses, you should review the financial aid award letter you got from your school to be sure you understand its information.

Student Aid Report and Financial Aid Award Letters

After you filed your FAFSA, you should have received a Student Aid Report (SAR) that told you how much the federal government concluded you can afford to contribute to your college costs. Your SAR also listed any Pell Grant or other federal grant that you qualified for.

The financial aid award letter from your school tells you how much financial aid it has given you, based on your SAR. The financial aid may come from a combination of sources, including federal grants and student loans, state education grants, and school grants or scholarships.

Financial aid award letters can seem just as complicated as the FAFSA itself, however. Knowing what to look for in your award letter will help you figure out how much “free” aid you’re getting in grants or scholarships, how much aid is in loans, and how much you will still need to come up with on your own.

The experts at the FinancialAidLetter.com website review examples of financial aid award letters from six schools, translating the jargon into plain English and decoding what the award letters are really saying (or not saying).

Vague information about expenses and fees not included in the tuition

One common problem with financial aid award letters is vague or confusing information about what is actually a group of different costs. Also, expenses such as fees, books, computer services, transportation, and housing are not usually considered part of tuition, but financial aid award letters often do not make this clear or list these extra expenses separately. Your award letter should list each cost of attendance and each financial aid award separately so that you know exactly what you’re paying for and what types of aid you’ll have to repay, if any.

Schools may add private loans to your financial aid without explanation

In order to cover costs not covered by federal, state, or school grants or federal loans, your school may add a private loan to your financial aid package, often from the school’s “preferred lender.” If the award letter doesn’t clearly label and explain the private loan, it may give you the impression that some of your costs are being covered by the school itself when the money will actually come from a loan you’ll have to repay, perhaps at a high rate of interest or under terms and conditions unfavorable to you.

State budgets under pressure in 2009

Many states are having to make very difficult choices about what they will fund this year. In states where financial aid has been cut back, students who received a state education grant last year or were counting on getting one this year may be disappointed on short notice. Check your financial aid award letter for information about your state grant and call your school’s financial aid office as soon as possible if you have any doubts.

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