Tag: Pell Grant

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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Thinking about going back to school, but don’t know where to start? Amanda Ly, a freshman at East Los Angeles College, wrote a gripping and informative LA Youth article about her initial experience with choosing and paying for college:

Hit with the real cost of college

Although her college plans didn’t turn exactly as she had hoped, Amanda’s financial situation will feel familiar to many students and her description of her experience in navigating student loans, and her hard-won advice, will benefit all readers—whether you’re a new high school graduate or a nontraditional student returning to school. For an introduction on college planning, take a look at this student’s thoughts about what she learned during her college selection and application process.

Top tips: What to find out from the school(s) you’re considering and how early to start planning how you’ll pay for college.

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The subject of today’s post, though not exactly financial aid, feels like a higher education story for the holidays: a glimpse into how successful nontraditional students get their college degrees. Nontraditional college students (anyone other than an 18-year-old going to a 4-year college straight from high school, that is) are students of all ages and walks of life. If you’re one of them, you’re already familiar with the challenges that may have made it difficult for you to pursue your dream of a college degree.

This celebratory article, For one student, a long path to college degree, provides both inspiration and some insight into what it means to be a nontraditional student. It’s a great read. In this year of grim news, it’s nice to read about someone’s success for a change!

One of the resources the article mentioned is the Pell Grant. Pell Grants help millions of students a year, and data on Pell Grant recipients provides a familiar snapshot of nontraditional students. For instance, a recent National Center for Education Statistics report (July 2009) profiled Pell Grant recipients who graduated with a bachelor’s degree in 1999-2000. Here’s what the study found:

  • Majority were low-income
  • 23% were age 22 and under; 31% were 23-24; 27% were 25-29; and almost 19% were 30 and up
  • 60% were considered financially independent
  • 24% had dependents of their own
  • 11% were single parents
  • 34% delayed their enrollment in college after high school
  • 58% left college or career school for 4 or more months and later returned to complete a degree at either the same school or a different one

These percentages are from 10 years ago, so some may have grown or decreased in the recent recession. It would be a surprise if the percentage of Pell Grant recipients age 30 and older had not noticeably increased over the past two years.

Clearly, pursing a college degree is a big investment of time, money, and maybe even personal sacrifice, but to many people, it’s worth the effort. If not straight from high school, how do nontraditional students get started on their college degrees? Here are a couple of ideas.

What college will work for me?

The nonprofit education organization ACT, maker of the college entrance exam by the same name, has a checklist of 11 items for prospective college students to consider when choosing a college. The checklist is geared more toward the traditional college-bound high school senior, but many items are still relevant to nontraditional students working on their degrees across the years, colleges, and even states. Here are a few, with a nontraditional student twist:

  • Academics, particularly the programs, majors, and courses you need to stay on your degree track
  • Admission and transfer-admission requirements, and transfer policy
  • Total Costs: tuition, fees, books, transportation
  • Financial aid (who will give you the most?)
  • School size (can you get the personalized academic guidance and support you need to succeed, especially if you’re transferring in?)
  • Location (is it convenient for you?)
  • Housing for independent students if you need it
  • Facilities: certainly academic, maybe recreational, but also practical (is there a daycare center?)

Based on Catherine’s story in the AP article, it sounds like a checklist specifically for nontraditional students would also include:

  • Powerful belief in both oneself and the value of a good education
  • Determination
  • Support from family and friends
  • Stick-to-it-iveness: the ability to persevere against the odds

How do I get financial aid?

You start with the Free Application for Federal Student Aid (FAFSA). A new and improved one is being released in stages and the FAFSA for the 2010-2011 school year will be available on January 1st. Submitting a FAFSA is required in order for you to get a Pell Grant.

In the meantime, try the FAFSA4caster on Federal Student Aid website. This little calculator, a sort of mini-FAFSA, allows you to plug in some of the information you’ll need to put on the FAFSA, including the school(s) you’re considering. The FAFSA4caster then gives you an estimate of your Expected Family Contribution (EFC) and your financial aid eligibility. It may be only the beginning of your journey to get your college degree, but a single step, or two, or three, can be a good start.

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New FAFSA: Latest Update

One enhancement of the new FAFSA that we’ve heard a lot about is the ability to electronically import your latest tax return data directly from the IRS website into your online FAFSA, replacing tax questions you would have had to fill in by hand. The electronic retrieval of IRS information is scheduled to begin in January 2010, but Stuart, an EducationGrant reader, pointed out that I was incorrect in some important details, and he was right. A little more research led me to information from the National Association of Student Financial Aid Administrators about how this new technology is going to work. For starters, it’s going to be rolled out in stages (which seems like a sensible plan).

At first, the new IRS information retrieval feature will only work for importing 2008 tax return data into a 2009-2010 online FAFSA, and the retrieval technology itself will not be available until late January 2010, rather than January 1st.

Once the IRS info retrieval function is fully tested and proves to work successfully, then importing 2009 tax return data into a 2010-2011 FAFSA may begin sometime in the summer of 2010.

The NASFAA stated that the IRS Data Retrieval process will be available to dependent and independent student who are 2009-2010 FAFSA-on-the-Web applicants, and the parents of dependent applicants, who meet all of these criteria:

  • You must be filing an initial or renewal 2009-2010 FAFSA (IRS Data Retrieval will not be available for corrections entry for 2009-2010)
  • You must have a PIN, which is required to access tax information on the IRS database, as well as to sign and submit the FAFSA online. (Any student or parent who does not have a PIN will get the opportunity to apply for a PIN and use it immediately to both transfer IRS data and submit the FAFSA, but to prevent glitches, it’s faster to get your PIN ahead of time.)
  • You must have a valid Social Security Number (SSN)
  • You must have filed a 2008 federal tax return
  • Your marital status has not changed since December 31, 2008

Other changes to the FAFSA, such as a streamlined form, the ability to skip questions that don’t apply to you, and instant estimates of Pell Grant eligibility, should be available even in the 2009-2010 FAFSA in January.

Here’s a quick look at the current (2009-2010) and new (2010-2011) online FAFSA forms, from the U.S. Department of Education’s Federal Student Aid Annual Report (FY 2009):
2010-2011 fafsa sm3

Stay tuned to EducationGrant for more updates on the new FAFSA over the next several months, and in the meantime, thanks to Stuart for the IRS retrieval clarification.

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iStock_000005608156XSM_momgirlEducationGrant often hears from single moms who are looking for ideas about going back to school and the financial aid that can help them accomplish this goal. It’s inspiring to see how many single moms are determined to get the higher education they need to create a better quality of life for their families!

Single moms have many factors to balance when it comes to going back to school: scheduling, child care, transportation, time management, college tuition and fees, money for schoolbooks, and keeping children fed, clean, and rested while mothers work, study, or both. (Not sure how they do it all!) It won’t come as a surprise to any single mother that money, or the lack of it, is the biggest worry that most single moms deal with every day. So going back to school can feel like a Catch-22. To earn more money and make your family financially stable, it helps to have a quality college degree. But to get the college degree, you need money.

Even still, finding financial aid isn’t always the first necessity in ideas for single moms going back to school. Another important goal, especially in this bleak economy, is to NOT end up with a lifelong mountain of student loan debt after you’ve graduated.

Are you determined to get your college degree? Here are some ideas on how to get started:

1) Choose a realistic education goal. Are you going back to school so you can qualify for a particular job or change your career? What’s the average pay for the new career? (How about the pay for an entry-level worker?!) Will this industry still need workers once you’ve graduated?

2) Comparison-shop for the best accredited school and program for your needs. When considering schools, keep these factors in mind:

  • Where is the school? Can you get to its campus easily by public transportation if you don’t have a car? How long is your commute?
  • How much time on campus will the program require? Will you be able to get child care to cover the time you want to devote to your classes and schoolwork? (Besides federal financial aid, look for grants and scholarships that provide funding for child care and other living expenses.)
  • Would an accredited online program work better for you?
  • Is there an admissions representative at the school that can tell you about the program and what it will require from you?
  • How much does the program cost? What fees are there in addition to tuition?
  • Is there a financial aid officer who can walk you through the financial aid process? Does the school have education grants for single moms? (If not, maybe consider a different school.)

3) Fill out the Free Application for Federal Student Aid (FAFSA).

  • This application opens the door to all federal financial aid, such as Pell Grants and low-cost student loans, as well as single mom education grants from individual schools and states.
  • Federal and state financial aid can be used for any accredited higher education program registered with the U.S. Department of Education as a “Title IV” school. These include community colleges, state universities, and online programs in addition to traditional 4-year schools.
  • You don’t need to be accepted or enrolled in a school before you submit your FAFSA. All you have to do is list the school(s) you’ve applied to. You’ll get a report back that tells you how much money you’ll be expected to contribute to your degree costs, and the school(s) will use that number to determine how much financial aid they can offer you. If you qualify for a Pell Grant, you’ll get one automatically.

4) Consider choosing the school that will allow you to graduate with the least amount of debt.

Single mothers do it all, and both the news and personal family histories are filled with countless stories of single moms whose children remember and honor them as role models and heroes. A college degree may be your ticket to the quality of life you want your children to have, but only if it doesn’t leave you worse off financially than you were before.

For more college planning details, see the earlier blog-post, How to Prepare for the FAFSA: 3 Pre-FAFSA Steps. You can also find more information about the FAFSA, scholarships for single moms, scholarships for women, adult learning scholarships, and low-cost student loans in earlier blog posts and the grants, loans, and scholarship pages in this site.

And if you have other tips and ideas for single moms going back to school, please share them here in the comments. The very best advisors for single moms are… other single moms!

Check out Grants for Single Mothers too!

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If you’re wondering if you can get financial aid for an online learning program, you’ll be glad to know the process is no different from getting financial aid for a traditional college program.

iStock_000006140971XSM_money-laptopThese days, with well over 3 million students enrolled in online education, the same rules, recommendations, and procedures apply to financial aid eligibility whether you’re taking your classes online or on campus. Federal financial aid for both online learning and campus-based programs begin with accreditation and the FAFSA.

Legitimate Regional or National Accreditation Required

Under Title IV of the Higher Education Act of 1965, any higher education institution that wants to be able to provide federal financial aid to its students must be accredited by an authorized, legitimate accrediting agency. When schools with online degree programs began asking to participate in the federal financial aid program, the Department of Education decided to require the same accreditation standards of online learning programs that it already requires of traditional “bricks and mortar” schools.

So now, the focus is on the quality and accreditation of an online learning program, rather than its computer vs. campus classroom. Higher education experts have agreed that if the quality of a school and its online degree program(s) are high enough to earn the same legitimate accreditation as campus schools, they should be allowed to provide federal financial to their students.

5 Tips for Getting Financial Aid for an Online Learning Program

1. Look for legitimate accreditation. Confirm that your school and online degree program are accredited by an authorized accrediting agency. Check the Department of Education site for authorized accreditors and the Council of Higher Education for your school’s accreditor.

2. Choose a school in your state. Online or campus, college programs are usually much less expensive for state residents than for out-of-state students. Even if you’re choosing an online degree program to avoid the hassle of having to get to a campus, your online learning course will probably cost less if you enroll in a school in your state. You’ll have the convenience of an online learning program and you’ll save money on tuition.

3. Choose an online learning program offered by a traditional “bricks-and-mortar” school. A reputable school that’s been around a long time, with a traditional campus, is usually accredited by one of the 6 regional accrediting agencies, and regional accreditation pretty much guarantees federal financial aid. What’s more, after you complete your online learning degree, your school’s name and reputation will serve as “brand recognition” when you’re job-hunting. (The oldest and best-known national accreditor specifically of online schools and degree programs is the Distance Education and Training Council.)

4. Ask about extra fees, state grants, and school scholarships. When you’ve found an online learning program that you like, ask the school’s admissions office for an explanation of all the fees and expenses they’re going to charge you in addition to tuition. Schools consider some fees and expenses as extras even if they’re directly related to the class and seem as though they ought to be included in tuition. Also ask the admissions office where you can apply for state education grants and special school scholarships that you may qualify for.

5. File a FAFSA as soon as you can after January 1st for financial aid to cover online learning programs from July 1st of the same year through June 30th of the year after.

Online Learning vs. Campus Costs

Tuition for online degree programs is not necessarily cheaper than that of their on-campus counterparts, especially at well-known colleges and universities. But the convenience of your personal classroom at home could save you transportation money, and doing your classwork on your own schedule may prevent you from having to cut into your hours at work. And if your school is legitimately accredited, then you should be able to get in-state residency discounts and federal financial aid for your online learning program just as you could for any similar campus class.

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Single Mom Scholarships

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Even with just a quick look at the news it’s easy to see that college classes are filling up with record numbers of students this fall, and single moms are among them. Both campus and online colleges from coast to coast are bursting with enrollment, despite an increased need for financial aid.

Fortunately, the large number of older, “non-traditional” college students is beginning to get more attention these days, and student aid providers are creating more financial aid opportunities tailored to students in special circumstances. Single mom scholarships fall into this category of financial aid.

Before applying for scholarships, however, be sure to thoroughly read our section on scholarships for moms scams. Unfortunately, the business of scholarships is peppered with a couple organizations who use deceit and false promises to take money from vulnerable or unsuspecting moms.

leisure activitySingle Mom Scholarships Start with Federal Education Grants

If you’re a single mom returning to school to pursue your first college degree or career certification, and you’re within a certain income range, you’ll almost certainly qualify for need-based federal education grants such as the Pell Grant. Grants, unlike student loans, do not need to be repaid, and they’re not age-restricted. The money you’ll qualify for will depend on what year you’re in in your program and how many dependents you’re supporting, along with meeting other basic eligibility requirements.

There are federal education grants for single mothers also. To apply for these grants, you must go to the federal Student Aid on the Web site and file a FAFSA:

  • Pell Grant
  • Federal Supplemental Education Opportunity Grant (FSEOG)
  • Academic Competitive Grant (ACG)
  • National SMART Grant
  • TEACH Grant

State Financial Aid Agencies Also Offer Single Mom Scholarships

Most, if not all, states also offer scholarships reserved for women and single parents. Different states have financial aid programs customized with their own eligibility requirements, grant amounts, and application procedures. Find your state higher education agency at this site and see what single mom scholarship programs they offer.

Keep in mind that single mom scholarships (and single dad scholarships) are going to be need-based. All scholarships of this type will ask for proof of financial need and may also ask for proof of your being the custodial parent. Many will require you to file a FAFSA (see above).

In many cases, state single mom scholarships will actually be offered through a college or university system in the state. In addition to contacting your state higher education agency, you should contact the financial aid office of the school you want to enroll in and ask if the school offers single mom scholarships or grants.

A few examples of state and school financial aid programs for single parents include:

Single Mom Scholarships from Private Foundations & Organizations

A wide range of philanthropic and corporate foundations provide scholarships for single parents. Like the state and school scholarships above, these programs may be getting ready to open their new application season. Check their websites to see when their 2010-2011 scholarship applications will be available:

Single Mom Scholarships are a Win-Win Investment

Officials from the federal level all the way down to your town council know that helping you get valuable higher education now is a way of “paying it forward”: If your college degree or career training helps you ensure financial stability and a better life for you and your family, everyone benefits – your community, our larger society, and you.

Still not sure how to get started with finding Financial Aid? Start here:

1) 4 Ideas for Single Moms Going Back to School offers a basic back-to-college plan.

2) How to Prepare for the FAFSA: 3 Pre-FAFSA Steps provides a basic introduction to the Federal Application for Pell Grants and other federal financial aid.

3) The EducationGrant Guide to Grants & Scholarships has tips and information on:

  • Understanding the difference between grants and scholarships
  • How to apply for Pell Grants and other federal financial aid
  • Searching for state and private grants and scholarships appropriate for you
  • Some characteristics of successful applications for state and private grants and scholarships
  • Websites and addresses for more than 80 scholarships, so you can contact them

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“So education is the key. It is the key to all the important progress this Nation is going to make in the future.” —Senator Edward M. Kennedy, U.S. Senate speech, July 2007, supporting the College Cost Reduction and Access Act

Ted_KennedyBorn into easy wealth and privilege, Senator Ted Kennedy dedicated his long career to working on behalf of the underdog and the common man. The goal of each piece of legislation he wrote or cosponsored was to level the playing field for those at a disadvantage, whether it was societal, physical, or financial. Securing federal funding so that non-wealthy students could get money for college tuition was just one element of an education policy he promoted and sustained for more than 45 years.

Senator Kennedy repeatedly identified education as “the pathway to progress and prosperity” and essential to the achievement of the “American Dream” — but he also saw how the high cost of college put earning a degree out of reach for many Americans. From the Higher Education Act of 1965 onwards, he worked relentlessly to make federal money for college tuition available to anyone who needed assistance. Millions of students have achieved college degrees with the help of the financial aid programs created and preserved by the senator and his like-minded legislative colleagues.

One of Senator Kennedy’s contributions to financial aid development will sound familiar to many students: in 1972, he supported Senator Claiborne Pell’s creation of today’s best known education grant for college, the Pell Grant.

In 1993, the senator helped to establish the Direct Lending program, an alternative to the FFEL student loan program. In the FFEL program, a third party such as a banking institution is the student loan lender. In the Direct Lending program, the U.S. Treasury is the lender. As of 2009, more than 12 million students have paid for college with low-cost direct loans. In 2008, when the credit crisis began to affect private loan availability, the potential advantages of the Direct Lending program became a little more visible.

Always aware that the money required for college tuition was surging upwards with every September, Senator Kennedy defended federal financial aid year after year. In 2007, he shepherded the successful passage of the College Cost Reduction and Access Act, authorizing the largest increase in student aid since the original GI Bill in 1944. Among other benefits, the CCRAA increased the maximum Pell grant, halved interest rates on subsidized student loans, and changed student loan debt repayment so that it was based on income rather than remaining debt.

The 2007 CCRAA led the way to more financial aid improvements in 2008, when Senator Kennedy worked with Senator Mike Enzi of Wyoming to pass the Higher Education Opportunity Act. The HEOA authorized simplifying the FAFSA, preventing unethical practices in the private student loan industry, and increasing federal money for college tuition for students with the greatest financial need, members of the military, and students with disabilities.

These are just a few of the ways that Senator Kennedy tried to support Americans seeking a college degree. But not everyone agrees with the senator that increasing federal financial aid is the best way to help non-wealthy students find money for college tuition. It often appears that with every increase in federal financial aid, most schools raise their tuition and the effect of the federal assistance is lost. A demand for college accountability is growing — a measure other than the annual “Best Colleges” rankings by which students and families can more realistically determine whether a school is worth its sticker price. Stay tuned for future posts about the subject of controlling tuition growth.

For now, one of education’s greatest legislative champions is gone. There are many other legislators just as dedicated to the education ideal, but none as influential. It will be up to students, families, and all those who believe in the value of a quality education to ensure that college costs and the money for college tuition stay within reach for anyone seeking a degree.

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One thing that has never been said about the federal financial aid system is that understanding it is a piece of cake. If you have ever had to fill out a FAFSA, you already know that your first college challenge is figuring out how to get money for your tuition from the feds. If this is you, you’ll be glad to hear that it may be possible to change big bureaucracy after all.

On July 21st, the U.S. House of Representatives will discuss the new Student Aid and Fiscal Responsibility Act, which the Hon. George Miller (D-CA), Chairman of the House Committee on Education & Labor, introduced last week. The SAFRA, as it’s already being referred to, contains sweeping changes to the ways federal money for education is allocated and managed. Theoretically, some of the changes would free up funds to pay for all the others, which means that the reorganization would cost us taxpayers nothing.

The new legislation also reemphasizes the Education Department’s plan to more closely align work and higher education.

How does the SAFRA help you find money for your college tuition? There are several changes to the student aid system that will make things easier for students at both the start and the end of the financial aid timeline. SAFRA:

  • Boosts the Pell Grant maximum to $5,550 in 2010 and $6,900 by 2019. (About 6 million students received a Pell Grant in 2007-2008.) Starting in 2010, the scholarship will be linked to match rising costs-of-living by indexing it to the Consumer Price Index + 1%.
  • Lowers the interest rates on need-based (subsidized) Stafford loans, the primary federal student loan, and changes the interest rate from fixed to variable in 2012, to keep the rate low. (Nationwide, about 5.5 million students take out Stafford loans each year.)
  • Increases access to the Perkins Loan program by expanding it to every U.S. college campus. (Last year approximately 495,000 students received a Perkins Loan.)
  • Follows through on simplifying the FAFSA, cutting down the number of questions on the form by allowing students and families to use their tax return information. (In 2003-2004, over 1.5 million college students who likely were eligible to receive Pell Grants didn’t apply for financial aid because they found the FAFSA form too confusing.)
  • Converts all new federal student loans to the Direct Loan program. Beginning July 1, 2010, all new federal student loans will be originated through the Direct Loan program, instead of through lenders subsidized by taxpayers in the federally-guaranteed FFEL student loan program. Unlike the lender-based program, the Direct Loan program is entirely insulated from market swings and can therefore guarantee students access to low-cost federal college loans, in any economy. Having the feds provide the money for and set interest rates on federal student loans also removes any potential for conflicts of interest between lenders and colleges.
  • Uses a competitive bidding process to select private loan servicers based on how well they serve borrowers, educate them financially, and prevent loan defaults. The Education Department wants to acknowledge private lenders for their customer service effort and create a new public-private partnership that would sustain it.
  • Invests $1.2 billion in Historically Black Colleges and Universities and Minority-Serving Institutions to provide students with the support they need to stay in school and graduate, and invests $3 billion to increase college access and completion support programs for students. There’s also more funding for the College Access Challenge Grant program, and for state and college programs to increase financial literacy and student retention.

In short, SAFRA makes much more federal money for tuition available, makes it easier to apply for, insulates it a little better from roller-coastery financial markets, and makes repaying it a little less painful (if the legislation survives the House and Senate mostly intact, that is). What’s not to like?

The United States Student Association, a longstanding advocate for college students, gave Mr. Miller’s bill an A+: Students Thrilled with Student Aid Reform Bill. In a previous statement about the substantial budget investments targeted for higher education, USSA President Carmen Berkley commented, “Funding for these programs is important not only for the financial health of the country, but because everyone has the right to an affordable college education.” (Don’t miss USSA’s press release today, which summarizes data from a new report on the Direct Loan program.)

Stay tuned to EducationGrant.com as we follow the coming House and Senate debates about the SAFRA. Sometimes criticism and debate uncover genuine problems with a plan; other times, they are just a lot of posturing and hot air. There is good intent in Mr. Miller’s bill, and so far, the Congressional Budget Office says it will pay for itself. If it becomes law, the process of getting money for tuition from the feds may become a little more user-friendly.

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