September 10, 2009
The EFC, or Expected Family Contribution is the amount you and your family is expected to contribute towards college education.
The federal government gives you an official federal EFC calculation after you have complete the FAFSA form. This calculation determines family resources available from a family’s income (less allowances for taxes and living expenses) and assets (less allowances for retirement). A percentage of these available amounts are earmarked as EFC. Read more about the Cost and your EFC.
The EFC formula is used to determine the EFC and ultimately determine the need for assistance from the following types of federal student financial assistance: Federal Pell Grants, subsidized Stafford Loans (though the William D. Ford Federal Direct Loan [DL] Program or through the Federal Family Education Loan Program [FFEL]), and assistance from the “campus-based” programs—Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Perkins Loans, and Federal Work-Study (FWS).
August 28, 2009
With colleges heading back this week, you should have your financial aid already lined up, but it’s the perfect time to start planning for next year.
Let’s go over the basics:
* Fill out the FAFSA as early as you can. Financial aid is first-come, first-served so get your paperwork in early. If you ‘re waiting on a few last 1099s, use your existing paperwork to file early, and file an amendment when everything finally arrives. If you use a tax prefessionsal, they will often file the FAFSA for you for little to no additional charge.
* You need the FAFSA for all federal loans, such as Stafford, PLUS and Perkins loans. Some scholarships also require the FAFSA.
*Always exhaust your federal options first, such as Perkins, Stafford and PLUS loans, before looking at alternative sources of funding such as private loans or home equity loans. Federal student loan offer borrower incentives and protections that you will not find elsewhere.
July 1, 2009
Welcome to the next fiscal year, and along with it come some great changes for borrowers.
- The maximum Pell Grant amount increases to $5,350 for the 2009-10 school year, a 13% increase from last year.
- The fees to originate a new loan fall by half of a percentage point. Next year, it will fall by that much again. The changes will free more money for those students to use for tuition.
- “IBR” plans come into effect – income based repayment. Borrowers may be eligible to reduce their monthly payments based on their income. Also, teachers or those working in other forms of public service can reduce their payments based on their public service salary.
May 19, 2009
While this won’t help parents as it doesn’t apply to PLUS Loans, this will help your students. Starting July 1, 2009 a new Income-Based-Repayment (IBR) plan will be offered to students for Stafford, GradPLUS and Consolidation loans that are not used to pay back Parent PLUS Loans.
According to the Team FFELP IBR Workgroup, “A borrower must have a partial financial hardship to qualify for an income-based repayment plan. A borrower who at one time had a partial financial hardship, but ceases to have a partial financial hardship may remain in the IBR plan.”
Partial Financial Hardship is calculated with the equation:
Standard Payment > 15%[AGI – (150% Poverty line applicable to family size)]
This means, partial financial hardship occurs when the standard repayment plan based on a 10-year repayment period at the time the borrower initially starts repayment is greater than 15 percent of the difference between the borrower’s adjusted gross income and 150% of the poverty line for the borrower’s family size.
Family size is defined as members of your household, such as spouse, children, grandparents who live in your residence with you and receive more than half their support from you. So a parent with Alzheimer’s that you take care of would count, but a roommate would not. It does include unborn children that will be born over the next year.
To qualify, you will need to authorize your loan company to receive the current year and past 3 years worth of tax returns from the IRS using IRS Form4506-T. Contact your lender to learn more!
May 6, 2009
So it’s May, you have your award letters. You don’t get enough financial aid from any school. What now?
How about delaying admission for a year and taking some online classes to get requirements out of the way? It’s certainly cheaper than tution at your first choice university.
Yes, I know this isn’t what you want to hear. There’s been a trend recently that people are entitled to a degree where and when they choose, but the reality in these tough economic times is that we have to make hard decisions. That may include either not attending the school of your choice, or delaying admission while you take classes online or at a community college.
Seriously, you should look at this problem from a completely different angle. You have options that you likely have not considered yet.
April 1, 2009
Trust me – take 15 minutes now, before you graduate and read a little on this convenient loan repayment portal set up by the Department of Education.
Learn NOW what will happen in the coming months BEFORE you graduate. Remember, you’ve taken out loans and sworn on paper that you’ll repay, so it’s worth your time to learn about what’s ahead for you.
Also, check out this Stafford Loan exit counseling interview – if you have a Stafford loan, you’ll be required to go through exit counseling. You’ll learn about your rights & responsibilities as a borrower in the federal student loan program.
March 23, 2009
Want to do a year of service after graduation? Then you’re in luck! Americorp and other service programs are set to expand from 75,000 positions to 225,000 positions. The house passed the bill last Wednesday, and the Senate is expected to pass a nearly identical bill very soon.
In addition to doing a lot of good, you may also qualify for some help paying your student loans. Visit the Americorp website to learn more.
March 13, 2009
Last month, the federal Dept. of Education released new guidelines about qualifying for Public Service student loan forgiveness program.
- The borrower must not be in default on the loans for which forgiveness is requested.
- The borrower must be employed full time by a public service organization –
- When making the required 120 monthly loan payments (certain repayment conditions apply – see below);
- At the time the borrower applies for loan forgiveness; and
- At the time the remaining balance on the borrower’s eligible loans is forgiven.
loan repayment requirements:
- The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date
- The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans–
- Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers)
- Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers)
- Standard Repayment Plan with a 10-year repayment period
- Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period may be counted toward the required 120 payments.
The borrower must be employed full time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term “public service organization” means –
- A federal, state, local, or Tribal government organization, agency, or entity (includes most public schools, colleges anduniversities);
- A public child or family service agency;
- A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (includes most not-for-profit private schools, colleges, and universities);
- A Tribal college or university; or
- A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services –
- Emergency management;
- Military service;
- Public safety;
- Law enforcement;
- Public interest law services;
- Early childhood education (including licensed or regulated health care, Head Start, and state-funded pre-kindergarten);
- Public service for individuals with disabilities and the elderly;
- Public health (including nurses, nurse practioners, nurses in a clinical setting, and full-time professionals engaged in health care practioner occupations and health care support occupations);
- Public education;
- Public library services; and
- School library or other school-based services.
February 27, 2009
President Obama is threatening to axe the FFEL program, through which students borrow federal student loans through banks and companies such as Citibank, Discover, and Sallie Mae.
It’s important to note that this will NOT affect the 2009-2010 school, year, so stop panicking. You can panic next year.
This is the first time the FFEL program has been targeted. Bill Clinton tried to do the same thing when he was president. Approximately 40% of schools transferred to the Direct Loan program, which is where students borrow directly from the government.
There were two major problems:
1)The program began to grind to a halt under it’s own weight. Remember, government functions by getting services from the lowest bidder. So as competition started to dry up, customer service became horrendous, to the point where financial aid officers pulled their schools out of the Direct Loan program.
2)Where will the government get the money to lend? Banks are set up to lend, and usually they do – they have to to make more money. Governments don’t have the same luxury. The United States is already $10.8 TRILLION – that’s $10,800,000,000,000.00 that our government owes to other people. So where is it suddenly going to get all this money to pay schools, while it waits for students to repay?
February 17, 2009
With President Obama set to sign the bill (likely today), here’s what’s in the final draft, according to NCHelp.org:
Concerning provisions of interest to higher education and student lending, the measure would:
- Provide $15.6 billion in Pell Grant appropriations.
- Increase the maximum Pell Grant by $500 for 2009-10 for a maximum of $5,350; funding is also reflected to be sufficient to increase the maximum Pell Grant for 2010-11 by $500 to a maximum of $5,550.
- Allocate $200 million additional funding for Federal Work Study programs.
- Not subject private activity bonds issued in 2009-10 to the Alternative Minimum Tax and clarifies refunding exemption for bonds.
- Increase the Hope Scholarship tax credit and make it partially refundable (40 percent).
- Provide $74 million to the Department of Education for student aid administration and audits and investigations.
- Create a $53.6 billion state stabilization fund.
The bill does NOT include an increase in the unsubsidized Stafford loan limit.