February 27, 2009

Obama proposes to end federal lending through banks

Posted in Parent PLUS Loans, Saving for College, Stafford Loans, Student Loan News, The Financial Aid Process at 2:32 PM by Joe From Boston

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 20, 2009

Have You Filed Your FAFSA?

Posted in FAFSA at 9:12 AM by Joe From Boston

It’s late Febrauray – have you filed your FAFSA yet?


What on earth on you waiting for?!??  Get that thing done now!  Deadlines are looming!

Remember, financial aid is first-come, first-served, so you should have done it by now.  It’s NOT  like taxes, where you file at any time with the same result.

Don’t have all your tax info handy?  That’s fine – estimate based on your paystubbs, W-2, 1099s, etc.  File now, then file an amendment in a few weeks when you have everything on hand.  Just get it done!

February 17, 2009

Stimulus bill – the final version

Posted in Graduate Students, Grants, Legislation Affecting Students, Parent PLUS Loans, Scholarships, Stafford Loans, Student Loan News, The Financial Aid Process tagged at 2:26 PM by Joe From Boston

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.

February 11, 2009

MTV aims for financial literacy amongst college kids

Posted in Misc at 2:59 PM by Joe From Boston

This is something I never thought I’d write about, but I am so happy to see this – MTV is trying to get young folks to understand financial literacy, and perhaps more importantly, to understand why financial literacy is so important.

To do so, they’ve started a new web site, www.InDebtEd.com.

Here, college kids and young adults can learn about personal debt, the dangers of the worry-about-it-later credit card habit, and even learn about how badly our government is indebt.

Did you know

  • you shoulder $184,000 of government debt?  And so does every other American.
  • 71% of last year’s federal budget went to a few key necessities such as defense, medicare, Medicaid and social security.
  • “Spending on all other programs—including education, transportation, science and research, law enforcement, and programs that protect our environment and help the poor—represented only 29%.”
  • college tuition is currently DOUBLE what it was in 1980

I feel it is vital that our young people learn financial literacy.  I’m 29 and even growing up the daughter of 2 finance majors, I didn’t feel prepared when I started living on my own.  Kids just aren’t taught fiscal responsibility.

So kudos to MTV for taking action!

February 9, 2009

Lost your job? Paying for your kid’s education? You need to watch this.

Posted in FAFSA, Parent PLUS Loans, Scholarships, Stafford Loans, Student Loan News, The Financial Aid Process at 6:58 AM by Joe From Boston

Lost your job? You’re not alone. Obviously, you can no longer afford what you previously expected to afford. So what can you do?

My co-worker, Chris Penn was on CNBC last night discussing this exact topic. Watch this video and start moving!


February 6, 2009

Are you an independent student?

Posted in FAFSA, Graduate Students, Grants, Parent PLUS Loans, Saving for College, Stafford Loans, Student Loan News, The Financial Aid Process at 8:23 AM by Joe From Boston

Independent students receive consideration for more financial aid as it’s assumed they have no parents or family to help support them. The Department of Education has its own criteria about who is or is not an independent student, and answering these questions helps determine your status.

Claiming on yourself as an independent on your taxes DOES NOT COUNT.

If you answer Yes to any of these questions, then you will be considered independent, however you may have to provide additional documentation to verify your claim.

  • Are you 24 or older?
  • Are you married?
  • Are you pursuing an advanced degree?(e.g. Masters, PhD)
  • Are you active duty military or a veteran?
    • Reservists who have never served on active duty do not qualify
  • Do you have a child and provide at least half their support?
  • Do you provide someone else with at least half their support? For example, taking care of an elderly relative?
    • Just being roommates doesn’t count. You have to support them financially.
  • Were you a foster child or ward of the court after the age of 13?
  • Were you legally emancipated?
    • “Emancipated minor” is a formal legal status that must be declared by a court of law. Simply moving out of your parents’ household does not count. A judge must legally declare you emancipated. The court order must still be in effect at the time you file your FAFSA.
  • Are you in legal guardianship as determined by a court?
    • Like legally emancipated, this is a formal legal judgment by a court of law.
  • Are you homeless or at risk of being homeless?
    • The determination of homelessness can be made by one of three legal entities:
      • A high school or school district liaison.
      • A director of an accredited HUD homeless shelter
      • A director of a runaway/transitional living program or homeless youth basic shelter.
    • Homeless is strictly defined as lacking fixed, regular, adequate housing. This includes living in shelters, hotels, cars, or couchsurfing anywhere you can.
    • Unaccompanied means that you’re not in the physical custody or care of a parent or guardian. This status only applies to students under the age of 21.
    • This question adds an additional twist. A director of a runaway or homeless shelter can make the determination that you are self-supporting and at risk of being homeless, which means you’re living on your own, paying your own way, and are at risk of homelessness.
    • You will need to provide documentation of your homelessness from any of the entities listed above.

February 2, 2009

Economic Stimulus Bill Update

Posted in Grants, Legislation Affecting Students, Stafford Loans, Student Loan News, The Financial Aid Process tagged , , , , , at 8:09 AM by Joe From Boston

Last week the House of Representatives passed the economic stimulus bill.  In their version, the Pell grant would increase and the Stafford loan borrowing limits would increase by $2000 per year.

The Senate is set to vote on the bill next week.  In the meantime, they’re reconciling their version of the bill which does not have the Stafford Loan increases.

Opponents say the increases will lead colleges to raise tuition even further; proponents say that higher federal loan limits would lower the amount of private loans taken out for college.