April 23, 2009
How Much Can I Borrow?
The yearly limit on a Parent PLUS Loan is equal to the cost of attendance minus any other financial aid received. If the students cost of attendance is $15,000, for example, and they receive $8,000 in other financial aid, you can borrow up to $7,000 to bridge the gap.
When Do I Begin Repaying My Parent Plus Loan?
For Plus loans made to parents on or after July 1, 2008, the borrower has the option of beginning the repayment period 60 days after the loan has been fully dispersed or waiting until six months after the student ceases to be enrolled on at least a half-time basis.
For parents who took out a loan prior to July 1, 2008 you do not have an option I’m afraid. The repayment period, as you already know, automatically kicked in 60 days after the loan was fully dispersed. Still, you may file for an economic hardship deferment or forbearance with your lender if needed as you do have three years worth of deferment benefits.
March 13, 2009
Student Loan Forgivenes as of Feb. 2009
Last month, the federal Dept. of Education released new guidelines about qualifying for Public Service student loan forgiveness program.
Eligibility Requirements:
- 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.
Eligible jobs:
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
Obama proposes to end federal lending through banks
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
Stimulus bill – the final version
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 9, 2009
Lost your job? Paying for your kid’s education? You need to watch this.
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?
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.
- The determination of homelessness can be made by one of three legal entities:
January 22, 2009
President’s official higher education agenda
There’s no change to report in President Obama’s agenda from what it was 3 days ago on hi campaign website, but I thought I should point out that his higher education agenda is now official and listed on the White House’s website:
- Create the American Opportunity Tax Credit: Obama and Biden will make college affordable for all Americans by creating a new American Opportunity Tax Credit. This universal and fully refundable credit will ensure that the first $4,000 of a college education is completely free for most Americans, and will cover two-thirds the cost of tuition at the average public college or university and make community college tuition completely free for most students. Recipients of the credit will be required to conduct 100 hours of community service.
- Simplify the Application Process for Financial Aid: Obama and Biden will streamline the financial aid process by eliminating the current federal financial aid application and enabling families to apply simply by checking a box on their tax form, authorizing their tax information to be used, and eliminating the need for a separate application.
December 12, 2008
PBS Online Newshour – 2 specials on the risign cost of colleges
This is must-read stuff for those of you struggling to pay, or those of you preparing to pay in the near future.
- Part 1:
Rising Tuition, Credit Crunch Threaten Affordability of Higher Education -“A new study on American higher education gave all but one state a failing grade on affordability, and warned that college could soon be out of reach for most Americans.” - Part 2:
Colleges Students Squeezed by Rising Costs, Less Aid -“More college students and their families are struggling to afford tuition at public institutions due to increasing costs and state funding cuts in education. John Tulenko of Learning Matters Television takes a look at the impact of rising higher education costs in the second of a two-part series.”
October 30, 2008
Presidential Candidate’s Higher Education Plans
With the election only days away, here is a very interesting article from the New York Times outlining both Obama and McCain’s plans for higher education.
Here’s an excerpt:
He is calling for a $4,000 tax credit for tuition, which would mostly benefit middle-class families rather than low-income students who struggle the most with tuition increases and loan repayment. Recipients of the tax credit would have to perform 100 hours of community service. And it is not clear if Congress, in the current economy, would have the desire to enact the tuition tax credit, which would cost the Treasury an estimated $10 billion.
“Whoever wins will not have any money to do anything new,” said Thomas G. Mortenson, a longtime independent analyst of student financial aid programs.
As president, Mr. McCain would take a bully pulpit approach to student aid, aides say. Rather than propose any new federal money, he would jawbone and publicly try to coax colleges to slow their rate of tuition increases, using the federal tax exemptions they receive as leverage. He also would press for a more robust student loan market, with flexible payment options and more competition in the hope of lowering interest rates.
Mr. McCain is also calling for the Pell Grant, which assists low-income students, to be high enough to cover in-state undergraduate tuition. The maximum Pell Grant award is $4,731 a year; average in-state tuition and required fees in 2007-8 was $5,749.
Mr. McCain, however, has not proposed any new money for the Pell program; Mr. Obama has proposed an additional $1.5 billion in Pell Grants. The program now receives about $16 billion a year.
“I have a feeling that for both candidates, their proposals will be a work in progress, and the best road ahead won’t be clear until the dust settles on the credit market situation,” said Becky Timmons, who helps oversee federal student aid issues at the American Council on Education, an umbrella group of colleges. “Given the economic situation, we assume there will be a lot more demand for aid and loans.”
Student Loan Info for Parents 