Purchase my Parents Countdown to College Toolkit
The college tuition system has been turned upside down now that the Student Aid and Fiscal Responsibility Act (SAFRA) is law. The Student Aid and Fisc-huh?!?
SAFRA is legislation President Obama tacked on to his infamous health care reform bill.
“The White House succeeded in not only getting the health care bill passed, but in making a huge change to the college loan system,” says Eric Yaverbaum, education expert and author of Life’s Little College Admissions Insights. “It’s gone largely unnoticed because it’s seemingly unrelated to the blockbuster changes in the health care industry.”
There’s been some controversy surrounding the issue of combining student aid reform with the seemingly unrelated matter of health care reform. But political views aside, let’s see how SAFRA affects students:
No. 1: You’ll get loans directly from the government — without a middleman. While some schools have participated in the Federal Direct Loan Program since its inception in the early ’90s, SAFRA requires that all federal student loans now be originated through the U.S. Department of Education. This means funds come directly from the federal government, which provides the loans at a low interest rate.
“It’s so advantageous to students,” says Yaverbaum. “My daughter is about to enter her freshman year, and as a parent I couldn’t be more excited about it. College students are really going to benefit. Paying back college loans kills kids forever. Now it doesn’t have to be such an awful experience.”
Your credit score and employment status are not factored into your application for a direct loan … unless you have extreme adverse credit (say, your car got repossessed or you’re more than 90 days past due on that Urban Outfitters account). If you get denied, you can appeal or get a qualified co-signer.
No matter where you are in the borrowing process, visit StudentLoans.gov to find out if you qualify for one of the four types of Federal Direct Loans:
1. Federal Direct Subsidized Stafford Loans are based on financial need. The government pays the loan interest until you’re out of school.
2. Federal Direct Unsubsidized Stafford Loans are not need-based, and students are required to pay all interest charges.
3. Federal Direct Parent PLUS Loans (“PLUS” stands for “Parent Loans for Undergraduate Students”) allow parents to borrow money to help pay for their child’s education.
4. Federal Direct Graduate PLUS Loans offer the same terms as Parent PLUS for graduate and professional-degree students.
No. 2: You can consolidate loans you already have. Federally guaranteed student loans will no longer be made by private lending institutions through what many of you already know as the Federal Family Education Loan (FFEL) Program.
What to do if you have an existing FFEL loan? For a one-year stretch — from July 1, 2010 to July 1, 2011 — current students who have FFEL loans can roll those into the Direct Loan program. The benefit is that you’ll only have to deal with a single lender (the Direct Loan Servicing Center) which means paying one monthly payment for all loans. Plus, your minimum monthly payment on a consolidated loan may be lower than the combined payments for FFEL loans.
No. 3: You’ll pay back less per month (and overall) and be done in fewer years.
Carrie Meyer, a rising senior at Ohio State University, has had to rely on three loans to cover her college tuition over the years: federal subsidized, federal unsubsidized and a personal loan. Meyer, a hospitality management student who currently works part time, still worries about paying off her loans after graduation: “With what I want to do, you don’t start out getting a big salary.”
Direct Loan borrowers can choose from several friendly payment plans, depending on needs — and you can switch to a different repayment plan if your situation changes. Beginning in 2014, the Income Based Repayment option will cap monthly loan payments at 10 percent of income and forgive remaining balances after 20 years of repayment. Sound like a lot? Actually, this is a major improvement from the current terms of capping repayments at 15 percent and 25 years, respectively.
No. 4: You could save big-time on loan payments if you go into public service.
Public Service Loan Forgiveness provides incentive for students to enter into full-time public service employment. The program forgives the remaining balance of a Direct Loan after a borrower has completed 120 monthly payments (that’s 10 years) while employed full time in public service. This includes government jobs, military service, safety professions, law enforcement, health care, social work, legal advocacy and some teaching positions.
No. 5: Maximum Pell Grant amounts will increase with inflation.
While SAFRA does not change the process for applying for federal grants, it does increase the amount of money awarded through the ever-popular Pell Grant program, which provides financial aid to low-income undergraduate students. For the 2009 to 2010 school year, the maximum Pell Grant was $5,350. The max will be upped to $5,550 for 2010 to 2011 and will gradually increase based on inflation costs beginning in 2013.
Students interested in applying for aid should complete a Free Application for Federal Student Aid at Fafsa.ed.gov or call 1-800-4-FED-AID. Keep in mind that this is not a one-time thing — students who want to be considered need to apply for aid for every school year, so it’s important to stay on top of application procedures.
A recent report released by the College Board found that millions in financial aid are left untouched by community college students. In the 2007 to 2008 academic year, 58 percent of Pell Grant-eligible students who attended community colleges applied for federal financial aid, compared with 77 percent of eligible students at four-year public institutions.
No. 6: Community colleges and minority schools will get big bucks for improvements.
Says College Board President Gaston Caperton: “Community colleges are a critical part of the education system, serving nearly half of all undergraduates in the United States.” The terms of SAFRA reflect this sentiment, as $2 billion is being committed to improving educational programs and updating facilities at community colleges. In addition, SAFRA has earmarked $2.55 billion to be invested in historically black and minority institutions.
Talk It up!
What do you think about SAFRA and its impact on the college student aid system?
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This article is by the editors at The Real College Guide. This article is made available to Parents Countdown to College Coach through a partnership with The Real College Guide.
It’s been in the news lately and it came up in a #CollegeBound chat yesterday: graduating with too much student loan debt. I wanted to lend my voice to the topic today and give parents something to think about and use in the future.
As I have said previously, I have a unique perspective in the college admissions process. As a parent, I’ve experienced all the frustration first-hand: the decisions about choices, the dilemma over financing, and the anxiety related to waiting for the final decisions. Something I haven’t talked about is how to handle making the final college choice when the acceptance letters and financial aid packages arrive. This can make a difference in the amount of debt your child graduates with and how it affects their life after college. Especially if you are unable to contribute to financing that education.
Case in point: my daughter’s decision to attend her “plan B or 2nd choice” college. After being accepted to her 1st choice/reach school, we waited for the financial aid award to arrive. In the meantime, awards from the other colleges she had applied to filtered in. She was offered a full-ride scholarship at one school, 80% of her financial need was met at two of the other colleges with grants and scholarships, and some small grants and loans from the rest of her college choices. Her 1st choice college met 0% of her financial need. Her heart was broken.
Here is where parenting comes into play. She wanted to attend her 1st choice college–her heart was set on it. She had been dreaming of it her whole life and any other option was out of the question. But, in order to attend, it would require financing the expensive education with loans (student and parent). While every fiber in me wanted to say YES, my common sense knew it would be a financial disaster. I sat her down, explained why she couldn’t go to her dream college, and she listened (while crying, of course). It might have broken both our hearts at the time, but it was the BEST decision for her in the long run.
To make a long story short, she fell in love with her Plan B college. It was smaller and offered a much better environment for her academically and socially. Most importantly, the college WANTED HER; as evidenced by their willingness to give her financial aid. They valued her contribution to the student body and from the moment she set foot on campus, she felt wanted. But the real payoff came when she graduated with only a small amount of college debt, being able to easily pay back the consolidated loans. Had she attended her 1st choice college, she would have graduated with close to $100,000 in debt, burdening her for years.
The bottom line:
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Choices. Choices. Choices.
Checking the “no financial aid needed” box
Last week, while participating in a #CampusChat on Twitter a question was asked by a parent about college financial aid. Since none of us participating were sure of the correct answer, I wanted to provide the parent with the correct answer and get some clarification myself on the subject.
Question: If you check the box that says, “no financial aid needed” on the college application, does it improve your chances for acceptance?
I immediately sought the answer from the two admissions representatives I have connections with on Twitter: Chip Timmons (@ChipTimmons) of Wabash College and Gil Rogers (@GilRogers) of the University of New Haven.
Chip responded by saying, “If the student is on the margin it may help provided they are prepared academically (i.e demanding curriculum, strong in high school). My guess is more schools are going to take that into consideration in the coming years as it gets tougher to fill classes”.
Gil responded by saying, “Not at the University of New Haven. With that said, at some schools it may if the student is on the wait list and the school is trying to control discounting.”
If you weigh both these responses, it appears that it’s not a determining factor unless other considerations are in place. The best advice would be to check with the colleges your teen is interested in and ask them if they use it as a factor. However, I wouldn’t plan on it being the card in your pocket to assure acceptance. And honestly, if you have a college-bound teen with an impressive high school record, you should make an attempt to get some merit aid; even if you can afford the entire tuition. It just makes sense to fill out the FAFSA and take your shot at grabbing a piece of the financial aid pie.
If you’re an admissions officer or college admissions expert, please leave your comments here and share your experience with us. We value your input.
Today I will be reviewing Lynn O’Shaughnessy’s new book: Shrinking the Cost of College–152 ways to cut the cost of a bachelors degree.
Lynn O’Shaughnessy, is an author, a college blogger and speaker. She writes about college strategies for TheCollegeSolutionBlog and CBSMoneyWatch. She gives presentations about college strategies for schools, companies and financial advisory firms. Lynn also wrote The College Solution, which is an Amazon.com bestseller.
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Using facts and figures, Lynn explains clearly and simply where college money comes from and how to maximize your efforts to get the most money for a college education.
In the introduction of her book, Lynn states:
Billions of dollars of aid are available to students who attend college. About two out of three full-time college students receive grants, otherwise known as scholarships, to attend school. At private colleges, a whopping 82% receive scholarships…Most people look in the wrong place for help when they begin contemplating the looming college tab.
Her book systematically explains how the system works and how every parent can arm their arsenal of knowledge to help find and maximize the money that is out there. At the end of each chapter is a “To Do List” to point you in the right direction and help you gather all the information necessary to make the best financial decisions. Each chapter provides tips and “bottom line” information making it easy to apply and carry out each step in the process.
Lynn explains state grants, government grants, and private college scholarships. Her explanation of financial aid and how it works makes it easy to understand the most complicated of formulas. She explains where to find the data and how to analyze it to find the colleges that will provide the maximum financial aid to your college-bound teen. As a parent, this one tip alone will make the college application process less stressful and help to ease the college sticker price fears.
And finally, she explains the financial aid award letter and what to do when the letter arrives; walking you through how to analyze the award and how to handle an appeal for more money.
Here are just 10 tips from the book that will help you shrink the cost of college:
Every parent should grab a copy of this Ebook to add to their arsenal of college information. You can also chat with Lynn live on Twitter during an upcoming #CollegeChat June 1 at 6PM PST.
As I stated last week, I love to find scholarships that DON’T require an essay. This week’s scholarship is sponsored by College Prowler.com and it’s a NO ESSAY scholarship. That’s right! All you have to do to be entered in the MONTHLY drawing is complete a short survey on their website and be a current college student or planning to enroll in college within the next 12 months.
The monthly contest begins on the first day of the month, and ends on the last day of every month. You may have one entry per month. It’s SUPER EASY and ANYONE CAN WIN!
Send your college-bound teen to CollegeProwler.com each month for a chance to win a $2000 scholarship. You might as well leverage ALL your opportunities for that FREE money!
College isn’t cheap. My College Guide has been saying that for years – 20 years to be exact! But don’t let a tiny matter like cost take your college bound hopeful off the college track! You should know that, when it comes to paying for college: you’ve got options.
Federal Loans – The Free Application for Federal Student Aid, or FAFSA, could send free college aid your family’s way! No matter what your financial situation may be, you and your teen should fill out the form, online or mail-in. Circumstances change – and colleges often require a completed FAFSA in order to consider your son or daughter for college-specific loans and scholarships!
Work — Study Programs – Sometimes nicknamed “self help aid” work-study programs are often provided by the college your teen actually wants to attend. There is a Federal Work-Study Program and state programs as well. It’s one way that your teen can help pay their way through college – and gain a little life experience in the process.
Grants and Scholarships – Simply applying to college will make your child eligible for some scholarships sponsored through the school. Of course, many scholarships are merit based. But, even if your college bound teen isn’t at the top of their class and the last sport your child played was tennis on the Wii – with the right scholarship or grant, lack of athletic or academic achievement may not matter. There are scholarships and grants out there to fit every student: no kidding. Your son or daughter can find free money to match their ethnicity, intended college major, religion, SAT scores, hobbies, and then some. Many colleges have their own specific scholarships and/or grants that cover a range of abilities and majors. To get started, have your teen sit down with their high school guidance counselor or surf the web for free money that fits!
Student Loans – There are various loan options: state, federal, and even loans from your child’s choice college. Loans do need to be paid back and there will be interest tacked on but repayments are very often deferred — at least until your child completes their college career. It’s good to know that when all else fails – there is still an option!
My College Guide has provided free college info with a 100+ page annual magazine for high achieving high school sophomores for over twenty years. We are rapidly expanding online – find us on Facebook and Twitter and say “hello!“
Are you or your spouse in the military? Do you have a family member that was a veteran of a foreign war? If so, there are scholarships available in these specific categories.
Educational benefits for families, particularly the children of deceased, MIA, POW, and disabled veterans, may be available in some states. Military.com has developed an on-line general summary of educational benefits for veterans, surviving spouses and their dependents.
Click here to learn more about State Education Benefits.
While looking for money for school many surviving spouses and their families overlook the over $300 million of military – and veteran – related scholarships and grants. These scholarships often go unclaimed.
Visit Military.com’s Scholarship Finder today and get started.
Also, don’t neglect to search in your military community. Many service aid organizations and associations, like the Navy Marine Corps Relief Society, offer scholarships, grants, and low interest loans to help cover education expenses.
Every parent frets, stresses and loses sleep over financing their college-bound teen’s college education. The good news is there is help available out there to ease your mind and get you on the right track to preparing for that day when your teen heads off to college. Here’s a list of my Top 10 College Money sites:
1. Reduce My College Costs–Marc Hill, CCPS, RFC® and founder of Reduce My College Costs, LLC. is both a financial planner and a parent, who know what you are going through. That’s why he created his firm to be a little different. It is not a scholarship search firm and not a student loan lender. He is well-versed in the financial aid process, but he knows not everyone is eligible for financial aid. So he takes a broader approach-identifying a variety of solutions that will make college more affordable for people at all income and asset levels.
2. FinAid–gives an overview of all types of college funding from scholarships, to loans, to savings, to military aid, to loans with links and information on each of them.
3, Saving for College–A top notch site explaining in great detail all the in and outs of college savings with calculators and tax information.
4. UPromise–A college savings service that harnesses the purchasing power of parents, extended family, family, and students to make it easier to pay for college. Members direct their spending to Upromise partners-including more than 600 online stores, 8,000+ restaurants, thousands of grocery and drugstore items-and earn money for college.
5. CollegeAnswer–Sallie Mae’s money management site gives an overview on college financing focusing on loans. The site provides a great School Affordability Analyzer.
6. CNN Money/College–A great site for the latest college financing news, calculators and how to maximize your financial aid.
7. MSN Money/College–A guide to saving for college with The Basics, Fast Answers and a message board.
8. CollegeBoard–The College Board’s EFC calculator which will help you determine your Expected Family Contribution BEFORE your teen starts applying to colleges.
9. Money Management 101–A blog created to help parents and students learn about money management.
10. StudentAid–A site for free information from the U.S. Department of Education and the home of the FAFSA4caster.
This week, parents and college-bound teens can attend College Week Live’s FREE virtual college fair online. On March 24-25 from 10AM-10PM you can:
If your schedule doesn’t permit you to attend, you can still log on and view the archived videos at your convenience. Make sure you and your student sign up and mark your calendars for two days of comprehensive college information gathering virtual events.
If you have a college-bound teen who is learning disabled, you will be happy to know that there are specific scholarships set aside for these type of students.
Start by looking at the Learning Disability Organizations in your home state. Those state specific college scholarships for ADHD will be less competitive than national scholarship programs as well, which makes them worth checking out even if the award amounts are small.
Another resource that students and parents seldom think about is scholarship programs that are only learned about through the Disabilities Department at the college that your teen will attend. It is vital that you check in with, and register with this department at the school, and inquire about available scholarship programs for learning disabled students when doing so.
Check into school specific college scholarships for ADHD available for learning disabled students as well. Many colleges offer at least one, if not several, ADHD scholarships for students who are learning disabled, and who will be attending that specific school, or even students enrolled in specific programs of studies – if they are learning disabled. Of course, ADHD Scholarships, although not specific, are considered learning disability scholarships as well.
Make absolutely certain that you check with vocational rehabilitation organizations or departments in your state and county as well. These organizations exist for the purpose of helping those who have been displaced or unable to work and get the educations that they need to find gainful employment – despite disabilities. Often, people mistakenly believe that these organizations only help adults who have already been in the workforce, but this isn’t true at all. They can also appraise graduating high school seniors and college students about scholarship and grant programs available for ADHD or learning disability scholarships.
Many organizations who would otherwise offer college ADHD scholarship programs for learning disabled students fail to do so because they assume that learning disabled students, such as those with ADHD will not be attending college. Today, nothing could be further from the truth, and in many cases, if you contact organizations or businesses that are related to ADHD in some way, you may find that they will help you to fund your teen’s education in some small way.
Here are just a few examples:
