5 Ways to Beat Student Loan Debt

5 Ways to Beat Student Loan Debt

After college, recent graduates have to face finding a new job, a place to live and a way to reconcile their new salary with the realities of paying for basic living expenses. On top of that, 69% of recent graduates had student loan debt, according to the Project on Student Debt. Furthermore, the average amount of student loan debt per graduate is $30,100.

It sounds pretty grim, but with a few changes to how you live in and out of school as well as some drive and motivation, you can pay those student loans off faster than you think.

1. Live frugally in college and/or graduate school.

When you have “unlimited funds” through student loans, it’s easy to rack up quite a bit of debt. It’s not uncommon for students to use their loans to pay for vacations, an over-the-top apartment and new clothes for any and every occasion. But living like that is a big no-no. Four years’ worth of spending on your student loans could lead to decades of student loan payments. Instead, live frugally in school, stay on budget and don’t use your student loans to pay for experiences and indulgences that you don’t need.

2. Work during school, and find work soon after you graduate.

Not only should you watch your spending during college or graduate school, but you should also work to bring in money. Depending on the type of loan you have, you can opt to pay your student loan interest while you’re in school. With the money you make, you can pay the interest. Additionally, working during college or graduate school increases your chances of getting hired soon after graduation. Rather than making zero payments on your student loans while you search for a job during the grace period, you can be getting a head start on paying off your student loan.

3. Pay student loans with the highest interest rate first, and make extra payments.

While some theories for paying down debt encourage individuals to pay off the debt with the least amountt, borrowers should focus instead on the highest interest loan. Obviously, borrowers should make minimum payments on all loans each month, but focusing on the loan with the highest interest will save graduates money in the long run. Additionally, make extra payments on your loans to pay them off faster. If you have an unexpected surplus of money, even if it’s just $100, use it on your student loans instead of a new pair of shoes or game system.

4. Supplement your income.

Your starting salary after graduation can seem like the most money you’ve ever had, but you’ll find once it’s time to pay rent, utilities and student loans that your money runs out pretty fast. Some graduates may need to supplement their income with a weekend job or freelance work. It’s not ideal, but if graduates are serious about paying off student debt, it will enable borrowers to make extra payments and pay off debt sooner.

5. Always keep in mind – it’s temporary.

Some of the above can be quite overwhelming, stressful and taxing on a student or recent graduate, but the most important thing to remember is that it’s all temporary. Anyone who has paid off their student debt will tell you that any sacrifice is worth it to know that you’re finally paid in full. And with a few extra hundred — or even thousand — dollars a month, you can finally indulge on those vacations, a better apartment and that pair of shoes or game system.

Source: Fastweb

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Summer Melt: The Financial Aid Secret that Can Earn You Big Bucks

Summer Melt: The Financial Aid Secret that Can Earn You Big Bucks

Summertime is upon us, and you know what that means: sunshine, sandy beaches and…increasing financial aid packages? Ok, so summer and more money for college don’t exactly go hand in hand, but who’s complaining? Certainly not students.

There is a little known secret in the world of college admissions and financial aid, and it’s referred to by professionals as “summer melt.” The phrase is used to describe the phenomenon that takes place when students, after May 1, change their minds about their “final” decision and switch allegiance to another college. By switching colleges, those students forego their financial aid and scholarship packages at their initial choice, therefore freeing up money for other committed students.

All you have to do to potentially get a hold of more money for college is ask. Here’s how:

1. Write a letter or make a phone call to the financial aid office.

First, start the conversation by thanking the school for the generous financial aid package that they already awarded you. Proceed to discuss your enthusiasm for the school and ask nicely if there is any further financial aid that has become available and can be distributed to your financial aid package.

2. Know when to call.

It would be pointless to contact the school’s financial aid office the week after May 1, or National Decision Day. Rather, wait until mid-summer, i.e. late June or early July. At this point, those students who were unsure in May have committed to their final decision, thereby freeing up financial aid.

3. Do your research.

While there may be financial aid money that is unclaimed, there may also be scholarships that fall into the same category. Ask the financial aid office if there are still scholarship opportunities that are open or were never distributed. They can tell you how to apply.

4. Be honest.

If your financial circumstances have changed, this is your chance to let the financial aid office know before the school year begins. Chances are, your package cannot be changed during the school year. So if a job loss or death has impacted your family’s finances, share this with the financial aid office now.

Recently, another phenomenon has claimed the phrase “summer melt.” It applies to low-income, minority students who commit to a college in May but then “melt away” over the summer months. According to the U.S. Board of Education’s blog, roughly 10 – 20% of college-bound students nationwide decide against actually attending a college altogether, rather than merely transferring colleges. In the Southwest alone, 44% of students in 2011 decided against going to college during the summer months leading up to the start of the school year.

Students that are daunted by the prospect of college and considering backing out should keep in mind a few things. First, if funds are too limited to realistically afford college, students can do the above and contact their school’s financial aid office to see if there is more money available. Second, they can continue the scholarship search throughout the summer and for the remainder of the college years, keeping in mind that scholarships are not just limited to high school seniors. Third, they can seek encouragement and guidance from their friends and family about the excitement and achievement of going to college.

As you make plans to start your first year of college, remember that there is more to do besides scoping out your future roommate on social media, picking out bedding and registering for classes. Talk to your financial aid office about a better deal, and share any concerns you have about leaving for college with your family, friends and counselors. This is one of the most exciting opportunities of your life; now it’s time to get ready for a life-changing experience!

Source: Fastweb

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What To Do When You Receive A Surprise Medical Bill

What To Do When You Receive A Surprise Medical Bill
So what can you do if you find yourself the unlucky recipient of a surprise medical bill? Torre recommends the following:
Source: Forbes

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How the Average Joe Can Pay for School

How the Average Joe Can Pay for School

As the cost of college is increasingly on the rise, many average, every day families are wondering how they’re going to pay the bill. Unfortunately, most families can only pay for some of the costs up front. And that means student loans become a requirement.

According to The Institute for College Access and Success, nearly 70% of college students graduated with roughly $30,000 in student loan debt in 2014. While that may sound bleak, there is still something students and their families can do to ease the burden or apprehension of debt.

First off, the Average Joe can start saving now. Even if you only manage to save a few hundred dollars before school starts, a dollar saved is a dollar less that students will have to borrow.

Check out FinAid for a plethora of savings strategies for students who are saving in advance as well as those doing so at the last minute.

Second, keep up the scholarship search. It doesn’t end when you get your high school diploma. Students in college and graduate school can continue the scholarship search through their last year of college. And remember that the more scholarships you apply to, the better your chances of actually winning.

Get a job – and that’s meant in the nicest way possible. Whether you find a job on- or off-campus, you can use your earnings to offset your tuition bill. Though on-campus jobs are typically reserved for students who qualify for work study, there is a chance you can still snag one of these opportunities. They usually pay minimum wage and have a limited number of work hours each week to accommodate study and extracurricular activity time.

At the same time, if you have to get a job off-campus, most employers in a college town will understand your student schedule and attempt to work with it.

But if you do have to pay for college with student loans like most of the other Average Joe’s out there, here are a few tips for navigating the borrowing process:

• Fill out the FAFSA. This is the only way that you will qualify for federal student loans, which have the lowest interest rates as well as loan consolidation, repayment options and loan forgivness.

• Don’t over-borrow to pay for frivolous things like late night pizza, spring break trips and new clothes for every occasion.

• Try to pay interest – or save the interest – while you’re in college. Accumulating interest can cost hundreds of dollars over the lifetime of the loan. By paying it down while you’re in school or saving that money to pay down later, that’s less money that you’ll have to pay with your hard-earned income after graduation.

• Check out loan forgiveness programs. These are unique opportunities for graduates who perform a public service like serving in the military, teaching in an underserved area or volunteering with AmeriCorps or PeaceCorps. After ten years of service, any remaining student loan debt will be discharged.

Just because you might be paying for college like the Average Joe doesn’t mean you have to settle for an overwhelming amount of student loan debt. It will take a lot of hard work, motivation and saving, but in the end, it’s worth it…literally.

Source: Fastweb

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The Dos and Don'ts of Tax Season for Students

The Dos and Don'ts of Tax Season for Students

This year, you don’t just have to worry about filing your taxes correctly – you have to worry about getting the best financial aid deal out of your taxes. No pressure – right?

It doesn’t have to be overwhelming or confusing; we’ve got you covered. Conquer your taxes – and make the results work to your advantage – with our do’s and don’ts of tax season.

1. Do know the difference between tax-free and tax-exempt scholarships. Scholarships fall into two categories: tax-free and not tax-free. Before you apply, ask the scholarship provider about their tax status. You don’t want to win a scholarship only to lose some of that money in paying taxes. Unless it’s more than worth it, of course.

2. Do take advantage of tax credits. There are two tax credits available to students and their families filing their taxes: the American Opportunity and Lifetime Learning tax credits. Eligible students can claim up to $2,500 with the American Opportunity tax credit; and if the tax credit pays your tax down to zero, you can have 40% of the remaining amount of the credit – up to $1,000 – refunded to you. The Lifetime Learning tax credit is worth up to $2,000, and there is no limit to how many years it can be claimed.

3. Don’t default on your student loans. Defaulting on your student loans has far-reaching ramifications, one of which is no more tax refunds. The federal government has the right to garnish your tax refund for each year you’re in default.

4. Do deduct your loan interest. As a borrower, you are eligible to deduct up to $2,500 on qualified student loans for interest paid. To be eligible, borrowers must make less than $80,000 a year – or $160,000 if married and filing jointly.

5. Do your research on student loan forgiveness and taxability. Student loan forgiveness is a huge benefit for borrowers working in certain fields. After 10 years – more of less depending on the type of service – student borrowers can have the remaining balance of their loans forgiven. However, it comes at a cost. If your student loans are forgiven, you’ll have to pay taxes on the remaining balance paid.

6. Don’t lie on your taxes. Intentional or not, mistakes on your taxes don’t just land you on the IRS watch list. They will affect your financial aid. The FAFSA asks for financial information from the prior prior tax year, meaning you could miss out completely if your taxes are pulled for review.

Filing your taxes plays a large role in formulating future financial aid. Be smart about the process, take your time and double check your financial information.

For more tax help, click here.

Source: Fastweb

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Programs and Scholarships to Pay Off Student Loans

Programs and Scholarships to Pay Off Student Loans

If you’re like the millions of students looking for a way out of your student loans; I’ve got good news for you. There are alternatives but, as with most things in life, there’s a tiny catch.

What’s the catch? If you’re willing to do some good for the world (gasp!) and volunteer, there are plenty of programs that will be willing to help pay off your student loans in exchange for service work.

So, if these options sound like they may options you’d be interested in pursuing, read on to learn more about the programs willing to help bail you out of student loan debt:

AmeriCorps

What is AmeriCorps?

When you become an AmeriCorps member and give your time through national service work, you’re able to gain real life educational and work experiences at the same time.

What do you do with AmeriCorps?

You’ll work within an intensive service position suited to your skills, interests or location preference, working to help move communities forward across the country.

How long will I volunteer for?

• Anywhere from 10 months to one year

• There are some part-time opportunities available, but most are full-time

What types of student debt relief will I qualify for?

• Most AmeriCorps members will qualify for postponement or forbearance of the repayment of your loans during your service

• When you’re finished with your service, you will a Segal AmeriCorps Education Award to help pay for college, graduate school, or vocational training or to repay student loans.

• The dollar amount of a full-time award is tied to the the maximum amount of the U.S. Department of Education’s Pell Grant, thus it can vary from year to year.

You can learn more about the Segal AmeriCorps Education Award here.

Will I get paid?

• As a member, you will receive a modest living allowance. (Note: Although you may not make much money, as in, to open a savings account, you should have enough to live on to cover your daily needs.)

• Depending on the program, you may receive housing

• Depending on the program, you may receive health insurance

You can learn additional Americorps program details here.

Peace Corps

What is Peace Corps?

“As the preeminent international service organization of the United States, the Peace Corps sends Americans abroad to tackle the most pressing needs of people around the world. Peace Corps Volunteers work at the grassroots level toward sustainable change that lives on long after their service—at the same time becoming global citizens and serving their country. When they return home, Volunteers bring their knowledge and experiences—and a global outlook—that enriches the lives of those around them.” –Peace Corps Mission Statement

What do you do with Peace Corps?

• Volunteers travel to a foreign country and focus on one specific volunteer area, determined by the needs of the host country and by the qualifying skills of the volunteer.

• The areas generally fall under one of several general categories: Education; Youth in Development; Health; Community Economic Development; Agriculture; Environment; HIVE/AIDS; Food Security; Earth Day; Stomp Out Malaria.

How long will I volunteer for?

• Generally, starting out for 2 years

What types of student debt relief will I qualify for?

• If you volunteer with the Peace Corps, you can qualify for student debt relief from federally administered or guaranteed student loan programs during the time of your Peace Corps service.

According to the Peace Corps web site:

• Public student loans may be eligible for deferment

• Perkins loan may be eligible for partial cancellation – for example, 4 years of service may be eligible for up to 70% of loan forgiveness. (Note: Even more may be forgiven for additional years of service. )

• A “readjustment” allowance of $7,425 (pre-tax) upon completion of service

The rules and regulations allowing relief for each specific type of loan and the interest rates that accompany it, however, are extremely complicated. If you’re considering this route, it’s best to consult with you financial aid advisor on the guidelines for the loans you’ve taken out.

Additionally, Seed Global Health partners with the Peace Corps to help encourage Americans to volunteer in service work, lifting any financial constraints of an individual accepted into the program.

Seed Global Health is able to provide loan repayment to eligible volunteers through private philanthropists, which includes educational debt in the amount of up to $30,000 to qualifying individuals.

Will I get paid?

As a Peace Corps volunteer, you will receive:

• A monthly living a housing allowance

• All travel expenses paid (to and from country of service)

• 48 paid vacation days

• Full medical and dental coverage

You can learn more about the additional tangible benefits for volunteers here.

Plus, Career Connections:

• Unique graduate school opportunities

• Transition and job support, including social networking after service

• Advantages in federal employment

You can learn more about volunteer opportunities with the Peace Corps here, additional educational benefits the Peace Corps offers here and debt repayment through Seed Global Health here.

Sponsor Change

What is Sponsor Change?

“SponsorChange.org provides non-profits a solution to increase their impact. Non-profits can easily recruit skilled college graduates to complete service projects and raise funds from sponsors to reward their work with student loan payments, helping both non-profits and college graduates reach their full potential.” – Sponsor Change Mission Statement

What do you do with Sponsor Change?

Through Sponsor Change, you can find work at non-profit organizations and you’ll complete service projects.

As you complete projects, the site will help you raise funding through sponsors to reward your hard work to help pay back your student loan payments.

As a result, both the non-profits and you, the college graduate, receive benefits from the arrangement.

How long will I volunteer for?

• The length of time you volunteer will depend on your amount of student loans you’ve accumulated – basically, how much debt you have to work off.

What types of student debt relief will I qualify for?

• This is basically an even exchange: time in exchange for payment, so there’s not added student debt relief.

Will I get paid?

• Yes, in a sense. All of your “payments” will go towards your student loans.

What You’ll Need:

• A bachelor’s degree

• Proof of student loan debt

To learn more about Sponsor Change and the programs it offers, visit Sponsorchange.org.

Career-Specific Loan Forgiveness Programs

If you’re entering a specific field, you may qualify to enter a career-specific loan forgiveness program. These programs do differ by state, so check your states requirements for specifics.

Most of these programs allow teachers, doctors and other recent college graduates in specific professional fields to have the option to work in exchange for student loan forgiveness, similar to those listed below:

Nurse Corps Loan Repayment Program

• What’s agreed to: You’ll work as a registered nurse for a minimum of 32 hours weekly for 2 years at a non-profit in need of nursing services

• What you’ll get in return: Up to 60% of student loans paid off

• Added value: If the nurse agrees to work 3 years or more, you’ll be eligible to get 25% more off loans

• Applications for the program are accepted once annually

You can learn more about eligibility and applications for the Nurse Corps Loan Repayment Program here.

National Health Service Corps. Program (for those within the medical field)

• What’s agreed to: You agree to work as a medical professional for two years within a community in need of medical services

• What you’ll get in return: You can receive up to $25,000 paid off of your student loans

• Added value: If you work longer, there’s potential for even larger payoffs of your student loans

Loan Forgiveness Program for Teachers

This is for those who have taken out Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans and Unsubsidized Federal Stafford Loans.

• What’s agreed to: You agree to work for 5 years as a teacher within a school in need – usually within a lower income community

• What you’ll get in return: You’ll be eligible for anywhere from $5,000-$17,500 in forgiveness of your student loans

To learn more about the Loan Forgiveness Program for Teachers, visit the Teacher Loan Forgiveness section of the Federal Student Aid web site.

Teacher Cancellation

This is for those who have taken out Federal Perkins Loans.

• What’s agreed to: You must teach full-time for a full academic year or its equivalent as a teacher in one of the following scenarios: in a school serving students from low-income families; as a special education teacher, including teachers of infants, toddlers, children, or youth with disabilities; teacher in the fields of mathematics, science, foreign languages, or bilingual education, or in any other field of expertise determined by a state education agency to have a shortage of qualified teachers in that state.

To view all of the requirements in detail, visit the Federal Student Aid web site.

• What you’ll get in return: If eligible, up to 100 percent of the loan may be cancelled in exchange for teaching service. It will, however, be cancelled incrementally, though it does include interest that was accrued throughout the year.

• Increments:

-15% cancelled per year for the 1st and 2nd years of service

-20% cancelled per year for the 3rd and 4th years of service

-30% cancelled for the 5th year

To learn more about Teacher Cancellation, visit the Teacher Loan Forgiveness section of the Federal Student Aid web site.

Public Service Loan Forgiveness Program

This is available for Direct Loans only.

• What’s agreed to: You must make a required 120 qualifying payments on your Direct Loans on time, monthly payment made under one of the Direct Loan Program repayment plans, while employed full-time by a public service organization. Jobs include public health and safety, social work, library and varied law professions.

• What you’ll get in return: After you make your 120th qualifying payment, you will need to submit the Public Service Loan Forgiveness (PSLF) application to receive loan forgiveness. The application is under development and will be available prior to the date when the first borrowers will be eligible for PSLF Program forgiveness, in October 2017.

• Added value: The program is most beneficial for those who have excessive student loan debt who would not be able to pay back loans within 10 years.

To learn more about the PSLF Program, visit the Public Service Loan Forgiveness section of the Federal Student Aid web site.

Source: Fastweb

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5 Myths about Financial Aid

5 Myths about Financial Aid

Let’s be honest about something: financial aid is tricky, confusing and overwhelming. As is with all things complicated, it’s easy to see why students and parents alike believe everything they’re told about the process. Unfortunately, that means students are told a lot of “falsehoods.” One of the best things students and parents can do for their financial aid chances is to know how the facts stand up against the myths.

Myth #1: I won’t qualify for aid.

This is perhaps the biggest and most believed myth about financial aid. While there are individuals with income thresholds that won’t receive financial aid, it’s imperative that these families still fill out the Free Application for Federal Student Aid (FAFSA). Firstly, every single student, regardless of their parents’ income, qualifies for unsubsidized Stafford and PLUS loans just by filling out the FAFSA.

Second, aid dollars can never be predicted; and with that, students and their parents may as well fill out an application to see if they qualify for aid. Finally, you never know when your family’s financial circumstances will change. Loss of job or divorce can take a toll on income and assets. Wouldn’t it be nice if your financial aid office had your FAFSA on hand to see how they could help you pay for college?

Myth #2: I can declare myself as an independent student.

You may be living on your own without any financial support, but does that make you an independent student by financial aid standards? Hardly. The federal government has a very strict definition of what makes a student independent: he or she must be older than 24, married, serving in the armed forces or financially responsible for a dependent.

Unfortunately, the federal government dictates that if a student is less than 24, his or her parents are responsible for paying for their education – whether or not your parents actually can is another matter.

Myth #3: I didn’t qualify for aid the first time, so I won’t qualify again.

Just as circumstances change, so does financial aid. As stated earlier, a job loss or divorce can have an impact on whether or not a student is determined eligible for aid. And in most cases, this new state of eligibility is determined through less drastic circumstances. For instance, if a family has two students enrolled in college at the same time, both of those students may then be eligible for financial aid. With that in mind, students and their families should apply for financial aid with the FAFSA every day.

Myth #4: I shouldn’t accept a financial aid package with any self-help.

Many families hear “student loans” and automatically reject the financial aid package – as well as the school. The truth is that student loans have the lowest interest rates of any type of loan, and while you hear horror stories of students graduating with hundreds of thousands of dollars in debt, that’s not necessarily the reality.

Financial aid experts will instruct borrowers not to acquire an amount of student debt that is more than their expected starting salary after graduation. Also, borrowers should attempt to pay the interest while they’re in school, which will save hundreds if not thousands of dollars after graduation. The trick to tackling a financial aid package with student loans is to borrow smartly.

Also, keep in mind that self-help comes in the form of work study jobs too. These on-campus work opportunities enable students to work to pay down their tuition bill during school, making the task of paying off any debt after school a lot simpler.

Myth #5: I can’t appeal my financial aid package.

When you get your very official looking financial aid package, it may seem as if there is no compromise or ability to appeal. Fortunately, that’s not true either. While you can’t make changes to the FAFSA at that point, financial aid officers are always willing to work with students and their parents to make paying for their dream school possible.

Oftentimes, financial aid officers can find ways to add to the financial aid package. Plus, a little known secret to the outside world is what is referred to by professionals in the space as “summer melt.” As students decide during the summer months that they really don’t want to go to a particular college – or to college at all – their financial aid at that school becomes available. Some families are able to benefit from this sudden allowance of financial aid if they contact the school and ask about any further available financial aid opportunities in July.

Yes, applying for financial aid can be baffling, but that doesn’t mean you should fall for the myths that we so often hear. If you do, your ability to pay for the school you really want to attend could be in jeopardy. So before you make any hard decisions, make sure you’re working with the truth about financial aid and paying for school.

Source: Fastweb

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You May Have More Retirement Income Available Than You Thought

You May Have More Retirement Income Available Than You Thought
If you thought your 401(k) or a similar retirement account was your only option for funding retirement, you may be pleasantly surprised to find out you have access to several different retirement income sources and strategies.
Source: Forbes

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7 Steps To Prepare For A Layoff

7 Steps To Prepare For A Layoff
The more prepared you are for the layoff, the easier it will be to find a job and the less impactful the layoff will be on your finances. A little bit of preparation can go a long way.
Source: Forbes

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12 Reasons To Contribute To A Roth IRA By April 18

12 Reasons To Contribute To A Roth IRA By April 18
Contributing to a Roth IRA can be particularly beneficial. (If your income is too high to contribute to a Roth IRA, check out this back-door method to get around the income limits.) Here are 12 reasons why:
Source: Forbes

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Guide to Financial Aid Award Letters

Guide to Financial Aid Award Letters

After you submit your application for financial aid, you will receive a financial aid award letter from the college(s) to which you applied, typically in early to mid-April. This letter spells out the details of your financial aid package.

A financial aid package is a collection of different types of financial aid from multiple sources. It is intended to help you fill the gap between your ability to pay (your expected family contribution or EFC) and college costs (the cost of attendance or COA). It is based on your financial need, the difference between COA and EFC.

After you receive the award letter, you may be asked to return a signed copy of the letter in which you accept or reject each source of financial aid. The college will not increase other aid to compensate if you reject part of the financial aid package, such as loans. (FinAid recommends accepting the Perkins and Subsidized Stafford Loans, as these are very low cost loans based on financial need. The government pays the interest on both loans while the student is enrolled in college at on an least half-time basis.)

Problems with Award Letters

There is no standard format for award letters, making them difficult to interpret and to compare and contrast. Some common problems include:

• Differences in definitions of cost of attendance. Some colleges don’t even include the cost of attendance on the award letter. Others include just tuition and fees, but omit room and board. Others include room and board in addition to tuition and fees, but don’t include other costs, such as books and supplies, transportation and personal expenses. Some spell out all the major components, while others just report a single total figure.

  Even when the award letter includes all the costs, there may be significant differences in individual cost components. For example, transportation costs may vary depending on whether the college is close to home or halfway across the country. Colleges may also underestimate certain costs, such as textbook costs, in order to make their financial aid offer appear to be more generous.

• Difficulty identifying award components. Sometimes award letters use cryptic acronyms to identify components of the financial aid package, without spelling out which are loans, which are grants, and which are work-study. When loans are included, the colleges rarely highlight the terms of the loans (interest rates, fees, years to repay, in-school deferment, subsidized vs unsubsidized interest) on the award letter. Some loans may appear to be need-based loans awarded by the college, but a really co-branded private student loans.
• Front-loading of grants. Some colleges will include more grants in the award letters sent to freshmen, with the balance between loans and grants shifting toward loans in later years. This is partly because the Stafford Loan limits are lower for freshmen and sophomores, and partly because of a desire to minimize the amount of debt of any student who drops out during the first year. But it can also make the first financial aid package appear more attractive to prospective students. So ask the colleges whether you can expect to receive a similar amount of grants in subsequent years if your financial circumstances are similar.
• Gapping. Some colleges do not meet the full demonstrated financial need of all students, but instead leave a gap. This usually occurs at colleges with limited student aid budgets. The colleges that practice gapping do not highlight the gap and often try to mask it by including non-need-based aid as part of the financial aid package.
• Packaging of non-need-based aid. Certain loans, such as the unsubsidized Stafford loan, the PLUS loan and private student loans, are intended to help families pay for the family contribution. These loans are available to everybody, without regard to financial need. Colleges sometimes include these on the award letter, to ensure that families are aware of these borrowing options. But it makes it more difficult to compare award letters, when one college packages the PLUS loan and one does not. You are eligible for these loans at every school, even if they are not listed on the award letter.
• Listing specific lenders on the award letter. You are not required to use a lender recommended by the school. You can use any lender. It pays to shop around, as lenders offer a variety of loan discounts that can save you hundreds or thousands of dollars over the lifetime of the loan. See preferred lender lists for additional information.

If you win any outside scholarships, you have to tell the college about them. Unfortunately, federal regulations require the college to reduce your need-based aid package when you win an outside scholarship or other ‘resource’. Colleges do, however, have some flexibility in how they reduce your financial aid package. Many will use the outside scholarship to first fill any gap, and then use half the funds to reduce loans and half to reduce grants. Ask the college for information about it’s outside scholarship policy if this will affect you.

Evaluating an Award Letter

The first thing to do when you receive an award letter is to identify the major cost components at the school and the major components of the financial aid package. The cost figures should include tuition and fees, room and board, books and supplies, transportation and personal expenses. The financial aid package should include grants, work-study, and need-based loans. There may also be non-need-based loans. Total each category separately, so that you can compare the award letters from different colleges on an apples-to-apples basis.

Some educators suggest calculating the percentage gift aid (grants and work-study) in the financial aid package. FinAid does not agree with this advice, as such percentages are at best an imprecise gauge of the factors that matter most to the family, namely how much the college is going to cost. For example, one college may offer a greater percentage grants, but still cost the family more because the total cost of attendance is greater.

FinAid recommends looking at two figures that provide meaningful information about the cost of the college: net cost and out-of-pocket cost:

• Net cost is the difference between the cost of attendance and the financial aid package, once everything has been put on an apples-to-apples basis. The cost of attendance figures should include all the missing components. The financial aid package should not include any loans that aren’t based on financial need. The net cost figure tells you how much money you will need to obtain from your own resources and non-need-based loans to pay the tuition bill. It is a measure of your cash flow requirements, and should roughly correspond to the expected family contribution (EFC). Since most colleges use the same EFC, the net cost should be similar across all the financial aid award letters. If there’s a significant difference in net cost, it is often a sign that there may be unusual circumstances that were brought to the attention of one college but not the others. (See negotiation and professional judgment for more information.) Financial aid packages are based on financial need, and shouldn’t vary much because the family’s ability to pay is the same for all schools.
• Out-of-pocket cost is the difference between the cost of attendance and just the gift aid components of the financial aid package (grants and work-study). It excludes all loans from the financial aid package. Out-of-pocket cost is a measure of just how much the college is really going to cost you. It tells you how much money you will spend from savings (including section 529 college savings plans and prepaid tuition plans), current income (including tuition payment plans), and future income (including need-based and non-need-based student loans) in order to pay from college.

Resources for Students and Parents

There are several tools available to help you decode your financial aid award letter. FinAid offers two award letter comparison tools.

• The Simple Award Letter Comparison Tool compares the financial aid packages from three colleges, highlighting any significant differences. The tool also calculates the net cost and out-of-pocket cost figures defined above, and estimates the lifetime cost of any education loans.
• The Advanced Award Letter Comparison Tool is like the Simple Award Letter Comparison Tool, but includes non-financial criteria in addition to financial criteria for comparing colleges, letting you see the differences visually in a matrix format.

Source: Fastweb

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3 Tips to Appeal Financial Aid Packages

3 Tips to Appeal Financial Aid Packages

By now, you’ve made your final college decision, but you may still have questions about how to pay that tuition bill once it’s time. Fortunately, there are options for students and families who may not be able to afford the education that they once thought possible.

Financial aid administrators are able to change their initial financial aid offer through an appeals or professional judgment process. Though these appeals are typically reserved for extreme cases, students can sometimes even negotiate their scholarship offers.

1. Assess your circumstances.

If your family has fallen under financial hardships, the school does not expect you to pay with your existing financial aid package. These special circumstances include, but aren’t limited to, job loss, unexpected medical bills or a parent’s death. Additionally, though the FAFSA attempts to provide a complete picture of your financial obligations, it doesn’t take into account conditions like disabled siblings or parents that require medical or occupational therapy, which also fall under the realm of a possible appeal to your financial aid package.

At this time, you can also “negotiate” your scholarships or merit aid. If you feel you deserve more or were given more scholarship money from a similar institution, you can always use that as leverage to make a case for more scholarship dollars. However, treat this particular request with care and tact. Don’t use the term “negotiate;” simply ask financial aid officers if anything can be done to further compensate your merit achievements.

2. Contact the financial aid office at your institution.

Whether you’ve just made your final college decision or you’re about to pack up for the dorms, it’s never too late to appeal your financial aid decision. You can even request an appeal in the middle of the school year.

Contact the financial aid office via phone call or letter; do not email. This is a personal plea for an appeal so you need to make it as personable as possible. If you write a letter, detail the circumstances and provide evidence to go along with your claims. However, if you call into the office, it may be best to set up an appointment either over the phone or in-person to discuss the change in finances at length.

3. Be prepared, open and willing to compromise.

When you have conversations with financial aid officers about the change in financial circumstances, provide documentation, like unemployment benefits or medical bills. You’re making a case for a new financial aid package, and you need to prove that you need it.

Finally, financial aid officers are helpful, knowledgeable staff at universities who work hard to ensure that paying for school is as feasible as possible for all students. You’ll get a lot further in your appeals if you see the financial aid officer as a partner and not an adversary. If you are open and appreciative of their help, financial aid administrators are more likely to do everything possible to make paying for school easier for you and your family.

Source: Fastweb

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Worried About Being Out Of A Job? How Unemployment Benefits Can Help

Worried About Being Out Of A Job? How Unemployment Benefits Can Help
Fortunately, our personal rainy day funds are not the only resources we can fall back on if we find ourselves suddenly out of work due to a layoff or similar event.
Source: Forbes

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9 Things Millennials Should Consider Before Moving In Together

9 Things Millennials Should Consider Before Moving In Together
Before you jump in head first, here are nine things to consider. Use this as your own personal checklist for making the move successful and full of joy for years to come.
Source: Forbes

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What The CFPB Can Do For You

What The CFPB Can Do For You
The CFPB is unique in that it is the first government agency exclusively focused on protecting you from unfair and unlawful financial practices. So how can the CFPB help you?
Source: Forbes

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