How Does a Parent Enrolling in College Affect the Child's Financial Aid?

How Does a Parent Enrolling in College Affect the Child's Financial Aid?

My daughter is hoping to attend a private college next year. Of

course, we will be applying for financial aid and as many scholarships

as we can find! My husband works full time and I have always worked

full time. In late February, I was temporarily laid off from my job.

I should be returning to work on a part-time basis in June. I am

contemplating going back to school, but would have to apply for

financial aid for myself as well. Would applying for financial aid

for myself now hurt the amount my daughter would get when she applies

next year? I don’t want to hurt her chances of getting aid by going

to school myself.

— Laura K.

When a parent applies for financial aid for her own education, it

generally does not hurt her child’s financial aid eligibility

and may even help both parent and child to qualify for more student

financial aid.

The financial aid the parent receives is not counted as part of total

income on the child’s current or subsequent FAFSA. The FAFSA includes

several questions designed to identify financial aid that may have

been included in taxable income so it can be excluded from adjusted

gross income in the calculation of total income.

The main question is whether the child can be included in the number

in college figure on the parent’s FAFSA and whether the parent can be

included in the number in college figure on the child’s

FAFSA. Increasing the number in college can significantly increase

eligibility for federal student aid.

If the child is a dependent student she will be counted in the family

size on the parent’s FAFSA. Since she is included in family size on the

parent’s FAFSA, she can also be included in the number in college on

the parent’s FAFSA if she is or will be enrolled in an eligible

college on at least a half-time basis in a degree or certificate

program during the award year.

Whether the parent can be included in the number in college on the

child’s FAFSA is more complicated. The Higher Education Amendments of

1998 (P.L. 105-244) modified section 475(b)(3) of the Higher Education

Act of 1965 [20 USC 1087oo(b)(3)] to exclude the student’s parents

from the number in college, effective starting with the 2000-01 award

year. Before this change parents could be counted in the number in

college on a child’s FAFSA. This change was enacted because the

previous rules were prone to fraud, where parents would enroll in a

local college just to increase their child’s eligibility for federal

student aid, usually without attending classes or intending to obtain

a degree. To address this problem, Congress switched the number of

parents enrolled in college to a professional judgment item, by

amending section 479A(a) of the Higher Education Act of 1965 [20 USC

1087tt(a)] to include “the number of parents enrolled at least

half-time in a degree, certificate, or other program leading to a

recognized educational credential at an institution with a program

participation agreement under section 1094 of this title” in a list of

examples of special circumstances eligible for an adjustment. This

made the inclusion of parents in the number in college on a child’s

FAFSA subject to the discretion of the college financial aid

administrator. College financial aid administrators are in a better

position to judge whether the parent’s enrollment in college is

genuine or not.

If a parent is enrolled in college at the same time as her child, she

should ask the college’s financial aid administrator for a

professional judgment review to count the parent in the number in

college figure on the child’s FAFSA. (If the parent is quitting her

job to go back to school full time, she should also ask for an

adjustment to income corresponding to the anticipated reduction in

family income.) Most college financial aid administrators will want

to see clear proof of enrollment on at least a half-time basis,

including paid bursar bills and in some cases grade reports, before

making an adjustment to the child’s FAFSA. They usually verify this

information with the other college. If there are any signs that the

parent isn’t genuinely seeking a degree they will disallow the

adjustment. If the college financial aid administrator allows an

adjustment, most will increase the number in college while some will

decrease the parent income by the amount of the parent’s college

costs. Either of these changes will improve the child’s eligibility

for need-based financial aid.

My 19-year-old is graduating with his Bachelor’s degree in one

week. One of his professors has asked him to pursue a Master’s degree and I am

beginning my law school career at the same time. My son has done

projects for which he has been paid nominal amounts but has never had

a regular (even part-time) job. On the FAFSA we listed him as independent

(according to the FAFSA guidance for grad school) but also indicated that

there are two of us in the household who will be full time students

for the upcoming year. I found no FAFSA guidance on this situation and

I do continue to provide more than half his support. FAFSA has

returned my application for corrections on this question but I have

answered appropriately according to the given definition and

instruction. What is correct? Can you point me to the standard upon

which FAFSA is basing its decision?

— Kim S.

If the FAFSA is for a school year during which your son will be

pursuing a Master’s degree, he will be a graduate student and is

considered independent for that year.

Unless you are considered part of his household (i.e., you

live with him and he provides more than half your support and will

continue providing more than half your support through the end of the

award year), you cannot be counted as part of his family size and thus

cannot be counted in the number in college on his FAFSA. You will need

to correct his FAFSA.

However, he is considered a member of your household on your

own FAFSA if you provide more than half his support and will continue

to do so throughout the award year. If he’s considered a member of

your household, you can count him in the family size and the number in

college figures on your FAFSA. Similar rules apply to counting him in

family size and number in college on the FAFSAs of his siblings.

Note that student aid, including student loans, counts as part of the

student’s own support. So even though he does not work, it is possible

that the student aid he receives exceeds the support you are providing

him. If he is using savings to pay for graduate school or living

costs, that also counts as part of his own support. You will have to

do the math to determine whether you are really providing him with

more than half his support, now and through the end of the award

year. The college may have a support test form that they use to

evaluate whether a parent is providing more than half

support. Dependency status for federal student aid purposes uses a

different definition of support than dependency status for IRS

purposes.

Most college financial aid administrators will question the inclusion

of an independent student in the household size on a parent’s

FAFSA. However, it is possible for a student to be independent on his

own FAFSA and to be included as a dependent on the parent’s FAFSA or

the FAFSA of the student’s sibling, if the parent provides and will

continue to provide more than half support. The rules are not

symmetric.

The student is not required to live with the parent in order to be

counted in family size and number in college on the parent’s

FAFSA. Only the support test is used. (Different rules apply when the

student is being counted in family size and number in college on the

FAFSA of someone other than the student, the student’s spouse or the

student’s parents. In such a circumstance the student must live with

the applicant in addition to receiving more than half support from the

applicant.)

The 2011-12 Federal Student Aid Handbook states on page AVG-30 that

“For children in the household size, the ‘support test’ is used rather

than residency because there may be situations in which a parent

supports a child who does not live with her, such as when the parent

is divorced or separated.” The Federal Student Aid Handbook also

states on page AVG-33 that household size for an independent student

includes “The student’s children, regardless of where they live, if

they will receive more than half of their support from the student

from July 1, 2011, through June 30, 2012.” Similarly, the verification

worksheet for independent students specifies in the family information

section that the student should include “your children, if you will

provide more than half of their support from July 1, 2011 through June

30, 2012, even if they do not live with you.”

The Federal Student Aid Handbook also provides two examples to

illustrate. The first example appears in the margin on page AVG-31:

Dependent student household size example

Lydia is a dependent student, and her parents are married. Her brother

Ron is 26, but his parents still provide more than 50% of his support,

so he is included in the household size. Her sister Elizabeth is

attending college but is an independent student and isn’t supported by

their parents, so she isn’t included in the household size. Her sister

Susan is not attending college, but is working and supporting herself.

However, if Susan were to apply for student aid, she would be

considered a dependent student, so she is included. Therefore, the

household size that Lydia reports for her parents is 5.

The second example appears in the margin on page AVG-33:

Independent student household size example

Eddy is an independent student. He was married, but now he and his

wife have separated. He’s paying child support, but it isn’t enough to

provide more than half his children’s support, so he can’t include his

children in his household size. Eddy’s nephew Chavo lives with him and

gets more than half of his support from Eddy (and will do so for the

award year), so he can be counted in Eddy’s household size, which is 2.

Having just turned 24, Chavo is also independent, and his household

size is 1.

These examples are based on the statutory language in section 481(k)

of the Higher Education Act of 1965 [20 USC 1087vv(k)], which was

added by the Higher Education Technical Amendments of 1993

(P.L. 103-208) effective starting with the 1993-94 award year.

The treatment on the CSS/Financial Aid PROFILE form, which is used by

about 250 colleges for awarding the college’s own financial aid funds,

may differ.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2x50XPV
via Student Loan Debt Relief Now

How Do You Calculate Individual Income From a Joint Return for the FAFSA When the Parents Are Separated?

How Do You Calculate Individual Income From a Joint Return for the FAFSA When the Parents Are Separated?

In your answer to How Does Income Tax Filing Status Affect Student Aid?,

you address the question of which parent is responsible for completing

the FAFSA. However, I’m very curious as to how the filing status of

separated parents affects how the FAFSA is processed, once the

primary/custodial parent has completed it. That is, is it more

advantageous for separated parents to change their filing status to

“married filing separately” so that the FAFSA only shows the income of

the one parent who completed it? It seems like it would be in the

parents’ and student’s best interest for the parent to have an income

tax filing status that demonstrates a greater need.

— Brad R.

Marital status on the FAFSA does not necessarily have to match marital

status on the federal income tax returns. There is a little play in

the joints that can lead to one status on the federal income tax

return and another status on the FAFSA. The most common circumstances

in which one might file a federal income tax return as married but the

FAFSA as separated include:

1. The parents have an informal separation but not a legal separation

or divorce. During an informal separation the parents may not live

together and must maintain separate residences. If the parents have

an informal separation they must still file their federal income

tax returns as married (either as married filing jointly or as

married filing separately) but file the FAFSA as separated.

2. The parents were married on the last day of the tax year, but

became divorced or separated between then and the FAFSA application

date. In such a circumstance the parents would file federal income

tax returns as married (either as married filing jointly or as

married filing separately) but would file the FAFSA as divorced or

separated, as appropriate.

Note that if the parents are divorced or have a legal separation as of

the last day of the tax year they cannot file federal income tax

returns as though they were married. Using the incorrect federal

income tax filing status in this situation is a fairly common

error. If the FAFSA is selected for verification and the college

financial aid administrator discovers that the wrong tax filing status

was used, this is considered conflicting information. The financial

aid administrator is precluded from disbursing student financial aid

funds until the conflicting information is resolved. Resolving the

conflicting information may include requiring the family to file

amended income tax returns if they wish to receive federal student

aid.

If the parents are separated, only the income and assets of the

custodial parent are reported on the FAFSA, regardless of the tax

filing status of the parents. If the custodial parent files a return

with a status of married filing separately, identifying her adjusted

gross income (AGI) from the income tax return is easy. On the other

hand, if the parents filed a joint return, the custodial parent must

calculate her income and taxes paid using information from the joint

return and the relevant IRS W-2 and 1099 forms. The income calculation

is based on the income from the custodial parent’s W-2 forms, plus

half of the income (or losses) from joint accounts and investments.

There are two approaches to calculating the taxes paid attributable to

the custodial parent from a joint return. The preferred method is to

use the IRS Tax Table or Tax Rate Schedule to calculate the amount

that would have been paid if a separate return had been filed,

assuming the appropriate deduction and number of exemptions. The other

method involves a proportional distribution of the taxes paid on the

joint return based on the custodial parent’s share of the joint AGI.

The bottom line is that the income should be the same regardless of

whether a joint or separate return was filed. The taxes paid may

differ slightly, depending on the method used to calculate the split,

but this usually has a negligible impact on the expected family

contribution as calculated by the FAFSA.

The main benefit of filing a separate return, if that is an option, is

that a separate return simplifies the income and tax calculations. It

also avoids some headaches, such as might occur if the FAFSA is

selected for verification. But filing separate returns precludes the

taxpayer from claiming certain education tax benefits, such as the

Hope Scholarship tax credit, Lifetime Learning tax credit, Tuition and

Fees Deduction, Student Loan Interest Deduction, and the exclusion

from income of interest in connection with the education bond program

(i.e., certain Series EE and I bonds).

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2vF5zbQ
via Student Loan Debt Relief Now

Should I Work My Way Through College or Quit My Job to Enroll Full-Time?

Should I Work My Way Through College or Quit My Job to Enroll Full-Time?

I am 26 and looking to start attending school full time this fall.

I am also taking some summer classes at a community college to get all

the credits I can before starting. I am also a transfer student with

37 credits from another school I went to right out of high school. I

am currently married and am considering quitting my job to attend

school full time. We would be able to just barely live off my wife’s

income but I’m wondering if the lower income would help by making me

eligible for additional federal and state grants. As of now, I

qualify only for Stafford loans and nothing else. The alternative for me

would be to keep working part time and make about $10,000 a year in

addition to my wife’s $25,000. Do you think it is worth it for me to

keep working and receive no grants, or quit, get some grants, and be

able to focus completely on school?

— John W.

Financial aid formulas are heavily weighted toward income, so quitting

your job will increase your eligibility for need-based financial

aid. In particular, the federal student aid formula has an income

threshold at $31,000 that can have a big impact on aid

eligibility. Students with family income below this threshold who were

eligible to file an IRS Form 1040A or 1040EZ (or who satisfy certain

other criteria) will have their expected family contribution (EFC)

automatically set at zero. Students with a zero EFC qualify for a

full Pell Grant. If your family income just misses the auto-zero-EFC

threshold, you will still qualify for a Pell Grant, although perhaps not

a full Pell Grant.

Note that the financial aid forms ask for information about your

family income during the prior tax year. Since you will be quitting

your job, last year’s income will not be reflective of your ability to

pay during the academic year. You should ask your college for a

professional judgment review to make an adjustment for the drop in

income. Some colleges call this a special circumstances review or

financial aid appeal. Most colleges will make an adjustment to the

income figures on your Free Application for Federal Student Aid

(FAFSA), switching you from last year’s income to an estimate of this

year’s income.

However, since you are in the 15% tax bracket, you will probably net

about $2,500 to $3,500 more after taxes with $10,000 in additional

income than with lower income and a higher Federal Pell Grant. Federal

and state grants may reduce the need to work and let you focus more on

academics, but you may be better off financially if you work

part-time.

Nevertheless, you should take care to balance your work and school

obligations. A study by Public Agenda found that work, school and

family conflicts are the primary reason why many students

drop out of college.

Work conflicts are more likely for students who are employed

full-time as opposed to students who are working part-time. On the

other hand, other studies have shown that money problems are a major

reason why some students drop out of college.

If you decide to work while in college, don’t work more than 12 hours

a week. Working part-time can improve grades by forcing you to learn

time-management skills. But working more than 12 hours a week takes

away too much time from academics.

Students who work 12 or fewer hours a week graduate with Bachelor’s

degrees at above-average rates. Almost three-fifths (59.2%) of

first-year undergraduate students who intend to obtain a Bachelor’s

degree successfully graduate with a Bachelor’s degree within six

years. Nearly two-thirds (65.9%) of those who do not work their first

year graduate with a Bachelor’s degree. But students who work up to

12 hours a week are even more likely to graduate, with nearly

three-quarters (73.3%) of students who work 1-12 hours a week

graduating within six years. Only students who work more than 12

hours a week are less likely to graduate: less than half (47.7%) of those

who work 13-40 hours a week and less than a third (29.6%) of those

who work more than 40 hours a week graduate within six

years. (Among students who work 1-12 hours a week, working fewer

hours increases graduation rates. 76.2% of students who work 1-6

hours a week graduate with a Bachelor’s degree within six years,

compared with 71.5% of students who work 7-12 hours a week.)

These statistics are based on an analysis of data from the 2009

Beginning Postsecondary Students longitudinal study, which tracks

outcomes for 16,700 students who first enrolled in college in 2003-04.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2vEE2qQ
via Student Loan Debt Relief Now

What Happens If You Deliberately Don't Report Assets on the FAFSA?

What Happens If You Deliberately Don't Report Assets on the FAFSA?

I’m doing everything possible to lower my EFC. I have assets, UTMA,

mutual funds, stocks and I know they hurt my chances of receiving free

money (Federal or state grants). I was thinking of cashing in the

assets and putting them in a safety deposit box. That way I won’t

have to claim them on the FAFSA because they are no longer assets. I

have two children who will be attending college. The age difference of

the two is six years. Which means they won’t be in college (hopefully)

at the same time. Is this legal to do? If not, what are the

consequences if I do this. Are there fines, penalties, etc.? I’m

exploring all my options and if this way is illegal, then obviously

doing it is out of the question. BTW. Any suggestions how to lower

your EFC when you have assets that count against you?

— Rich N.

Failure to report assets on the Free Application for Federal Student

Aid (FAFSA) is fraud. It doesn’t matter whether you keep the money in

a safety deposit box or stuffed under your mattress. Failing to report

the money is still fraud, since you will be making a false statement

on the FAFSA in response to the question about the “total current

balance of cash, savings and checking accounts.”

The penalties for providing false information on the FAFSA are severe.

Per section 490(a) of the Higher Education Act of 1965 [20 USC

1097(a)], the penalties include a fine of up to $20,000 and/or up to 5

years in prison. These penalties apply both to attempts to receive and

to the actual receipt of Title IV federal student aid through fraud,

false statement or forgery. (The FAFSA also includes the following

signing statement: “If you purposely give false or misleading

information, you may be fined up to $20,000, sent to prison, or

both.”) You will also be required to return all student aid, making it

much more difficult for you to pay for college. Some colleges will

expell students who submit falsified financial aid applications, as it

is a violation of their honor code.

If you try to submit false information on the FAFSA, you probably

won’t get away with it. The college financial aid administrator has

much more experience in detecting discrepant information than you have

in falsifying your FAFSA, so the odds are stacked against you. For

example, cashing out your assets will generate capital gains that show

up on your income tax returns. If your assets are inconsistent with

your income or interest/dividend income is inconsistent with reported

assets, the college might require you to submit several years of

income tax returns and account statements. The verification process is

not intended to be an audit, but if the college detects signs of

fraud, they are required to notify the Inspector General at the US

Department of Education (1-800-MIS-USED) for possible prosecution. The

US Department of Education also has a variety of automated tools

designed to detect fraud, and will be using a much more targeted

process this year to select FAFSAs for verification.

It is also often pointless to try to hide assets. If parent assets are

sufficient to eliminate eligibility for need-based aid, usually the

parent income on its own is sufficient to prevent the student from

qualifying for the Pell Grant and state grants. The need

analysis formula is much more heavily weighted toward income than

assets. You can see this by using a financial aid calculator to

evaluate the impact of zeroing out the assets on the expected family

contribution (EFC). Parent assets affect the EFC scores of only about

4% of dependent students.

The main type of assets that can have a big impact on aid eligibility

are assets in the child’s name, such as the UTMA account, since 20% of

the student’s assets will be added to the EFC. Parent assets are

assessed at a much lower rate. To reduce the impact of the UTMA

account, move the money into a custodial 529 college savings plan

account. This is like a regular 529 plan account, but with the student

as both account owner and beneficiary. The titling of the custodial

529 plan account is similar to that of the original UTMA account. The

College Cost Reduction and Access Act of 2007 changed the treatment of

student-owned qualified tuition plans (including 529 plans, prepaid

tuition plans and Coverdell education savings accounts) to consider

them as though they were parent assets starting with the 2009-10 award

year. So shifting the money from the child’s name into a custodial 529

plan account is a legal way of reducing the impact of the assets on

eligibility for need-based financial aid.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2x4Xocb
via Student Loan Debt Relief Now

Answers to Introductory Questions about Financial Aid for College

Answers to Introductory Questions about Financial Aid for College

I am a high school junior and an Upward Bound scholar. I do not

have any way to pay for college and I really want to attend. How do I

apply for financial aid? What are the requirements? Do I have to pay

for anything? What advice do you have for me if I do receive

financial aid?

— Alexis M.

Financial aid for college may seem complicated, with an entire

language of cryptic acronyms like FAFSA, SAR and EFC, but there are only a

few simple steps you need to take to apply for financial aid.

There are two main types of financial aid, merit-based aid and

need-based aid. Scholarships and merit-based aid are awarded based on

academic, athletic or artistic talent, or other criteria of interest

to the scholarship sponsor. Need-based aid is based on financial need,

the difference between college costs and your ability to pay.

To find merit-based aid, register for free at Fastweb.com to search

for scholarships that match your background. There are scholarships

available for students at all grade levels, including grades K-12 and

current college students, so the sooner you start searching for

scholarships, the more you will find. When completing your personal background profile on Fastweb, take the

time to review all of the choices in the optional questions. Students

who answer the optional questions match twice as many scholarships, on

average, as students who answer just the required questions. The

Fastweb scholarship matching service is updated daily, and you will

receive email notification when there is a new scholarship that

matches your personal background profile. The Fastweb and FinAid sites

are free.

To apply for need-based aid, submit the Free Application for Federal

Student Aid, also known as the FAFSA, as soon as possible after

October 1 of your senior year in high school. This form is used to

apply for student financial aid from the federal and state government

as well as for financial aid from most public and private colleges and

universities. The FAFSA is submitted annually. (A Renewal FAFSA will

be submitted during your freshman, sophomore and junior years in

college.)

If you have questions about completing the FAFSA, there are several

sources of free help. The US Department of Education’s Federal Student

Aid Information Center operates a toll-free hotline at 1-800-4-FED-AID

(1-800-433-3243). You can ask your high school guidance counselor or

the financial aid administrator at a local college for help. Several

states operate a free program called College Goal Sunday that provides

hands-on help with the FAFSA on weekends in January and

February. Visit http://ift.tt/14RGX1T

to see if and when it is offered in your state.

There is also information and advice in the FAFSA section of FinAid

and in the FAFSA articles on Fastweb.

These days almost everybody submits the FAFSA online, at

www.fafsa.ed.gov. If you do not

have a computer, ask your high school or local public library if

there’s a computer you can use. Otherwise, call 1-800-4-FED-AID and

they can send you a printed version of the form. The online form is

better, since it is a “smart” adaptive form that will skip unnecessary

questions and detect the most common errors.

Your college may also have its own supplemental form. About 250 mostly

private colleges use a form known as the CSS/Financial Aid PROFILE

form. This form is similar to the FAFSA, but typically asks more

detailed questions. You can find this form online at profileonline.collegeboard.com.

(Note that there is no “www” as part of this web site’s address.)

You will receive a “financial aid award letter” from the colleges

after you’ve submitted the FAFSA and other financial aid forms. This

letter will summarize the types and amounts of financial aid you will

receive. The financial aid will include gift aid that does not need to

be repaid, such as grants like the Pell Grant. It will also include

self-help aid, such as loans and work-study.

The prospect of taking on debt to pay for college can be frightening,

especially if you will be borrowing more money than your parents earn

in a year. You should try to minimize your debt, because every dollar

you spend using student loan money will cost you about two dollars by

the time you’ve paid off the debt. One of the best ways of minimizing

debt is to enroll at a less expensive college, such as an in-state

public college. But so long as you don’t borrow excessively and you

major in a field of study with good job prospects, you should be able

to repay the debt after graduation.

There are also a handful of financial aid programs that are available

to you when you file a federal income tax return. These include the

Hope Scholarship Tax Credit, the Lifetime Learning Tax Credit and the

Tuition and Fees Deduction. You should file a federal income tax

return to obtain these education tax benefits even if you are not

required to file a return. The Hope Scholarship, for example, is

partially refundable, so you can benefit even if you have no tax

liability.

After you get your financial aid package, review the requirements for

keeping each source of funding. In most cases you will have to get

good grades or you might lose the money. Some scholarships are

renewable and may require a renewal application, academic transcripts

or other requirements for you to keep the scholarship in subsequent

years.

Finally, beware of scholarship scams and other financial aid scams. If

you have to pay money to get money, it’s probably a scam. Never invest

more than a postage stamp to get information about scholarships or to

apply for a scholarship.

Can I start applying for financial aid when I am a 10th grader in

high school?

— Cierra B.

You will have to wait until October 1 of your senior year in high

school to submit the Free Application for Federal Student Aid

(FAFSA). However, you can and should start searching for scholarships

immediately, as there are many scholarships available to students in

grades 9, 10 and 11, not just grade 12. These scholarships can be

found in the Fastweb scholarships database.

If you are under age 13, you won’t be able to search the online

scholarship databases because of the Children’s Online Privacy

Protection Act (COPPA). However, a list of scholarships for children

under age 13 can be found on FinAid at www.finaid.org/age13.

You should also save as much as you can for your college education,

because every dollar you save is a dollar less you will need to

borrow. Encourage your parents to save for your college education in a

section 529 college savings plan. These are tax-advantaged ways of

saving for college, similar in concept to a Roth IRA and other

retirement plans. Every state offers one, and you can save in any

state’s 529 plan. More than 30 states offer a state income tax

deduction for contributions to the state’s 529 plan. It is best to use

the direct-sold version of the state’s 529 plan, as the fees are lower

than in an advisor-sold plan. Choose the age-based asset allocation

within the state plan to minimize the risk of stock market

losses. This shifts the funds to a more conservative mix of

investments as college approaches, reducing the risk of loss to principal.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wffisf
via Student Loan Debt Relief Now

Emergency Dental Care for an International Student; Reporting a New Spouse's Income and Assets on the FAFSA

Emergency Dental Care for an International Student; Reporting a New Spouse's Income and Assets on the FAFSA

I am not a US citizen. I came to the United States a month ago to

begin graduate school. Unfortunately I got a severe toothache a week

ago. As a teaching assistant I have health insurance provided by my

school, but it doesn’t cover dental care. No matter how bad it gets,

the toothache will not be considered an emergency. The $1,400 cost to

take care of it is one and a half times my monthly salary. I don’t

have any other funds, I don’t have anyone in this country and I don’t

think I can get credit to cover the cost. I had no idea I could be

rattled in such a way on my first month in this country. I am

terrified that if I don’t address this soon, it will affect my results

on my first semester and I will lose my current funding which is based on

my academic performance.

— Mahmoud D.

The federal regulations at 22 CFR 62.14 require international students

(and their accompanying spouse and dependents) to have and maintain

health insurance in order to obtain a J-1 student visa. The

regulations do not, however, require dental insurance.

Ask your college whether they have an emergency loan fund you could

use to spread the cost out over several months. Individual offices,

such as the international students office, your academic department

and the office of the dean for student affairs, may have their own

loan funds.

Shop around for a lower cost dentist. $1,400 seems rather high for a

root canal or extraction, even if the tooth is impacted. Call a nearby

dental school to ask if they run a low-cost dental clinic. This can

save you about half the typical cost for most procedures. The work

will be performed by a student dentist and may take longer, but it

will be supervised by a licensed dentist.

I am widowed and remarried, but my current wife keeps her

assets separate from mine. We do file a joint tax return. When

completing the FAFSA do I have to include her assets since they are not

mine to use? It’s important because she has more assets than I do.

— Zach D.

If an independent student is married as of the FAFSA application date,

the spouse’s income and assets must be reported on the FAFSA alongside

the student’s income and assets. Likewise, if a dependent student’s

parent has remarried as of the FAFSA application date, the income and

asset of the stepparent must be reported on the FAFSA too. The

spouse’s income and assets must be included even if you were not

married last year. Prenuptial agreements have no impact on this

federal requirement.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wf176d
via Student Loan Debt Relief Now

Does Applying for Financial Aid Affect Your Chances of Admission?

Does Applying for Financial Aid Affect Your Chances of Admission?

Does applying for financial aid ever limit one’s chances of

acceptance to a college? Do colleges give any subtle preference to

students who state on their application that they do not need

financial aid? For example, would it be advantageous for a student

whose parents earn $150,000 and have adequate savings to tell a

college costing $30,000 that they do not intend to seek financial aid?

— Mary M.

Most colleges practice need-blind admissions, where they do not

consider a student’s financial need when deciding whether to

grant admission. But very few colleges are completely need-blind, as

financial need often affects the admission of wait-listed,

international and transfer students. Accordingly, full-pay qualified

applicants are somewhat more likely to be admitted at some colleges,

affecting up to 5% of the admitted students. Note that even if a

college practices need-blind admissions, that doesn’t mean that

they’ll provide enough aid to cover the student’s full demonstrated

financial need. Students should never forgo applying for aid just to

get in, if they need financial aid to help pay for college.

A 2008 study by the National Association for College Admission

Counseling (NACAC) reported that 81% of private colleges and 93% of

public colleges practiced need-blind admissions. An additional 6% of

private colleges practiced need-blind admissions for the regular

admissions pool, but then became need-sensitive when admitting

students from the waiting list. The NACAC study reported that only 10%

of private colleges and 2% of public colleges were need-aware

throughout the entire admissions cycle. (Some colleges refer to

need-sensitive admissions policies as “need-aware”. The two terms are

synonymous.)

Other studies have reported lower percentages of need-blind

colleges. For example, one study reported that half of the nation’s

top colleges have need-blind admissions policies. The difference is

due to the distinction between a need-blind admissions policy and a

need-blind admissions practice. Many colleges practice need-blind

admissions even if they do not have a formal need-blind admissions

policy.

But just because a college practices need-blind admissions doesn’t

mean that all students are admitted without regard to financial

need. Even need-blind colleges have a tendency to switch to

need-sensitive admissions when admitting international students,

transfer students and students on the waiting list. This typically

affects up to about 5% of admitted students.

(Section 568

of the Improving America’s Schools Act of 1994 provides a temporary

antitrust exemption to colleges that coordinate their institutional

need-based aid policies provided that all students at the colleges are

admitted on a need-blind basis. The exemption has been extended three

times and currently runs through September 30, 2015. The requirement

that colleges must be completely need-blind is one of the reasons why

only two dozen colleges participate in the

568 Group. Most of the 568 Group

colleges have adopted more generous

no loans financial aid policies.)

Need-blind admissions doesn’t guarantee that the college will provide

enough financial aid to meet full demonstrated financial need. The

2008 NACAC study, for example, reported that only 18% of private colleges

and 32% of public colleges meet the full demonstrated financial need

of all students. Many colleges practice gapping, where they leave

students with unmet need. (Often the colleges will use the unsubsidized

Stafford and Parent PLUS loans to fill the gap.) This can lead to an

admit-deny situation, where a student is admitted but can’t afford to

attend the college.

Need-blind admissions also doesn’t mean that the admissions is

wealth-blind. A college might ignore financial need for low-income

students, but then grant an admissions preference for high-income

students. Most colleges define need-blind as meaning that financial

need has no role in the decision to deny admission to low-income

students. As such, financial need is not treated as a negative

characteristic for low-income students. But colleges can treat a lack

of financial need as a positive characteristic for high-income

students and still consider themselves to be need-blind. For example,

some need-blind colleges will admit full-pay but borderline candidates

or grant wealthier students more attactive financial aid packages.

This combination of admissions and financial aid policies drives

low-income students away from the more selective colleges and the more

advanced degree programs. As a result, wealthier students are overrepresented

at these colleges. According to data from the National Postsecondary

Student Aid Study (NPSAS), 34.9% of the students at very selective

4-year colleges have family adjusted gross income (AGI) under $50,000,

compared with 45.8% of students at moderately selective 4-year

colleges, 54.1% of students at minimally selective 4-year colleges and

63.8% of students at open admission 4-year colleges. In contrast,

34.5% of students at very selective 4-year colleges have family AGI of

$100,000 or more, compared with 22.6% of students at moderately

selective colleges, 16.0% of students at minimally selective colleges

and 10.5% of students at open admission colleges. In effect

greater selectivity is manifested as a preference for wealthier students.

Similarly, data from the 2007-08 NPSAS demonstrates that 27.2% of

students pursuing Bachelor’s degrees had family adjusted gross income

under $25,000 in 2007-08, compared with 40.6% of students pursuing

Associate’s degrees and 51.5% of students pursuing Certificates. A

quarter (24.9%) of students at non-profit colleges had a family AGI

under $25,000, compared with a third (33.4%) of students at public

colleges and three-fifths (58.0%) of students at for-profit

colleges. For-profit colleges tend to have open admissions policies. A

fifth (19.7%) of students at very selective 4-year colleges received

the Pell Grant in 2007-08, compared with 25.2% of students at

moderately selective 4-year colleges, 30.2% of students at minimally

selective 4-year colleges and 34.2% of students at open admission

4-year colleges.

Some need-blind colleges use financial aid and other discounts to

attract wealthier students. The 2008 NACAC study reported that 63% of

private colleges and 15% of public colleges use preferential

packaging, where more desirable applicants will get a more attractive

mix of grants, work-study and loans. Preferential packaging is mostly

based on academic merit or a particular talent or skill of interest to

the college, but about two-fifths of it is based on income. This

leveraging of the financial aid package helps the colleges financially

because they get more net tuition revenue from a wealthier family than

a low-income family even after accounting for the extra grant aid to

the wealthier student.

Institutional aid — money from the colleges own funds —

has increasingly been shifting away from need-based aid because of

preferential packaging. For example, data from the National

Postsecondary Student Aid Study (NPSAS) demonstrates that 45% of

institutional aid dollars were need-based and 55% were non-need or

merit-based in 2007-08, compared with 65% need-based and 35% non-need

or merit-based in 1993-94. Moreover, while 85% of non-need or

merit-based aid was awarded to low-income families earning less than

$50,000 in 1993-94, this dropped to 32% in 2007-08. In 2007-08,

need-based aid represents 55% of financial aid to low-income families,

44% of financial aid to middle-income families and 30% of financial

aid to high-income families. Wealthy families still get some financial

aid, but most of it is not based on financial need.

The most selective colleges appear to be the only colleges opposing

this shift away from need-based aid. According to data from the NPSAS,

56% of institutional financial aid dollars were need-based at very

selective 4-year colleges in 2007-08, compared with 37% of

institutional financial aid dollars at less-selective 4-year colleges.

Even so, 44% of institutional financial aid dollars at very selective

4-year colleges were non-need or merit-based, and enrollment at these

colleges is still tilted in favor of wealthier students.

Colleges are increasingly under financial pressure, so need-blind

admissions policies may change. For example, Tufts University

suspended its need-blind admissions policy recently, and Williams

College ended need-blind admissions for international students. On the

other hand, Hamilton College just switched from need-sensitive to

need-blind admissions.

While some colleges have admissions preferences for wealthier

students, few if any public and non-profit colleges have admissions

preferences for low-income students. The selectivity of the more elite

colleges puts talented but poor students at a disadvantage in the

admissions process. Low-income students do not have the luxury of

participating in extracurricular activities or athletics, nor can they

afford SAT-prep classes, because they have to work at one or more

part-time jobs to help their parents put food on the table. Frankly, a

low-income student who succeeds academically despite adversity is much

more impressive than a wealthier student who had every opportunity

handed to him or her. It’s a mystery why the most selective colleges

don’t do more to admit and enroll talented low-income students.

The bottom line is that there might be a slight admissions advantage

for wealthier students who do not have financial need, especially for

wait-listed students. Ask the colleges you are considering whether

they practice need-blind admissions, and whether that need-blind

admissions policy or practice includes students who are wait-listed.

Nevertheless, you should still apply for financial aid if you need

it. It does a student no good to be admitted if he or she can’t afford

to enroll. Some families figure they’ll dig deep to cover the costs

the first year, hoping that the college will pick up the tab after

that, but this may not be realistic. Some colleges front-load the

grants, meaning that they award more grants during the first year and

less grants in subsequent years. Other colleges restrict institutional

grants to just students who applied for aid the first year, leaving

you with mostly loans to cover your costs.

Even if you don’t apply for financial aid, the colleges can infer

something about your family’s finances by looking at your zip code or

the parent’s occupation.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wezF8D
via Student Loan Debt Relief Now

Ask for a Professional Judgment Review for One-Time Events

Ask for a Professional Judgment Review for One-Time Events

In our base year, my spouse will have a one-time job that will

significantly raise our income for one year only. We have significant

credit card debt and no savings for our child’s college education. We

plan to use the extra income to pay down our debt and to have

money available to help with college costs. But will this one time boost in

our income, which will happen to fall during our base year, limit our

access to financial aid? Also, unfortunately, I will be getting income from

the sale of my parents’ home, which would also have gone directly to

debt reduction/college expenses. The timing of this is unusually bad

for us.

— B.J.

Having extra money to pay bills and reduce debt is never

unfortunate. Even if the money reduces eligibility for need-based

financial aid, the family will still come out ahead financially.

The Free Application for Federal Student Aid (FAFSA) considers both

income and assets when calculating ability to pay. Extra income during

the base year can show up on the FAFSA as both income and an

asset. However, if the family uses the money to pay down credit card

debt or other forms of consumer debt (e.g., auto loans or mortgages),

it can reduce or eliminate the treatment of the money as an asset on

the FAFSA. Still, the money will be counted as income on the FAFSA,

which can have a significant impact on eligibility for need-based

financial aid.

The best solution is to ask the college for a professional judgment

review, sometimes called a special circumstances review or financial

aid appeal. The goal of need analysis is to use the prior tax year

income as a proxy for income during the academic year. So college

financial aid administrators are often persuaded by arguments that

claim that the extra income was due to a one-time event that is not

reflective of the ability to pay during the award year. College

financial aid administrators also dislike the double-counting of a

windfall as both income and an asset.

The family will need to present documentation demonstrating that the

extra income was due to a one-time event that is unlikely to be

repeated. The college financial aid administrator may want to see

copies of the past 3-5 years worth of federal income tax returns to

verify that the extra income was an unusual event.

It also helps to demonstrate that the money was used to pay down debt

and is no longer available to pay for college costs (except for any

money contributed to a 529 college savings plan).

Is there any way around the fact that we withdrew money from

retirement accounts to purchase a house. We are a low-income family

but wanted to take advantage of the housing market and reduce our monthly

housing costs. Our FAFSA/EFC will be very skewed because of this “taxed

income”. We have two children in college and I (mom) will be

returning to school on a full-time basis. Any advice?

— Jackie A.

Distributions from retirement plans count as taxable income even if

the money is used to buy a home, pay for tuition or other

hardship expenses.

This can artificially increase the family’s income, affecting

eligbility for need-based financial aid.

Since this is a one-time event that is not reflective of ability to

pay during the award year, the family should ask the college financial

aid administrator for a professional judgment review. The family

should provide the financial aid administrator with documentation

concerning the hardship withdrawal from the retirement plan accounts,

such as the amount withdrawn and the purpose for which it was used. It

helps to refer to it as a hardship distribution. Note that this

situation is similar to the rollover from a traditional IRA to a Roth

IRA, where Dear Colleague Letter GEN-99-10 gave guidance to encourage

financial aid administrators to eliminate from income the amount

attributable to the Roth IRA conversion. As with the Roth IRA

conversion, neither the retirement plan nor the family home is a

reportable asset on the FAFSA and the family does not have additional

available income or assets to spend as a result of the hardship

distribution.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wfgMT9
via Student Loan Debt Relief Now

Which of a Student's Divorced Parents Must Complete the FAFSA? Is the Stepparent's Information Reported on the FAFSA?

Which of a Student's Divorced Parents Must Complete the FAFSA? Is the Stepparent's Information Reported on the FAFSA?

I will be filling out the FAFSA soon for my daughter who will be

attending college next fall. My question is regarding her father, who

is my ex-husband. Her father does not pay child support and has not

supported her financially since our divorce 5 years ago. Do I have to

include his financial information, or any of his information, on the

FAFSA? Also, I have remarried, and my daughter lives with me and her

step-father. Do I have to include her step-father’s information, both

financial and personal, on the FAFSA?

— Kari L.

You must include the step-father’s information, not your ex-husband’s

information, on your daughter’s Free Application for Federal Student

Aid (FAFSA).

When a student’s parents are divorced or separated, only one parent’s

information is reported on the FAFSA. This parent is often referred to

as the custodial parent. The term custodial parent has

nothing to do with which parent has legal custody of the student. The

custodial parent is defined in section 475(f)(1) of the Higher

Education Act of 1965 as the parent with whom the student lived the

most during the 12 months ending on the FAFSA application date. Since

your daughter lives with you, you are responsible for completing the

FAFSA.

If your daughter lived with you and your ex-husband equally or with

neither of you, the custodial parent would be the parent who provided

more support to her during the 12 months ending on the FAFSA

application date. Since there usually are an odd number of days in the

year, this situation most often arises in leap years, in recent

divorce cases, when the parents continue to live together after the

divorce or when the student no longer lives at home. Cash support

includes money, gifts and loans. It also includes food, clothing,

housing, car payments and expenses, auto insurance, medical and dental

care and insurance, college costs and any money paid to someone else

on her behalf. Money you receive for her from her stepfather and

government benefit programs for dependent children counts as part of

your support of your daughter. Note that if the non-custodial parent

provides some cash support for your daughter beyond the requirements

of a legal child support agreement, this money must be reported as

untaxed income to your daughter on her FAFSA.

If both parents split the student’s support equally or neither

provided support during the 12-month period, then the custodial parent

is the parent who provided more support during the most recent

calendar year during which either parent provided support for the

student. It is quite rare for a student to live with both parents and

receive support from both parents equally. Usually there is at least a

day or a dollar difference. If none of the statutory criteria apply,

the college’s financial aid administrator will determine which parent

is considered the custodial parent; financial aid administrators

usually choose whichever parent has the greater income.

Section 475(f)(3) of the Higher Education Act of 1965 specifies that

if the custodial parent is married as of the FAFSA application

date, then the stepparent’s income and assets must be reported on the

FAFSA. There are no exceptions to this statutory requirement, not even

if the parents have a prenuptial agreement. The stepparent’s income

during the prior tax year must reported even if the stepparent and

custodial parent weren’t married until after the end of the prior tax

year.

(If the custodial parent dies, the non-custodial parent becomes

responsible for completing the FAFSA. The income and assets of the

stepparent who was married to the custodial parent are no longer

reported on the FAFSA, even if the student continues to live with the

stepparent. Any support received by the student from this stepparent

will be reported as untaxed income to the student on her FAFSA. If the

student has had no financial support from or significant contact with

the non-custodial parent for an extended period of time, some colleges

will use a dependency override to treat the student as independent.)

Note that separation is treated the same as divorce. A separation does

not need to be a legal separation. An informal separation is

considered a separation for federal student aid purposes, but the

parents may not live together. Colleges are often suspicious of recent

separations because of a high frequency of sham separations. They will

want to see proof that the parents maintain separate residences and

that the relationship has ended. Having one parent live in a hotel

room, with friends and family or in a separate bedroom in the same

house is usually not considered sufficient.

When one divorced parent has much lower income than the other parent,

it can be financially advantageous to have the parent with the lower

income complete the FAFSA. But falsely identifying this parent as the

custodial parent is fraud. Likewise, failing to report the income and

assets of the stepparent on the FAFSA is fraud. Colleges legally may

not disburse federal student aid until all discrepancies are

resolved. For example, if the student’s custodial parent lives in a

different school district than the student’s high school, the college

financial aid administrator will want more information to resolve this

apparent discrepancy. College financial aid administrators often ask

for a copy of the original divorce decree or separation agreement to

verify assertions concerning living arrangements and child support. If

a college financial aid administrator discovers credible evidence of

fraud affecting eligibility for federal student aid or the amount of

aid, the college is required to refer the case to the Office of the

Inspector General at the US Department of Education for further

investigation. Criminal penalties for financial aid fraud include

fines of up to $20,000 and/or imprisonment for up to 5 years, in

addition to disgorgement of the fraudulently-obtained student aid

funds.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wffibJ
via Student Loan Debt Relief Now

What are Your Options When Your Parents Refuse to File the FAFSA?

What are Your Options When Your Parents Refuse to File the FAFSA?

I am hoping you can help me with my FAFSA issue. I am 16 and a

senior this year in high school, so I plan on attending a university

in the fall. However, my dream college is a private university and is

extremely expensive. My parents refuse to help pay a dime towards

furthering my education — they believe college isn’t necessary

and that I can get by without it. I begrudgingly accepted this, but

asked if they would give me their tax information so I can fill out

the FAFSA. They now won’t even let me look at their tax information

and refuse to fill out the FAFSA because they don’t want the

government seeing their assets and what not and don’t want an

audit. This was extremely upsetting for me, as the scholarship I want

to apply for requires a completed FAFSA, and a FAFSA is required for a

work-study job on campus. I have pretty much no money for college

myself, just $1,000 in my personal account but that is all I have. I’m

not sure how much we make — my mom doesn’t have a job and my dad is a

printer and owner of our family business, which is enough to make ends

meet, but we are definitely middle class. I am willing to take out

loans, but I can’t pay my entire education on loans. The FAFSA

considers me to be a dependent student. Is there any way I can receive

federal aid while still being a dependent student and not filling in

my parents information?

— M. D.

As President Barack Obama said, “In a global economy where the most

valuable skill you can sell is your knowledge, a good education is no

longer just a pathway to opportunity — it is a prerequisite.”

There are more jobs available for college graduates than for people

with just a high school diploma. Unemployment is lower for college

graduates and salaries are higher.

But your goal of enrolling in the film school at one of the most

expensive private colleges in the US is unrealistic. This college

charges $37,500 a year in tuition alone. Even with student aid you

would have to borrow excessively in order to attend this college and

you will have difficulty repaying that debt as a starving artist. You

should consider pursuing a more practical field of study instead, one

that will help you pay your bills after you graduate, and enroll in a

less expensive college. You might be able to minor or double-major in

film.

The US Department of Education does not currently share FAFSA

application data with the IRS. Discuss your situation with a

financial aid administrator at the college; sometimes they can help

address your parent’s concerns about the privacy of the information

provided on the FAFSA.

However, it is possible that your parents may not have filed their

federal income tax returns. (Self employment combined with excessive

concern about triggering an audit increases the likelihood of tax

evasion or tax fraud.) If they haven’t paid their taxes, you won’t be

eligible for federal student aid until they do.

The Higher Education Act of 1965 allows a student whose parents refuse

to complete the FAFSA and who have terminated all financial support to

obtain unsubsidized Stafford loans of $5,500 to $7,500 a year,

depending on the year in school. That is just a drop in the bucket

compared with college costs at an expensive private college.

If your parents do not change their minds about completing the FAFSA

and helping you pay for college, there are only two practical

options. One is to enroll at a low cost community college. You might

be able to obtain a part-time job to pay for the college costs. The

other is to wait until you turn age 24 to go to college, when you will

automatically be considered independent.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wdGbLv
via Student Loan Debt Relief Now

How Do You Complete the FAFSA When a Parent is Undocumented?

How Do You Complete the FAFSA When a Parent is Undocumented?

I live with my mother and my brothers. My mother is undocumented and

does not work. However, I am a permanent resident and my brothers were

born here in the United States. We are receiving help from

welfare as food stamps and cash for needy families. We are also living

in a shelter. My question is: What kind of financial aid can I get if

my mom cannot fill out the FAFSA? Can I fill out the FAFSA by myself?

Is there another way that my mom can fill out the FAFSA?

— Jose B.

As a permanent resident you are eligible for federal student aid

regardless of whether your mother is a US citizen or not. You are also

eligible for other forms of financial aid, including state grants and

money from the colleges. Likewise your brothers will be eligible for

student aid.

Your mother, however, will not be able to borrow from the Parent PLUS

loan program, since she is not a US citizen or permanent

resident. Instead, you will be eligible for the same unsubsidized

Stafford loan limits available to independent students, namely $9,500

to $12,500 per year depending on the year in school and an aggregate

limit of $57,500. You will need to talk to the college’s financial aid

office to obtain these higher loan limits.

If you submit the FAFSA without your mother’s information, it will be

rejected. Since your mother does not have a Social Security number,

you will need to enter “000-00-0000” instead. If the form is still

rejected, try resubmitting it. You may need to have your college’s

financial aid administrator submit it on your behalf.

Discuss your situation with a financial aid administrator at the

college. The financial aid administrator will be able to help you in

other ways as well.

I am a bit confused about filling out the FAFSA form. Here are the

facts: I was married, my husband left when I was 5 months pregnant, he

hasn’t talked to or seen his son or myself in 15 years. Child support

is taken out of his paycheck and ends the day my son graduates. I do

not have my husband’s social security number, know how much he makes,

his birth date or anything else about him. How do I complete the

FAFSA? Single, with just my info? When it asks about support, I will

not have that when he goes to college, do I list what I received for

the prior year?

— S. D.

If you are divorced, you are considered separated. Either way you

should specify your marital status as “Divorced or separated” on the

FAFSA and only your information will be required on the FAFSA. Your

husband’s information will not be included on the FAFSA.

The child support you received from your husband last year should be

reported on the form, even if it will be ending when your son enrolls

in college. After you submit the FAFSA, ask the college for a

professional judgment review to remove the child support from the

FAFSA, based on the fact that the child support payments will be

ending. Many colleges will make such an adjustment to the FAFSA. You

cannot omit the child support on your own.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wdgn1P
via Student Loan Debt Relief Now

Do Twins Get More Aid? If a Student Gets Married, Does the Financial Aid Change?

Do Twins Get More Aid? If a Student Gets Married, Does the Financial Aid Change?

My boyfriend and I are afraid that if we marry my annual gross

income ($47,000) will prevent him from getting federal grants and

loans for college. He has no income at all. He is disabled but was

denied disability when he applied. We don’t mind waiting if it would

be better to wait.

— Sarah K.

Your fears are justified.

When a married student files the Free Application for Federal Student

Aid (FAFSA), the income and assets of the student’s spouse must be

reported on the FAFSA, not just the student’s income and assets. Your

income is likely to affect your boyfriend’s eligibility for the Pell

Grant. It may also affect his eligibility for subsidized loans, but he

will still be eligible for the unsubsidized Stafford loan. His parents

will no longer be eligible for the Parent PLUS loan, since he will be

independent because of the marriage. As an independent student he will

be eligible for higher unsubsidized Stafford loan limits: an extra

$4,000 a year during the freshman and sophomore years in college and

an extra $5,000 a year during the junior and senior years in college.

The regulations allow but do not require applicants to

update their FAFSA due to a mid-year change in marital

status. However, the regulations also allow colleges to require an

applicant to update the FAFSA because of a change in the applicant’s

marital status “if the institution determines the update is necessary

to address an inequity or to reflect more accurately the applicant’s

ability to pay.” So colleges have the discretion to update the FAFSA

to reflect a change in the applicant’s marital status, but are not

required to do so. Thus policies regarding whether an applicant must

update the FAFSA for a change in applicant marital status will vary

from college to college.

I have twins. Do I have to fill out the FAFSA twice or can they

both be included on one form? Also, does the federal government give

more “free” money to those who have multiples in college?

— Donna M.

You have to complete two FAFSAs, one for each child. The parent

information on the two FAFSAs will be the same, but usually there are

some differences in the student section of the FAFSA. For example, the

student income and assets may differ, and the student names and Social

Security numbers will certainly differ.

Twins, triplets and other multiples tend to qualify for more student

financial aid than singletons because more children are enrolled in

college at the same time. The federal need analysis methodology

divides the parent contribution by the number of children in

college. The expected family contribution (EFC) is often much lower as

a result, yielding an increase in eligibility for need-based financial

aid. For example, among low and moderate income families (AGI <

$75,000) with dependent children pursuing Bachelor’s degrees, 46.0% of

those with two or more children in college qualified for a Pell Grant,

compared with 39.9% of those with just one child in college.

Some colleges offer special scholarships or discounts for twins. The

Lake Erie College Twins Scholarship splits a full tuition scholarship

among the twins. Other colleges offer a discount for siblings enrolled

simultaneously, not just twins. George Washington University, for

example, provides a 50% discount for the second sibling enrolled in

college at the same time through the GW Family Tuition Grant. Ask your

college if they provide a “buy one, get one free” deal. Colleges are

more likely to offer discounts if the twins are identical or if a

multiple of three or more children will enroll at the college at the

same time.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wdD6ek
via Student Loan Debt Relief Now

Who is Considered an Independent Student? What if you are not yet 24 years old?

Who is Considered an Independent Student? What if you are not yet 24 years old?

I’m having problems with my financial aid. I’m a single mother of

one. My daughter is almost three years old and will be attending

daycare this semester. I’ve been going to college for two years and

will receive my associates degree soon with a cumulative GPA of 3.7. I

will continue my education at another college this fall, and again I’m

having problems with financial aid. I received a Pell Grant only one

semester, but they took it away from me because they said I was still

considered an dependent until I’m 24 years of age. I do not live with

my parents and they do not provide me any support. I’ve taken out

student loans ever since they denied me the Pell Grant. The loans are

hardly enough money to get by, I have had to work two jobs and I

usually take more than 12 hours a semester. Since my daughter is

attending daycare this will be an added expense, on top of my moving

to an apartment in a different city. I’m very depressed about this

situation and I cannot stop crying because I just don’t know what to

do. It seems no matter how hard I try to find help I just cannot get

any. Please help me.

— Casey F.

Congratulations on your academic performance! You should be very proud

of your accomplishments. Students who are single parents and who work

full-time often find it much more difficult to graduate than dependent

students who have the emotional and financial support of their

parents. You are going to be a great role model for your

daughter. Keep up the good work!

Reaching age 24 is not the only method of achieving independent

student status. Section 480(d) of the Higher Education Act of 1965

specifies eight criteria for independent student status, any one of

which is sufficient:

1. A student who will be age 24 or older as of December 31 of the

award year.

2. A student who is an orphan, in foster care or a ward of the court

(not ward of the state) at any time after reaching age 13.

3. A student who is an emancipated minor (prior to reaching the age of

majority) or in a legal guardianship as determined by a court of

competent jurisdiction in the student’s state of legal residence.

4. A student who is a veteran of the Armed Forces of the United States

or currently serving on active duty for other than training

purposes.

5. A student who is a graduate or professional student.

6. A student who is married.

7. A student who has legal dependents other than a spouse.

8. A student who is an unaccompanied youth who is homeless or who is

an unaccompanied youth who is at risk of homelessness and

self-supporting.

In addition, college financial aid administrators have the discretion

to perform a dependency override when justified by unusual

circumstances.

Since you have a three-year-old daughter, you are independent under

the seventh reason listed above. Your daughter is considered a legal

dependent because your parents are not providing more than half her

support. When a student lives with her parents, usually the parents

are providing more than half support, since support includes non-cash

assistance such as lodging. But you said that you are not living with

your parents and are not receiving any support from them.

Even if you are not providing your daughter’s support from your own

income, any money you receive for your daughter from a source other

than your parents counts as part of your support to the child, per the

discussion on the bottom of page AVG-27 of the 2010-11 Application and

Verification Guide. This includes child support from your boyfriend,

government assistance programs such as TANF and SNAP (food stamps) and

federal student financial aid.

If you satisfy these requirements, you are considered independent

according to the statutory definition, and the college financial aid

administrator does not have the authority to treat you as a dependent

student. The financial aid administrator’s authority to perform a

dependency override is one way, from dependent to independent, not in

the other direction, as noted on page AVG-30 of the 2010-11

Application and Verification Guide.

You should also ask the college’s financial aid administrator to

increase your cost of attendance to include the childcare costs. The

definition of cost of attendance at section 472(8) of the Higher

Education Act of 1965 includes an allowance based on estimated actual

expenses for dependent care. The allowance is limited to the

reasonable cost of this dependent care where you live. It includes but

is not restricted to the time you are in class, studying or

commuting.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wdT6Nw
via Student Loan Debt Relief Now

Can a Family on Fixed Income Afford to Pay Double for an Out-of-State Private College?

Can a Family on Fixed Income Afford to Pay Double for an Out-of-State Private College?

My husband took early retirement so we are on a fixed income. We

set aside enough money in various college funds for our daughter to

attend any in-state public college. However, she is interested in an

out-of-state private college that costs approximately double what we

have saved. We are researching scholarship opportunities but wonder

how the fact that we are retired will be evaluated in the financial

aid application process?

— Elizabeth J.

Money in qualified retirement plans like a 401(k) or IRA are not

reported as assets on the Free Application for Federal

Student Aid (FAFSA). The current year’s contributions to retirement

plans, however, are added back to adjusted gross income and treated as

untaxed income to the extent that such contributions are

discretionary in nature. Money that is not in a qualified retirement

plan, however, is reported as an asset even if you are already

retired. The net worth of your principal place of residence is also

ignored on the FAFSA.

The federal need analysis formula also includes an asset protection

allowance that shelters a portion of parent assets in taxable accounts

based on the age of the older parent. For example, the asset

protection allowance is about $80,000 for a parent age 65 or older and

about $50,000 for a parent age 48, the median age of parents of

college-age children.

Income is assessed the same way regardless of whether you are retired

or not. However, parents who are on fixed income often have lower

income, which may qualify for more financial aid. If your adjusted

gross income is less than $50,000 and you are eligible to file an IRS

Form 1040A or 1040EZ or satisfy certain other requirements, you will

qualify for the simplified needs test, which ignores assets. If your

adjusted gross income is less than $30,000 and you satisfy the other

requirements, you will qualify for automatic zero EFC, which will make

your daughter eligible for a full Pell Grant.

If your husband retired recently, the previous year’s income might not

be reflective of your ability to pay for college. If so, you should

ask the college for a professional judgment adjustment based on the

change in income. The college is not required to make an adjustment,

so it pays to be polite, but if they make an adjustment it can have a

big impact on your daughter’s eligibility for need-based financial

aid.

Given that you are on fixed income, your ability to stretch to pay for

a more expensive college is limited. While you may get a bigger

financial aid package because of the greater cost, you will be paying

about three-fifths of the added cost out of pocket or through

additional student loans. The total amount of college debt at

graduation will likely be at least 50% higher.

Generally, it is not a good idea to take on more debt if you are

retired, since your ability to repay the debt is limited. If you were

to default on the Parent PLUS loan, the federal government can

garnishee up to 15% of your Social Security benefits to repay the

debt. Income-based repayment is not available for the Parent PLUS

loan.

If you convince the college that your financial circumstances limit

your ability to repay the Parent PLUS loan or that you are likely to

be denied the Parent PLUS loan, the college has the authority to grant

your daughter increased unsubsidized Stafford loan limits. These are

the same loan limits available to independent students. However, these

loan limits are only $4,000 a year higher during the freshman and

sophomore years and $5,000 a year higher during the junior and senior

years. That increase is unlikely to be sufficient to cover the cost of

a higher-cost private college.

It is also unreasonable to expect your daughter to take on that much

debt on her own, even if she’s the one choosing the more expensive

college. Borrowing more than $10,000 per year of school is excessive

and she will experience some difficulty repaying the loans. Even if

she works full time in the summers, she will probably graduate with

more debt than most of her peers.

Review your finances, but you may discover that your main choices are

between saying no to your daughter or coming out of retirement to pay

for her education at the more expensive college.

This is a good opportunity to teach your daughter about budgeting and

living within one’s means. College is the start of her transition from

a sheltered existence to the real world.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wdGaHr
via Student Loan Debt Relief Now

Reporting of Untaxed Social Security Benefits on the FAFSA and the Impact of IRS Filing Extensions on FAFSA Verification

Reporting of Untaxed Social Security Benefits on the FAFSA and the Impact of IRS Filing Extensions on FAFSA Verification

I am a college student with a severe congenital physical

disability. If I apply for and am granted SSI benefits, will receiving

these benefits cause my family’s EFC to increase? I am not employed

and am a full-time student, living in my parents’ home. Would we end

up paying more for my college expenses if I were to receive SSI benefits?

— Sharon K.

The College Cost Reduction and Access Act of 2007 (P.L. 110-84)

amended section 480(b) of the Higher Education Act of 1965 to remove

the Supplemental Security Income Program (SSI) from the definition of

untaxed income and benefits starting with the 2009-10 Free Application

for Federal Student Aid (FAFSA). As such, receipt of SSI benefits will

have no impact on your eligibility for need-based federal student aid.

Besides removing untaxed Social Security benefits such as SSI from the

definition of untaxed income and benefits, the legislation also

removed removed welfare benefits such as TANF, the earned income tax

credit, the credit for federal taxes on special fuels and the foreign

income exclusion.

My FAFSA has been selected for ‘verification’ and I have been asked

to submit my tax return for review. However, we are filing an

extension, and so the tax return is not available. Can I use the

previous year’s income tax return instead?

— Lisa

Taxpayers can get an automatic six-month extension of the time to file

their federal income tax return by filing IRS Form 4868.

Contact the college’s financial aid office for instructions on what to

do if you filed for an extension. Generally, the college will want to

see a copy of the IRS Form 4868 as filed by the family, as well as

copies of W-2 forms and 1099 statements. It may also be helpful to

provide them with copies of the last pay stub of the

year. Occasionally colleges will want to see a copy of the previous

year’s federal income tax returns to determine whether there are any

additional significant sources of income that aren’t included in a W-2

form or 1099 statement.

The college will also require you to send it a copy of the federal

income tax return after you file it later this year.

Some colleges will require you to submit IRS Form 4056-T to the IRS so

that they get confirmation from the IRS that you did indeed file for

an extension.

Source: Fastweb

from Student Loan Debt Relief Now http://ift.tt/2wEoGH6
via Student Loan Debt Relief Now