Going to college is a noble choice. Navigating the financial aspect of that decision can be quite daunting. CheapScholar.org provides a number of resources to help our readers traverse the challenges associated with paying for college.

I have always been a big fan of infographics – especially those that are informative and esthetically pleasing to the eyes. The following infographic is chocked full of great information related to the financial aid process. Some of the topics covered are: FAFSA, Federal Loans, Comparing Financial Aid Packages, The Costs of College, Grants, Scholarships, and Work Study. Enjoy!

Brought to you by SNHU.EDU

The following guest article is provided by Dawn Lee.

Our method of providing student aid is focusing too much on what a person ‘was’ and ‘had’ done. It isn’t focusing enough on what a person ‘could’ do, and changing the way we dole out student aid to better suit this philosophy could very well change our country for the better.

This is at least according to Sandy Baum and Matthew Chingos in their report on strengthening state grant programs.

Baum is a Senior Fellow at the George Washington University Graduate School of Education and Human Development, while Chingos is a Fellow in Governance Studies as well as the research director of the Brookings Institution Brown Center on Education Policy.

Lengthy titles aside, these two folks are proposing some pretty significant changes to the way we distribute financial aid. They propose that:

1. States should target aid to students whose potential to succeed is restrained by their available resources.
2. Simplify aid programs so that prospective students and their families can more easily avail of them.
3. Reward concrete academic achievements like completing credit hours and on-time degree attainment.
4. Lower income limits and cut grants with priority placed on needier students during financial difficulties while still building up incentives for college completion.
5. Test, evaluate and promote innovative programs to replace programs found to be wasteful and inefficient.

These five points are the main components of their proposal, which aren’t really that bad on paper. I am even surprised at how basic they are. I mean, is our student aid system really that messed up that we need an entire research team to point out the basics of any aid-related program all over again?

What I’m really interested is the first point of the program, where aid should be given to students who have the potential to succeed.

I am particularly iffy about the ‘how’ of this process. How will we determine if a student has the potential for a better college if not by looking at his or her past performance? And another point I am concerned about is what about the other kids who don’t show a promising college career? Do we just leave them to fend for their own?

A solution to both issues is to stop focusing so much on where the aid goes and to start focusing on the education process itself.

We need a standardized system of education that molds students of all backgrounds into success stories. It’s not about rewarding the smart ones and disposing of the dumb ones – it’s about giving everybody a productive role to play in society. Establishing such a system will guarantee that student aid of any form will indeed return much more to society regardless of who receives that aid.

How we do that will, of course, need a lot of discussion. Have any ideas on how to make education universally rewarding for all? Just write it up on the comments section and let’s talk about it.

About The Author:

Dawn Lee is a single mother of one & a regular contributor at http://singlemothergrant.net.

If you’re considering going to college—undergraduate or graduate—you’ve probably heard a variety of educators, teachers, administrators, and fellow students discussing the FAFSA, or the Free Application for Federal Student Aid, as though it were the most important form in the world. For many students who have aspirations of climbing the ladder from higher education into lucrative careers in life sciences, financial consulting, or any number of highly specialized fields, the FAFSA may very well be one of the most important documents out there.

So, if you’ve found yourself asking ‘do I really need to fill this thing out,’ the short answer is: if you’re planning on receiving some kind of financial aid for school, then yes. Here is a breakdown of the more specific forms of financial aid the FAFSA makes you eligible for:

Pell Grant—Pell Grants, named after U.S. Senator Claiborne Pell, are sponsored by the Department of Education and covered by federal legislation dating back to the mid sixties. The Pell Grant allocates up to $5,500 for enrollment at over 5,400 educational institutions across the nation. This grant is specifically tailored for students with low EFCs (estimated family contribution).

Stafford Loans—Stafford loans are available to students enrolled in higher education institutions. Available as both subsidized and unsubsidized loans, interest rates for the Stafford awards are currently at 6.80%.

Perkins Loans—Perkins loans are similar to Stafford loans, but are given directly from schools that are Title IV eligible. There is a fixed interest rate of 5% that is sustained over the ten years the recipient has to repay the loan. Graduates can earn a lifetime amount of $60,000 from a Perkins.

Federal Work-Study Program—This is a federal program set up to help students pay for their educations while also earning an income. Students usually work at an on-campus facility, such as a library or dining hall,  and apply their earnings toward tuition costs or other miscellaneous living expenses. This is one of the most common forms of financial assistance in the American educational system and is open to all students in need.

All four of the preceding financial assistance programs require the proper filing of a FAFSA, underscoring the importance of the form. All in total, the FAFSA is your portal to applying for nine federal student-aid programs, over 600 state aid programs, and most other forms of grants, scholarships and institutional aid offered for education.

So in other words, yes, you definitely need to fill out a FAFSA.

Today’s guest article was provided by Amanda Green.

The purpose of CheapScholar.org is to provide families and their students with the financial tools, resources, and knowledge that will assist in their pursuit of a college education.

As a professional school counselor at the high school level, you often serve as the “front-line” for fielding questions related to college expenses from students that are contemplating a post-secondary educational experience.  At CheapScholar.org, we hope to provide a support tool for not only you but also the families and students in which you serve.

In an effort to better help you and your families, CheapScholar.org has put together this Paying For College Toolkit as a way in which you can provide quick reference information to those visiting your office (in person or online).

Implementing CheapScholar.org as a resource for your families is as easy as 1-2-3.

1. Below you will find a number of pdf handouts (sized for easy printing) referencing some of the more hot topic issues related to the financial aspect of the college experience. Feel free to print these off and use them as a quick resource in your office to provide to students and families as questions arise.

2. Provide a link to CheapScholar.org on your High School Guidance Counselor Webpage. This will insure that your students have access to the most current information related to their paying for college experience. In addition, they can ask questions at anytime to receive prompt helpful advice. The following 2 links are the most popular:

CheapScholar’s College Resource Center: http://cheapscholar.org/about/college-resource-center/

CheapScholar’s Scholarship Resource Site: http://cheapscholar.org/find-scholarships/

3. As you implement CheapScholar’s Paying For College Toolkit as a resource for your school, you may encounter additional questions or topics that are not covered by the handouts below. We encourage you to send us those topics/questions so that we can incorporate them in future releases of the toolkit. If you would like to receive future updates to the toolkit, please send us your contact information and we will be glad to add you to our notification list.

Click here if you would like to see how one school utilizes the toolkit.

We hope that you find this Paying For College Toolkit helpful. If you know anyone else in your profession that may find benefit from this information, please be sure to share this resource with them. We are always glad to help.

CheapScholar’s Guide To:

Filing Your FAFSA

Need-Based vs. Merit-Based Financial Aid

Finding Outside Scholarships

Federal Loan Programs

Landing The Perfect Work Study Job

Having A Car On Campus

Paying Tuition In Three Easy Steps

Saving On Textbooks

Getting Your Degree In Three Years

Avoiding Tuition Increases

Paying For College When You Have Bad Credit

Student Financial Literacy

Choosing Private Education Loans

Paying Back Student Loans

MASTER PDF That Includes All The Handouts Referenced Above

Over the course of the past few weeks, CheapScholar.org has been covering the implementation of the new IRS Data Retrieval Tool that has been incorporated into the FAFSA filing process. The concept of making the information gathering process easier is a noble one but there has certainly been some challenges along the way.

Here are some of the informative DRT articles graciously provided by Mr. Randy Green, Financial Aid Director at Wittenberg University:

Digging up “DRT” on the New FAFSA IRS Linking Tool

Today’s guest article is provided by Mr. Randy Green, Director of Financial Aid at Wittenberg University.

Last week, I received this email from the mother of one of our college sophomores.

“This has been a very frustrating time with the new policy on obtaining IRS transcripts for financial institutions.  I have been calling for the past month to obtain this document for financial aid and as of today this document is still unavailable.

This creates such a discomfort in award distribution, not only for the institution, but the recipients.  My son, [name removed], felt very uneasy, as well as we as parents, about this as he is a presidential scholarship recipient.  He is working so hard at the university and finds this discouraging.

According to the IRS this document may not be available until late April early May 2012.  We had to pay taxes again this year and although the check was cashed by the IRS about 4 weeks ago the document is not available until the time indicated.  Please somehow assure students of their scholarships because this is discouraging.”

To be clear: tax filers who received a refund are having their returns processed first; tax filers who had to pay on their taxes had their checks cashed, but have returns that will not be processed until late April or May – a delay of twelve weeks or more.

I responded to the mother that the delay caused by the IRS Data Retrieval Process would not affect her son’s financial aid package here, but that the package would not be final until the verification process is completed; it appears likely that this will happen in May at the earliest.

We perform a quick review of every ISIR (the school side of the FAFSA results) we receive, but when I received her email I pulled her son’s record and looked it over closely.  There is nothing obviously wrong with the data (the taxes paid are in a “normal” range, the wages earned are close to the Adjusted Gross Income, and so on), but the most reassurance I could give them is that everything appeared to be in order.  The final aid package must wait for a completed verification.

March and April can be anxious, frustrating times for families even if everything goes smoothly.  Requiring that families use the Data Retrieval Tool or IRS tax transcripts to complete verification adds to that frustration.  The fact that they will not be available – due to IRS policy decisions on processing tax returns – until May takes that frustration to a whole new level.

The powers-that-be should note two items that may make this issue explode in the next four weeks:

1) In mid-April the Department of Education is going to send out a reminder to families that they should use the DRT process,  i.e. to people who have already tried to use it and were told they cannot use it until May;

2) May 1 is the national deposit deadline for most colleges – some families are going to be asked to commit before their financial aid packages are final.

We have always had those families who miss deadlines, who don’t file taxes properly, who don’t respond to instructions on verification.  And there have been those who have situations that require a delay due to tax filing extensions.

The difference this year is that families who do everything right – those who file their FAFSA and tax returns on time and accurately, who respond quickly to requests for information – are barred from getting their financial aid in a timely fashion solely because of federal policies.

With the economy making a slow trudge back from the brink, many are considering going back to school. Student loans are the only viable option for many potential college students, but that means incurring extra long-term debt at the worst possible time. A lot of language about reform has been batted around at all levels of government this past year. What has changed, what are politicians promising, and what policies are on the way?

Pay as You Earn

President Barack Obama announced in October 2011 that he would be making some major changes to the federal student loan program. Introducing the “Pay As You Earn” proposal, he promised smaller monthly payments for over 1.6 million students.

It won’t take effect until 2014, but you will then be able to ensure your student loan payments are no more than 10% of your income. If you make payments for 20 years, your balance may then be forgiven. The current Income-Based Repayment Plan (IBR) only allows your payments to be reduced to 15% of your income, with balance forgiveness after 25 years. Visit this link to find out if you are eligible.

President Obama announced recently that he intends to spur this to 2012 for students who are already struggling with payments. If you are employed in public services, such as nursing or teaching, you may get balance forgiveness in as soon as 10 years.

Bear in mind that none of this affects students who got loans for school from private lenders.

Loan Consolidation

Because of multiple payments for different loans, there has historically been a high default rate, as juggling multiple loans gets tricky. Beginning January 2012, 6 million more students were able to consolidate all their loans so that interest rates are more affordable.

It is not advised to do a loan consolidation with a credit card. If you can pay off a short term loan, check out financial tips from Plain Green Loans. Taking advantage of the consolidation earns you a 0.5% reduction of your interest rate.

Better Informed

As part of these reforms, the Consumer Financial Protection Bureau and the Department of Education have partnered up to offer the “Know Before You Owe” project. This is a form that endeavors to help potential students better understand what type of aid they qualify for, how much they may receive, and how to compare the different financial aid and work study options offered by various colleges. They believe that a lot of students sign for loans each year or each quarter without really understanding the repercussions for default or even how much they may end up owing, much less what other options exist.

If you are interested in seeing what a form looks like and helping the organizations with the project by providing feedback, please visit: http://www.consumerfinance.gov/students/knowbeforeyouowe/

Interest

One thing that isn’t very clear in any of President Obama’s speeches is that subsidized loans are slowly disappearing. The government (beginning July 1st, 2012) will no longer subsidize the interest for graduate student loans and interest will also start accruing for undergraduate subsidized loans during the 6 month grace period after graduation.

In addition, it is probably important to mention that the interest rate on subsidized student loans is doubling from 3.4% to 6.8% this coming academic year.

Startup Encouragement

The Small Business Administration (SBA) hopes to help young entrepreneurs by offering the Student Startup Plan. While the current administration says it wants to support and grow new startups, the SBA is backing it up by promoting the IBR as part of their startup planning for recent graduates. The ideology is that student loan payments should not stand in the way of anyone starting a business.

Graduate and Professional Students

Meanwhile, the Budget Control Act (BCA) became law in August 2011. This law makes it so that graduate and professional students can no longer get Stafford Loans. While the total annual loan amount allowed ($20,500) has not changed, the cap has traditionally been only for unsubsidized loans. Now that there are not subsidized loans, this means you may borrow the same amount, but now you pay much more in interest.

Other things that changed with the BCA include disallowing the Department of Education from offering repayment incentives such as interest reductions or rebates to encourage on-time payments, though they are still allowed to offer rate reductions if you are a Direct Loan borrower who has opted to have your payments automatically withdrawn from your bank account.

Private Borrowers

If you were a private borrower, Tennessee Rep. Steve Cohen and other Democrat Congress members are working for some relief for you, too. Since 2005, thanks to the Bankruptcy Reform Bill, you could not declare your privately held student loans in a bankruptcy. He is looking to reverse that, likening it to credit card debt. He is facing major opposition from his Republican counterparts, however.

Demand for Bigger Reform

Tuition will continue to climb as long as enrollment is up – and it is. The Occupy Wall Street movement has spawned Occupy Student Debt – asking for 0% interest on student loans, total and immediate debt forgiveness for prior students, and a future of free public college. While the solvency of these demands is debatable, politicians are listening. They have to. These future students are current voters.

Today’s guest article was provided by Christina Jones who is a Blogger Outreach Specialist with Blue Glass Interactive

Sources:

[1] http://www.whitehouse.gov/the-press-office/2011/10/25/we-cant-wait-obama-administration-lower-student-loan-payments-millions-b

[2] http://www.finaid.org/loans/forgiveness.phtml

[3] http://www.secureloanconsolidation.com/blog/changes-in-2012-for-holders-of-student-loan-debt/

[4] http://www.whitehouse.gov/economy/business/startup-america

[5] http://www.sba.gov/startupamerica/student-startup-plan

[6] http://www.loyno.edu/financialaid/federal-student-loan-changes-2012-2013

[7] http://www.cbsnews.com/8301-503544_162-20126172-503544/who-will-benefit-from-obamas-student-loan-plan/

[8] http://www.occupystudentdebtcampaign.org/our-principles/