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So Long Federal PIN, Hello FSA ID – Starts May 10th!


For a number of years, college-bound students (and their parents in most cases) across the country would be required to utilize their uniquely assigned Federal PIN to electronically sign and submit their FAFSA (Free Application for Federal Student Aid). In addition, this Federal PIN would serve as an electronic signature for any education loans accessed through the StudentLoans.gov website. The Federal PIN was versatile and opened a number of doors when it came to accessing education information/services provided by the Department of Education (FAFSA.gov, NSLDS.gov, StudentAid.gov, etc…).

The Federal PIN has served us well but it is now time for it to retire and allow a new age of technology to take its place and be the gatekeeper to all things good when it comes to college affordability and accessibility for future generations of students.  This new technology is known as the Federal Student Aid ID or FSA ID for short. Beginning Sunday May 10th, 2015, the FSA ID replaces the PIN as the new way in which you will identify yourself with the Department of Education. Below is a nice visual of the simple 6-step process required to get your new FSA ID (on or after May 10th). I hope you find this information helpful as you continue to achieve your education goals!

FSAIDInstructions

 

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The Scary World of Scholarship and Financial Aid Scams


scamFamilies that are paying for college are facing one of life’s biggest expenses. To make college affordable, students often search for scholarships to help themselves pay for school. Unfortunately, although many legitimate and generous scholarship opportunities exist, there are also scammers that prey on vulnerable students and their families.

Online financial scams are getting more and more common. In fact, people who earn a Certificate in Financial Crime Investigation often spend their careers rooting out online fraud. To read more about using due diligence before paying someone who approaches you over the Internet, visit this page. Then, before you commit to a school, familiarize yourself with some of the most common scholarship and financial aid scams.

“Come to Our Free Seminar!”

If you get a direct mail or email invitation to a free scholarship seminar, you’re usually better off staying at home. When you show up to the seminar, you’re more likely to hear about annuities, insurance and other investment products than scholarships. Presenters might also ask for money to enroll you in a scholarship matching service, or they might offer student loans with exorbitant fees and interest rates. Always verify the identity of the company that’s hosting the event. If the company doesn’t list a legitimate phone number, it’s a scam.

hooray“You’ve Been Pre-Qualified for a Scholarship”

Scholarships are competitive, and there are usually many qualified applicants. No scholarship has to try to recruit students via email. If you receive an email saying that you’ve been pre-qualified for a scholarship, delete it immediately, and never click on any of the links.

Also, beware of pop-up windows that say, “Congratulations! You’ve just won a $10,000 scholarship!” Be especially cautious if you’re told that scholarships are available on a first-come-first-served basis.

“Please Send Your Application Processing Fee”

Legitimate scholarships don’t ask for a fee when you apply, and neither do legitimate financial aid offers. If you’re asked to provide a credit card number or bank account number to hold your scholarship, never provide the information.

Most scholarships are paid directly to the university, not to the student. Even if the disclosure statement offers a money-back guarantee, never ever pay a fee to hold a scholarship or student loan.

“We’ll Do All the Work”

Some companies offer to help you apply for grants, work-study, loans and other kinds of aid. They say that they’ll fill out your paperwork for a “nominal upfront fee.” The only way to get federal student loan funds is to fill out a FAFSA, and you never have to pay to submit your FAFSA. Also, don’t be duped by testimonials praising the company’s amazing service. Most of the time, companies pay for these testimonies, or they make them up entirely.

Other Signs of a Scam

The scams described here are just some examples of potential scenarios. Fraudsters are dreaming up new kinds of scams all of the time. However, by recognizing some of these additional warning signs, you can steer clear of almost any scholarship or financial aid scam.

  • “You won’t find this information anywhere else.” Legitimate scholarship programs are transparent about what they offer, and they’re eager to give away their funds. If someone promises special insider scholarship information, then it’s probably a scam.
  • “You’re a finalist — even though you never entered the contest.” Scholarships have a competitive application process. People who award scholarships probably aren’t going to cold call you or send you an unsolicited email.
  • “You get a scholarship, or you get your money back.” Some legitimate services do enter your name and qualifications into a database and match you with available scholarships for a fee. However, no legitimate service guarantees that you’ll win a scholarship or get your money returned to you.
  • “This offer won’t last long.” Most scholarship applications have strict deadlines, but you’re not going to be pushed to apply. If a salesperson is pressuring you for money for a limited-time opportunity, then the salesperson is probably shady.

What If You’ve Been Scammed?

If you’ve been victimized by a scholarship or financial aid scam, file a complaint with the Federal Trade Commission, and contact your state attorney general’s office. You might feel embarrassed to admit that you’ve become a victim, but your report might help someone else to avoid the same fate.

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What NOT to Do When You Can’t Afford College Without Parental Help


Your parents probably started pushing you to attend college when you began preschool. They insisted that you join every extracurricular activity at your school in hopes of earning scholarships. Then, when they saw how much college was going to cost you, they turned out their pockets and said, “Sorry, we can’t help you.”

If your parents encouraged you toward the college route but were unable to assist to the level that they had hoped, or if your family had severe financial struggles and truly couldn’t afford to help, you still have options for getting a college degree. Don’t become one of those students who try to defraud the system. You can find legitimate options to fund your education.

Grant Fraud? Don’t Even Think About It

The U.S. government distributes Pell Grants totaling as much as $5,500 to needy students, and it sends the grant money directly to the students’ colleges. Colleges deduct their portion of tuition and give the money to students to help students pay for room, board and supplies. Unfortunately, some fraudsters called “Pell runners” target inexpensive online schools or community colleges, apply for and get accepted to low-cost degree programs.  When their Pell Grant disbursements come, they take the cash, drop out of school and disappear.

In some cases, studied by students at a school that offers an accredited MS in Criminology program, Pell running is the work of gangs of students (to read more about how gangs have branched out into white-collar crime, visit this page). In Arizona, a student named Trenda Halton recruited over 60 fake students to sign up for college, get the Pell Grant money and give her a $500 to $1,000 cut. Colleges and the Department of Education are cracking down on Pell running; Halton and her cohorts were all sentenced for their crimes. Complete your FAFSA and take advantage of Pell Grants if you can, but don’t attempt to get cash by committing grant fraud.

crossingfingersLying on the FAFSA? Not a Chance

If your parents either refuse to help or can’t help you pay for school, you might think that the best solution is declare yourself an independent student. The bad news is that if you don’t meet government requirements for independent students, then declaring your independence requires lying on your FAFSA.

Unfortunately, it’s not easy to be declared an independent student. You have to do more than move out of your parents’ house. You’re not even considered independent when they don’t claim you on their taxes. Unless you’re an Armed Forces member or veteran, supporting dependent children, considered an emancipated minor, going to graduate school or past your 24th birthday, then you’re considered dependent no matter what your parents do.

If you’re caught committing FAFSA fraud, you could get up to five years in prison and a $20,000 fine. You would also have to reimburse the government for any money that you received, and if your school has an honor code, you’re likely to be expelled.

So What Are Your Options?

If you received an acceptance letter only to discover that your parents can’t pay, you can try other options to get your degree.

  • Pick a cheap school. You might have to get an affordable undergraduate degree at a less prestigious school. On a positive note, since grad students are considered independent, your parents’ income won’t count when you go for your master’s or doctorate. So, for your graduate degree, you can swing for the fences and apply to a great school.
  • Investigate scholarships. Even if you have to take an extra year to line up money, take some time to look into available scholarships. Hit up community groups, religious groups and industry groups related to your field. Also, use the Department of Labor’s scholarship search engine.
  • Get a job. Many employers offer at least partial tuition reimbursement. Some employers, like Starbucks, have agreements with colleges and universities so that their employees get a free or reduced-price college education.

Remember that your parents’ inability to pay your tuition isn’t about you; it’s about them. Also, when you’re trying to go to school, don’t be shy about searching for financial assistance and assertively asking for available money. You deserve to build a great future whether you are getting help from your parents or not.

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Financial Aid For College (video)


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Comparing Financial Aid Awards (video)


Students across the nation have completed the college application process, successfully submitted their FAFSA, and are now in a holding pattern as they wait to see what the financial aid package will be from the schools that they intently hope to attend this coming fall semester. Here is a great video that highlights what these financial aid awards may look like. In addition, feel free to visit CheapScholar’s resource for deciphering financial aid packages.

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Are Schools Using Aid to Lure Wealthy Students?


moneybagA recent CNBC report highlights a quiet, but growing, concern in the higher-education community: schools may be offering more scholarship money to wealthy students and less to students from lower-income backgrounds.

While the study shows that schools—most especially private institutions—must operate as businesses, it also highlights the importance of scholarships and grants for higher education.

The Study

The 2013 Sally Mae study, titled “How America Pays for College,” surveyed undergraduate students (aged 18-24) and found a couple changes in payment methods for students and their families over the last several years. Based on their observations and interviews, the researchers found that:

  • Parent spending has declined post-recession (27 percent in 2013 compared to 37 percent in 2010) and the average parent contribution has declined by 15 percent since 2010.
  • More students depend on scholarships and financial aid.
  • A greater number of families take out additional actions to make college affordable (e.g., taking out a second job, seeking out grants, etc.)
  • Despite a recent recession and growing costs, the majority of American families surveyed still believe in the value of college.

The increasing significance of grants and scholarships for student expenses is highlighted by the study, which proclaims that “the post-recession reality appears to be that grants and scholarships have replaced parent income and savings as the major contributor to paying for college.” The majority of scholarships come from colleges themselves (61 percent of families surveyed received scholarships this way).

The most interesting finding of the study, though, focused on the distribution of scholarship money from institutions. As noted by CNBC, “36 percent of students from wealthy families received scholarships averaging $10,213 for the school year, while 35 percent of students from families earning less than $35,000 a year received scholarships worth an average of $7,237.”

Granted, this data may be affected by a number of different factors—merit-based scholarships do not typically take family income into account, for instance—but the research is upsetting enough to leave some educators and families wondering whether universities are targeting and enticing wealthy students with scholarship aid, while not offering as much funding to students in need.

Are Lower-Income Students Being Left Behind?

Despite the findings of the study, lower-income students still receive a large amount of financial aid from schools. In this past year, 19 percent of high income families (those making more than $100,000 per year) received federal grants that averaged $5,757. On the other side of the spectrum, a whopping 63 percent of low income families (those making less than $35,000 per year) received federal grants that averaged $6,170.

Scholarship amounts offered by schools are painting a different picture, however. Because scholarships can be granted by the institution—not by the government—the school is not obligated to take financial considerations into account. As such, most schools offer myriad “merit based” scholarships (presumably to students most deserving based on their academic, and not their financial, standing). When these scholarships are taken into account, it would appear as though colleges are granting more aid to those who least need it.

Schools as Businesses

While this makes matters more difficult for students from low income families, it’s hard to fault the academic institutions too heavily. Universities are simply trying to continue a successful cycle. This is especially in the case with private schools.

Private universities rely on donations from alumni and families, so “investing” in high-income families is a smart move. In an exploration of this concept, the New America Foundation issued a study titled “Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind,” which asserted that scholarships for the wealthy are part of an institution’s “relentless pursuit of prestige and value.” According to CNBC, schools may also be using these scholarships to entice “highly-qualified” students (or, students with outstanding scores, competitive academic honors, etc.) who may even be from higher-income families and who may not qualify for need-based grants.

The New America Foundation also makes the point that it is more profitable for a school to provide four $5,000 scholarships to affluent students than one $20,000 scholarship to a single low income student. This places universities in a tricky situation as they try to balance future resources with current academic integrity and rewards.

Finding Support

So are students from lower- and middle-income families left facing a future without aid from competitive or private universities? Probably not. This general lean towards the affluent is only with regards to scholarships. Low income families still have pole position—as well they should—when it comes to federally issued student loans and grants. While policy makers and educators may need to refocus their efforts on finding ways to make higher education possible for people from all backgrounds, students should take from this new research a newfound reliance on performing a wide search when it comes to scholarships and aid.

About The Author:

Today’s guest article comes from Candice Mahoney. She is an engineering student and freelance blogger, currently residing in Houston, Texas. With help from a variety of scholarships, she has been able to pursue her dream education in the field of engineering project management, and is eager to apply her skills towards large-scale construction projects.

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Tips to Avoid Financial Aid and Scholarship Scams


ScamsApplying for scholarships and grants can be a stressful time; you’ve got different forms to fill out, you’re worried about college, and, on top of it all, you’re dealing with the most stressful subject in the world: money. While scholarships and financial aid are two of the best ways to pay for school, prospective students should be wary of potential scholarship scams. According to Whitworth University, scholarship scams cost students and their families an estimated $100 million dollars every year. Here are five tips to help you avoid being scammed in your search for college aid:

Never Divulge Sensitive Information 

Lots of scams are based around securing your personal information. This occurs routinely with scams like identity theft, but can also happen in scholarship searches. While financial aid information such as your FAFSA pin number and social security number may be required for your FAFSA forms, it should never be required to apply for scholarships.

Never Pay for FAFSA 

FAFSA stands for Free Application for Federal Student Aid.  If you’re confused, their customer service team is there to walk you through any and all questions you may have. Many groups and programs will offer to fill out your FAFSA for you for a fee. While there are some scholarship organizations that legitimately aim to help students get their FAFSA filled out or locate scholarships—and may charge some fees—they should have enough information available to help you make an informed decision (such as a physical address and other contact information, and ideally a proven track record or history with third-party reporting or review companies). Avoid working with a company or scholarship search organization when red flags, including sales pitches and pressure, are present.

The New York Times also cautions students and parents to make sure they are on the right website when filling out the FAFSA. Parents and students should fill out their FAFSA on FAFSA.ed.gov.

Unsolicited Information 

According to CollegeBoard.org, you may be encountering a scholarship scam if the organization promises or guarantees you a scholarship, or if you receive unsolicited emails informing you that you’ve been selected to receive a scholarship. Scholarships are great ways for students to get “free” money for school, but they must be earned through applications and, often, essays and other projects. Be wary of spam emails telling you that you’ve won money for school or guaranteeing you a scholarship.

Do Your Research 

There are a limited number of people, organizations, and websites that you should trust when you are going through this process.  The Federal Student Aid Office of the United States Department of Justice has plenty of information on reputable organizations.

You can also do a bit of background research on your own. According to US News and World Report, you should never trust a scholarship offer if there is no clear history of past winners, no phone number, or if the scholarship organization claims to “do all the work for you.” Legitimate scholarship organizations or search services will present a student with a number of scholarships that the student is eligible for (sometimes even for a small fee), but will not do the work for the student.

Work with the Officials

Scott Weingold, in his report with The Huffington Post, warns students to try to reach out to officials whenever possible. Weingold offers an example of spam emails telling students there was an issue with their FAFSA. If you receive an email like this, do not respond to the email—instead, revisit your FAFSA or contact someone from the Department of Education. Likewise, any issues with your scholarship information should be handled with the organization itself, not a third-party.

Applying for financial aid and scholarships doesn’t need to be an overly stressful time. It should be exciting; after all, it’s the start of the next big journey in your life. However, to avoid falling for a scholarship scam, make sure that you are level-headed, informed, and never give out personal information to those who don’t need it.

This article was contributed with inputs from Jodelyn Guerrero, a career expert who hopes to help you get started with the first steps to start your career. She recommends taking a look at the finance jobs with moneyjobs.com if you’re interested in a finance position after graduating.

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How to Pay for College Without Parental Help


Glass bank for tips with money isolated on whiteWith the cost of college tuition rising and the need for an advanced degree to attain post-graduate success, both students and parents alike are wondering about the best methods for paying costly university bills. It’s not just tuition that levies a hefty balance, it’s the additional costs such as room and board, college textbooks, and meal plans.

To estimate the total of college expenses, try using a financial aid calculator. This number can give an idea of just how much will be necessary to save, borrow, or earn in scholarships and aid. Many students find that they are able to afford college without parental support by using these tactics below.

Get a Job

Part-time jobs not only offer diversity to a student’s resume, but they provide a way to earn extra cash for those college costs. College admission counselors admire a resume with a mix of educational and professional experience.

Most colleges offer work-study programs, as well, so students can work on campus while they complete their degree. Many extracurricular clubs offer monthly stipends to lead the clubs. Look into getting involved on campus and find monetary benefits opportunities.

Some part-time jobs may provide tuition assistance or scholarships to their employees, or provide flexible work hours to accommodate a student’s schedule.

Offbeat ideas like freelancing or participating in research studies are also prime options for college students.

Start a Savings Account

It’s never too late to start a savings account. While there are specific savings accounts for college, like pre-paid or a 529 account, students can set-up their own individual savings account to learn financial responsibility. This savings account can start healthy finance habits. A student who sets aside just 10 percent of each paycheck can see how a savings account will be helpful in the event of unexpected expenses.

Also, look into savings accounts that pay interest or think about investing some money. It’s possible your investments could make enough money to pay-off your loans by the time you’re ready to graduate. Talk to a financial planner before making any big financial decisions.

Apply for Financial Aid

The process of applying for financial aid can be time consuming and require a lot of paperwork. Get a jumpstart by rounding up tax information early and filing taxes on time. Most colleges allow you to start financial aid applications on January 1st, so it’s crucial that you don’t hesitate. Some financial aid is awarded on a first-come, first-serve basis.

Financial aid applications are necessary for many students, even those who might not need aid based on income. You never know how much money you can receive from aid, until you turn in your application. Criteria for financial aid changes every year so be sure to submit your form even if you did not qualify last year.

Another surprising fact is that sometimes you have to be rejected by federal aid as a prerequisite for private scholarship awards.

Submit Scholarship Applications

Free money does exist, but students have to work for it. Students should start by scanning scholarship websites and reviewing the necessary criteria for various awards. Some scholarships have particular essay topics. Scholarship committees want to understand the student for more than just their financial background, so they ask for essays to understand students’ personalities and writing skills.

Students should compile a list of scholarship applications to complete and dedicate specific time to work on essays and forms. Have someone with strong writing and editing skills proofread the essay to find any mistakes before you submit the essay.

Consider Student Loans

More than two-thirds of college students take out some type of loan while attending classes. While many want to remain debt-free, some students may have a need for additional funding to finish paying off university fees. Try using income and savings for one-third of college costs and grants, scholarships, and loans for the rest. This formula shows an easy and attainable way to calculate how to afford college. To also help alleviate student loans, check for cheaper online college-accredited classes to help supplement your on-campus education. Internet-based classes are cost-effective and more convenient for students trying to juggle school and work.

The key to affording higher education is to start planning early. College bills may feel impossible to pay, but it can be done. Analyze all your options, before you commit to a large loan or avoid college altogether.

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