Special Bulletin: Congress Considering Cuts to Student Aid Programs

On Monday the White House released its budget proposal for Fiscal Year 2019, which begins this coming October. The prospective budget is similar to HR 4508, the “Promoting Real Opportunity, Success, and Prosperity through Education Reform” IMG_0890(PROSPER) Act. This is a bill designed to revamp federal higher education programs. It will soon to be debated in the House.

If your student is now or likely will be a federal financial aid recipient, contact your  U.S. Representatives and Senators to let them know your thoughts on the proposed budget and HB 4508. Why? If Congress passes either as written, several federal student aid programs would be reduced or eliminated.

Subsidized Federal Direct Loans: Currently, no interest is charged on these loans until six months after their undergraduate borrowers leave college. But they would end for those first borrowing on or after July 1, 2019. Even at current interest rates, which are expected to rise, this would increase the cost of borrowing the $27,000 maximum allowed over 4 academic years by at least $2,800.

Income-Driven Repayment: Four repayment options would be replaced by one repayment plan requiring ex-students to pay 12.5%, instead of the current 10%, of their discretionary income toward their federal college debts. The repayment period would last 15 years instead of 20 to 30 years for undergraduates, and 30 years for graduate students. Discretionary income is the amount a borrower’s income exceeds 150% of poverty-level.

Public Service Loan Forgiveness (PSLF): Any student first borrowing a federal loan on/after July 1, 2019 would be ineligible for PSLF.

Federal College Work-Study (FCWS): The budget would reduce FCWS funding by 49.5%. FCWS currently helps over 630 thousand students earn more than $1 billion a IMG_0891year to pay college costs. Graduate students would become ineligible for FCWS.

Federal Pell Grants: College costs keep rising, but the budget proposes to limit Pell Grants to the same amount as in FY 2019 as this year.

Pell Grant eligibility would be extended to students in short-term programs providing certificates, licenses, or other credentials for “in-demand fields”. For-profit vocational schools usually offer such programs, but their certificate earners average 1.5% higher unemployment rates, 11% lower earnings, and $5,000 more in student debt than students earning similar certificates at community colleges.

Federal Supplemental Education Opportunity Grants (FSEOGs): The FSEOG program, which provides extra grant dollars to approximately one million of the nation’s neediest Pell Grant recipients, would be eliminated.

Contact College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com for a no-cost consultation you have questions about how to pay for college.


During College: Pell Grants Can Help Pay for Summer School 2017

Got an undergraduate who could benefit from summer school? Did she receive a Federal Pell Grant in the fall/spring? If so, here’s good news — Pell Grants will be available this summer!

Undergraduates who earn bachelor’s degrees in 4 years or less borrow 35% less in student loans, so this presents an opportunity for your student to speed her time to degree and reduce her college debt.

A new law funding the government through September includes an exception toIMG_6269 rules prohibiting Pell Grants for most summer students. So summer Pell recipients may get up to the same amount they received for a single semester or quarter earlier this academic year.

Summer Pell Grants rules are due by July 1, so we’ll have to wait for the actual terms and conditions of these grants. Also, Pell funds may not be available until early July, so your student should contact the financial aid office to explore short-term options (emergency loans, payment plans, etc.) for covering summer expenses until then.

Other things to remember about Pell and summer school . . .

Enrollment Status: To receive federal student aid for which she’s eligible, including Pell, your student must be a regular student in an eligible program of study. So she probably needs to take summer classes at the institution where she’s pursuing her degree, not at a community college as a “transient” student.

Grant Amount: Pell amounts are based on enrollment status — i.e. undergraduates enrolled full-time (generally 12 or more hours) get 100% of what they qualify for; students enrolled three-quarter time get 75%; half-timers get 50%; and those enrolled less-than-half-time get 25%.

IMG_6270Summer Costs and Other Summer Aid: Make sure your student avoids the trap of enrolling in summer courses but lacking sufficient funds to finish them despite her Pell Grant. The aid office’s website displays summer costs. Check out whether your student can get federal loans or other aid for summer — many Pell recipients use up their annual loan eligibility during fall/spring and some schools award all their work-study and state/institutional aid during fall/spring. Have your student call the aid office to see what’s available for summer.

This Summer Only: Summer Pell is currently available for 2017 only. Whether it’s there for future summers depends on what Congress does.

Affordable summer enrollment where she’s getting her degree may benefit your student more than summer employment or community college summer school. Check it out!

For strategies on getting the most out of the financial resources available to your student, contact College Affordability Solutions at collegeafford@gmail.com or (512) 366-5354.

Before College: Should You File a Financial Aid Appeal?

Your 2017-18 Free Application for Federal Student Aid (FAFSA) — despite all the information it collects, it can’t cover everything. It doesn’t gather unusual information that could impact your student’s Expected Family Contribution (EFC) — the key to determining his eligibility for financial aid awarded on the basis of financial need.

Since 2015 ended, did you suffer:

  • A big income loss — a layoff or employment termination — that’s still affecting IMG_5702you; or
  • Any major uninsured medical expenses in 2015, 2016, or 2017; or
  • Similarly unavoidable financial problems?

If so, appeal. These may lower your student’s EFC, qualifying her for more need-based aid.

The financial aid office can tell you how to do an appeal. You’ll no doubt be asked to file it in writing and to provide documents proving your income reduction, medical bills, or other financial losses. Why? Because parties funding your student’s need-based aid often audit EFCs. If they’re not convinced that your student’s EFC is correct, the school becomes liable for need-based aid it gives him in excess of his resulting financial need.

DOG_ATTACKKeep copies of the documents you submitted with your appeal. You might need to them to respond to follow-up questions from the aid office.

Because there are so many appeals at this time of year, file yours as soon as possible to give the aid office’s staff sufficient time to review it and make a determination before May 1. That’s when your student must make a go/no-go decision about which 4-year college in which she’ll enroll next fall, and you don’t want this decision made without knowing her financial aid situation.

If your student’s EFC should be changed, the aid office will tell your student. And should additional need-based aid still be available, it’ll send him a revised financial aid award letter showing changes in such aid.

Remember, the EFC can’t be lowered for small, optional, or routine financial matters. A successful appeal will document that your situation is exceptional and unavoidable — e.g. medical bills aren’t for something like elective cosmetic surgery. It’ll also demonstrate that your situation significantly impacts your ability to help pay your student’s college costs — i.e. the loss you’ve suffered costs more than just a few hundred dollars.

If you meet these criteria, file an appeal ASAP. It could make a difference!

Questions about the financial aid process? Contact College Affordability Solutions for a free consultation at (512) 366-5354 or collegeafford@gmail.com.


Special Bulletin: IRS Data Retieval Tool for FAFSA Not Working

Hopefully you filed your 2017-18 FAFSA many weeks or months ago. If you haven’t filed it yet, you’re going to hit a snag just as we reach many college and state deadlines for getting priority to receive various forms of financial aid.

The IRS has announced that it, “. . . decided to temporarily suspend the Data Retrieval Tool (DRT) as a precautionary step following concerns that information from the tool could potentially be misused by identity thieves.”

The DRT is the mechanism through which most students ensure that key fields on their Free Applications for Student Financial Aid (FAFSAs) are accurately populated with data. FAFSA information is used by the U.S. Department of Education (ED) and colleges to determine how much need-based financial aid students may receive for IMG_56692017-18.

While the DRT has worked well in past years, nobody knows when it will begin operating again for 2017-18 FAFSAs. Some colleges and states are changing their FAFSA priority deadlines because of this failure. In Texas, for example, the state is allowing colleges to suspend its March 15 deadline. So check with the school(s) your student may attend during the upcoming academic year.

If necessary, get a copy of your 2015 federal tax returns out of your records and manually enter data required by the FAFSA. Do this as soon as you can because, if you miss the school or state’s FAFSA priority deadline, your student will go to the end of the line for certain grants, scholarships, loans, or work-study awards.

College Affordability Solutions will publish another special bulletin when the DRT is back up and running.


Before College: Beware of “Bait and Switch”

Bait and switch is a sleazy practice in which some, though not all, supposedly reputable colleges and universities engage. These institutions include some but, again, not all, schools requiring mid-February enrollment deposits from students offered “early admission.”

Here’s how bait and switch works: (1) Unsuspecting freshmen are lured to a school with generous grant and scholarship (gift aid) offers that seem to significantly discount their 4-year cost of attendance. (2) The school manipulates its awards so all thor most of their recipients lose them after a year or two. The cancelled funds are then switched to bait future recruits. (3) Families suffering gift aid reductions must then borrow more or use more of their financial resources to keep their students at the school.

Not surprisingly, colleges don’t publicize bait and switch. You have to look for it before paying your student’s enrollment deposit. Here are some common practices and ways to spot them.

Renewable Non-Renewable Gift Aid

A big grant or scholarship is renewable for 4 years. But its renewal criteria — e.g. GPA, credit hours completed — are so grueling that few students meet them.

The National Association of Student Financial Aid Administrators’ Code of Conduct img_5441requires institutions to disclose grant and scholarship renewal criteria, but the criteria may be obscurely placed or written in a complicated way.

So carefully read the “fine print” on your student’s financial aid award letter or the school’s website, and honestly assess your student’s ability to meet gift aid renewal standards.

The Incredible Shrinking Gift Aid

The overall amount of gift aid awarded drops each year, even if the student’s ability to pay college costs holds steady or decreases.

img_5440To identify this practice, you generally have to pose direct questions to the financial aid staff about whether the school engages in it. Make sure you get clear, comprehensive answers.

Gift Aid Displacement

Gift aid originally awarded decreases as the student brings in other scholarships. They may be outside scholarships, but the financial aid office may also reduce gift aid it awarded due to scholarships from the school’s academic departments. The student typically looses a dollar for every other dollar received.

Federal and state rules sometimes force displacement because they prohibit the receipt of financial aid in excess of cost of attendance. But sometimes displacement is an institutional choice.

Ask the financial aid staff for the order in which it makes reductions if additional scholarships come in. Hopefully it’s unmet financial need first, loans second, and gift aid third. If it’s gift aid first, the school clearly employs displacement.

Need help scrutinizing the financial aid offers you’ve received from colleges and universities? Reach out to College Affordability Solutions at (512) 366-5354 or collegeafford@gmail.com. 


Before College: Shop Comparatively Using the Financial Aid Shopping Sheet

Many colleges have begun sending newly admitted undergraduates “award letters” showing the types and amounts of financial aid they can expect if they enroll in those schools. If your high school senior hasn’t already received such letters, they’ll probably start arriving in the next few weeks.

So dust off your calculator because, just as with any major purchase, the key to college affordability is comparative shopping.

Unfortunately, no two award letters are alike. Each uses its own unique layout and terminology. Few offer consumer information you need to know about institutions. This makes it difficult to compare schools based on affordability.

img_5222That’s why the U.S. Department of Education created the “financial aid shopping sheet.” Thousands of colleges send it with their award letters, making it easier to compare key numbers about them.

The shopping sheet’s left side shows each school’s cost of attendance — the college’s “sticker price” for the upcoming academic year.

Next comes the grants and scholarships your student is set to receive at that college for that academic year. These discount sticker price to determine the college’s “net price.”

Then comes other types of financial aid — work-study, loans — being offered to help your student pay the school’s net price.

The shopping sheet’s right side also has useful data. These include 6-year graduation rates at universities and 3-year graduation rates at community colleges. Such rates show how schools compare to similar institutions in getting undergraduates across the finish line.

The sheet also discloses the percentage of the school’s alumni repaying their federal student loans three years after beginning to do so — indicating how well the school prepares students for gainful employment.

Finally, you’ll see the median amount the college’s students borrow in federal loans, and their median monthly payments. This can give a rough sense of how much debt your student might be burdened with to attend that school.

Schools use shopping sheets on a voluntary basis, but beware of colleges that don’t provide them. Why are they trying to make it more difficult for you to compare them with other institutions? What don’t they want you to know about their aid offers or graduation and borrowing data?

You should select a college based on many factors, but the shopping sheet gives you useful, easy-to-compare affordability information for this all-important decision.

College Affordability Solutions conducts affordability analyses on institutions students are considering, whether or not those institutions provide shopping sheets. Call (512) 366-5354 or email collegeafford@gmail.com for more information.


Thank You, Mr. President!

Families that struggle with college costs need help. Fortunately, they had friend in Washington over the last eight years — Barack Obama.

The President and his wife are the first couple in the White House to have borrowed for college. Coming from families of modest means, they borrowed a lot, so much that they paid off their college debts just four years before entering the White House. “When we married we got poor together,” the President once said, “we added up our liabilities and there were a lot . . . basically in the form of student loans.”


So although Congress did little on student aid, President Obama’s administration created several helpful initiatives:

  • Federal Direct Loans. The President’s lone student aid success in Congress established the government, not banks, as the primary maker of student loans. It simplified federal student loans, reduced corruption, and redirected billions in subsidies from bankers to students.
  • PAYE and REPAYE. The President began the Pay As You Earn and Revised Pay As You Earn programs, which limit what college borrowers must repay to 10% of their discretionary incomes, and forgives what they still owe after as few as 20 years.
  • Aid Application Process. The administration made the Free Application for Federal Student Aid (FAFSA) available in October, not January, and began collecting “prior-prior” tax year data on it. So students now know what their federal student aid will be as they narrow their college choices. Also, families can img_5167now tell the IRS to load key numbers directly onto their FAFSAs, and they now have more time to verify their FAFSA data. All this makes applying for financial aid easier.

So thank you, President Obama! You made college more affordable and reduced barriers to financial aid. Millions benefitted from your efforts, and our country is better off for them!

If you want to contact College Affordability Solutions, email us at collegeafford@gmail.com or call (512) 366-5354.