Special Bulletin: Tell Your Congressperson to Increase Federal Student Aid Appropriations

The U.S. House of Representatives’ Committee on Appropriations recently voted to send HR 3358 to the full House for debate and a vote. This bill appropriates funds forIMG_7979 federal student aid programs for federal Fiscal Year (FY) 2018.

Here’s a summary of HR 3358’s key financial aid provisions as currently written. But they’re not final yet, and you should tell your congressperson what you think about them. Visit during their August recess, or call or write them. For their contact information, go here and enter your zip code.

Federal Pell Grant

This program provides grants of $600 to $5,920 to the nation’s neediest students. It has a $4.3 billion surplus that could be used to increase the size of these grants or provide grants to additional needy students.

HR 3358 would reduce this surplus by $3.3 billion and keep Pell Grant amounts the same as they were in FY 2017. With inflation, this would reduce the Pell Grant’s “purchasing power” — the portion of college-related expenses covered by Pell. Furthermore, it would not provide Pell Grants to any more students.

Federal Supplemental Educational Opportunity Grant (FSEOG)

FSEOG goes to the poorest Pell Grant recipients — mostly those with family incomes below $30,000 per year.

HR 3358 would put the same amount into FSEOG for FY 2018 as that program received for FY 2017. FSEOG would be unable to help any additional students and its purchasing power would diminish

IMG_7978Note: As Pell Grant and FSEOG purchasing power decline, it’ll be necessary for colleges and states to divert more of their grant and scholarship dollars to help Pell and FSEOG-eligible students. This would reduce the numbers of college and state awards available to students who are not needy enough to receive Pell and FSEOG, but who still need plenty of financial assistance to go to or remain in college.

Federal Work-Study (FWS)

Hundreds of thousands of needy college student get part-time jobs through FWS. Most of these jobs are on-campus and many are related to students’ majors.

The administration proposed to cut FWS appropriations by 50%. But HR 3358 rejects this proposal and keeps FY 2018 FWS funding the same as it was for FY 2017. Still, there would be little or no opportunity for additional numbers of students to secure FWS jobs unless the program receives more funding.

Time to Act!

HR 3358 could affect your student’s financial aid even if he doesn’t receive Pell Grant, FSEOG, or FWS. So don’t sit on the sidelines! Make your voice heard!

Special Bulletin: Proposed Federal Budget Would Reportedly Makes Big Cuts in Programs for College Students and Graduates

The Washington Post reports it has received what a U.S. Education Department staff member described as “near final” documents showing the administration will IMG_6510recommend a 13.6% reduction in federal education spending next week. The budget proposal would reportedly affect federal financial assistance for college students as follows:

  • Child Care for Enrolled Parents: End a $15 million program helping to make child care affordable for low-income parents attending college.
  • Federal Direct Subsidized Loans: Make as yet unannounced cuts that could end this program, which currently serves financially needy students. If this happens, all federal loans for such students would be unsubsidized and begin compiling interest the day they are made — significantly increasing student borrowing costs.
  • Federal Pell Grants: Hold Pell Grants for the nation’s neediest undergraduates at their current levels ($606 to $5,920 for fall and spring combined). Due to inflation, this would decrease Pell’s future “purchasing power.” Some good news is that the budget would fund an extension of 2017’s summer Pell Grants in future years.
  • Federal Work-Study (FWS): Cut FWS funding by $490 million (almost half), significantly reducing federally subsidized on and off-campus jobs that financially needy students use to pay for college.
  • Income-Driven Repayment: Close down all current income-driven repayment plans available to federal college loan borrowers. These plans offer loan forgiveness for balances remaining after borrowers pay 10% to 20% of their incomes over 20 to 25 year periods. They would be replaced with a new income-driven option requiring payments equal to 12.5% of income and limiting loan forgiveness to balances still outstanding after 30 years of such payments.
  • Public Service Loan Forgiveness (PSLF): Eliminate PSLF, which offers tax-free debt cancellation on federal student loan balances owed by ex-students in public service jobs after 10 years of on-time payment. Over 550,000 federal, state, local, and nonprofit employees are already registered for PSLF. It’s not yet clear whether they or public servants not yet registered would be cut off from It.IMG_6511

Presidents propose federal budgets, but Congress ultimately decides them. So if you support or oppose any of these proposed cuts, call or write your U.S. representative and senators to tell them how you feel.

College Affordability Solutions will post more bulletins on this website as additional information becomes available.

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.

Special Bulletin: Status of IRS Data Retrieval Tool

A key tool used by students seeking financial aid borrowers applying for income-driven repayment plans on their federal student loans is still offline. However, a new government announcement outlines a schedule for getting it back up and running.

In March, the government shut down the IRS Data Retrieval Tool (DRT), expressing concerns about the need for extra system security. Here’s where things are now according to a recent status announcement from the U.S. Department of Education —

DRT in October for Student Financial Aid Applicants: For the next 5 months, students will need to keep finding and using recent federal tax returns for themselves and their parents in order to accurately complete their Free Applications for Federal Student Aid (FAFSAs). The government’s announcement says it’ll be October 1 when a new, more secure DRT will become available to them.

DRT on May 31 for Student Loan Borrowers: Parents and ex-students seeking to certify their eligibility for one of the 4 federal student loan income-driven repayment plans will again be able to access to the DRT beginning May 31, the announcement says. Until then, they’ll need to keep submitting alternative documentation when applying for these plans. Alternative documentation could be paper copies of their federal tax returns or pay stubs.

If and when more information about this problem becomes available, College Affordability Solutions will post another bulletin.

Before College: May 1 is Right Around the Corner!

May 1 is just 34 days away. That’s the deadline for paying a nonrefundable enrollment deposit to hold a spot at the 4-year college your student decides to attend this fall. When it comes to affordability, there’s much to do.

(1) Award Letter: Be sure your student has his financial aid offer from each school he’s considering. If a school’s award letter hasn’t arrived yet, make sure you’ve completed verification (if the school required it), then contact the financial aid office to request one IMG_5726ASAP.

(2) Outside Aid: If you know about scholarships your student’s getting from parties outside the school, report them to the aid office right away. Not doing so will freeze financial aid once the school learns of these awards, because it’s required to determine that the aid it awarded isn’t affected by outside scholarships. Should reductions be required, schools usually cut loans, then work-study and, last, grants or scholarships.

(3) Appeal: File a financial aid appeal ASAP if it might lower your student’s Expected Family Contribution and qualify her for more need-based aid. The aid office can tell you how.

(4) Affordability Analysis: Evaluate the affordability of each school under consideration.

First, use the “Tuition, Fees, and Estimated Student Expenses” on the National Center for Education Statistics College Navigator website to calculate annual growth in the average cost of attending a school over the last four year. Multiply the school’s 2017-18 costs by this average for each of the next four years to project your student’s 4-year cost.

Now project the financial aid to be received over four years. Some institutional grants and scholarships are for one year only, so be sure to differentiate between them and 4-year IMG_5659awards. And watch out for schools that practice bait and switch. Assume federal and state grant amounts will remain constant each year. Keep your borrowing assumptions within annual federal loan limits.

Subtract your 4-year financial aid projection from your 4-year cost projection. Now the big question — can you and your student cover the remaining gap? If so, keep that school on the list for consideration. If not, it may have to be dropped.

(5) Fit: Fit is absolutely critical. If a college or major doesn’t work for your student, chances are he’ll transfer, which’ll increase the cost of his degree. So consider fit carefully.

Need help analyzing the affordability of the colleges your student is considering? Contact College Affordability Solutions by email at collegeafford@gmail.com or by phone at (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.