On Friday, the House of Representatives passed a bill that included as part of it the ability to keep Subsidized Stafford loan interest rates at 3.4% for one more year. This would assist students for one more year in keeping their interest rates at a lower rate than the 6.8% (double what it currently is) that it is scheduled to go up to on July 1.
We will see what happens with this bill as it goes up the pipeline. First it has to pass the Senate, and if it changes in the Senate, then it goes back to the House. Once the House and Senate approve, then it goes to the President to be signed into law. The fear is that he will veto the bill, and so far the news from the White House is that Obama will veto the bill.
But have you been keeping track of this debate? Here's a small lesson in politics, which will be a great example of how FA laws seem to go through half the time.
As stated above, there benefits to students who have a lower interest loan. And Obama was saying a week ago that he is going to stand by students and was willing to help them by keeping the Subsidized loan at 3.4%. His opponent didn't specifically say one way or the other what his plans were, but his comments haven't been viewed as being favorable toward it.
So, why the sudden change in tone from he Administration? It's all politics, friends. You see, when a Republican led House passes a bill, and when that bill goes to a Democrat President, it suddenly is evil and must be killed. And even though he supported it a week ago, it is from the Republicans, so therefore it is bad.
One must keep in mind, however, that the news is early, and there may be more to the bill that is unsavory for the Democrats, but it's also early in the sense that it still has to pass the Senate. And rest assured that changes will be made in the Senate! However, it became painfully obvious today that the simple act of ensuring a low interest rate for student loans (and only Subsidized loans) is nothing more than a political tool of being elected or re-elected rather than helping the constituents it is meant for.
Now this isn't meant to cause anyone to get into an uproar one way or the other. It is more often than not typical politics. Nothing new. With FA, most rules are created as either political tools (as in this case), or they are created by people who don't know what the ramifications of their rules will do (such as the gainful employment rules). All we in the industry can say is: "it is what it is."
Welcome to the fun of studying the political side of FA, friends!
Monday, 30 April 2012
Monday, 23 April 2012
"I have questions about servicers..."
"...Where do I find out more?"
That would depend on what information you are looking for. If you are looking for direct information about your individual servicer, then you'll need to research them on their website or give them a call. Your specific situation is unique to you and will be unlikely to be answered by someone other than them.
However, if you have questions about servicers in general, then there are many places to find out some information. It's understandable that if your servicer changes, you may wonder why, and you may not really get an answer from your servicer.
The one site that is a good resource for many things is called Mapping Your Future. They are a non-biased site that offers information in financial aid, careers, college, and money management. For the purpose of this posting, I'm going to share a specific link of theirs: http://mappingyourfuture.org/paying/loanservicers.htm This has answers to questions about Direct Loan servicers that you may find useful.
That would depend on what information you are looking for. If you are looking for direct information about your individual servicer, then you'll need to research them on their website or give them a call. Your specific situation is unique to you and will be unlikely to be answered by someone other than them.
However, if you have questions about servicers in general, then there are many places to find out some information. It's understandable that if your servicer changes, you may wonder why, and you may not really get an answer from your servicer.
The one site that is a good resource for many things is called Mapping Your Future. They are a non-biased site that offers information in financial aid, careers, college, and money management. For the purpose of this posting, I'm going to share a specific link of theirs: http://mappingyourfuture.org/paying/loanservicers.htm This has answers to questions about Direct Loan servicers that you may find useful.
Monday, 16 April 2012
Grace Period
What is a grace period?
A grace period deals with your student loans, and it's the time during which you don't have to make any payments on those loans. For federal Stafford loans, the grace period is six months. At Metro Business College, the Central Finance Loan is only three months. For the federal PLUS loan, the grace period is sixty days from the last date of disbursement. This is the short answer, and like with everything dealing with FA, there are no real short answers. There are different scenarios.
One possible scenario is where you delay your grace period. If you complete a program then go directly into another program or another school, then you can fill out an in-school deferment. This will save your grace period for when you make it out your second time.
Another possible scenario is where you've already used your grace period. This would happen if you go to school, then you are out for over six months, and then go back to school. You've essentially used your grace period. On your new loans, you will still have the grace period, but your old loans may not. In the past, once it's used, then you don't get it again.
The only way to know exactly how your grace period will affect you is to contact your servicer. They will be able to give you an exact answer as to how it affects you personally, as opposed to how it works for most people.
And remember: for any new federal Stafford loan you qualify for and take out, you have a right to a six month grace period.
A grace period deals with your student loans, and it's the time during which you don't have to make any payments on those loans. For federal Stafford loans, the grace period is six months. At Metro Business College, the Central Finance Loan is only three months. For the federal PLUS loan, the grace period is sixty days from the last date of disbursement. This is the short answer, and like with everything dealing with FA, there are no real short answers. There are different scenarios.
One possible scenario is where you delay your grace period. If you complete a program then go directly into another program or another school, then you can fill out an in-school deferment. This will save your grace period for when you make it out your second time.
Another possible scenario is where you've already used your grace period. This would happen if you go to school, then you are out for over six months, and then go back to school. You've essentially used your grace period. On your new loans, you will still have the grace period, but your old loans may not. In the past, once it's used, then you don't get it again.
The only way to know exactly how your grace period will affect you is to contact your servicer. They will be able to give you an exact answer as to how it affects you personally, as opposed to how it works for most people.
And remember: for any new federal Stafford loan you qualify for and take out, you have a right to a six month grace period.
Monday, 9 April 2012
2012-13 FAFSA Question
Here's a good question that was asked recently: "If my FAFSA is verified and I am widowed, how do I verify just my income since 1040s are no longer acceptable?"
This question deals with a few elements. Remember that if you are divorced, widowed, or separated, you don't have to use your spouse's income on the FAFSA (this goes for students and parents of students). You should also be aware that this means that you can't count them as a member of the household either. So, because you don't have to include the spouse's income and you are only counting your own, where do you get this information?
The way the rules currently are is different than the way the rules are for July 1. Currently, if you are verified, you have to submit a copy of your 1040 tax return, and if you fall into the category of being separated, widowed, or divorced, then you could submit your W-2 or state 1040. In Missouri, income is separated into how much was earned by each member (filer and spouse). The Missouri return was perfect for this since most people keep their state and federal returns together. Unfortunately, in July the state return is no longer acceptable, and this is what the question deals with.
The answer is the W-2. Copies of the W-2s are still acceptable, so you will need to present these to the FA office when you are widowed, divorced, or separated in order to more accurately report your income on the FAFSA. Also, remember that the FAFSA has the line "as of today", meaning that you are divorced, widowed, or separated as of the day you fill it out.
This question deals with a few elements. Remember that if you are divorced, widowed, or separated, you don't have to use your spouse's income on the FAFSA (this goes for students and parents of students). You should also be aware that this means that you can't count them as a member of the household either. So, because you don't have to include the spouse's income and you are only counting your own, where do you get this information?
The way the rules currently are is different than the way the rules are for July 1. Currently, if you are verified, you have to submit a copy of your 1040 tax return, and if you fall into the category of being separated, widowed, or divorced, then you could submit your W-2 or state 1040. In Missouri, income is separated into how much was earned by each member (filer and spouse). The Missouri return was perfect for this since most people keep their state and federal returns together. Unfortunately, in July the state return is no longer acceptable, and this is what the question deals with.
The answer is the W-2. Copies of the W-2s are still acceptable, so you will need to present these to the FA office when you are widowed, divorced, or separated in order to more accurately report your income on the FAFSA. Also, remember that the FAFSA has the line "as of today", meaning that you are divorced, widowed, or separated as of the day you fill it out.
Monday, 2 April 2012
FSA Handbook
What is the number one place Financial Aid personnel are told to look for more guidance regarding FA rules and regulations? The FSA Handbook. Published every year, the Federal Student Aid is a very complete answer guide to most of the rules and regulations concerning financial aid. It is a thick book containing a total of six volumes, and comes to the school hole punched for a binder. FA offices should have a copy of the handbook somewhere to refer to. The entire handbook is online on the IFAP website so it's easier to search for certain topics than it is in book form. The website is http://ifap.ed.gov/. The language in the FSA Handbook isn't entirely in government jargon, so it's easier to understand than most government written publications. The website doesn't require a login so FA professionals as well as students can check it out. It covers rules and regulations for every possible higher educational institution, so semesters, quarters, trimesters, and modules are covered as well as standard and nonstandard terms and clock hours.
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| Cover of the current FSA Handbook |
Monday, 26 March 2012
ATB Test
"I've heard about an ATB Test. What is it?"
An ATB Test stands for Ability-to-Benefit Test. Not all colleges accept ATB Tests, but some do, and what it allows you to do is to attend college without a high school diploma or GED. Not only does it allow you entry into the school, it allows you to obtain FA.
The tests themselves are made by publishers, and are administered by (according the the FSA Handbook) a certified official which may include "high school guidance counselors, test and measurement experts, human resource development professionals, qualified professional educators, or regional Armed Forces Command staff who are experts in education, training, and human resource development." The test itself must be administered properly for it to be used. For an administrator of the test to be certified, they must be certified by the state or by the publisher of the test used.
If a school or its employee(s) affect the outcome of test scores in any way, or if the test wasn't administered independently of the school, then the school is responsible for returning any FA funds. So, basically, if anything is out of the ordinary, then the student isn't eligible for FA funds.
However, a new change is on the horizon beginning July 1, 2012. The ATB Test can still be used as an entrance into college, but the student will not be eligible to receive any FA funds. In order to be eligible for FA funds, the student will have to have a high school diploma, a GED, or pass a state-recognized home school program.
So, the short answer is go ahead and get your diploma, GED, or finish home schooling. You won't get FA without one of them!
For more information about ATB Tests, check out the 2011-12 FSA Handbook (available online only at this point), Volume 1, Chapter 1, pages 8-11.
An ATB Test stands for Ability-to-Benefit Test. Not all colleges accept ATB Tests, but some do, and what it allows you to do is to attend college without a high school diploma or GED. Not only does it allow you entry into the school, it allows you to obtain FA.
The tests themselves are made by publishers, and are administered by (according the the FSA Handbook) a certified official which may include "high school guidance counselors, test and measurement experts, human resource development professionals, qualified professional educators, or regional Armed Forces Command staff who are experts in education, training, and human resource development." The test itself must be administered properly for it to be used. For an administrator of the test to be certified, they must be certified by the state or by the publisher of the test used.
If a school or its employee(s) affect the outcome of test scores in any way, or if the test wasn't administered independently of the school, then the school is responsible for returning any FA funds. So, basically, if anything is out of the ordinary, then the student isn't eligible for FA funds.
However, a new change is on the horizon beginning July 1, 2012. The ATB Test can still be used as an entrance into college, but the student will not be eligible to receive any FA funds. In order to be eligible for FA funds, the student will have to have a high school diploma, a GED, or pass a state-recognized home school program.
So, the short answer is go ahead and get your diploma, GED, or finish home schooling. You won't get FA without one of them!
For more information about ATB Tests, check out the 2011-12 FSA Handbook (available online only at this point), Volume 1, Chapter 1, pages 8-11.
Monday, 19 March 2012
Claiborne Pell
The Pell Grant has been called the foundation for a student's entire financial aid package, and rightfully so since all other higher education financial aid is dependent on the Pell Grant. You can still qualify for other grants and loans without a Pell Grant, but you have to apply for the Pell Grant to even have the option of qualifying for the other FA. But where did this come from? It certainly hasn't always been around. The Pell Grant is one of those things that seems to have been around as long as anyone can remember, but if they think about the 1950's, it's not there.
So where did this come from? It came from a man named (oddly enough) Claiborne Pell. He was a senator from Rhode Island. He served six terms from 1961-97 and was most known for his work with education. He was largely responsible for creating the Basic Educational Opportunity Grant in 1973. This grant was created specifically for prison inmates to get an education. Pell and others believed that prisoners who received an education were less likely to return to jail and would ultimately create a safer public. The funding for this grant was never a problem in that there was always more money available than what was paid out. The odd thing was that people on the outside of prison weren't usually turned down for the grant. The Basic Educational Opportunity Grant was dubbed Pell Grant and soon the official name of the grant changed to it.
Claiborne Pell died at the age of 90 in 2009, and without his support, there would be no Pell Grant serving the needs to students in higher education since 1973.
So where did this come from? It came from a man named (oddly enough) Claiborne Pell. He was a senator from Rhode Island. He served six terms from 1961-97 and was most known for his work with education. He was largely responsible for creating the Basic Educational Opportunity Grant in 1973. This grant was created specifically for prison inmates to get an education. Pell and others believed that prisoners who received an education were less likely to return to jail and would ultimately create a safer public. The funding for this grant was never a problem in that there was always more money available than what was paid out. The odd thing was that people on the outside of prison weren't usually turned down for the grant. The Basic Educational Opportunity Grant was dubbed Pell Grant and soon the official name of the grant changed to it.
Claiborne Pell died at the age of 90 in 2009, and without his support, there would be no Pell Grant serving the needs to students in higher education since 1973.
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