The FAFSA for the 2012-13 award year begins the new era of FA (once again). In this new era, the FAFSA is intended to be completed by the student, as opposed to the school submitting the FAFSA after the student fills it out. As part of this, the IRS Data Retrieval Tool is a main element.
The IRS Data Retrieval Tool isn't new this year, but it is the first time that it's become mandatory. The good thing about the tool is that it will cut down on the number of FAFSAs that have to be verified, but the bad thing is that smaller schools have to change how they are processing FAFSAs.
What the retrieval tool does is simply imports the student's tax information directly from the IRS to their FAFSA. Since it is genuine information from the IRS, then it has to be correct for Pell Grant purposes. As long as a student doesn't change the information that has been imported, then there is no need to verify the income information (even if the FAFSA is verified).
But how would anyone know if the information has been changed after it was imported? When a FAFSA is processed, it will come back with a certain code on the ISIR. This code tells the FA Administrator what happened with the retrieval tool. There is a code for if the student used the tool, one for if the student didn't, and one for if the student changed in the information after it was imported. A subsequent posting will list the codes and possible troubleshooting.
So far, the number of verifications is much lower than one would expect, so that part of it is true. However, it still has a few bugs as to whose information it can find. Some students who filed their taxes in January and February are still being told their information isn't found. Although this doesn't happen often, it does happen. Overall, it will be interesting to see what happens next.
Monday, 14 May 2012
Monday, 7 May 2012
"Why Does My FA Not Get Disbursed At Once?"
This is a common question that students ask. The answer is actually really simple, but it's not always what a student wants to hear.
If you're talking about Pell Grants, then your FA is based on Payment Period (or Period of Enrollment), such as a semester, quarter, trimester, etc. If you have two semesters in the Period of Enrollment, then your Pell will be split in half, with each disbursement coming once per semester. If you're in a quarter system, then (for a very confusing reason that will be discussed in another posting) the Pell is split into three disbursements. And so on. You only receive Pell for the amount of Payment Periods you actually attend, so if you attend one quarter in the award year, then you only receive one quarter's amount of Pell.
If you're talking about loans, typically your loans have to have a minimum of two disbursements, although some schools are actually allowed to have one disbursement. There are many schools who could have one disbursement, but choose not to use it. Your loan is based on the amount of time in your loan period, which could be an academic year or a single Payment Period (depending on your situation). At a semester-based school, if your loan is for the academic year, then it would last for two semesters which means two disbursements. At a quarter-based school, typically your loan is for three quarters (one academic year), so the loan is split into thirds, one for each quarter.
The good thing about Pell not coming at once is if you drop before the year is over, you still have Pell left to use at another school (if you switch) or at your current school (if you stay). The good thing about loans not coming at once is (once again) if you drop, you don't owe back the entire loan, just the part that came in and the school was entitled to keep. If you attend one semester and then drop, then you only owe back $4750 (combined Sub and Unsub for a first year Independent student), but if your entire loans had come in, then you'd owe $9500 (combined Sub and Unsub for a first year Independent student). That's a big difference. Just remember, your FA is based on the amount of time and number of credits you are attending from Payment Period to Payment Period.
If you're talking about Pell Grants, then your FA is based on Payment Period (or Period of Enrollment), such as a semester, quarter, trimester, etc. If you have two semesters in the Period of Enrollment, then your Pell will be split in half, with each disbursement coming once per semester. If you're in a quarter system, then (for a very confusing reason that will be discussed in another posting) the Pell is split into three disbursements. And so on. You only receive Pell for the amount of Payment Periods you actually attend, so if you attend one quarter in the award year, then you only receive one quarter's amount of Pell.
If you're talking about loans, typically your loans have to have a minimum of two disbursements, although some schools are actually allowed to have one disbursement. There are many schools who could have one disbursement, but choose not to use it. Your loan is based on the amount of time in your loan period, which could be an academic year or a single Payment Period (depending on your situation). At a semester-based school, if your loan is for the academic year, then it would last for two semesters which means two disbursements. At a quarter-based school, typically your loan is for three quarters (one academic year), so the loan is split into thirds, one for each quarter.
The good thing about Pell not coming at once is if you drop before the year is over, you still have Pell left to use at another school (if you switch) or at your current school (if you stay). The good thing about loans not coming at once is (once again) if you drop, you don't owe back the entire loan, just the part that came in and the school was entitled to keep. If you attend one semester and then drop, then you only owe back $4750 (combined Sub and Unsub for a first year Independent student), but if your entire loans had come in, then you'd owe $9500 (combined Sub and Unsub for a first year Independent student). That's a big difference. Just remember, your FA is based on the amount of time and number of credits you are attending from Payment Period to Payment Period.
Monday, 30 April 2012
Hope for the Subsidized Loans?
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!
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, 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 |
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