What if? Scenario 3

What if I will be the father of a child, but I'm not married to my girlfriend?

This question is a bit complicated to answer. The rules of Financial Aid are clear, but at the same time sometimes leave a little room for interpretation. The key in Financial Aid is not only to follow the rules, but in cases like this where there is some room for interpretation, the school has to make sure that the Dept of Ed, their accrediting agency, and their policies agree on the answer. So, the answer to this may be different from school to school.

The FA rules state that to count a child (or any dependent for that matter), you have to provide more than 50% of their support for the year. Just because you have a child doesn't necessarily mean you are automatically an independent student; the key is the 50%. The rules also state that unless you are married to your significant other, you can't count them as a member of the household unless (you guessed it) you provide more than 50% of their support for the year.

The real key to answering the question above (and what makes this a tricky question) is the phrase "will be". This means that the child is unborn. The rules on this are quite simply stated: 1.) you will provide more than 50% for the unborn child when it is born, and 2.) the child must be born before or during the award year for which you want to count it. So, if you are filling out a 2012-13 FAFSA, and the child will be born in April, then you would count the child (if the first condition also applies). If the child will be born in December 2012, you can count the child for the 2012-13 FAFSA (if the first condition applies). But if you are filling out a 2011-12 FAFSA, and the child isn't born until August, then you can't count the child since it isn't born during the 2011-12 award year.

These are just the rules as stated. The interpretation and policies of some schools differ. Schools are always allowed to go stricter than the federal guidelines. Some schools will only allow an unmarried mother of an unborn child to count the child as a member of the family on the FAFSA, but not the unmarried father. Some require documentation of how much support the father and/or mother will be contributing to the unborn child (this is especially true if the prospective student is still considered a dependent except for the factor of having a child).

The best idea for a student to ask their school what their policy is. Like it says above, there is some interpretation for schools. If the Dept of Ed doesn't agree with a school's decision in awarding aid to you, then the school is in trouble, and if the school has awarded that aid to you, then the school owes it back, which means you will have to find your education elsewhere. Schools typically want to avoid this at all cost, so they want to make sure that things are right. So, don't be too frustrated if your school won't allow such an interpretation; it may actually be less of a hassle in the future for you in some cases.

What if? Scenario 2

What if my schedule changes from what is originally was? Will this affect my Financial Aid?

The answer is probably. The normal schedule is a fulltime schedule (meaning you have at least 12 credits) per quarter/semester. Loans are based on an academic year (2 semesters/3 quarters). If for one of those you have less than 12 credits, your loan may or may not change, but your pell grant will. You see, since loans are filled out for the academic year, as long as you have a total of at least 36 credits in your 2 semesters/3 quarters, then your your loans won't change. So you could be 3/4 time or even half time in one, as long as the other(s) make up the difference to total at least 36. Your pell grant, on the other hand, is based on the number of credits in the individual term, so if you drop below 12 credits in your semester/quarter, then your pell grant will drop for that term.

So, the short answer is maybe. For some situations, a change in schedule may change your Financial Aid, and in other situations, it won't. The important thing is that you make sure you stop by the Financial Aid office and ask them how a situation will affect your eligibility. Sometimes, what seems like an insignificant change could potentially be a big deal. It's always best to find out.

Consumer Information

Beginning in the 2009-10 Award Year, Consumer Information became a new rule for schools. The Department of Education required colleges and universities to make available certain pieces of information to all potential students in a manner that was easy for people to find. They have since gone on to say that the information should be no more than 3-4 clicks from the homepage, with less clicks being preferred. Although not necessarily required, it is important to have all the Consumer Information in the same place. Some of the larger universities already had most of the information on their websites, but they weren't together. The solution they had was to create a page on the website called "Consumer Information", which had links to the specific page on the website with the information. Some of the smaller schools, just created a pdf document on their websites with the information typed.

The information that was supposed to be included in the Consumer Information included things like policies. Schools would have to include their Satisfactory Academic Progress policy, refund policy, and general school policies. Cost of attendance including tuition and fees, and an explanation how a student's COA is figured. The types of financial aid available is a required disclosure, as well as a description of them. Contact information such as phone and address should be included. There really is no such thing as being too specific, because it is supposed to be a student's guide to how things work at the school they are looking at. The information is supposed to also be a more regular English (as opposed to governmental regulation lingo).

Here is a link to Metro Business College's Consumer Information; it is found under the "About Us" tab of the website: http://metrobusinesscollege.edu/pdfs/ConsumerInformation.pdf

Each year it is updated with new and/or updated information.

GE Disclosures

The last couple years have been very busy for schools, especially schools in the for-profit sector. New rules and changes to existing rules have kept schools very busy in staying in compliance. Along with these rules (which are too many to mention in one post) is the Disclosures rule.

All schools that offer gainful employment programs (which is almost exclusively for-profit schools, which I'll explain in another post) have to disclose certain pieces of information on the previous award year. Placement rates, on-time graduation rates, median loan debt, median institutional loan debt, and cost are all to be mentioned, and each of these categories are to be separated by program. These disclosures have to be a school's website, and not hidden on the website either (so, a school can't create a hidden link to the information). Any advertising that specifically mentions a school's programs has to include this information too. The Department of Education then specified that it's impossible to put all that information on a flyer, billboard, or a TV/radio ad. Schools have to give the direct link to where the information can be found. For example, we can't say "for information regarding placement rates, on-time graduate rates, median loan debt, and cost, visit metrobusinesscollege.edu." It has to be the exact page, so we would have to say "metrobusinesscollege.edu/GainfulEmploymentDisclosures".

It's not much different than a commercial with a car driving all crazy on the road, and at the bottom of the screen, the company making the commercial has to put a phrase like "Stunt driver on a course. Do not attempt", or a medication commercial that has to list all the side effects. The disclosures are supposed to inform prospective and currently enrolled students of the programs at a school, and whether they choose to look at the information is voluntary, but a school has to make the information available.

2012-13 Pell Grant

So it's been announced already how the 2012-13 Pell Grants (which begin July 1, 2012) will change. I often mention that Financial Aid itself is like a car model, and each year the new edition is released with some changes from the previous years. Sometimes it changes a little, and sometimes it's not recognizeable from the previous year. Fortunately, there are fewer changes this year than in previous years.

First, let's start out with the good news.

The good news is what is being reported in all the media outlets and on most websites. And it's true. The Pell Grant's maximum will remain at $5550 for this next award year. And really, in a time when the government is trying to find places to save money, they haven't lowered the Pell Grant, which is amazing considering it's money from the government which doesn't get repaid typically.

And now for the bad news.

The bad news is what isn't being reported. In order for the Pell Grant to stay at the same level, something has to change, and there's a couple things. A couple other grants (such as SEOG) are being reduced, which will help pay for the Pell Grant. A major change is the way Pell Grants are figured. Currently, they are based on a family income of $30,000, but that will drop to $23,000. For those whose income didn't change, this means that it won't be as easy to get as much Pell as you received the previous year, and people who were borderline Pell Grant recipients will lose Pell starting in July. Also, the lifetime eligibility for earning Pell Grants has been reduced from 18 to 12 semesters. This is cut down on the students who keep attending and never obtain degrees or keep deferring their loans (some call these professional students or perpetual students). One more change was that a student must have a high school diploma or a GED to be eligible for Pell. (What this change means is some schools allow students to begin attending if they take an ATB [Ability to Benefit]Test. Metro Business College never allowed entry for students with this, and a high school diploma or GED was always a requirement.)

Really, the bad news isn't all that bad. The only change that may be a problem is the reduction of how the Pell is figured. This will make it a little harder for people to qualify for as much Pell as they did the previous year. So, even though the Pell stays at the same level, it won't be as easy for some students to get. We'll see how the year goes.

Entrance and Exit Counseling

Entrance and Exit Counseling are requirements for anyone taking out a federal student loan. Even if you've had one before, then you are required to do it again.

The purpose of Entrance and Exit Counseling is so that you understand how your loans work before you run into a problem. Entrance Counseling is required for your loan to even go through at the beginning of your loan. This is because you still have time to decide not to take out the loan if you understand the loan better in the Entrance Counseling process and decide you don't want it. Exit Counseling is required before you graduate from your program because you should know what to expect before you are out in the real world. If you drop from your program, Exit Counseling is still a requirement for you to complete.

Many schools allow you to complete Entrance and Exit Counseling online. Some schools choose to do Entrance and Exit Counseling in person as a group. The purpose of this is to allow people to ask questions instead of just clicking buttons without actually reading or understanding your loans. Either way that it's done, it's still required. Many schools even require you complete exit counseling in order to graduate. So, it's important that you do that.

Consolidation

If you consolidate your student loans together, it's very similar to consolidating other loans together: taking more than one loan and combining them. There are a few good reasons to consolidate, such as if you have to make more than one payment to different lenders/servicers. Anyone who falls in this category is a good candidate for a consolidation. It's much easier to make one payment for all your loans than three payments because it's easy for one of your loans to fall between the cracks.

There are a few things to consider if you're interested in consolidating. Firstly, you have to be approved for your consolidation. Now, the Direct Loan program is the only program consolidating federal student loans, so they will have to approve you. Secondly, your interest rate will change. Because you are going from several loans with differing interest rates into one loan with one rate, an average rate of your existing interest rates will be created. Thirdly, your monthly payment will likely decrease. If you have three payments of $50, then you will be paying a total of $150 plus interest. If you consolidate, your payment may drop to $100. If that's the case, then you'll be saving yourself $50 a month. Fourthly, the length of your loan might change, and you may end up paying more in the end due to the change of interest.

Usually, there are three factors that go into deciding whether you want to consolidate or not:

1. Do I want a lower monthly payment now
2. Am I willing to owe more over the life of the loan
3. Should I combine the loans to make them easier to handle

These are questions that you should think about and discuss with your servicers/lenders. Also, if you have questions, you can research at loanconsolidation.ed.gov.