FAFSA, Grants, Money, Scholarships

FAFSA and Financial Aid Tips for Low-Income Students

No Comments 23 February 2017

If you come from a low-income household, paying for college can be intimidating. Take a look at these tips financial aid and FAFSA tips to receive the most aid you are eligible for.

Apply for the FAFSA early. More than a dozen states award grants on a first-come, first-served basis. That means that the later you apply, the less likely you are to receive grants. Only about 33 percent of low-income students file the FAFSA during the first three months of application season. This is compared to 58 percent of middle-income students and more than 71 percent of high-income students. For this reason, low-income students tend to miss out on billions of dollars in grants by filing the FAFSA too late.

Use the IRS data retrieval tool. You must fill out more than 100 questions on the FAFSA – that can be intimidating if you do not understand each question. That is where the IRS data retrieval tool comes in. This tool will pull information from your tax returns and input them directly onto your FAFSA application.

Seek out free money. There is no limit on how many scholarships you can apply to. The more scholarships a student receives, the less their total out-of-pocket cost will be for college. We are always updating the College Greenlight scholarship database, so be sure to always check in on your scholarship matches. You should also look into grant partnerships between colleges you are considering and organizations to maximize how much money you receive.

Consider work-study. The work-study program is based on financial need and provides an opportunity to earn money to that will help cover college expenses. The amount you earn will depend on how much you decide to work. But it is important to keep in mind that this money won’t be available to pay tuition at the beginning of the semester, but will instead help to cover ongoing expenses throughout the year.

Ask for help. There are multiple free sources you can utilize for help with filling out the FAFSA. Your counselor will be a great resource for any questions you or your parents may have. The U.S. Department of Education sponsors a toll-free hotline (1-800-433-3243) that can answer any questions you may have about student aid and the FAFSA.

FAFSA, Federal Loans, Grants, Merit Aid, Money, Private Loans, Scholarships, State Loans

Understanding Your Financial Aid Letter

No Comments 20 February 2017

When you’re accepted to a college, you’ll receive a letter explaining the financial aid package you are awarded.

These letters are sometimes filled with terms you might not be familiar with. You need to make sure you understand what your financial aid letter offers before you accept any part of it.

Here’s what you need to know:

  • You will be told about grants, scholarships, work-study programs and federal student loans. Grants and scholarships are funds that you never have to repay. Work-study is government funding that you earn by working a qualifying job on or off campus. Federal-student loans are borrowed money that’s taken out through the government that you will repay.
  • The cost of attendance (COA), which is what you can expect to pay for tuition, fees and room and board, also will be included. Additional expenses, such as textbooks, transportation and basic necessities, are not included in this cost. Tip: You cannot rely on this estimate beyond your freshman year. The cost of attendance is not fixed and does not take potential tuition increases into account.
  • An important aspect of your financial aid is the expected family contribution (EFC). This number, based on information from your FAFSA, estimates how much you and your family can afford to pay for college out of pocket.
  • It’s important to note that you don’t have to accept all the terms of your financial aid letter. You can decline things such as work-study and loans. Make sure to ask the right questions before you accept your letter and find the average student loan debt for each school you are accepted to. Ask how many graduates find a job in their field within six months because that is when the grace period for student loans typically ends.
  • Check to see if you can expect the same scholarships every year as well. Keep your College Greenlight profile up to date so you can find scholarships to help with college expenses.

FAFSA, Money

Introducing the Streamlined FAFSA

No Comments 16 January 2017

Multiple organizations understand that the FAFSA application process is complicated and may present barriers to college access for many students. For this reason, the National College Access Network (NCAN) has created the Streamlined FAFSA. The FAFSA is a free a universal form for students to fill out in order to apply for financial aid from the U.S. Department of Education. NCAN’s model eliminates unnecessary and redundant questions in order to maintain FAFSA’s original purpose, which is to serve as the premier and free form to apply for financial aid.

Applying for the FAFSA is a complicated process, with only about 44 percent of students completing the form. This means about $24 billion goes unclaimed in federal aid, which includes $2.7 billion in Pell Grants. NCAN recognizes that there are several barriers for students completing the FAFSA. Chief among them is a lack of understanding the application process, overly complex questions and the length of the FAFSA. These issues cause barriers for many applicants, especially first-generation students.

The Streamlined FAFSA eliminates these issues by providing a shortened series of eligibility and demographic questions for applicants. An updated Federal Student Aid ID (FSA ID) and expanded access to the IRS Data Retrieval Tool (IRS DRT) allows many identifying and financial questions to be automatically filled in, which saves the applicant time and reduces errors.

The Streamlined FAFSA reduces the number of questions by guiding students down one of three paths. Pathway one has as few as 20 questions for applicants from families who receive benefits from eligible federal means-tested programs. This means that these individuals automatically can skip all financial questions and receive the maximum Pell Grant award.

Pathway two has no more than 23 questions for applicants who do not participate in means-tested benefit programs and do not file a schedule with their taxes. Pathway three includes 25 questions for students who file tax schedules with their taxes.

NCAN’s Streamlined FAFSA is outperforming the current FAFSA. Independent testing of the NCAN model shows a 56 percent lower error rate, a 39 percent improvement in completion times and 50 percent fewer questions to answer.

Transparency has been increased and uncertainty is reduced in the FAFSA filing process because of the streamlined FAFSA. This model could increase Pell Grant expenditures by nearly 5.1 percent and increase FAFSA completion by 7.4 percent.

With 85 percent of four-year college students receiving financial aid, a simplified FAFSA application process is vital. The streamlined FAFSA could ensure that needy students have the access to financial aid.

FAFSA, Money

FAFSA Tips for Low-Income Students

No Comments 15 November 2016

Every low-income, first-generation and underrepresented student should follow a few simple tips about applying for financial aid to help pay for college. They should always apply for financial aid, even if they think they are ineligible or don’t need it. They should apply for financial aid every year and apply early, to increase the amount of grants they get and allow them to work less. They can simplify the process by using the IRS Data Retrieval Tool. They should ask for help if they encounter problems.

Tip 1: Apply for Financial Aid Every Year

Every student should file the Free Application for Federal Student Aid (FAFSA) every year. The financial aid formulas are complicated, so it is difficult to know whether you will qualify without applying first. For example, the number of children in your family in college at the same time has a big impact on the amount of financial aid you get.

Tip 2: Get Grants So You Can Work Less

The FAFSA provides access to federal and state grants, such as the Federal Pell Grant. Students who qualify for grants may be able to work less, which increases the likelihood of graduating from college. Students who work a full-time job are half as likely to graduate within 150% of the normal time-frame, as compared with students who work 12 hours or less per week. Even working just a few hours less each week will help, since every extra hour that can be devoted to academics increases the likelihood of graduating.

If a student will be quitting their job to enroll in college full-time, they should appeal to the college’s financial aid administrator for an adjustment to the financial aid package. Financial aid administrators can substitute an estimate of income during the academic year for actual income during the base year. If income has decreased, this should yield an increase in the amount of financial aid the student receives.

Tip 3: Always Apply for Financial Aid

Unfortunately, you can’t get aid if you don’t apply. Each year, millions of students don’t file the FAFSA. One third of them, about 2 million students, would have qualified for the Federal Pell Grant. Two thirds of these students, about 1.3 million students, would have qualified for the maximum Federal Pell Grant. Collectively, they are leaving more than $10 billion in federal, state and institutional grants on the table.

It is unclear why millions of Pell-eligible students don’t file the FAFSA. Some students said that they thought that they were ineligible or had no financial need, did not want to take on debt, had no idea how to apply for financial aid or felt that applying for financial aid was too much work. Some students may they think they can work their way through college, because they are working a full-time job while enrolled part-time at low-cost public colleges, such as community colleges. Independent students may not have the luxury of being able to quit their jobs to go back to college full-time. But, perhaps they could work shorter hours if they qualified for college grants.

Tip 4: Apply for Financial Aid Early

Even when low-income students file the FAFSA, they tend to file the FAFSA later than middle- and high-income students. Only about a third (33%) of low-income students file the FAFSA during the first three months of the application season, compared with more than half (58%) of middle-income students and more than two-thirds (71%) of high-income students. Students should file the FAFSA as soon as possible after the October 1 start date, to avoid missing priority aid deadlines and early state deadlines. For example, a dozen states award state grants on a first-come, first-served basis until the funds are depleted. Low-income students miss out on billions of dollars of state and institutional grants each year because they file the FAFSA too late.

Tip 5: Use the IRS Data Retrieval Tool to Simplify the FAFSA and Avoid Verification

Low-income students should also take advantage of the IRS Data Retrieval Tool when filing the FAFSA. The IRS Data Retrieval Tool transfers information from federal income tax returns to the FAFSA. Not only does this simplify the FAFSA, but it also reduces the likelihood that the student’s FAFSA will be selected for verification. Any data element that is transferred unmodified from a federal income tax return will not be subject to verification.

Many low-income students find it challenging to get through verification. They may be the first in their family to go to college, and their parents may resist providing financial information multiple times. Or, their parents may be incarcerated, institutionalized or disabled, so getting the information needed for verification may be challenging. Every time you ask for information, it erects a new barrier to college access.

If the student’s FAFSA is selected for verification, they may be required to provide an IRS tax return transcript. The online IRS Get a Transcript tool is not friendly to low-income students who do not have a stable permanent address. The IRS Get a Transcript tool can be used to mail the tax return transcript to the address on the federal income tax return. If the taxpayer wants an online copy, has moved since the tax return was filed or wants the tax transcript sent to the address of the financial aid office, they will need to verify their identity by providing a financial account number (e.g., credit card, mortgage, home equity loan or car loan) and a mobile phone number, both in the taxpayer’s name. Otherwise, they will need to file IRS Form 4506-T on paper, which can take weeks to process.

Tip 6: Ask for Help

Completing a complicated form can be challenging, especially one as detailed as the FAFSA. Luckily, there are many sources of free help completing the FAFSA. Counselors and mentors are available to answer student and parent questions. The U.S. Department of Education sponsors a toll-free hotline, 1-800-4-FED-AID (1-800-433-3243), to answer questions about federal student aid and the FAFSA. The National College Access Network (NCAN) provides free financial aid workshops and one-on-one help completing the FAFSA through Form Your Future.

FAFSA

What You Need to Know about Prior-Prior Year

No Comments 14 September 2016

Starting with the 2017-18 award year, the Free Application for Federal Student Aid (FAFSA) will be based on prior-prior year (PPY) income and tax information instead of prior-year (PY) income and tax information. For example, the 2017-18 FAFSA will be based on 2015 federal income tax returns instead of 2016 federal income tax returns.

The switch to PPY enables two key benefits for all students:

  • Students will be able to start filing the FAFSA three months sooner, on October 1 instead of January 1. This will align the start of the financial aid application season with the start of the college admissions application season.
  • Students and their families will be able to use the IRS Data Retrieval Tool to pre-fill the FAFSA, making it easier to complete the form. Most taxpayers will have already filed their federal income tax returns. Even taxpayers who use the automatic 6-month filing extension must have filed their federal income tax returns by October 15, near the start of the FAFSA application season.

The switch to PPY may be especially beneficial for low-income students:

  • Generally, low-income students are more likely to be selected for verification because they are more likely to qualify for the Federal Pell Grant. But, low-income students are also more likely to face challenges in completing verification, causing them to lose the financial aid they need to pay for college. However, with the use of the IRS Data Retrieval Tool, any data element that is transferred unmodified from the IRS onto the FAFSA will not be subject to verification. This will significantly reduce the number of FAFSAs selected for verification, helping more low-income students to qualify for need-based financial aid.
  • Low-income students tend to file the FAFSA later than middle- and high-income students. Students who file the FAFSA earlier tend to qualify for more grants than students who file the FAFSA later, because some aid is awarded on a first-come, first-served basis and some states and colleges have very early FAFSA deadlines for their financial aid funds. The earlier start date may encourage low-income students to file the FAFSA sooner, helping them meet more state and college deadlines. Nine states will still award state grants on a first-come, first-served basis, but the 12 or so states with February and March deadlines have not yet moved up those deadlines.

Note that if there is a significant drop in income from the prior-prior year to the prior year, applicants cannot substitute prior-year income for prior-prior year income, even if it is available. The prior-year income, and now the prior-prior year income, are proxies for income during the academic year. However, families experiencing a decrease in income can and should appeal to the college financial aid administrator for a professional judgment review, arguing that their prior-prior year income is not reflective of ability to pay during the award year. The financial aid administrator can choose to substitute an estimate of income (and income taxes) during the award year for the prior-prior year income and taxes, when the student and/or family have experienced a sustained decrease in income. If the family normally has volatile income from one year to the next, as is common among small business owners, the financial aid administrator can choose to substitute an average of income during the last 3-5 years.

To help low-income students take advantage of the switch to prior-prior year, counselors and colleges must encourage them to file the FAFSA, to file the FAFSA sooner and to use the IRS Data Retrieval Tool to simplify the application process. This will help more low-income students qualify for grants, which will help more of them enroll in and graduate from college.

College financial aid administrators should also consider distributing financial aid award letters and notifications earlier. Even a few weeks earlier, in early March, will students and their families with more time to choose a college before the May 1 National Candidates Reply Date. It will also allow more time for families to prepare for college costs and for financial aid administrators to counsel students and parents.

 

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