Campus Overload Live with Jenna Johnson: Understanding FAFSA

Network News

X Profile
View More Activity
Jenna Johnson,Mark Kantrowitz
Thursday, February 24, 2011; 1:00 PM

Campus Overload's Jenna Johnson introduces you to ambitious student leaders, journalists, activists, interns and newsmakers from colleges across the country in her blog daily. In her live chat, she'll be answering your questions about college life, on and off campus.

_______________________

Jenna Johnson: Hello, everyone! Hope you had a great Presidents' Day...This morning our education pod has been buzzing about the announcement that Harvard and Princeton will once again offer nonbinding early action admissions. I am interested to hear what you guys think of that decision...But the main topic of the day is the FAFSA. If you have ever filled one out, I am sure you have questions. Here to answer those questions is Mark Kantrowitz, a true financial aid whiz.Okay -- I can't wait to hear your questions. Let's roll.

_______________________

Mark Kantrowitz: My name is Mark Kantrowitz. I am the publisher of Fastweb.com and FinAid.org, the two leading web sites about planning and paying for college. Fastweb is a scholarship matching site. FinAid is an encyclopedic guide to student financial aid information, advice and tools. Both sites are available to the public for free.I am also the author of a newly published book, Secrets to Winning a Scholarship, which is available on Amazon.com in both Kindle and paperback formats for less than $10.

_______________________

FAFSA: I completed the FAFSA for my daughter and I hope I did it correctly. Is there a way to see if it is accurate and correct and how can I check on the status and dollar amounts available?

Mark Kantrowitz: After you submit the FAFSA the colleges will prepare financial aid award letters. The financial aid award letters will provide you with information about the types and amounts of aid for which your daughter qualified. If there are potential inaccuracies on the FAFSA, it will be selected for verification, in which the college will ask for copies of the source documents for the information on the FAFSA (e.g., IRS Form 1040, W-2 statements, etc.). To check on the status of your FAFSA, go to www.fafsa.ed.gov.

_______________________

Funding for Graduate Students: Many of the independent scholarships out there are only for undergraduate students, and many universities only have a few select assistantships as a means of providing aid for graduate students. How can I, as a graduate student looking to foot the bill for my own master's degree, fund my education without incurring well over $50K in debt?

Mark Kantrowitz: Financial aid for graduate school is a bit different than financial aid for undergraduate school. There is no general need-based grant for graduate school like there is for undergraduate school. Instead of scholarships, there are fellowships. (You can search for them on Fastweb.com just as you can search for scholarships on the site.) More financial aid is in the form of loans. See www.finaid.org/loans for some statistics on the percentage of students graduating from graduate school with debt and the average amount of debt. Unfortuantely, of students applying for financial aid for medicine, law and business, almost 100% graduate with debt. There are also teaching and research assistantships for graduate school, where you get a full or partial tuition waiver and perhaps a small living stipend in exchange for teaching or research duties. Contact the graduate department at the colleges of interest to you, since financial aid for graduate school tends to be decentralized.

_______________________

FAFSA: Our home needs $68,000 in structural (not cosmetic) repairs due to construction flaws that we haven't been able to "persuade" the builder to fix. So when we file our FAFSA, our assets will include that money (set aside for the repair, which won't happen until spring), yet that money won't be available for our child's college tuition in the summer. It feels wrong to exclude that amount from FAFSA, but by including it, we're not showing the true picture of our finances or the need we'll have for financial aid, since we can't get a scholarship for a home repair. What advice would you give us?

Mark Kantrowitz:

_______________________

Too Many Forms: Why can't the schools agree on one form to show our financial information? Some schools want the FAFSA, some want the College Board info (which means doing our taxes 2 months early because we have to include the current tax return, including our 1099s) and I think that others want different information. Our children applying for college is stressful enough!

Mark Kantrowitz: unfortunately forces many families to answer many more questions. I have testified in favor of simplification of the FAFSA, but there's a risk that further simplification may cause some colleges to adopt their own forms rather than use the FAFSA if the form discards information that the colleges deem important.

_______________________

Paying for college...again: Like many parents in the DC area, we don't qualify for aid based on the FAFSA. This is our second child going to college, is there any source for merit aid or other grants not related to income that we could pursue? So much money going out the door!

Mark Kantrowitz: Financial aid eligibility depends significantly on the number of children enrolled in college at the same time. The federal formula more or less divides the parental contribution by the number of children in college when calculating the EFC. So having two or more children in college at the same time can significantly increase aid eligibility. You should submit the FAFSA every year even if you didn't qualify for aid last year because of this and because the f0rmula changes every year. Also, the FAFSA is a prerequisite for the unsubsidized Stafford and PLUS loans, which do not depend on financial need.For scholarships, search the Fastweb.com scholarship database for free.For academic scholarships, ask the college admissions office about such awards. These are often automatic, but you won't find them at the top colleges. See MeritAid.com for a tool for searching for them. (Such awards are also listed in the Fastweb database, but you have to list the college in your profile to see the available awards at that college.)

_______________________

re-arranging personal finances to "look poor": Nothing's more annoying than hearing that high-income households have rearranged their finances in a way that their applications for finaid are granted. I can't be there for the discussion, but please post links to articles that tell parents how to manage that.

Mark Kantrowitz: http://www.finaid.org/fafsa/maximize.phtml.

_______________________

Overseas student: I've been accepted and plan to go to a one-year grad program in September, overseas. I've done the FAFSA forms and even got the statement about how much they suspect I/my family can afford, which is pretty accurate. But I haven't gotten any notification from any loan agency offering me a loan. I NEED a loan to attend! How long does this process take, or should I be contacting loan agencies myself? I thought I read that they would contact me. I'm really getting worried I won't be able to attend. Please help!

Mark Kantrowitz: aid, you won't be able to obtain the Stafford and Grad PLUS loans for the college. In such a situation you'll be limited to private student loans. But many are wary of lending for non-US programs.

_______________________

parent financing: We don't yet know where our daughter will be attending college, much less what our actual costs will be. We have filed FAFSA and are not eligible for federal aid. Our finanal advisor tells us that our daughter will be eligible for up to $5500 per year of loans in her own name. We are submitting the financial profile form to the two universities that require it. What are our options as far as loans? I really don't want to take out a home equity loan if we can help it. Thanks for taking these questions.

Mark Kantrowitz:

_______________________

Cosigners: I read somewhere that if you apply for a loan for a foreign school, you have to have a cosigner who resides in the US. I'm in my mid-30s, single, and don't really want to ask my parents to cosign for a loan. Is this a requirement? Thanks!

Mark Kantrowitz: If the foreign school is not eligible for federal student aid, you will need to get a private student loan. Most private student loan borrowers these days require creditworthy cosigners to be eligible. For example, Sallie Mae recently said that 93% of its private student loans had cosigners. That compares with 50% before the credit crisis.

_______________________

Jenna Johnson: A commenter on my blog made a good point yesterday: "This year's FAFSA is so much easier to complete than last years. FAFSA is a requirement for financial aid of all types of aid - it is a right of passage. Breather in; breather out; repeat."The new form is definitely shorter and easier to navigate -- but there is talk of simplifying it even more. What changes would you want to see?

_______________________

Math and Science.: Can financial aid differ from major to major? For example, the goverment has been really pressing the issue of getting people involved in math and science. So is there anymore incentive to do those subjects?

Mark Kantrowitz: The National SMART Grant provided higher grants to Pell Grant recipients who majored in STEM fields (Sciennce, Technology, Engineering, Mathematics) plus national security languages. That program sunsets this year, however, and will not be extended. Some state grants are major-specific. Major-specific government aid is more common at the graduate level. However, there are many private scholarships that are major-specific. Free scholarship matching web sites like Fastweb.com ask for your current or proposed major in order to match you with the major-specific awards for which you are eligible.

_______________________

Second-year aid: I'll soon be filling out the FAFSA for my daughter's sophomore year. Our income has gone down slightly in 2010, and our savings---thanks to college payments!---are also slightly less. Do colleges routinely give families the same aid package each year, or do they make adjustments for changing assets?

Mark Kantrowitz: Each year's financial aid package is calculated fresh based on the current income and assets.

_______________________

Single parent students: With 13% of the US college student body now identifying as single heads of households with minor children, can you speak to how these students can maximize their financial aid as well as how FAFSA and TANF benefits do/do not influence each other?Dr. Erin Taylor, SMART in Oklahoma (Single Mother Academic Resource Team)

Mark Kantrowitz: TANF benefits do not reduce financial aid eligibility.programs, such as TANF and WIC. The purpose of this question is to make it easier for these students to qualify for federal student aid. Depending on income, these families may qualify for the simplified needs test (which disregards asset) or automatic zero EFC (which then qualifies the student for a full Pell Grant).

_______________________

Paying for College: How can I learn more about the different types of loans available and other ways of paying for college?

Jenna Johnson: Mark's two Web sites are a good start -- Fastweb.com and FinAid.org. The Department of Education's student financial aid Web site is another treasure trove of information, including a few calculators that can help you budget and plan.As you are searching for information online, pay special attention to who is sponsoring the site.

_______________________

marriage and the fafsa: Can you talk a little about a student filing his or her FAFSA for the 11-12 school year who has either gotten married or divorced since Jan. 1 2011?

Mark Kantrowitz: There is a recent change that will allow colleges to consider applicant marital status changes that occur after the FAFSA is filed. It is subject to the discretion of the college, but at least they can do this now. Previously updates due to a change in applicant marital status were prohibited.parental information will once again be required.

_______________________

FAFSA Determination of Financial Need: How realistic is the FAFSA's determination of the amount of financial support we as a family can contribute toward tuition? I have no idea how we will be able to live in this area and still get by if the school my daughter will be attending *really* expects us to contribute that much!

Mark Kantrowitz: Most families will have to pay more than the FAFSA's expected family contribution (EFC) figure. This is partly because of gapping (where the college does not meet full demonstrated financial need) and partly due to the inclusion of loans in the financial aid package. Also, the EFC calculation does not consider unsecured consumer debt such as credit cards, auto loans and previous student and parent education loans. So you can think of the EFC as a harsh measure of ability to pay, and more of a rationing system than anything realistic.

_______________________

The change from private lenders: Hello, I was wondering, generally speaking, how well university financial aid offices seem to be dealing with the change over from private lenders (who handled much of the actual work of getting money to students) to a government-managed system (which means that the offices themselves are responsible for much of the processing). My spouse is a 3rd year law student, and this year it's taken 7 weeks for him to receive the balance of his loan each semester (the school paid itself the first day of school). In the past, it was a week at most. Now, his institution's FA office has many other issues (like a director who spends 2/3 of her day in a friend's office chatting and has weeks of unread emails from students), so I was wondering if his experience is the new normal.

Mark Kantrowitz: For the most part the transition to 100% Direct Lending has gone smoothly. There have not been very many serious problems, and those were addressed quickly. There's more work for the colleges on the back-end (you might overhear the financial aid administrator complaining about the reconciliation process, which matches their records with the US Department of Education's records). It should not take 7 weeks for the loans to be disbursed. The US Department of Education disburses funds at least weekly. So the delay is probably occuring in the college's financial aid office. I suggest asking the college why there is a delay.

_______________________

Income/asset rule of thumb: I am wondering if there is a general rule of thumb regarding a family's income/asset level as to whether or not it even makes sense to even apply for FAFSA?

Mark Kantrowitz: an increase in your aid eligibility.

_______________________

Financial Disclosure: I am a financial consultant. How does FAFSA treat assets held in non-qualified variable annuities (meaning not part of any retirement plan)? My understanding is that such assets do not factor into the EFC calculation in the same way that retirement assets do not.

Mark Kantrowitz: Annuities that are part of a qualified retirement plan are not reported as an asset on the FAFSA. The regulations and statute are ambiguous as to non-qualified annuities, but my understanding is that such annuities (say, from winning the lottery or as a form of investment) are reported as an asset on the FAFSA.Distributions from annuities that are not reported as an asset on the FAFSA are treated as income to the beneficiary on the subsequent year's FAFSA. This can have a severe impact on aid eligibility.

_______________________

Budget Cutting: With federal and state governments cutting financial aid budgets, will the effect be immediate or is there some lag time (hopefully years) between the votes and when the financial aid drops? Also, with the dwindling pool of government student grants and loans, what is the best strategy for maximizing my student's financial aid?

Mark Kantrowitz: the 2011-12 academic year. There are some master calendar provisions with the federal aid that may cause a year delay in the effective date if they take too long to pass changes. Most colleges are putting together financial aid packages around now, so a change in federal aid now could cause a major headache for colleges and families.

_______________________

Too many forms!: This chat overwhelms me. Have you heard stories of friends and family fundraising to help meet their tuition goals? Why does it always come down to loans and forms and all that?

Jenna Johnson: Oh phew -- I thought that I was the only one overwhelmed :) saving ahead (a concept sometimes forgotten) or hoping for generous graduation gifts, I have read about a few families holding fundraisers to pay for college... although usually there's another factor in play, like a family illness or hardship.Another new avenue: A few micro-financing Web sites have popped up, such as SponsorMyDegree.com, which connect students-in-need-of-cash with individuals or organizations willing to lend.

_______________________

How Old Can Kids Be?: I will have three in college next year, including my 24 year old who may or may not complete his associate degree this spring... the other two will be in 4 year schools. Will I be able to have his costs considered by the FAFSA or is he too old? Even at community college prices, this genius has cost me a fortune.

Mark Kantrowitz: If you provide the 24-year-old with more than half his support, you can count him in household size and number in college on his sibling's FAFSAs even though he is considered an independent student on his own FAFSA.

_______________________

Qualifying : I am almost positive that we won't qualify for aid under the FAFSA. Is it even worth filling out the form? Is there some ancillary benefit that we don't know about? Thanks!

Jenna Johnson: Most of the financial aid officers I know always, always tell parents to fill out the FAFSA, even if they don't think they will qualify for aid. You just never know. Plus, some scholarships or programs require students to fill out a FAFSA to participate, so it's a good form to have on file.

_______________________

A bright light in the recession?: I was talking with a friend who had to sell her home at a loss because she lost her job. Her family is now renting a house. She said that one bright spot is that, because they don't own a home anymore, they won't be expected to list it as an asset on the FAFSA and can't be expected to borrow against it. I don't want to burst her bubble... but is she right?

Mark Kantrowitz: The family's principle place of residence is not reported as an asset on the FAFSA. Only second homes and investment real estate. On the PROFILE form net home equity is reported, but it is capped at 2-3 times income. If selling the home yielded an increase in non-home assets (e.g., cash in a bank account), that asset will be fully considered by both formulas. So in most cases selling a home increases the EFC and decreases need-based aid eligibility.

_______________________

Jenna Johnson: Some great questions so far -- keep them coming! We have about 15 minutes left to chat.I am curious: Do parents always fill out the FAFSA for their children? Do any families encourage their children to fill out the paperwork themselves?

_______________________

College Financial Aid Comment: No Question - just a comment after reading some of the questions and your responses below. Our family too did not qualify for financial aid via FAFSA. It is sad how socialized our country has become in that the people that work so hard are having to foot the bill through through tax dollar subsidies for these types of programs but yet cannot qualify ourselves for our own children. The incentive to work hard in this country is being taken away slowly but surely. It makes me sick.

Jenna Johnson: Passing along this comment from a reader...

_______________________

Medical School: As someone who is going to attend Medical School next year, I am confused about how FAFSA functions for it. I know that it differs from undergraduate funding, but in which ways? Will all of my med school loans come from filling out the FAFSA? Or will I diversify between private and public lenders?

Mark Kantrowitz:

_______________________

2nd BSN Program: I about to begin a second BSN degree in another career field (nursing). This is the only way in for many "older" workers who wish to change careers in mid-life. I'm no longer a dependent, single, have been unemployed for awhile and have some modest savings. I was so disappointed to find out that there is no need-based aid given to second degree students. I'm eligible for some sub and un-subbed loans, but not enough to cover my costs. The first time around, my parent's income made me ineligible for need-based FAFSA as well, but this time around, I could really use it. Why is need-based aid not an option for those of us taking this educational route? It must be so discouraging for many people who want to better themselves or try something new.

Mark Kantrowitz: The lack of aid for a second bachelor's degree is due to a statutory restriction. I address this in my Ask Kantro column.

_______________________

Graduate School: How will having a 22 year old starting graduate school (independent for financial purposes) affect, if at all, any financial aid that our 18 year old will eligible for (she will be a freshman in the fall)? Also, how do parents' finances play into the financial aid prospects for our independent grad student? Thanks for your help!

Mark Kantrowitz: As noted in the answer to a previous question, if you are providing more than half support to the graduate student, you can include him or her in the family size and number in college for the sibling.For federal student aid the graduate student is considered independent and the aid will not depend on parent income and assets. However, the colleges may still ask for parental information for the college's own aid funds, depending on the field of study. This is especially c0mmon for law school, where some colleges ask for parental information even if the student is 30 years old.

_______________________

Jenna Johnson: The Sockingtons - The Deadline from Fresno Pacific University on Vimeo.

_______________________

Mark Kantrowitz: We have 10 minutes left. Any more questions?

_______________________

FAFSA and Retirement: Does the FAFSA take the age of the parents into account when calculating the EFC?

Mark Kantrowitz: Yes. The asset protection allowance is based on the age of the older parent. The older the parent, the higher the asset protection allowance. The asset protection allowance is intended to be the present value of an annuity which will supplement Social Security benefits at retirement up to a moderate income level. That sounds complicated, but for most parents of college-age children it shelters about $50,000 in assets. Other than that, the FAFSA does not consider the age of the parents.

_______________________

maximize contributions to retirement fund: Can you explain how this suggestion helps you in the fasfa process?How does it increase your chances of aid?

Mark Kantrowitz: Money in a qualified retirement plan is ignored as an asset on the FAFSA. However, the current year contribution to the retirement plan is treated as untaxed income and added back to taxable income. So it is best to make such contributions prior to the previous year so that they count as neither income nor assets.

_______________________

Second Bachelor's Question: I am in my 30s and considering going back to school for a second bachelors... I clicked on the link you provided in your answer to the nursing student... Good info, I hadn't realized that. Given the restrictions, do I even need to fill out the FAFSA for a Stafford Loan (assuming I qualify for one)? I've got some GI Bill left, which will help with tuition, but I'll definitely still need some loans to cover living expenses while I'm a student. Thanks.

Mark Kantrowitz:

_______________________

Jenna Johnson: Lots of great questions today! Mark, thank you so much for taking the time to explain the fascinating world of financial aid.And good luck to everyone filling out the FAFSA!

_______________________

Mark Kantrowitz:


© 2011 The Washington Post Company

Discussion Archive

Viewpoint is a paid discussion. The Washington Post editorial staff was not involved in the moderation.

Network News

X My Profile