A Focus on Federal Aid

A Focus on Federal Aid

As the new year begins, looking a bit at the federal financial aid scene may be helpful. As always, the primary concern in Washington is with the Pell Grant program. All other federal aid programs are secondary. One of the current Pell issues is something called “prior prior” year. Historically, aid eligibility for a given



The Loan Repayment Game

Among the many complex paths of financial aid procedures, perhaps no other rivals the multitude of repayment options for student loans.  New federal legislation seems to appear almost weekly, which makes keeping abreast of the rules challenging for many borrowers.  Compounding the changes is the unfortunate and frustrating fact that Congress has decided to select



Verification beware!

If you are a college feeding in the federal financial aid trough, you have to eat what you are given. Unfortunately, we are stuck with a diet rich in red tape and ever-changing regulations. The culinary soup du jour for the coming year is verification. Verification, or the need to make sure that the data



Should I borrow for my education?

I’m sure you have seen the pervasive media coverage of increasing student loan debt. At the College, we are not immune to that problem and unfortunately have examples of students who have borrowed far too much money for their education. Fortunately, those numbers are much smaller here than many other schools. What has sometimes been



NPC and a grain of salt

Colleges across the country are racing this month to be in compliance with a federal requirement that all schools have a Net Price Calculator (NPC) on their website by October 29. In theory, families will be able to enter a limited amount of financial data and be given a financial aid offer that reflects the



How am I going to pay for it?

Good
news!  You’ve gotten the proverbial thick
envelope from your top school.  Time to
send the deposit and start packing…but…wait…how am I going to pay for it?
By
now, most of you entering students should have received financial aid offers from
your accepted schools.  I hope that they
have all followed the Golden Rule of financial aid awarding…that they have all
met your need and you can make your decision on factors other than cost.  In all probability, however, different
resources and packaging philosophies have resulted in the Golden Rule being
totally disregarded, leaving you with a collection of offers that bear little
resemblance to each other.  Some are only
merit, some only need, and some a combination of the two.
Here
are several suggestions on how to sort them out to make sensible financial
decisions:

Know the terms. Ask the school whether the funds are merit or
need-based. Are there GPA requirements
to meet? If they are based on need, what
will your package look like in the sophomore year and beyond? Many schools use a self-help (work/loan) base
before you can receive grant money…will that base increase in subsequent years?
Check on cost increases. You can ask schools what the increase will be
for subsequent years, but probably won’t get an answer as the question is a
difficult one, especially for public schools.
However, many schools post the results of their Common Data Set (CDS)
survey, which is a nationally used research document. You can search on the school
and CDS to find them. You should be able
to see many years of historical data.
Watch your loan debt. This is an issue for both students and
parents. Both student and parent direct
loans have 10-year repayment periods which result in approximately $12 per
month per $1,000 borrowed. If a student
borrows 25,000 as undergraduate, for example, he would owe $300 per month for
10 years. Is this manageable…it probably
is for some students, but not others.
Keep in mind that students can borrow more in Direct Loans each year
(5,500 the first year, 6,500 sophomore, and 7,500 the junior and senior), so
the temptation is there to go for the annual maximum. The student would therefore have a four-year
loan debt of not 22,000 (four times the first year amount of 5,500), but
27,000.
Look ahead. You can’t project everything that will happen
during the next four years, but some changes, like having two or more in
college at the same time, are probably more certain. If you are a candidate for need-based aid,
the parents’ contribution is divided by the number in college, so, in theory,
you should not have to pay anymore for two as financial aid will cover the
difference. However, see disregarding
the “Golden Rule” above…you can’t assume
that all of your need will be met by every school.
Can you do this four times? To me, this is the most important
question. With one-time outside
scholarships, savings, and maybe money from Grandma, you may be able to scrape
together enough money for one year, but can you do it for four? You certainly should plan to bend financially
during the college years, but you do not want to break. Keep those “gotta go to my top school or else”
emotions in check until you’ve done the financial analysis.
See
you next time.



What are we building in the Financial Aid Office?

Well, this will probably be the only Financial Aid
blog which ties together my occupation and the work of
singer-songwriter Tom Waits, whose intriguing song  ‘What’s He Building in
There?” provides a good insight into human nature. 
In his work, the reclusive object of the song is presumed by his neighbors to be
doing something untoward simply because he keeps to himself.  Some of you
may have had the same reaction to the mountain of Quality Assurance forms that
we have requested …what exactly are we “building in there” with
them?  Let me assure you that we are not using routers and table saws (read the lyrics!)  to make our calculations.  We are trying to accomplish two goals:

History corrections- From your 1040s and W2s, we
are updating the FAFSA information.  Many of you filed before 1040
completion and had to use estimated figures.  You may also have made a
common reporting error such as listing taxes withheld rather than your actual
tax liability.  In these situations, we correct the data with the federal
processor, which will then send you a corrected family contribution
figure.

Professional judgments- These are a lot more
complicated.  The FAFSA only gives us a small glimpse into your
situation.  It does not tell us where you work, your monthly expenses,
unusual medical costs, where the applicant’s siblings are attending college,
and possible loss of employment.  All these are factors which can greatly
affect your family contribution.  We make PJ changes in in one of two
different ways.  The FAFSA is always initially based on the prior year
family income, 2009 for the 2010-11 school year.  However, if we
decide that a job loss make using estimated 2010 income more practical,
we will substitute the estimated 2010 for the actual 2009.  On the other
hand, we may make no FAFSA changes, but decide that your reported family
income, while correct for IRS purposes, may underestimate your true ability to
pay.  As a result, we may offer less aid than the family contribution
might indicate.

So, what we’re “building in there” is a financial offer that we hope measures your complete financial circumstances and ability to pay.  We will be in touch soon.
See you next time.



Thinking of withdrawing?

One of the murky corners of financial aid deals with
withdrawals during the semester.  Nobody
plans on this happening, but it can be a financial headache.
You financial aid credits are to cover your whole semester.  As you progress through the term, you “earn”
the financial aid that was provided to you at the start of the term.  If you withdraw before the end of the semester,
you may not be entitled to all of the aid that you have received.  You then fall into a tangled web of refund
policies that are controlled by College and federal regulations.  As a result, you may owe a lot of money back
to W&M.
The problem is especially acute if you are an off-campus
student who has received a financial aid refund for your living expenses.  Here’s an example:
      5,700  Spring
semester tuition and fees for a Va resident 

  – 11,500 Spring aid
credits
      5,800
Refund
If you withdraw this week (Feb. 22-26), the sixth week of
the semester, you will have to pay 60% of your tuition and fee charge.  Under federal regulations, the aid
adjustments work differently, so you will have “earned” only 34% of your total
aid.  As a result of the changes, here
are your revised charges and credits:
      3,420 Revised tuition and fees
      3,910 Revised aid
         490  Revised refund
But you have already received 5,800 in a refund.  You will have to return the 5,310 difference
between the original and revised refund. 
This will undoubtedly be a real financial hardship for you, but it will
have to be repaid before you can return to the College or receive transcripts,
if you wish to transfer.  You can read
more about withdrawals at the Student Accounts site http://www.wm.edu/offices/financialoperations/sa/refunds/withdrawals/.
One final point.  The
Dean of Students (DOS) approves withdrawals that occur before the end of the
ninth week of the semester.  However,
federal aid regulations still require a reduction in aid for about 10 days
after the ninth week.  You could
therefore withdraw before the DOS date and still owe the College money after we
make the aid change.
See you next time.



The FAFSA

I was asked at a workshop Saturday whether entering students
are required to submit a FAFSA. The short answer is “no,” but there are
several compelling arguments in favor of completing it.
I understand the reluctance to tackle the form.  You have been pummeled for years with your
friends’ tales of how fruitless hours were spent completing the FAFSA….with the
only result being loan eligibility.  Then
there’s the issue of releasing your confidential financial data.  Yet, there are very important  reasons to apply:

You may be pleasantly surprised. Need-based aid is a function of your family
contribution and the cost of the school.
As a Virginia resident, you may not receive any need-based money from
W&M, but may be awarded a lot of aid at a much more expensive school.

Having the FAFSA on file will help us if your
financial situation changes. In the
current economy, you may be ineligible now, but might be if you lose your
job. Having the FAFSA already on hand
will save you weeks in getting some help.

The FAFSA is required for both student and
parent loans. We would like nothing
better than to give everyone grants, but, here, as well as most schools, much
of the aid comes in the form of loans.
In most cases, in fact, loans are the base of the aid offer before grant
money is awarded.

See you next time.



The Scholarship Chase

“Millions of dollars in unclaimed scholarships!” scream the
headlines.  You may not be getting any
money from us, but you can still tap into this vast sum of money.  Well, maybe.
There certainly is money available, with the current W&M
freshman class having almost $1M in outside money, but two factors should be
noted:

Most of the scholarships are not from national
searches. They come from local sources
such as high schools, community organizations, parents’ employers, and places
of worship. In Williamsburg, the
Williamsburg Community Scholarship Fund provides money for local
graduates. There are similar
organizations in Richmond and Norfolk. Look
nationally, if you wish, but realistically expect the money to be local.

For the
most part, the scholarships are for one year only and will only pay a small
fraction of your total cost. You will
need to rely much more heavily on your family’s contribution and financial aid
from the College. Don’t miss the FAFSA
deadline because you’re putting all of your faith in outside money.

How will we treat the new money?  We understand perfectly that you have worked
hard for these awards and don’t want them swallowed up in a replacement of other
W&M grant money. The problem we face, however, 
is that your aid offer most likely contains money that is based on
financial need…need which was calculated based solely on your family’s
financial circumstances and before we
knew about this additional support. So, we usually have to make an
adjustment.  In most cases, however, the
change will be a reduction in the work/loan part of your offer and we will not
need to reduce grant money. 
On final issue with outside scholarships.  If you have more than one, we may learn about
them over a couple of months.  This may
result in more than one change in your financial aid package.
See you next time.