1. Where can I get a copy of the FAFSA? The online version of the FAFSA is available at http://www.fafsa.ed.gov. FAFSA forms may also be available at the local college or in a high school career or counseling center.
2. Are photocopies of the FAFSA acceptable? No. Only the original FAFSA form produced by the US Department of Education is acceptable. Photocopies, reproductions, facsimiles and electronic versions are all not acceptable.
3. How soon after January 1 should the FAFSA from be sent in? Is it better to wait until the income tax forms have been completed? Send the form in as soon as possible after January 1. Do not wait until your taxes are done. Although it is better to do your taxes early, it is ok to use estimates of your income, so long as they aren't very far off from the actual values. You will have an opportunity to correct any errors later on the Student Aid Report (SAR). If you wait too long, you might miss the deadline for state aid which is March 2 for California.
4. My parents are separated or divorced. Which parent is responsible for filing out the FAFSA? If your parents are separated or divorced, the custodial parent is responsible for filling out the FAFSA. The custodial parent is the parent with whom you lived the most during the past 12 months. Note that this is not necessarily the same as the parent who has legal custody. If you did not live with one parent more than the other, the parent who provided you with the most financial support during the past twelve months should fill out the FAFSA. This is probably the parent who claimed you as a dependent on their tax return.
5. My parents are divorced, and the parent I'm living with has remarried. Does my step-parent have to report his or her income and assets on the FAFSA? Yes, provided that the parent you're living with is the one filling out the FAFSA. If the step-parent is married to your custodial parent at the time you fill out the FAFSA they must report their income and assets, even if they weren't married to them in the previous year.
6. My custodial parent remarried and signed a prenuptial agreement that absolves the step-parent from financial responsibility for my education. Why does my step-parent have to provide financial information on the FAFSA? Prenuptial agreements are ignored by the federal need analysis process. After all, two individuals (parent and step-parent) cannot make an agreement between them that is binding a third party (the federal government). The federal government considers the step-parent a source of support regardless of any prenuptial agreements to the contrary. If a step-parent marries the parent, he or she is considered responsible for supporting the parent and children, even if he or she is unwilling to do so.
Ron Them College Planning News
Saturday, December 29, 2007
15 FAFSA Tips and Pitfalls
1. Read the instructions and questions carefully
2. Meet financial deadlines
3. Apply for two pin numbers --- one for the student and one for the parent
4. A common error is to leave a field blank. All income questions must be completed. If the answer is zero or the question does not apply to you, write 0.
5. Use your legal name as it appears on your Social Security card. Using a nickname or any other name will cause a processing delay. Be careful of putting parent's Social Security number in place of the student's.
6. Be careful to write your Social Security Number and date of birth accurately and clearly. Any error will cause processing delays.
7. The words "you" and "your" on the FAFSA always refer to the student, not the parent.
8. Make sure you have the school's institutional forms completed with the same information.
9. Don't hide assets.
10. Be honest. Some schools verify 100% of the student's financial aid applications through the use of tax returns and federal verification documents.
11. Claim that the student lives with lower earning parent, if the parents are divorced.
12. Report as earned income Box 1 instead of Box 5 of the W-2 form.
13. Don't leave the drug question blank.
14. Another common error is to report taxes withheld or tax due instead of taxes paid. The total of your withholdings can be higher or lower than the taxes paid. Be sure you report the taxes paid.
15. Refer to www.finaid.org for additional information and directions.
Homer Sweeney The College Plan
2. Meet financial deadlines
3. Apply for two pin numbers --- one for the student and one for the parent
4. A common error is to leave a field blank. All income questions must be completed. If the answer is zero or the question does not apply to you, write 0.
5. Use your legal name as it appears on your Social Security card. Using a nickname or any other name will cause a processing delay. Be careful of putting parent's Social Security number in place of the student's.
6. Be careful to write your Social Security Number and date of birth accurately and clearly. Any error will cause processing delays.
7. The words "you" and "your" on the FAFSA always refer to the student, not the parent.
8. Make sure you have the school's institutional forms completed with the same information.
9. Don't hide assets.
10. Be honest. Some schools verify 100% of the student's financial aid applications through the use of tax returns and federal verification documents.
11. Claim that the student lives with lower earning parent, if the parents are divorced.
12. Report as earned income Box 1 instead of Box 5 of the W-2 form.
13. Don't leave the drug question blank.
14. Another common error is to report taxes withheld or tax due instead of taxes paid. The total of your withholdings can be higher or lower than the taxes paid. Be sure you report the taxes paid.
15. Refer to www.finaid.org for additional information and directions.
Homer Sweeney The College Plan
Questions About Applying for Financial Aid
1. I probably don't qualify for aid. Should I apply for aid anyway? Yes. Many families mistakenly think they don't qualify for aid and prevent themselves from receiving financial aid by failing to apply for it. In addition there are a few sources of aid such as unsubsidized Stafford and PLUS loans that are available regardless of need. The FAFSA form is free. There is no good excuse for not applying.
2. Do I need to be admitted before I can apply for financial aid at a particular university? No. You can apply for financial aid any time after January 1. To actually receive funds, however, you must be admitted and enrolled at the university.
3. Why can't I submit my financial aid application before January 1? The need analysis process for financial aid uses the family's income and tax information from the most recent tax year to judge your eligibility for need-based financial aid during the upcoming academic year.
4. Do I have to reapply for financial aid every year? Yes. Most financial aid offices require that you apply for financial aid every year. If your financial circumstances change, you may get more or less aid. After your first year you will receive a "Renewal Application" which contains preprinted information from the previous year's FAFSA. Note that your eligibility for financial aid may change significantly, especially if you have a different number of family members in college. Renewal of your financial aid package also depends on your making satisfactory academic progress toward a degree, such as earning a minimum number of credits and achieving a minimum GPA.
5. How do I apply for a Pell Grant and other types of Federal need-based aid? Submit a FAFSA. To indicate interest in student employment, student loans, you should check the appropriate boxes. Checking these boxes does not commit you to accepting these types of aid. You will have the opportunity to accept or decline each part of your aid package later. Leaving these boxes unchecked will not increase the amount of grants you receive.
6. Are my parents responsible for my educational loans? No. Parents are, however, responsible for the Federal PLUS loans. Parents will only be responsible for your educational loans if you are under 18 and they co-sign your loan. In general you are responsible for repaying your educational loans. On the other hand, if your parents (or grandparents) want to help pay off your loan, you can have your billing statements sent to their address. Likewise, if your lender or loan company provides an electronic payments service where the monthly payments are automatically deducted from a bank account, your parents can agree to have the payments deducted from their account. But parents are under no obligation to repay your loans. If they forget to pay the bill on time or decide to cancel the electronic payments agreement, you will be held responsible for the payments, not them.
7. Why is the family contribution listed on the SAR different from the family contribution expected by the university? The federal formula for computing the expected family contribution is different from those used by many universities. In particular, the federal formula does not consider home equity as part of the assets, yet many private colleges will take home equity into consideration for their institutional funds.
8. If I take a leave of absence, do I have to start repaying my loans? Not immediately. The subsidized Stafford loan has a grace period of 6 months and the Perkins loan has a grace period of 9 months before the student must begin repaying the loan. When you take a leave of absence you will not have to repay your loan until the grace period is used up. If you use up the grace period, however, when you graduate you will have to begin repaying your loan immediately. It is possible to request an extension to the grace period but this must be done before the grace period is used up. If your grace period has run out in the middle of your leave of absence, you will have to start making payments on your student loans.
9. I got an outside scholarship. Should I report it to the financial, aid office? Yes. If you are receiving any kind of financial aid from university or government sources, you must report the scholarship to the financial aid office. Unfortunately, the university will adjust your financial aid package to compensate. Nevertheless, the outside scholarship will have some beneficial effects. At some universities outside scholarships are used to reduce the student loan level.
10. Are work-study earnings taxable? Yes, the money earned from Federal Work-Study is generally subject to federal and state income tax, but exempt from FICA taxes. The student should be careful to report amounts based on the calendar year, not the school year.
11. Is it legal for a 17-year -old student to sign a promissory note for a student loan, even though the student has not yet reached the age of majority? Normally, a minor cannot be held liable for a contract that they sign. However, in 1992 the Higher Education Act was amended to permit eligible students to sign promissory notes for their own student loans. As such, student loans represent one of the few exceptions to the so-called "defense of infancy".
Ron Them - The College Planning News
2. Do I need to be admitted before I can apply for financial aid at a particular university? No. You can apply for financial aid any time after January 1. To actually receive funds, however, you must be admitted and enrolled at the university.
3. Why can't I submit my financial aid application before January 1? The need analysis process for financial aid uses the family's income and tax information from the most recent tax year to judge your eligibility for need-based financial aid during the upcoming academic year.
4. Do I have to reapply for financial aid every year? Yes. Most financial aid offices require that you apply for financial aid every year. If your financial circumstances change, you may get more or less aid. After your first year you will receive a "Renewal Application" which contains preprinted information from the previous year's FAFSA. Note that your eligibility for financial aid may change significantly, especially if you have a different number of family members in college. Renewal of your financial aid package also depends on your making satisfactory academic progress toward a degree, such as earning a minimum number of credits and achieving a minimum GPA.
5. How do I apply for a Pell Grant and other types of Federal need-based aid? Submit a FAFSA. To indicate interest in student employment, student loans, you should check the appropriate boxes. Checking these boxes does not commit you to accepting these types of aid. You will have the opportunity to accept or decline each part of your aid package later. Leaving these boxes unchecked will not increase the amount of grants you receive.
6. Are my parents responsible for my educational loans? No. Parents are, however, responsible for the Federal PLUS loans. Parents will only be responsible for your educational loans if you are under 18 and they co-sign your loan. In general you are responsible for repaying your educational loans. On the other hand, if your parents (or grandparents) want to help pay off your loan, you can have your billing statements sent to their address. Likewise, if your lender or loan company provides an electronic payments service where the monthly payments are automatically deducted from a bank account, your parents can agree to have the payments deducted from their account. But parents are under no obligation to repay your loans. If they forget to pay the bill on time or decide to cancel the electronic payments agreement, you will be held responsible for the payments, not them.
7. Why is the family contribution listed on the SAR different from the family contribution expected by the university? The federal formula for computing the expected family contribution is different from those used by many universities. In particular, the federal formula does not consider home equity as part of the assets, yet many private colleges will take home equity into consideration for their institutional funds.
8. If I take a leave of absence, do I have to start repaying my loans? Not immediately. The subsidized Stafford loan has a grace period of 6 months and the Perkins loan has a grace period of 9 months before the student must begin repaying the loan. When you take a leave of absence you will not have to repay your loan until the grace period is used up. If you use up the grace period, however, when you graduate you will have to begin repaying your loan immediately. It is possible to request an extension to the grace period but this must be done before the grace period is used up. If your grace period has run out in the middle of your leave of absence, you will have to start making payments on your student loans.
9. I got an outside scholarship. Should I report it to the financial, aid office? Yes. If you are receiving any kind of financial aid from university or government sources, you must report the scholarship to the financial aid office. Unfortunately, the university will adjust your financial aid package to compensate. Nevertheless, the outside scholarship will have some beneficial effects. At some universities outside scholarships are used to reduce the student loan level.
10. Are work-study earnings taxable? Yes, the money earned from Federal Work-Study is generally subject to federal and state income tax, but exempt from FICA taxes. The student should be careful to report amounts based on the calendar year, not the school year.
11. Is it legal for a 17-year -old student to sign a promissory note for a student loan, even though the student has not yet reached the age of majority? Normally, a minor cannot be held liable for a contract that they sign. However, in 1992 the Higher Education Act was amended to permit eligible students to sign promissory notes for their own student loans. As such, student loans represent one of the few exceptions to the so-called "defense of infancy".
Ron Them - The College Planning News
Wednesday, December 12, 2007
True Cost of College Cut
There is now hard evidence that the true cost of college will be cut in the 2008-09 school year for some middle and upper middle class families. True cost is defined as the difference between Cost of Attendance and grants,scholarships and other aid that does not have to be paid back. Harvard just announced that a family making upwards of $180,000 that is paying $30,360 this year will pay about $17,500 next year.
This cut is the direct result of the Higher Education Act of 2007 signed earlier this year that requires the Department of Education to investigate colleges with large endowments and report if they have been providing enough tuition support for current students. Colleges did not want to be singled out as hoarders and have begun to act. Some colleges announced plans to guarantee that tuition will not rise during the student's tenure while others plan to replace loans with grants. These are worn out strategies that have been heard before and failed. It is clear however with the action taken by Harvard to make college more affordable, elite expensive colleges will have to cut their true cost of college to remain competitive.
For decades Congress has heard complaints about the hideous cost of college. Their solutions haven't worked. In fact making money easy to get for college by providing guaranteed low cost loans may have been the biggest contributing factor to the continual rise in cost.
What changed? People with money have influence and send their children to elite colleges. Congress listens to people with influence and agreed that the high cost of these elite colleges should be studied. Harvard then decided to spend more of their $35 billion endowment for tuition support. Let's put that figure into perspective. A million seconds is roughly 12 days whereas a billion seconds is approximately 32 years. Will this new tuition initiative be enough to avoid the Crimson from being called "The Hoarders?"
This cut is the direct result of the Higher Education Act of 2007 signed earlier this year that requires the Department of Education to investigate colleges with large endowments and report if they have been providing enough tuition support for current students. Colleges did not want to be singled out as hoarders and have begun to act. Some colleges announced plans to guarantee that tuition will not rise during the student's tenure while others plan to replace loans with grants. These are worn out strategies that have been heard before and failed. It is clear however with the action taken by Harvard to make college more affordable, elite expensive colleges will have to cut their true cost of college to remain competitive.
For decades Congress has heard complaints about the hideous cost of college. Their solutions haven't worked. In fact making money easy to get for college by providing guaranteed low cost loans may have been the biggest contributing factor to the continual rise in cost.
What changed? People with money have influence and send their children to elite colleges. Congress listens to people with influence and agreed that the high cost of these elite colleges should be studied. Harvard then decided to spend more of their $35 billion endowment for tuition support. Let's put that figure into perspective. A million seconds is roughly 12 days whereas a billion seconds is approximately 32 years. Will this new tuition initiative be enough to avoid the Crimson from being called "The Hoarders?"
Monday, December 10, 2007
Don't Wait . . . Apply for Pin Numbers Today!
If you plan to file the FAFSA form electronically for federal and state student aid for the 2008-09 school year now is the time to obtain your PIN numbers if you have not already done so in the past. Obtain one number for the parent and one number for the student. The FAFSA form will be rejected unless both the parent and student sign the document. Go to http://www.pin.ed.gov/ and follow the directions.
Saturday, December 8, 2007
University of California Admissions Update 12/07
Although the priority filing period for fall 2008 has closed, some UC campuses are still accepting applications to some programs and majors.
UC Merced and UC Riverside : Open to freshman and transfer applicants in most majors
UC Davis, UC Irvine and UC Santa Cruz: Open to transfer students in most majors
UC Santa Barbara: Open to transfer applicants at the junior level
UCLA: School of Nursing open to transfer students at the junior and senior levels
UCLA: Athletic Department: Opening for head football coach
For more information about open majors and deadlines,check
http://www.universityofcalifornia.edu/admissions/download
UC Communications
UC Merced and UC Riverside : Open to freshman and transfer applicants in most majors
UC Davis, UC Irvine and UC Santa Cruz: Open to transfer students in most majors
UC Santa Barbara: Open to transfer applicants at the junior level
UCLA: School of Nursing open to transfer students at the junior and senior levels
UCLA: Athletic Department: Opening for head football coach
For more information about open majors and deadlines,check
http://www.universityofcalifornia.edu/admissions/download
UC Communications
Friday, December 7, 2007
Is Investing In Property for College Still A Good Idea?
Many families have found in the past that buying a house or condo that they could afford near a college was a good idea because it was an investment, and for the student it meant additional freedom and an opportunity to create a credit history that a college could not provide. This has been a very popular strategy especially for students attending public schools out of state because in many cases, it allowed families to pay in-state rather than out-of-state tuition, a savings annually of around $15,000.
Real estate is currently in a slump. Attitudes about mortgages are changing. Are students being given too much responsibility? The following four questions addresses these concerns to help determine if investing in a condo or house for college is a good idea for your family.
Question #1 ARE YOU FINANCIALLY SECURE?
To become financially secure is to own your home so that you can provide security for your family. It is now possible for many families to pay off their 30 year mortgage in 8 to 12 years using the Money Merge Account system. With a house free and clear it frees up those funds paid monthly for the mortgage and with the availability of a Home Equity Line of Credit provides insurance in case of unemployment, job transferring and short term ill health. Other options are unlimited. You can build your retirement fund, make investments, buy additional property, fund college, a new car and home improvements.
Before MMA it was nearly impossible to pay off a 30 years mortgage early so families would refinance when they needed a large sum of money. This was a very popular strategy especially when refinancing to a lower interest interest rate and consolidating other debts. There were some drawbacks to this approach the biggest being that for a $300,000 loan you would pay back a total of $647,515 over 30 years. Another disadvantage was the fact that the amount the family could refinance was limited by their ability to pay. To obtain an additional $100,000 for their $200,000 mortgage at the same interest rate would cost an additional $599.55 a month.
Question #2 WHAT IS TOO MUCH FREEDOM?
Your college student may have all the good intentions to keep the house neat and clean. Peer pressure sets in and all of a sudden there are meetings, gatherings and then parties being held at the house. Serious property damage becomes a real possibility. A few years ago families living near a college in Kalamazoo, Michigan could not literally give their property away because of the damage caused by students living in the area.
Question #3 CAN YOU MAKE A PROFIT IN FIVE YEARS?
If this question was asked a few years ago the answer would have been a resounding yes in most areas of the country without hesitation. But ask the families that just sold short term living around the University of California Irvine campus. According to The Orange County Register they lost 13.7% and the loss was about 17% in the Cal State Fullerton area.
If you bought a condo with a $200,000 30 year 6% mortgage your payments would be $1199. a month. After five years you would have paid $71,946. P&I and have $13,891 of equity in the property. Factor in the cost of buying and selling property and it would seem almost impossible to make a profit unless the property appreciates substantially.
Question #4 WHAT HAPPENS IF THE WRONG COLLEGE IS CHOSEN?
This would be a nightmare. All you can do is hope. You would have three choices.
1) Hope you can sell the property immediately and keep the losses to a minimum.
2) Keep the property and rent it to other students hoping they will care for the property.
3) Have your student stay and make the best of a difficult situation and hope for success.
Real estate is currently in a slump. Attitudes about mortgages are changing. Are students being given too much responsibility? The following four questions addresses these concerns to help determine if investing in a condo or house for college is a good idea for your family.
Question #1 ARE YOU FINANCIALLY SECURE?
To become financially secure is to own your home so that you can provide security for your family. It is now possible for many families to pay off their 30 year mortgage in 8 to 12 years using the Money Merge Account system. With a house free and clear it frees up those funds paid monthly for the mortgage and with the availability of a Home Equity Line of Credit provides insurance in case of unemployment, job transferring and short term ill health. Other options are unlimited. You can build your retirement fund, make investments, buy additional property, fund college, a new car and home improvements.
Before MMA it was nearly impossible to pay off a 30 years mortgage early so families would refinance when they needed a large sum of money. This was a very popular strategy especially when refinancing to a lower interest interest rate and consolidating other debts. There were some drawbacks to this approach the biggest being that for a $300,000 loan you would pay back a total of $647,515 over 30 years. Another disadvantage was the fact that the amount the family could refinance was limited by their ability to pay. To obtain an additional $100,000 for their $200,000 mortgage at the same interest rate would cost an additional $599.55 a month.
Question #2 WHAT IS TOO MUCH FREEDOM?
Your college student may have all the good intentions to keep the house neat and clean. Peer pressure sets in and all of a sudden there are meetings, gatherings and then parties being held at the house. Serious property damage becomes a real possibility. A few years ago families living near a college in Kalamazoo, Michigan could not literally give their property away because of the damage caused by students living in the area.
Question #3 CAN YOU MAKE A PROFIT IN FIVE YEARS?
If this question was asked a few years ago the answer would have been a resounding yes in most areas of the country without hesitation. But ask the families that just sold short term living around the University of California Irvine campus. According to The Orange County Register they lost 13.7% and the loss was about 17% in the Cal State Fullerton area.
If you bought a condo with a $200,000 30 year 6% mortgage your payments would be $1199. a month. After five years you would have paid $71,946. P&I and have $13,891 of equity in the property. Factor in the cost of buying and selling property and it would seem almost impossible to make a profit unless the property appreciates substantially.
Question #4 WHAT HAPPENS IF THE WRONG COLLEGE IS CHOSEN?
This would be a nightmare. All you can do is hope. You would have three choices.
1) Hope you can sell the property immediately and keep the losses to a minimum.
2) Keep the property and rent it to other students hoping they will care for the property.
3) Have your student stay and make the best of a difficult situation and hope for success.
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