Fall is For FAFSA

October 1 of each year marks the date that the FAFSA (Free Application for Federal Student Aid) becomes available. Students who wish to receive any form of student loan or grant from the federal government must complete and submit it. Most states and colleges also require completion before schools offering aid and formulating a financial aid package.  Even some scholarship foundations and other private grantees will ask for the FAFSA.  

The financial aid process can feel somewhat mysterious for both students and their families.  The first step is to complete the form.  It is available on the StudentAid.Gov website and can be submitted online or mailed.  If sent in electronically, the Department of Education processes your application in about three days, and then makes the information available to all of the schools you chose to list on the form.  Each school then uses the information you documented on the FAFSA to determine how much aid you are eligible to receive if you attend that school. Aid can be a combination of subsidized loans, unsubsidized loans, grants, and scholarships. 

To determine a student’s financial package, the financial aid office evaluates a complex formula.  The parts of the formula are the cost of attendance (COA) and an Expected Family Contribution (EFC). The outcome of this formula will determine the amount and mix of student financial aid. 

Cost of Attendance. The COA takes into account the variety of costs that the student will incur in order to reasonably complete their education.  This calculation includes tuition and fees, living expenses such as lodging and food, books and related resources, dependent care expenses if the student is a caregiver, travel to and from the school, costs of disability accommodation, and reasonable study abroad costs if applicable.  

Expected Family Contribution. The EFT is the portion of costs that the student and family are expected to pay toward the cost of attendance.  The EFT is also a formula, and factors in the size of the student’s family, the number of students attending higher education (for now), most forms of income, and certain assets. Whether home equity is considered or not can depend on requirements of some private institutions

Be careful with deadlines.  While the FAFSA can be completed and submitted any time between October 1 and June 30, many schools have earlier deadlines, especially for specific scholarships and grants.  Additionally, even some federal grants are available on a first-come-first-served basis, and the opportunity for those funds can close once the budget is used. 

Next year, there will be many changes happening to the FAFSA application.  These changes will not be in effect until the 2023-2024 application period, but they will be discussed in an upcoming post so families can plan accordingly. 

Mental Fitness for Incoming Freshmen

As high school seniors are making their way across the graduation stage, their minds are turning to thoughts of leaving for college in the fall. Making the transition from living at home to living on campus can be exciting but also overwhelming.

During this shift, it is important for students to check in with themselves and regulate their mental health. Being away from home can lead to additional stress and strain on students because living on campus often means taking on more responsibilities. Freshmen must learn how to coordinate their schedules to attend class, study, show up to social events, and bear the responsibility of caring for themselves.

Since we all struggle with this balance, here are some resources and tips for improving and maintaining good mental health.

One of the most important resources available to students on campus is the counseling center. Students can visit the counseling center for mental health care including individual counseling, group counseling, couples counseling, career counseling, drop in hours, and referral services. The counseling center or the disability support center can also provide accessibility and disability services in order to accommodate students in their classes. It is important for students to keep in mind that professional mental health experts are available on campus because a busy semester could mean that students may not have time to seek these resources outside of campus.

Listed below are some mindful tips for taking care of your mental health during the semester.

  • Staying active. Physical exercise is a key component of good mental health. Taking time to go to the gym or going for a walk can be a good way to improve your mental health.
  • Reaching out. Maintaining regular social engagement whether it be with family or friends can be extremely beneficial to your mental health. Isolating during stressful times can lead to even more stress, so it is important to stay connected to your loved ones throughout the semester.
  • Eating and sleeping. Many college students skip meals and avoid sleep in order to get their work done, but a consistent diet and enough sleep is essential to maintaining good mental health. Eating and sleeping keeps our brains and bodies functioning as well as possible.
  • Meditation. During the rush of classes and assignments, meditation can be a simple practice to keep your thoughts focused and your mind at ease. A few minutes of meditation and quiet time on a daily basis can reduce stress and improve mental performance.
  • Seeking resources. Even when you’re trying your best to keep up with yourself and school, it can still be tough to deal with certain issues. Knowing what resources are available to you and seeking them out during times of crisis can help you solve a problem much easier.

This blog written by Mumtahina Tabassum, FCS senior intern, class of ’22

Paying for your Future – Four things to consider

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While the world’s attention at the moment is on the global COVID-19 pandemic, it is healthy and wise to still think about future goals. Some of you are planning to head to college, technical school, or trade school in the near future. For many, school acceptances are due soon. Whether continuing your education means living away from home, commuting, or learning online from your home, it is important to consider the impact the cost of your education will have on your future. Here are four points to think about when making decisions about your educational future. 

How do I make a wise purchasing decision?

There are many components to making an education choice, but it is important to consider it from a purchasing perspective. If you were planning to buy a car, what are some of the considerations you need to make?  You will want to answer questions such as, “Why do I want it?” “What will I use it for?” “Is the price a good value for me?” and, “What else will I need to pay for once I’ve made my decision?” These and others are some of the same questions you should be asking, and answering, before making a costly education decision. Think about why you plan on going to college and weighing the pros and cons. Set a game plan for yourself by listing all your goals as well as how you plan on achieving those goals, which can ultimately put things into perspective. 

What are my educational choices and costs?

There are many educational program choices one can make regarding their future. For example if you like to work with your hands, you might be interested in going to a trade school to become a chef, licensed electrician, or contractor. If that’s not the path for you, going to a college may be a better option. If you want to pursue a college degree you may have to consider financial options. For example, an in-state public university is usually a less expensive option than a private university. Choosing to start at a community college and transferring to a four-year program is another cost-effective option to consider. The University of Maryland offers a 2+2 option, granting transfers to four-year UMD system universities for students after completion of a community college degree. 

While much depends on student loan structure, (see below) for every $10,000 you borrow to attend school, you will pay roughly $100 each month in loan payments after you leave. It is wise to research the expected income potential of your career choice to make sure you are not overpaying. Student loan debt can affect other life goals, such as marriage or buying your own home.

How do student loans work?Friends People Group Teamwork Diversity

Federal direct subsidized loans are the most common type of student loan. The government is the lender, and also pays the interest while the student is in school. Payments usually start within six months after graduation or when the student leaves school. Borrowers have many loan repayment choices. Loan criteria, choices, and payback options are highly individualized, so it is crucial to carefully review accurate student loan resources and understand interest and repayment terms

What are good sources of funds? 

Financial aid officers at your school of choice will inform you of student loan choices. However, don’t overlook the thousands of smaller dollar scholarships and grants offered by community organizations and businesses. It is worthwhile to research those opportunities and take time to apply. School guidance counselors are excellent resources for scholarship information and can also advise you on federal and state financial aid programs. Money earned from evening, weekend, and summer jobs can also go a long way to reducing loan burdens.

Selecting an educational path can be exciting, but it is smart to consider how choices affect your financial future.  

 

 

 

Take Action! Don’t Lose Qualification for Student Loan Forgiveness

College affordability and student loan forgiveness are frequent topics of public concern.  Two weeks ago, I discussed Public Service Loan Forgiveness (PSLF) qualification standards. There are very specific guidelines that must be followed in order to qualify for this program. However, it is not enough to just qualify — specific action steps need to be followed in order to benefit from PSLF. Borrowers who wish to pursue Public Service Loan Forgiveness need to carefully manage both their loan repayment terms and their loan documentation.

Friends People Group Teamwork DiversityLet’s discuss the key actions for both.

Choose the right repayment plan. When borrowers graduate, they are given many choices for loan repayment plans. The default option is the standard repayment plan. Under this plan, loan payments are calculated for a 10-year, or 120-month, fixed payment. You must make 120 qualified payments toward your loans before qualifying for PSLF, so there is no benefit to this repayment plan.  

A borrower who wishes to qualify for PSLF should select an income-driven repayment plan, or IDR.  Income based payment plans were introduced to ease the burden of loan repayment, especially during the early earning years. Under these terms, your payment is calculated using a formula that is based on a percentage of your income, with payments stretched over 20-25 years. 

Caution! Beware of loan consolidation! It is not unusual to leave school with multiple loans, with different servicers and different due dates. Tracking payments can be challenging. A federal consolidation loan with a single payment can be a good option, however, this will affect progress toward Public Service Loan Forgiveness. A consolidation loan is considered a new loan, and re-starts the counter toward the required 120 payments needed for loan forgiveness. If you’ve already been making progress toward PSLF, those payments will no longer count toward the 120 under consolidation.  

Loan Forgiveness Debt Filling Application Concept

Document carefully and frequently. Qualifying for PSLF requires that your employment is with a qualified employer. The federal government provides a form to document your employment. It must be signed by you AND your employer and filed with the Department of Education. Directions are on the form.  It can be mailed, faxed, or uploaded depending on your loan servicer, but it cannot be completed online. It is recommended that you file the form annually, or at a minimum, whenever you change employers. Otherwise, it becomes more difficult to verify qualifying employment.  

Be mindful of on-time payments. There are other important actions for maintaining PLSF qualification.  You must make payments every month, on time. You can’t double-up or skip months. You do not lose the benefit of payments made during qualified employment if you leave that job for non-qualified work. The counter resumes if you once again work for a qualified employer.  

Public Service Loan Forgiveness: Who is it for?

image-from-rawpixel-id-1247-jpeg.jpgEarning a college, graduate, or professional degree is an accomplishment to celebrate, but once school ends, the reality of paying back student loans begins. Most direct student loans offer a six month grace period, with interest subsidized by the federal government, intended to provide the borrower with sufficient time to find employment. But for the millions of students who graduated in the spring of 2019, that grace period is ending. Fortunately, the federal government has many options to ease the burden of student loan payments.  

If you work for the government or a nonprofit organization, you might be eligible for Public Service Loan Forgiveness (PSLF). This is a federal program designed to provide an incentive to attract job seekers to employment in much needed, but often lower paying, service work. Those who qualify for PSLF can have their student debt balance paid in full by the federal government, however, there are many rules to follow.   

Qualify!

Loan Forgiveness Debt Filling Application ConceptIf you want to be eligible for PSLF, keep in mind that you must do qualifying work, for a qualified employer, make qualified payments, for a qualified amount of time, under a qualified plan.  

The key word is qualified.  

  • Qualifying work –  Full-time employment, defined as 30 hours or more per week, or work that your employer considers full time. Part time hours at different qualified employers (see below) can be combined to reach the 30 hour minimum. There is a notable exception for religious work. Time spent on religious teaching, worship, or proselytizing does not apply toward the 30 hours.   
  • Qualified employer – Any government organization or a nonprofit organization recognized under section 501(c)3 of the Internal Revenue Code, or federal tax code.  Any level of government is acceptable. It could be a local, state, federal or tribal agency. However, if you work for a for-profit government contractor, a labor union, or a partisan political organization, your loan payments will not count toward PSLF.  
  • Qualified payments – A minimum of 120 payments are required before your debt can be considered for PSLF, and are only counted if they are on time (no more than 15 days after the due date), and paid in full. Payments are only considered qualified if they are made while you are working for a qualified employer. 
  • Qualified repayment plans – Borrower payment plans include all income driven repayment plans. There are several income driven repayment plan choices that a borrower can select. As the name implies, these repayment plans are based on the borrower’s income, as well as on other considerations, such as family size. 

Where can I learn more?  

Is Public Service Loan Forgiveness a good option? The best source for more detailed information is the Federal Student Loan Website.  Many rules must be followed to qualify for PSLF and it is important to follow the rules carefully to reap the benefits of this program.