Got a Scholarship? Write a Thank You Note!

Receiving a scholarship is a great honor. Don't forget the important step of writing a thoughtful thank you to the donor.

A well written thank you letter not only shows how much you appreciate the financial support, but more importantly it also helps to ensure that the donors continue to offer their scholarships to future students.
https://resume.io/blog/how-to-write-a-scholarship-thank-you-letter


 FAFSA Deadlines and Higher Pell Grants

January 10, 2023

Watch a short video that explains the Free Application for Federal Student Aid (FAFSA) and how to apply for federal aid at: https://www.bestcolleges.com/blog/college-fafsa-deadlines/. “Each year, the FAFSA helps millions of students get aid for college. Learn when FAFSA deadlines are and what changes to expect for 2023-24 and beyond,” by Tyler Epps.

“The 2023-24 FAFSA form opened Oct. 1, 2022, and will be available until June 30, 2024. This means that students who need financial aid for the upcoming 2023-24 school year can begin filling out the FAFSA now and will have all the way until summer 2024 to submit it (though the earlier you submit your FAFSA, the better).”

“The 2022-23 FAFSA form — which awards aid for the current 2022-23 school year — can still be filled out and submitted through June 30, 2023. Note, however, that many states and schools maintain earlier deadlines.”

“Students must submit the FAFSA to qualify for federal student loans, the Pell Grant, and other college and state-issued grants and scholarships. The same applies to college students who plan to apply for federal work-study.”

1. The FAFSA Is Now Shorter and More User-Friendly

2. “Expected Family Contribution” Will Be Renamed “Student Aid Index” for 2024-25

3. Pell Grant Eligibility Will Expand, and the Max Award Will Increase

Get all the details at: https://www.bestcolleges.com/blog/college-fafsa-deadlines/

How to Appeal Financial Aid

Tyler Epps explains how to request more financial aid for higher education. The main points are listed below but get the details at: https://www.bestcolleges.com/blog/financial-aid-appeal/

• At certain colleges, you can write an appeal letter if you didn't get enough financial aid.
• In general, students must have special circumstances that merit an appeal.
• Most colleges have financial aid administrators who can assist students with appeals.
• As you write your appeal letter, be sure to use polite language and provide examples.

 

Most Colleges Give Inaccurate Price Details in Financial-Aid Letters, Federal Report Finds

 "GAO blasts poor disclosures to students, calls for legislation standardizing cost and aid information," according to The Wall Street Journal (12/6/22) writer Melissa Korn. 

According to the Government Accountability Office (GAO), most schools provide "woefully inadequate and even misleading" information to prospective students. 

I noticed this problem with my niece's college aid offers that listed federal student loans as "financial aid" in the same column with actual scholarships (that don't require repayment), implying that loans requiring repayment fit in the same category. And we all know how controversial student loans are as the burden for many students, especially those who borrow but don't graduate, is often far more than anticipated.

"Aid letters that are supposed to lay out tuition, fees and other expenses, and what grants, loans and other financing options are available to cover those costs, lack crucial information that would allow families to compare institutions. At their worst, some financial aid offer letters lead students to enroll in schools they can’t afford."

"One of the most troubling findings from its review, the GAO said, was that 91% of schools don’t properly list their net price, or the amount a student is expected to pay for tuition, fees, room, board and other expenses after taking into account scholarships and grants."

Student Loan Forgiveness

Under President Biden's federal student loan forgiveness program:

• up to $10,000 in federal loans (does not apply to private loans)
  
• up to $20,000 for Pell Grant recipients
• if income is <$125,000/individual or $250,000 for couples
• student loan payment freeze is extended to December 31, 2022
• interest rates remain at 0% until repayment starts
• if you voluntarily made payment during the repayment freeze, you can apply to your servicer for a refund. 
• Typically loan forgiveness is treated as income by the IRS, BUT cancelled student debt is exempt from federal taxes. 

• Borrowers in 7 states may be taxed on their student loan cancellation: 

  1. North Carolina
  2. Indiana
  3. Mississippi
  4. Arkansas
  5. Minnesota
  6. Wisconsin
  7. California

  "The U.S. government has instructed student loan servicing companies not to mail a federal 1099-C form to the millions of borrowers who receive debt relief. This matters, a lot."

  "In the past, the 1099-C form has been sent not only to borrowers who receive debt relief, notifying them of their tax burden, but also to state tax authorities."

  "This year, though, because debt relief is not considered taxable income at the federal level, the U.S. government won't be sending out 1099-C forms." Source: https://www.npr.org/2022/09/09/1121717824/biden-student-loans-debt-cancellation-taxpayer-impact
  

Stay tuned to the federal student aid website for details on how to apply.

About 43 million Americans owe federal student loans. One-third of students borrow to pay for college, with average balance of $37,667.

• 1/3 of those owe < $10,000
• 1/2 owe < $20,000
• The Department of Education estimates that almost 90% of the relief in the measure will go to those earning less than $75,000 a year
  

If you have trouble repaying federal student loans, apply for an income-driven repayment plan. 

If you worked for a government agency or nonprofit, you may be eligible for Public Service Loan Forgiveness Program. 

For readers who think this is a give-away to get votes, remember that Republicans have repeatedly (since Reagan) passed tax cuts for the wealthy, most recently in December 2017. Fifteen percent of the benefits went to people making under $75,000 a year, and 85% went to people making over $75,000 a year. People making over $250,000 a year got nearly half of the benefits of the GOP tax bill and are getting 0 dollars under this student loan forgiveness plan.

Remember, there was very little objection to the forgiveness of 10.2 million Paycheck Protection Program (PPP) loans to businesses, with $72,500 being the average dollar amount forgiven.  

After World War II, the U.S. funded higher education through a series of measures that increased college attendance while keeping prices low. Beginning in the 1980s, that funding began to dry up and tuition prices rose to make up the difference.  The shift to “high-tuition, high-aid” caused a “massive total volume of debt,” according to Assistant Professor of Economics Emily Cook of Tulane University.

I was fortunate enough to complete college and grad school with no student loans (I didn't own a car) because the taxpayers of the states adequately funded the land grant colleges that I attended, unlike today. Back then a student could work a minimum wage job and actually pay for a realistic amount of college costs. So folks who paid their way through college and/or repaid student loans may object to helping out today's student loan debtors but they may be the same people who vote for politicians who promise to NOT raise taxes or even lower their taxes. 

College Scorecard: Find the right higher ed fit for you

The Department of Education's College Scorecard website https://collegescorecard.ed.gov/ is designed to help you find the best higher education institution for your needs. You can ask to "Show me Options" to search nearby schools, institutions where most students graduate, and other options. Search "Fields of Study" to find the best institution for your career goals. Already narrowed down school choices? Check out and compare your options. 

Explore: 

• Costs
• Graduation and Retention
• Financial aid and Debt
• Typical Earnings
• Student Body Characteristics
• Test Scores and Acceptance Rates
  

Information is provided on:

Alternative Pathways to a Career 

Learn More About Paying for College 

 

 

Financial Literacy and Career Resources for College Students and Grads

 Have questions about borrowing, student loans, car loans, savings, setting goals? Need help with your resume and job search? https://www.igrad.com has videos, info, worksheets and more on its comprehensive website. With additional topics like long term care insurance, the site isn't just for young folks.

Evaluating College Aid Offers and Asking for More Financial Aid

 We live in an upside down world due to Coronavirus. Many families have experienced major disruptions to their financial circumstances. Ann Carrns, financial and college expert writing for The New York Times reports on last minute strategies to try to garner more financial aid if you family has suffered a major income loss. Keep in mind that students need to file an annual FAFSA and re-apply for financial aid each year so tuck this info away for future reference even if it doesn't apply to you this year. 

With May 1 or May 3 as the deadline for newly admitted applicants to declare that they will enroll and submit deposits, students still have time to appeal to a college for more financial aid. “If the pandemic has caused a significant decline in income, a job loss or added medical expenses, you should let the school know.”

"Be careful to distinguish between 'gift' aid, like grants and scholarships, which doesn’t have to be repaid, and loans, which do. Subtract the gift aid from the college’s cost of attendance — the total cost of tuition, housing, meals, books and supplies — to get a net price. Do this for each school before considering how much of the cost you can cover from savings and earnings, and how much you would have to borrow to cover any shortfall."

"One big factor this year is that the Free Application for Federal Student Aid — the gateway to federal as well as state and much institutional financial help, known as FAFSA — required students to report financial information from 2019. So families that fell on hard times during the pandemic may find their aid offers don’t reflect their true situation."

"College financial aid officials have discretion to use 'professional judgment' to increase aid if a student’s circumstances have changed."

SwiftStudent is a free tool to help students file an appeal letter. https://formswift.com/swift-student

"uAspire, created a free online cost calculator to help applicants make 'apples to apples' comparisons of aid offers. The Consumer Financial Protection Bureau also offers an online tool to compare offers, and the Institute for College Access & Success offers a tip sheet."

Strategies to pay for college webinar March 25, 2021

 Strategies to pay for college

Thursday, March 25, 2021, 2-3 p.m. ET 

Presented by the Consumer Financial Protection Bureau

Join us for a presentation on how to finance higher education. You’ll hear from our Office for Students and Young Consumers on the federal financial aid process, college funding sources, and college budgeting techniques. What’s more, we will discuss nonfinancial ways to help students reach their higher education goals.

Audio and presentation:  https://cfpbgov.webex.com/cfpbgov/onstage/g.php?MTID=e1d33a400bde6b8f04104c4c1ace9d61b

Event number: 199 682 7962

Audio only:
Dial-in:   +14043971590
Access code:   199 682 7962
Event Password: 3VfPQmvpm*42 (38377687 from phones)

How Home Equity Affects College Aid

 Now that you've filled out the FAFSA (free application for federal financial aid) it's time to tackle the College Scholarship Service Profile (CSS Profile) for non-federal financial aid. 

Be ready to provide your home's purchase price, year of purchase, current value (check your property tax bill) and current debt to determine your home equity. 

Schools that require the CSS treat home equity very differently, ranging from including 100% of equity in parents' assets (Boston College) to not considering home equity at all (Stanford). Cornell factors in 50% of equity. You aren't necessarily expected to tap home equity to pay for college but it is used to determine how much parents should be able to pay. If you own more than one home or other real estate assets, expect to disclose this information on the CSS profile.

Parental contributions are typically 5% of their assets. Also factored in are the number of siblings attending college and many other factors. 

So, how colleges treat home equity has "an Enormous impact on what parents" are expected to pay. 

When borrowing against home equity to pay for college, avoid a home-equity loan because the entire amount available to you is considered an asset. A better choice is a home-equity line of credit. 

Lots to consider when comparing the cost of various colleges! 

And Covid-related financial set-back such as job loss further complicate the analysis. 

Thanks to Beth DeCarbo, writing for The Wall Street Journal, 10/4/19.

Filing FAFSA (financial aid application) early is especially important this year

The new FAFSA (free application for federal student aid) form (available October 1) uses last year’s tax data. But families that have lost income this year need to take extra steps to qualify for aid. The FAFSA form is the major gateway to financial aid from the U.S. government, as well as from many states and colleges. 

"Completing the form early is always a good idea in order to meet varying deadlines for scholarships. But this year, college students or prospective applicants who have been affected by the pandemic may need to submit extra documents to their colleges."

Students whose families have been affected by the Coronavirus, suffering job loss, major medical bills and even deaths need to file early and provide updated information since the FAFSA relies on 2019 income tax data. Last year's income data won’t accurately reflect a student’s current financial picture, diminishing eligibility for need-based grants and scholarships.

Although the FAFSA will use 2019 data students with substantial changes in their family's finances should contact college financial aid offices to alert them to their changed situation and request a review known in as a “professional judgment.”

"A professional judgment review involves submitting new information — like layoff notices, unemployment checks or medical bills — to give financial aid officials a more accurate picture of a student’s current finances. With that review, financial aid administrators have discretion to make adjustments to the FAFSA so that students can qualify for more aid."

Thanks and credit to Ann Carrns writing for The New York Times for this information.

Your financial path to college graduation

 The Consumer Financial Protection Bureau (CFPB) offers lots of help for college students. https://www.consumerfinance.gov/paying-for-college/

Check out:

 "Your financial path to graduation" https://www.consumerfinance.gov/paying-for-college/your-financial-path-to-graduation/?utm_source=newsletter&utm_medium=email&utm_campaign=gradpath&houx=826&fdx=340&clhx=87&trnx=324&hltx=121&entx=94&retx=22&taxx=-6&othx=385

This tool can help you:

• Understand your financial aid offer
• Plan to cover the remaining costs
• Estimate how much you’ll owe and if you can afford that debt
• Compare offers from different schools
• Decide what to do next
  

Keep coming back as your plan evolves.

For many students, planning how to pay for school is complicated. It may require multiple conversations with family, advisers, and the school financial aid office to get more information. As you figure out your best options, come back and update your plan as many times as you need!

This tool does not save your personal data. Learn how we got the numbers and guidelines for our calculations.

To start, you will need:

• Your financial aid offer(s)
• An idea of how much money you and your family can put towards school
• A private loan offer (if you have one)
• The phone number or email address of someone in the financial aid office – it’s their job to answer your questions!

You may want to use this tool with someone you trust who can help you weigh your options.

 

How much of your college scholarship is taxable?

Wait! What? My scholarship money is taxable?
Many students have no idea that their scholarships might be taxable.
Due to the coronavirus the income tax deadline has been extended to July 15, 2020.
Payments and interest on federal student loans for 6 months of relief....

So, about those scholarships and possible taxation.
Any aid used for living, travel and other expenses is taxable income.  The Tax Reform Act of 1986 made aid used for living (housing, food) and travel expenses taxable. Financial aid use to buy textbooks and college supplies remains free of taxation.

Calculating the amount of tax owed is confusing. Students receive a 1098-T tuition statement which shows how much a student received in total financial aid and how much they paid in tuition and fees. Check the annual IRS tax guide and guide to tax benefits for education to find out how much tax you might owe. Be informed and prepared so you aren't blind-sided by a tax bill.

See: "Reporting Scholarships and Fellowship Grants" on p. 6 of the IRS 2019 guide to tax benefits for education.

A variety of organizations have been working to restore tax-free status to financial aid used for living and travel expenses.

I remember the good old days where I earned a B.S., M.S. and Ph.D. without taking out any student loans. I was lucky to have a New York State Regent's Scholarship to pay undergrad tuition, a job as a resident assistant my junior and senior years which paid room junior year and room and board senior year. With some help from my parents and summer jobs I was able to pay for the rest of my expenses. Of course this was back when the minimum wage was wroth far more than today and before the strong anti-tax movements of the Reagan years when citizens understood the value they received for paying taxes. Of course, like most students, I didn't own a car so escaped that expense. I saved enough while earning my master's degree to be able to travel in Europe during the summers. I used to wait until the last day to pay (in person) my quarterly doctoral program tuition with my credit card. Payment wasn't due until the quarter was nearly finished so I kept earning interest on my savings, back when savings accounts paid real interest.

Who should own 529 Educational Savings Account?

When considering a college student's eligibility for financial aid, who owns their 529 account makes a difference. Sarah Mouser, writing for Advisor Perspectives explains.

"Parent-owned 529 plans are treated differently than grandparent-owned 529 plans when applying for financial aid and completing the free application for student aid (FAFSA)."

"When a 529 plan is owned by a parent or student, distributions are ignored. But when distributions from a 529 plan occur from an account owned by a grandparent or other relative, it is considered untaxed student income, which is important because income carries a much more significant impact on aid eligibility than assets. This income can reduce eligibility for need-based aid by as much as half of the withdrawal."

"When completing the FAFSA, there is a two-year “look-back” period. For families filing the FAFSA in fall 2020, they will be completing this form using 2018 tax data. For a student attending a four-year university, grandparent-owned 529 plan distributions used to pay for expenses in their first few years of college will impact FAFSA filings for their later years."

Get complete details at:
https://www.advisorperspectives.com/articles/2020/05/19/who-should-be-the-owner-of-a-529-plan

College Co-op Programs

"The right work experience can give graduates a boost, but there are lots of questions to ask."

Cheryl Winokur Munk, The Wall Street Journal, 2/10/20.

"About 60 schools offer a formal cooperative-education, or co-op, program, where students generally alternate periods of work and classes. These schools include Drexel University in Philadelphia, Northeastern University in Boston and the University of Cincinnati." Other colleges offer formal career-related internship or apprenticeship programs. 

Since only 10% of college students graduate with formal work experience, it can give them an advantage in finding employment.

"Co-op programs and other work opportunities vary from one institution to another, so students need to understand the particulars of each program they consider. To help them make informed choices, students should consider these questions:"

What is the nature of the program?

"In co-op programs, students usually spend at least one period of several months working, during which time they scale back or suspend their studies. They may or may not have to pay tuition while they’re working, depending on the program." How many opportunities are offered? When spending time away from classes for co-op, students may need an extra year to graduate. How does this affect tuition costs? 

Who are "typical employers, what types of job opportunities exist, and whether they are for pay, school credit or some combination of the two."

"Drexel University, for instance, generally offers two co-op programs for undergraduates, one with three co-ops over five years, or a four-year program with one co-op—both for the same tuition. Generally, students are on each co-op for six months, alternating with six months of classroom study. They don’t pay tuition while on a co-op, but they do pay certain university fees. Typically a co-op is a paid, full-time work experience for which students also receive college credit."  

"Endicott College in Beverly, Mass., requires all students to complete two 120-hour internships, one during freshman year and one during sophomore year. Students are also required during junior or senior year to complete a semester long for-credit internship. For this, students are required to work four days a week and attend an on-campus seminar once a week. They earn a total of 12 credits for successfully completing the work and seminar components, and they pay normal semester tuition charges. There is no requirement for students to be paid, but they can be."

Taxes: "pay from a co-op is subject to income taxes." "Co-op earnings are excluded from the federal aid determination process—except for any portion unspent at the time the Free Application for Federal Student Aid, or Fafsa, is filed, which will be counted as student assets. Students might consider using at least a portion of co-op earnings to fund a Roth IRA, since retirement assets aren’t considered for federal aid purposes."

 

How "No Loan" College Works (It doesn't mean free)

Although rare, more private colleges are joining the club of offering sufficient grants and work options to help students avoid or minimize student loan debt. Princeton started the trend more than 20 years ago. (Good luck getting accepted).
Writing for The Wall Street Journal, (12/9/19), Cheryl Winokur Munk explains.

1. "No loans" doesn't mean no out of pocket costs. Once the college determines a student's financial aid needs, they expect a contribution from parents and the student. So plan on working summers in high school to save some money for college.
Example: Cost of attendance (tuition, room, board, other costs) = $65,000. Depending on the family circumstances, they may be expected to contribute $25,000/year. The remaining $40k might be offered as grants and student employment.

Expected family contribution: https://studentaid.gov/help-center/answers/article/what-is-efc

2. Few schools offer "no loan" options and they tend to be selective.
While about 6 dozen institutions offer the program, that's a tiny segment of higher education. They are the highly selective, competitive institutions.
Examples: Amherst, Bowdoin, Brown, Colby, College of Ozarks, Columbia, Davidson, Harvard, Johns Hopkins, Princeton, Swarthmore, U of Pennsylvania, Vanderbilt, Washington & Lee, and Yale.
However, that means that "smart students from poorer families could end up paying less to go to a top private university with a no-loan policy than to a state school with a lower sticker price."

3. No-Loan policies vary
Every institution has it's own policies so check the fine print.

4. Still... you may still graduate with loans.
Some students may choose to take out loans to cover their expected student contribution rather than working as much as might otherwise be required. 

Where to search for college scholarships AND How to avoid scams

Rather than conducting a random search which might result in scams, use these resources recommended by The Wall Street Journal (complied by Cheryl Winokur Munk, 1/6/20):
CareerOneStop: sponsored by the US Labor Department. careeronestop.org and click on Toolkit, then scholarship Finder.
Lots more help from these sources listed in the WSJ article: 
https://www.cappex.com/

https://www.studentscholarshipsearch.com/
https://www.fastweb.com/
https://www.fastweb.com/
https://pages.collegeboard.org/scholarship-opportunities-from-collegeboard
https://scholarshipamerica.org/
https://www.scholarships.com/
https://www.scholarsnapp.org/
https://www.unigo.com/

The Federal Trade Commission (FTC) got 725 complains in 2018 about scholarship scams. Of course, this number only counts people who complained to the FTC. Lots more victims didn't know where or how to complain or were too embarrassed to complain. 

Warning signs of scholarship scams:
1. NEVER pay to apply for a scholarship! 
2. Be wary of unsolicited offers.
3. Avoid giving personal information. Sure you need to provide your name, year in school and email address, but never give personal or financial info such as Social Security, driver's license, or credit card number. "All of the financial information that scholarships use to determine eligibility comes from the Free Application for Federal Student Aid, or Fafsa."
4. Beware of pressure tactics.
If you see the word "guarantee" it's got to be a scam.  

Avoiding scholarship scams

If it sounds too good to be true, it probably is. C.W. Munk, writing for The Wall Street Journal (1/6/20) offers this advice to students seeking scholarships:

1. Never pay for scholarship opportunities. 
Students should never pay to become eligible for a scholarship; avoid "money-back" guarantees. Instead of randomly searching online for scholarships, use resources provided by college counselors; see related Blog post.

2. Be wary of unsolicited offers. 
Some scammers use scholarship offers to obtain personal and financial information from students. Unsolicited offers are a major RED FLAG. If you receive a check and congratulations for a scholarship you haven't applied for notify the Federal Trade Commission at FTC.gov. "Legitimate scholarship providers don't distribute money randomly to students, and it's likely the check will bounce, or the student might be asked to send funds back for 'processing' or for an 'accidental' overpayment" all ways to bilk students.

3. Avoid giving personal information.
Beyond providing your name, year in school and email address, never give out personal information like Social Security number, driver's license, bank or credit card info. All the info the scholarship provider needs is available from the Free Application for Federal Student aid (FAFSA).

4. Beware of pressure tactics. 
If you feel you are being pressured, it could be a scam. Guarantees and unrealistic promises are further red flags.

How to afford college

"COLLEGE STUDENTS who borrow graduate with an average $37,000 in loans. While many people believe loans are the only way to finance a college education, that’s simply not the case."
Author Kristine Hayes is a departmental manager at a small, liberal arts college.

Here are five ways to get an advanced education while minimizing debt:"

1. Stay close to home.

2. Comparison shop. On paper, private schools typically appear to cost more than public institutions, but it’s worth digging into the details.

3. Scholarships. Billions of dollars in scholarships are given to college students every year.

4. Condensed degree programs.

5. Tap your employer. Some employers offer tuition reimbursement programs

"Many hospitals offer these types of programs for students interested in nursing. It’s even possible to attend medical school for free. Kaiser Permanente recently announced that the first five cohorts of students to attend its new medical school will pay no tuition. With medical doctors typically graduating with nearly $200,000 in debt, Kaiser’s program will no doubt generate significant interest."

 Read the full article for details: https://humbledollar.com/2019/09/educated-consumers/

Finding an affordable college

The college selection process has become more complicated over the years due to the rising cost. Significant planning should be done before students apply if your goal is to an affordable institution. By estimating Expected Family Contribution (EFC) and net cost of college before your child applies, you can eliminate those schools that will put your student’s future in financial jeopardy.

Need-based or Merit Aid?

The vast majority of aid falls into the need-based and merit categories. Since need-based awards (on average) are larger than merit awards, the first step should be to see if they qualify for need-based aid, and that means calculating Expected Family Contribution (EFC).

Step 1: Calculate EFC

Calculating and minimizing EFC for both FAFSA and CSS Profile is a critical first step in the effort to save on the cost of college. My favorite calculator is the College Board’s calculator, because it calculates EFC under both methodologies.

Step 2: Compare EFC to COAs

Compare the EFC it to the Cost of Attendance (COA, which is tuition + room and board + books and fees + travel). You can find the COA and other data on Collegedata.com. You can utilize the College Match search engine there to filter schools by over 15 different criteria, including geography, major, four-year graduation rate and financial aid criteria.

Author: Robert J Falcon, CFP®, CPA/PFS, is the founder of College Funding Solutions LLC, and the founder of Falcon Wealth Managers LLC, both in Concordville, Pa.

Read the complete article at: https://onefpablog.org/2019/02/07/buying-college-in-the-21st-century-clients-should-search-for-colleges-they-can-afford/?utm_source=informz&utm_medium=email&utm_campaign=membership&utm_content=date_description