Dependent students must have their legal parents complete the Free Application for Federal Student Aid (FAFSA), regardless of where they live. Legal parents include the student’s biological or adoptive parents. Parents who are listed on the student’s birth certificate can also count as a legal parent.
If I’m a graduate student, can I use 529 plan funds without it affecting my loan eligibility?
Loan amounts, along with 529 plan distributions, may not exceed the college's cost of attendance (COA). So long as the total does not exceed COA, it should not reduce your Direct Unsubsidized Loan and Grad PLUS Loan amounts.
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Can a 529 plan qualified distribution be used to pay off a student loan?
No. Student loans are not included in the definition of a qualified higher education expense for 529 college savings plans.
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What's the best way to add, delete, or modify my list of colleges on my FAFSA?
The easiest way to make changes to your FAFSA is to log in as a returning user at FAFSA.ed.gov using your FSA ID. On the My FAFSA page, click “Make FAFSA Corrections.” Go to the “School Selection” page to change the order of the schools listed, or to add or delete schools.
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Should I submit my parents’ financial information on my FAFSA for graduate school?
Graduate students are independent, so parental information is not required. Some graduate schools require students to submit parental information for awarding the school’s own financial aid funds. This is especially common among medical schools and law schools. If parent information is submitted, it will not affect eligibility for federal and state aid.
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What should I do if my parents are unwilling to complete the FAFSA?
If your parents refuse to file the FAFSA, you should talk with your college’s financial aid administrator about the circumstances surrounding your parents’ unwillingness to complete the form. Sometimes, financial aid administrators are able to address the parental concerns and convince them to complete the form.
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Is it too late to get assets out of my name before filing the FAFSA?
Financial aid application forms, like the FAFSA (Free Application for Federal Student Aid) and CSS/Financial Aid PROFILE, use a snapshot approach with regard to assets. In other words, the asset valuation is as of the date the FAFSA or CSS/ Financial Aid PROFILE is filed. From a practical perspective, this means the valuation as of the most recent statement prior to the FAFSA or PROFILE filing date, though these days people can also login to their broker’s web site and print out a current valuation.
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How will dropping to half-time status affect my student loan grace period?
The grace period can be thought of as a “waiting period” which affords a student loan borrower time before he or she has to start repaying his or her federal student loans. Grace period begins when a student loan borrower graduates or drops below half-time enrollment.
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Can a lender collect on a student loan from 20 years ago?
The answer to this question depends on whether the loans are federal or private. Statutes of limitation specify the maximum number of years after a loan goes into default during which the lender can sue to recover the debt.
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Is it OK to wear my nose ring and leave my tattoos visible when I go to a scholarship interview?
Unless you are wearing the jewelry or tattoo for religious or cultural reasons, you should probably not wear it to an interview. Although body modification, such as nose rings, tongue piercings and tattoos, is growing in acceptance, there is always a risk that the interviewer will be offended or distracted by it. Avoid giving the interviewer an excuse to deny you the scholarship.
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Should I pay off my student loans or buy a condo?
From a financial perspective, using a wedding present or graduation gift to pay off student loans or as a down payment on a condo or home saves money by avoiding the interest the borrower would otherwise have to pay. Prepaying a student loan is like earning a tax-free return on investment at the student loan’s interest rate. Similarly, a down payment avoids the need to pay interest on the amount of the down payment at the mortgage’s interest rate. So, the decision should be based on whichever option has the highest interest rate, since that will yield the greatest savings.
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Is it too late to start saving for college?
With only two years left before a child starts college, most of the money in the child’s college savings plan should be invested in conservative investments, where there is little or no risk of loss to principal. No more than 20 percent of the money should be invested in stocks or other risky investments.
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How can I apply for financial aid and student loans if I'm an international student attending a U.S. college?
There is very little financial aid for international students to study in the U.S., just as there is very little financial aid for U.S. students to study in other countries. Most students must rely on resources from their friends, family and sponsors to pay for college in the U.S. There may also be money available from businesses, foundations, the government and religious groups in their home country.
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Can I continue to defer payments on my Parent PLUS Loans now that my daughter is in graduate school?
Yes. Many financial aid professionals will incorrectly answer “no.” Their intuition tells them that the repayment obligation may be deferred only during the student’s initial in-school period. Their reasoning may be influenced by other restrictions on the Parent PLUS Loan, such as the loan being available only for a dependent student’s undergraduate education. But, a careful reading of the law and regulations clearly indicates that the repayment of a Parent PLUS Loan may be deferred whenever the student is enrolled on at least a half-time basis. In this case, intuition is wrong.
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I have reached the maximum limits on my federal student loans. Where can I get the money I need to pay for college?
The annual loan limits on the Direct Unsubsidized Loan range from $5,500 to $7,500 for dependent undergraduate students and $9,500 to $12,500 for independent undergraduate students. The cumulative loan limits are $31,000 for dependent students and $57,500 for independent students.
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How do I replace Direct Unsubsidized with Direct Subsidized Loans?
Federal rules require a college to award a student the maximum Direct Subsidized Loan amount for which the student is eligible before certifying any Direct Unsubsidized Loans. The only exception is when the amount of the subsidized loan would be $200 or less, in which case the college may include it in an Direct Unsubsidized Loan, up to the loan limits. Since subsidized Direct Loans are not subject to a fixed pool of funding like the Perkins Loan and some institutional loans, there’s no reason why a college would not award a Direct Subsidized Loan to an eligible student.
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Can my grandfather borrow a Parent PLUS Loan instead of my parents?
Grandparents cannot borrow from the Parent PLUS Loan program for the benefit of a grandchild unless they have legally adopted the grandchild. Grandparents who are a legal guardian to a grandchild but who have not adopted the grandchild are also not eligible to borrow from the Parent PLUS Loan program. If a student is or was in a legal guardianship (as determined by a court of competent jurisdiction in the student’s state of legal residence) prior to reaching the age of majority, the student is considered to be an independent student.
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Is a Parent PLUS Loan forgiven if my parent dies?
If the borrower of a federal student loan dies, the loan is cancelled. For example, if the borrower of a Parent PLUS Loan dies, the debt is discharged. It will not be charged against the borrower’s estate, nor is the cancelled Parent PLUS Loan debt treated as income to the student or the surviving spouse, if any.
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What's the best way to use a 529 plan to pay for college?
There are several possible strategies for how to use a 529 college savings plan to pay for college. One strategy involves using as much of the available funds as possible during the student’s first year in college and the rest, if any, during the second year. Another strategy involves spending the money in equal increments over the student’s college career. For example, this strategy would spend one-quarter of the money each year for a student enrolled in a four-year degree program. Which of these strategies is better?
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How can I fix an error in my Social Security Number on my FAFSA?
A typo in the Social Security Number field on the FAFSA can cause major problems with college financial aid. Find out how to correct this FAFSA error.
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What should I do if my top-choice college put me on an admissions waiting list, but another college offered me admission and a scholarship?
Accept the offer of admission from the college with the merit scholarship and pay the deposit by the May 1 deadline. If you ultimately enroll at the wait-listing college, you will lose the deposit, but the odds of admission off of the waiting list are slim to none. You won’t know whether you are admitted off of the waiting list until after May 1, so you have to choose one of the colleges that admitted you now.
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How can I qualify for a mortgage refinance if I cosigned my son's private student loans?
When a mortgage lender evaluates a homeowner’s eligibility to refinance a mortgage, the lender considers all debts for which the homeowner is responsible. This includes cosigned loans, such as a cosigned private student loan. A cosigner is a co-borrower, equally obligated to repay the debt. The cosigned loan shows up on the credit history of the cosigner, not just the primary borrower. Delinquencies and defaults will damage the credit scores of both the borrower and cosigner.
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What's the best way to help our son pay off his student loan debt?
“Nothing prevents parents from helping their children with their student loan payments. Doing so will not obligate the parents to continue making the student loan payments. Only the borrower and cosigner who signed the loan’s promissory note are responsible for the debt.”Read Entire Answer
Is it worthwhile to let my student loans go into default to get a settlement?
As a general rule, lenders do not settle non-defaulted student loans for less than what is owed. The payoff amount on a student loan equals the total outstanding loan balance, including the principal balance and any accrued but unpaid interest.
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Does FAFSA dependency status affect exemptions on tax returns?
Dependency status on the FAFSA and dependency status on federal income tax returns are not the same. Dependency status on the FAFSA is defined by the Higher Education Act of 1965 while dependency status on federal income tax returns is defined by the Internal Revenue Code of 1986. Each statute has different rules.
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Can an independent student be counted in household size on a sibling's FAFSA?
A 23-year-old child is considered to be an independent student on the Free Application for Federal Student Aid (FAFSA) if he will reach age 24 by December 31 of the academic year. Otherwise, he is considered to be a dependent student, assuming that he doesn’t satisfy any of the other criteria for independent student status.
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Does claiming my son as an exemption on my tax return make me the custodial parent on his FAFSA?
The parent responsible for completing the Free Application for Federal Student Aid (FAFSA) is not necessarily the same as the parent who claims the student as an exemption on the parent’s federal income tax return. Which parent claims the student as an exemption on the parent’s federal income tax return does not affect which parent is responsible for completing the FAFSA.
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I have Deferred Action for Childhood Arrival (DACA) status. How should I complete the FAFSA?
Under certain circumstances, undocumented individuals who entered the U.S. before reaching age 16 and before June 15, 2007 may apply for a temporary 3-year exemption from deportation under the Deferred Action for Childhood Arrivals (DACA) program. People granted DACA status may also receive a work permit. Undocumented students with DACA status are not eligible for federal student aid. They may, however, be eligible for state or institutional financial aid, depending on the state and the college.
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Am I eligible for financial aid if my parents are undocumented?
To qualify for federal student aid, the student must be a U.S. citizen, permanent resident or eligible noncitizen. It does not matter if the student’s parents are undocumented, under-documented or foreign citizens. The student is still eligible for federal student aid.
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Who is the "preparer" on the FAFSA?
The preparer section of the Free Application for Federal Student Aid (FAFSA) is intended for paid preparers of the FAFSA, not the student or parents. A paid preparer is someone who was paid a fee to provide personalized help or advice in completing the FAFSA or to complete the FAFSA on behalf of the student and/or his or her family.
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Who is the custodial parent?
Which parent or parents are responsible for completing the Free Application for Federal Student Aid (FAFSA) depends on the parents’ marital status, living arrangements and financial support of the student as of the date the FAFSA is filed. Also, the parents must be legal parents (e.g., biological or adoptive parents or listed on the student’s birth certificate) or married to the student’s legal parent. Legal guardians and foster parents are not considered to be legal parents unless they have adopted the student.
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Do I need to list an asset that lost value on the FAFSA?
Investment real estate is always reported as an asset on the Free Application for Federal Student Aid (FAFSA) and the CSS/Financial Aid PROFILE form. The asset value should be reported as the net worth, which is the difference between the current market value of the asset and any debts secured by the asset. The PROFILE form also asks for the year of purchase and the purchase price.
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Which year is the "base year" for financial aid calculations?
The Free Application for Federal Student Aid (FAFSA) calculates the expected family contribution (EFC) based on income and taxes from the tax year prior to the award year for which the student is seeking student financial aid. (Award years run from July 1 to June 30 and often align with college academic years.) The prior tax year is often called the base year. For example, if a student is seeking financial aid for the 2015-2016 award year, the base year is 2014.
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What is the best way to answer the question about parental financial support on the CSS/Financial Aid PROFILE?
The CSS/Financial Aid PROFILE form is used by about 250 mostly private colleges to award institutional financial aid funds. These colleges still use the Free Application for Federal Student Aid (FAFSA) for awarding federal and state financial aid. The PROFILE may be customized by each college and there is no standard for how the colleges use the answers submitted on the PROFILE. In particular, there are several different ways that colleges may use the answer to the PROFILE question about financial support for college from the student’s parents.
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How can we help our son get some of the unclaimed scholarship money we've heard about?
The claim that billions of dollars of scholarships go unclaimed each year is a myth based on a 1976-77 academic year study by the National Institute of Work and Learning, which estimated that $7 billion in employer-paid tuition assistance was available each year, but only $300 million to $400 million was used annually. Subtract one figure from the other to arrive at $6.6 billion that was subsequently misreported as unclaimed scholarships. Thus, the myth is more than 30 years old, was based on an unsubstantiated estimate and had nothing to do with private scholarships.
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What can I do to prevent my college financial aid package from being reduced because I won a private scholarship?
Award displacement occurs when the receipt of one form of financial aid, such as a private scholarship, causes a reduction in other forms of financial aid.When a student is receiving need-based financial aid, receipt of a private scholarship may reduce the student's demonstrated financial need. The college financial aid office responds by reducing the student’s need-based financial aid package by a similar amount.
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Is it better for a grandparent or the parents to set up and own a 529 college savings plan?
Generally, a grandparent-owned 529 college savings plan will reduce the grandchild’s eligibility for need-based financial aid much more so than a parent-owned 529 plan. If the student expects to be eligible for need-based financial aid, it is better for the 529 plan to be owned by a parent, not the grandparent. The grandparents can then contribute directly to the parent-owned 529 plan.
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What are the differences between federal, college and private loans?
It is best to borrow as little as possible for college. Budget before you borrow. Try to borrow only what you absolutely need. Do not treat loan limits as targets. Every dollar you borrow will cost about two dollars by the time you repay the debt. Before you spend student loan money on anything, ask yourself if you’d still buy it at twice the price. Live like a student while you are in school, so you don’t have to live like a student after you graduate.
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Why would the amount on a college bill be more than the EFC originally indicated on the financial aid award letter?
Despite the confusing terminology, the expected family contribution (EFC) is not the amount a family will have to contribute to pay for college. The EFC is a measure of the family’s financial strength that is used to determine eligibility for need-based student financial aid.
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Which type of student loan is best – federal or private?
Federal student loans usually cost less and offer more flexible repayment options. Private student loans may have interest rates that are competitive with Federal PLUS Loans, so shopping around is critical.
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Are student loans forgiven when you reach a certain age?
Federal student loan debt in the United States is not forgiven when the borrower retires or at any other age. If a borrower defaults on his or her federal student loans, the federal government may offset up to 15% of the borrower’s Social Security disability and retirement benefits to repay the student loans.
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What should we look for during college campus visits?
Summer vacations and spring break are not the best time to visit colleges, as classes might not be in session and there may be very few students on campus. Touring a bunch of empty campus buildings will not help the student (or parents) make an informed decision about which college is the best academic and social fit.
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What will the new federal education loan interest rates be starting on July 1, 2014?
Interest rates on Federal Stafford loans and Federal PLUS loans are fixed rates that change each July 1 based on the last 10-year Treasury rate auction in May. The current rates for the 2013-2014 award year are 3.86% for undergraduate Federal Stafford loans, 5.41% for graduate Federal Stafford loans and 6.41% for Federal Grad PLUS loans and Federal Parent PLUS loans.
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How should we prioritize spending our college savings now that we've received our first bill?
Families should spend down student assets before parent assets, because student assets are assessed more heavily than parent assets in the financial aid formulas. Use money from custodial bank and brokerage accounts first, spending it down to zero before touching the parent’s money. There is one exception to this rule: the custodial versions of 529 college savings plans. If the student is a dependent student, these are treated as though they were parent assets on the Free Application for Federal Student Aid (FAFSA).
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How do we read an award letter?
The best approach involves calculating the net price for each award letter. The net price is the difference between total college costs and just the grants, scholarships and other gift aid (money that does not need to be repaid). This is the amount of money the family will have to pay from savings, income and loans to cover the college costs. Think about it as a discounted sticker price.
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How do I update my FAFSA now that my income taxes have been filed?
The income and tax questions on the Free Application for Federal Student Aid (FAFSA) must be updated after the student and parents file their federal income tax returns. If the student and parents checked the “will file” answer to the tax return question on the FAFSA, the U.S. Department of Education will email them a reminder to update the FAFSA if they provided email addresses on the form.
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Are scholarships taxable?
The portion of a scholarship or fellowship used to pay for tuition, required fees and required textbooks, supplies and equipment may be excluded from taxable income in certain circumstances. The student must be a candidate for a degree or certificate and the scholarship or fellowship must not represent fee for services. Scholarship and fellowship amounts used or earmarked for living expenses, such as room and board, are taxable. If the student is not a candidate for a degree or certificate, the full amount of the scholarship or fellowship is taxable, even if the student uses it for tuition.
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Are tuition and fees tax-deductible?
Yes. There are three overlapping education tax benefits based on qualified higher education expenses, such as tuition and fees (and in some cases also course materials such as textbooks). These are the American Opportunity Tax Credit, the Lifetime Learning Tax Credit and the Tuition & Fees Deduction.
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Do I need to report my legal guardian's income on the FAFSA?
If a student is in a court-ordered legal guardianship, the student is considered to be an independent student. The legal guardianship must have been granted by a court of competent jurisdiction in the student’s state of legal residence. A student who is in a legal guardianship to his or her parents is not considered to be an independent student. If the legal guardianship was not court-ordered, but arranged by an attorney, it does not make the student an independent student.
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How can we complete the FAFSA if our income taxes haven't been filed?
It is important to file the Free Application for Federal Student Aid (FAFSA) as soon as possible after January 1, because many colleges and state agencies use the FAFSA to award their own financial aid funds and some have very early deadlines. Some even award aid on a first-come, first-served basis.
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When will the FAFSA form be available and when is it due?
The Free Application for Federal Student Aid (FAFSA) becomes available on January 1st of the award year. Submit the FAFSA as soon as possible after January 1. Do not wait until you have filed your federal income tax returns or been admitted to the college or university you hope to attend. The FAFSA is used not only to apply for federal student aid, but also for state grants and college-specific financial aid funds. Some states and colleges have very early deadlines or award money on a first-come, first-served basis.
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