UIC Financial Aid Webinar Part Five: Q&A III


Uploaded by thisisUIC on 09.02.2011

Transcript:
Richard: Now we may have touched on this before, but let's look at it in this version of the
question. "If I'm a parent with assets that I reported on the FAFSA, will it reduce the
chances of my daughter being eligible for financial aid?" And I'm assuming big assets,
I guess. Well, it doesn't necessarily mean big assets, but you know." Tim: Well I think
that's, well, that's kind of my first response reading the question, is in many cases assets
play a very small part in the federal calculation. For example if you go on and play with those
financial aid calculators that we previously talked about, you know just put in there various
amounts of assets and you'll notice that sometimes if you put in $20,000 as opposed to $50,000,
for a parent it actually may not change that family contribution, so you know there are
many factors. An asset in a student's name is going to be taken into account a lot more
than in a parents name. For example if you have an asset in a student's name, they could
actually consider 20% in that family contribution, whereas that same amount in a parent's name
may not change that family contribution at all. So it kind of depends who is the holder
of the asset, what is the amount of the asset, and actually there are also parts of the formula
based on the tax form if assets are even considered. So I think the main thing is you want to report
the assets as they are. But I wouldn't be too concerned because many times assets play
a very small part in the process. Richard: Well, here's a question from, well, it doesn't
say. "Do I need" - and this has to do I guess with the whole integration question - "Do
I need a social security number to apply for aid, and does my mom need a social security
number?" Gloria: A student definitely needs to have a valid social security number and
be a U.S. Citizen to apply for federal student, so that's a yes for the student. For the parent,
the parent does not need to have a valid social security number. It is safe to put zeroes
in the place in the place of that social security section of the financial aid application.
So students: yes. Parents: not necessary. Tim: That brings up a good point too. When
you're filling out the FAFSA form, if you're ever at a question where you're not too sure
what the answer is. For example like the parent social security number, you know there isn't
a number, what do I do? You actually look at the FAFSA instructions because it actually
says if the parent doesn't have any, put zero zero zero. So look at the FAFSA instructions.
Secondly, always keep in mind that if you're not sure how to answer a question, you can
call the schools you're applying. Additionally, the federal government actually has a hotline
you can call, and the full number is 1-800-4FEDAID So you can always call that hotline and they'll
be glad to help you and walk you through the FAFSA form and answer questions. So there's
always help available if you're not sure. Richard: Well now here's a question that cuts
right to the quick. This is from George "How much time do you have to pay off a loan before
the collection agencies starts to come after you?" That's a valid question! Gloria: Very
good! [ laughter ] Tim: George, you don't want to
get to that point. You know, normally what happens... Richard: Well there are circumstances,
you know, things happen in peoples lives and it becomes difficult. Tim: Yes. Well you never
want to get to that point but I think the main thing is that if a student, for example,
leaves school graduates, is not able to find to find a job, or something happens where
they can't repay, you always want to work with the federal government. There are other
things that a student can do. They can request forbearance where the loan will get deferred
for a certain time frame. You never want to just stop paying and think it's going to go
away. The main thing is you want to let the federal government know, and maybe there are
other options for you. Because keep in mind that federal student loans are not, you cannot
dismiss that in bankruptcy. They are going to stick with you forever. So you always want
to make sure you're making payments and if you can't, you want to work with the source
to make sure they are aware of it, and that eventually you will pay it back. Gloria: Because
nevermind the collection agencies coming after you, what you don't want to do is afterward
have default added to your name, because that also could make you ineligible to get further
aid. So that's very important. Work with the government. And that is another reason why
it's important to consider taking out government-based loans rather than private-based loans because
you get more flexibility options than the other. Richard: You need to say that again,
because that's a very significant point. Gloria: Yes. You don't want to go into default. And
it's all about communication. So everybody experiences financial hardship. We're going
through economic hard times right now. The main thing is to reach out to - and sometimes
the government assigns agencies, organizations like Sally Mae who kind of are overseeing
your loans - you want to find out who is in charge. And if you get a loan you are going
to have to sign a promissory note. As you graduate from school you are going to have
to go through an actual exit interview so they make sure you understand your responsibilities
and obligations for payment and who is kind of overseeing that process. Those are the
people you would need to get into contact with. And actually just give your information
to have your loan put into forbearance. Or if you go to graduate school, for instance,
your loans can go into deferment. If they're deferred, you won't have to pay it back while
you are in school. There are even some options, if you go into a certain, you are teaching
in a certain underprivileged population, you'll have opportunities like if you have the Perkins
loan, you'll actually be given the chance to have those loans forgiven. Richard: Okay,
keep those questions coming Here's one from Alma: "Can one keep applying for scholarships
and awards every year?" Saying, you know, I got that one last year, let me try for something
else this year, and some additional stuff. Can you keep doing that? Tim: Definitely.
You can continue applying. And even if you apply for one one year and you don't receive,
apply the next year if you can. Now keep in mind that some scholarships have certain criteria
that you have to be a freshman or a sophomore or a junior. So there may be some that you
cannot apply for continuously. But definitely if they're advertising, they're looking for
students, apply. You just never know if you're going to receive. Gloria: And that is part
of being a consumer educator. If you're getting the financial award from a school, you want
to find out that if they've offered a scholarship, particularly an institutional aid, you want
to find out if that scholarship is renewable each year. Because you want to know if your
award amount could potentially remain the same, increase or decrease the following year.
Richard: Well now, here's a family situation that does occur. My daughter's father and
I got divorced several years ago. We both remarried. Whose information do we report
on FAFSA? Gloria: Great question. Tim: And actually, that would be one right there where
I'd definitely look at the instructions on FAFSA. Really what the FAFSA defines is that
whichever parent is providing the greater support, which they would define as 51%, so
of your two biological parents, which parent are you receiving 51% of the support from,
that would be the parent whose information you would report, Now given the fact that
you said that they're remarried, you would actually have to give the information for
the stepparent. So, if for example you're using your mother's information and she's
remarried, you'll also need to report your stepfather's information on the FAFSA form
and that sometimes gets tricky, because they don't understand, but that's actually the
way the federal government has written the regulation. Gloria: Tim, for clarification
does that also include which parent you've lived with for more than half of the year,
or just only the custodial parent, or... Tim: Well really the way the instructions are is
whichever parent gives 51% of the support. So in most cases, we tend to default to who
you are living with. That is in most cases what we would recommend to the student and
the parent. But it doesn't always happen that way. Richard: Blended families are a reality
today, right? Here's a question: "When will we here if we receive a financial award or
loan?" How does that process work in terms of getting notification? Tim: Most schools
will try to send financial aid awards in early to mid March. A lot of time what happens is
we're really dependent on the federal and state government telling us what funds are
available. For example the federal Pell grant, usually they tell us by February 1, but recently
they have told us that due to the fact that there is no federal budget, that they're going
to give us an estimate but they may not actually have anything official until later in March
or April. So the tough thing is that schools will try to get that information as soon as
possible, but in many times schools may be waiting on the federal and state government
to give more guidance on various grants as well. So you know, schools will try as soon
as possible, probably not much later than April. But if you're concerned and worried,
then definitely you want to check with the school. Because it will vary from school to
school. Richard: I've got to tell you, I've known students who bite off all their fingernails
waiting for the answer. Gloria: And the key thing is to not just wait for the answer.
Some students and parents will never call or find out any information if they've never
received an award letter. You do want to contact the financial aid administration office. They'll
likely have an advisor that's assigned to you. And if you want to find out if everything
that you need is in that office because the financial aid administrator won't process
an application for an award letter if there's missing information. You may find that you've
actually been flagged for verification and they're waiting on you to send additional
information. This is a big step that students and parents often miss and know that you will
never get an award letter until that information is received. The other key thing is to actually
make sure that you apply to a school. Often we have students who apply for financial aid,
they put a school in the financial aid application, but they've never actually submitted an application
for enrollment. Award letters go to students who have applied and have been admitted to
a school, so they go hand-in-hand. You must do both. That's very important. Richard: That's
very important, yep. Hey guys, what is a a MAP grant? M-A-P? And when do we apply for
it? Tim: The MAP grant is actually the state of Illinois' monetary award program. Which
is actually their largest program; rewards the neediest students in the state of Illinois
so the main thing is actually by you filling out the federal FAFSA, you actually are applying
for the MAP grant at the same time. The state of Illinois uses that federal application
as their application. So there's not an additional application. But get that FAFSA form in as
soon as possible. Because like I said, they go by that. And this last year, if you pull
up a FAFSA form on April 19, you are considered eligible. If you fill it out on April 20,
you are considered ineligible. So you might have cost yourself close to $5,000. So you
want to get the FAFSA form in as soon as possible. Richard: Okay, we've got time for just a couple
more questions here. When we're offered a student or parent loan in our financial aid
award, how do we know which bank we should use? Tim: And that's actually, the answer
to that would have been different about two years ago. What recently happened as of July
1, 2010, at this point all the federal loans go through the Department of Education at
this point. For example, Unity Bank and Wells Fargo and Chase used to be able to lend student
and parent loans federally. They are no longer eligible to do this. So actually at this point
all the federal-related loans actually go through the federal government. And the schools
will actually tell you the process for doing that. It is actually very streamlined; it
works very smoothly. So, it's from one source and the school will tell you waht to do. Richard:
Well here's a final question. It's a good one. "If we receive a financial aid award
and it's not what we expected or can afford, can we ask the college to re-evaluate?" Tim:
This kind of goes back to a previous question where the mother was retiring and the situation
was changing You know, obviously if there's something that's changing you can always go
back to the school and give them that information. Now, if you receive a financial aid award
and there's really nothing changing in your situation. More or less, you're saying that
you just can't afford it you can definitely let the school know that you probably can't
afford it. Very few schools will probably change the award. Most schools have to have
something documented, a change in income, a change in assets to change an award. Now
in saying that, there are some private schools - it's very rare for a public institution
- but there are some private schools that if you go to them and say you know, I need
more money to attend, they may be able to re-evaluate your award and give you some additional
grant money. But it's on a case-by-case. Some schools do it and some schools do it. And
some schools are actually very blatant and put on their website that if you want, we
will review it, and we will reward you more money. So it's on a case-by-case. But never
expect it, it doesn't hurt to ask the question. Richard: We're just about out of time. Did
you have something more to say? Gloria: I just wanted to quickly say, that's why it's
important for you to do those financial need analysis early. Use the EFC calculator to
determine what your potential aid eligibility can be. Because if the school is going to
be unaffordable, you may need to look for a more affordable choice that offers the same
options that you were looking at at that first college.