Financial Aid FAQ's

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 need-based aid?

Submit a FAFSA. To indicate interest in student employment, student loans and parent 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 they co-sign your loan. In general you and you alone are responsible for

repaying your educational loans.

You do not need to get your parents to cosign your federal student loans, even if you are under age

18, as the 'defense of infancy' does not apply to federal student loans. (The defense of infancy

presumes that a minor is not able to enter into contracts, and considers any such contract to be void.

There is an explicit exemption to this principle in the Higher Education Act with regard to federal

student loans.) However, lenders may require a cosigner on private student loans if your credit history

is insufficient or if you are underage. In fact, many private student loan programs are not available to

students under age 18 because of the defense of infancy.

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 servicer provides an electronic payment 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 your parents are under no obligation to repay

your loans. If they forget to pay the bill on time or decide to cancel the electronic payment 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.

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 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 self-help level. For example, at MIT the outside scholarship is first applied to

reducing the self-help level, and only when the scholarship exceeds self-help does it replace

institutional grants. At other universities outside scholarships are used to replace loans instead of

grants.

10. What are GATE loans, and why doesn't my university participate?

GATE loans is a nonprofit private loan program (Guaranteed Access to Education) offered through

participating schools in conjunction with Bank of America and the National Collegiate Trust (NCT).

There is a minimal credit check (no FICO score or cosigner requirement) and schools can recommend

whatever loan amount they'd like the student to receive. The interest rates range from LIBOR + 2.35%

to LIBOR + 8.85%, with fees of 0% to 9%. The loan term is 13 to 20 years.

If this program is so wonderful -- no loan limit, no credit check, low interest rate -- why don't more

schools participate? There are several reasons why a university might not want to participate in this

program:

There is some risk-sharing by the schools. As a result, the program will be most attractive to schools

with a low default rate.

There are no federal guidelines or regulations governing this loan program.

Membership is not open to two-year colleges.

Universities that are interested in participating in the GATE loan program should call 1-800-895-GATE

(4283).

11. Where can I get information about Federal student financial aid?

Call the Federal Student Aid Information Center (FSAIC) at 1-800-4-FED-AID (1-800-433-3243) or 1-

800-730-8913 (if hearing impaired) and ask for a free copy of The Student Guide: Financial Aid from

the US Department of Education. This toll free hotline is run by the US Department of Education and

can answer questions about federal and state student aid programs and applications. You can also

write to

Federal Student Aid Information Center PO Box 84 Washington, DC 20044

12. Are work-study earnings taxable?

The money you earn from Federal Work-Study is generally subject to federal and state income tax, but

exempt from FICA taxes (provided you are enrolled full time and work less than half-time). Federal

Work-Study earnings during the calendar year should be included in the totals for AGI and Worksheet

C on the FAFSA. Work-study earnings should only be included in Worksheet C when they represent

financial aid to the student, since the answer to this question is used as an exclusion from taxed

income. The student should also be careful to report amounts based on the calendar year, not the

school year.

13. 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, defined as per Title IV regulations, to sign

promissory notes for their own Federal student loans. As such, student loans represent one of the few

exceptions to the so-called "defense of infancy". The specific citation is section 484A(b)(2) of the

Higher Education Act of 1965 (20 USC 1091a(b)(2)), and applies to Stafford, PLUS and Consolidation

Loans. It does not appear to apply to Perkins and Direct Loans, although it was clearly the intent of

Congress that it should.

Several states have also passed similar laws that consider minors to be competent to enter into a

contract for an education loan. This extends similar protection to private and non-federal loans. All

private education loans require a cosigner when the student is under the age of majority, just to be

safe.

FAFSA Questions

1. Where can I get a copy of the FAFSA?

You can ask your guidance counselor for a copy. You can also get the FAFSA from the financial aid

office at a local college, your local public library, or by calling 1-800-4-FED-AID. The online version of

the form is available at http://www.fafsa.ed.gov.

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. (See DCL GEN-

95-21.)

3. How soon after January 1 should the FAFSA form be sent in? Is it better to wait until the income tax

forms have been completed?

Send in the form 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. If you wait too

long, you might miss the deadline for state aid. Most states require the FAFSA to be submitted by

March 1, and some even as early as early or mid-February.

4. I sent in my FAFSA over four weeks ago but haven't heard anything. What should I do?

If you haven't received a Student Aid Report (SAR), call the Federal Student Aid Information Center at

1-800-4-FED-AID (toll free) or 1-319-337-5665. You must provide them with your Social Security

number and date of birth as verification.

You can also write to

Federal Student Aid Programs PO Box 4038 Washington, DC 52243-4038

to find out whether your FAFSA has been processed or to request a duplicate copy of your SAR.

5. I was born on January 1, when I will be 24 years old. Can I check Yes in the answer to the FAFSA

question "Were you born before January 1, ..." to qualify as an independent student?

The official answer is no. If you check yes, your SAR will be flagged for verification. However, most

financial aid administrators would use professional judgment to override the default dependency

determination for a student born on January 1 who also demonstrates financial self-sufficiency.

6. What do those acronyms on the Student Aid Report (SAR) mean?

The acronyms on the bottom of the SAR represent intermediate results in the need analysis. To fully

understand their meaning, you will need to be familiar with the federal need analysis methodology,

such as is used by the EFC Estimator. The meanings of the acronyms are as follows:

EFC Expected Family Contribution

TI Total Income

ATI Allowances Against Total Income

STX State and Other Tax Allowance

EA Employment Allowance

IPA Income Protection Allowance

AI

CAI Contribution from Available Income

(Independent Student)

DNW Discretionary Net Worth

APA Education Savings and Asset Protection

Allowance

PCA Parents' Contribution from Assets

AAI Adjusted Available Income

TPC Total Parents' Contribution

TSC Total Student's Contribution

PC Parents' Contribution

SIC Dependent Student's Income Contribution

SCA Dependent Student's Contribution from

Assets

If an asterisk appears next to the EFC figure, the student has been selected for verification. The

asterisk is followed by a code that explains the reason why the student was selected for verification.

The letter explains the reason for selection, and the number indicates the priority, with code 1 the

highest priority and code 25 the lowest priority (although there are higher codes).

For additional details about SARs and ISIRs, please see the Guide to 1997-98 SARs and ISIRs.

7. I qualify for the Simplified Needs Test. Should I fill out Section G anyway?

Yes. Some states and most private colleges require the asset information in Section G to compute

their own financial aid awards. Including this information will not affect your eligibility for federal

financial aid (it is disregarded by the Federal Need Analysis Methodology if you qualify for the

Simplified Needs Test). Even if none of the schools require the information, you should include it

anyway, just in case.

Home Schooling and Financial Aid

1. Are there any programs that provide student financial assistance to homeschooled children?

Homeschooled students are eligible for federal student aid for college if they have "completed a

secondary school education in a home school setting that is treated as a home school or private

school under State law" (Section 484(d)(3) of the Higher Education Act of 1965). Homeschooled

students have not been required to take the GED or take an ability-to-benefit test since the Higher

Education Amendments of 1998. High school dropouts must take a GED exam or an ability-to-benefit

test, but students who have completed a home schooled secondary education that satisfies the

requirements of state law do not. For additional information, see Federal Requirements for

Homeschoolers Seeking College Admission and Financial Aid, Home School Legal Defense

Association (HSLDA), May 2003.

Many private scholarships are open to homeschooled students. Some scholarships, however, require

a high school diploma or GED. If a scholarship requires a high school diploma or GED, ask for a

clarification or exception before applying. If you encounter resistance, it can help to point out that in

2005 the winner of the Siemens Westinghouse Competition in Math, Science and Technology's

$100,000 scholarship was a 16-year-old homeschooled student.

There aren't many scholarships specifically targeted at homeschooled students, other than those

sponsored by the Home School Foundation.

Divorce and Financial Aid

An entire section of FinAid is devoted to the topic of Divorce and Financial Aid. It discusses which

parent is responsible for completing the FAFSA, the obligations of non-custodial parents to pay for

college, college support agreements, the obligations of step-parents, and the ability of non-custodial

parents to take advantage of the various tax benefits for education.

Bankruptcy and Financial Aid

An entire section of FinAid is devoted to the topic of Bankruptcy and Financial Aid. It discusses both

whether student loans can be discharged by bankruptcy, as well as the impact of a bankruptcy on

eligibility for student aid.

Misc. and Unusual Questions

1. I have heard about a scholarship for left-handed students. Can you tell me more information about

it?

This question comes up frequently, because the popular press and scholarship matching services like

to use it as an example of unusual scholarships.

The only scholarship for left-handed students is the Frederick and Mary F. Beckley Scholarship of up

to $1,000. This scholarship is awarded to left-handed students who will be attending Juniata College.

This scholarship is not available to students who aren't enrolled at Juniata College. For more

information, write to Office of Student Financial Planning, Juniata College, 1700 Moore Street,

Huntington, PA 16652.

To find other scholarships for students with specific interests or abilities, see the profile-based aid

section. FinAid also has a page devoted to unusual scholarships.

2. What colleges have cut their tuition rates instead of increasing them?

A handful of schools have instituted one-time tuition rate cuts, temporary tuition freezes, or level tuition

rates (same tuition rate all four years). A list of these colleges can be found in the Tuition Freezes,

Tuition Cuts and Level Tuition section of FinAid.

3. Which colleges have committed to providing free tuition or no loans in the aid package for low

income students?

A handful of schools have instituted policies that ensure that low income students have no loans in

their financial aid packages. See No Loans for Low Income Students for additional information.

4. Is financial aid available for illegal aliens and undocumented students?

See Financial Aid and Scholarships for Undocumented Students.

5. Why doesn't the FAFSA include line 58 of IRS Form 1040 (self employment tax) with taxes paid?

Line 27 of IRS Form 1040 subtracts one-half of self-employment taxes from AGI, corresponding to the

employer's share of FICA taxes. The employee share of FICA taxes is calculated automatically by the

need analysis formula based on income earned from work. If you include line 58 in the total for taxes

paid, contrary to the FAFSA instructions, you are double counting the self-employment taxes.

Other helpful Financial Aid, Scholarship & College Application resources include:

www.fastweb.com – Helps students find scholarships, colleges and jobs.

www.studentaid.ed.gov – Sponsored by the federal Department of Education. Contains information on

government loan programs and a download for the FAFSA form (Free Application for Federal Student

Aid).

www.famemaine.com – Sponsored by the Finance Authority of Maine. Contains information on loans,

scholarships and college planning.

<<<more links on next page>>>

www.mainecf.org – Sponsored by the Maine Community Foundation. Contains information on

scholarships administered by MCF for Maine students.

www.finaid.org – Sponsored by a non-profit organization that is dedicated to providing information on

college financing. Contains information on college selection, on-line application forms, scholarships

and loans, and scholarship search.

www.financialaid.wayne.edu – Sponsored by Wayne State University. Click on the “links” icon at the

bottom of the page for more great links to other college planning and college financing websites.

www.collegeboard.com – Sponsored by the College Board, the folks who bring you the SATs.

Contains information on preparing for SATs, registration and test administration information and

college planning information.

www.petersons.com – Sponsored by Peterson’s the folks who produce the college guidebook.

Contains information on financial aid, college profiles/college ranking, summer jobs and internships

and preparing for college entrance exams.

www.nacacnet.org – Sponsored by the National Association for College Admission Counseling, a

professional association for high school guidance counselors and college admission officers. Contains

tips on essay writing, how to get the most from your guidance counselor, and information on college

fairs.

www.princetonreview.com – On-line test preparation, fellowships, grants, information/services for

college preparation.

www.collegenet.com – Complete on-line guide to colleges, universities and financial aid.

www.makingcollegecount.com – Information from high school to college and beyond.