Monday, September 9, 2013

Interview with a Financial Aid Rep-20 Questions Answered!!

Today we welcome our guest, Financial Aid guru and former TRIO SSS Advisor Shannon:

1.       What is the most frequent question/problem you see on a day to day basis?


a.       Students who don’t realize that dropping a course or withdrawing from a course affects their financial aid. NEVER do anything to your schedule without first checking with your TRiO advisor, and then together, going to financial aid. Too many students end up owing part of their aid BACK to the college because they didn’t know that, federally, there are times were when someone withdraws or drops, we have to adjust the aid you’re getting, and then give part of it back to the government. This could create a balance owed for you, and if you can’t pay it, you have an unpaid balance, and can’t register for the next term.

b.      Withdrawing from a course could also put you on warning or suspension. So again, before you do anything TALK TO YOUR TRIO ADVISOR. I cannot stress that enough. They get paid to help you make good decisions, so let them help you!


2.       What would be three key pieces of advice for students and parents about financial aid?


a.       Know your business: Your life is exactly that: YOUR LIFE. Don’t assume everything will work itself, because many times, there is a hang up you didn’t realize was there, and it could (and many times does) affect your ability to get aid. Be aware of your own aid package, and check your Anoka-Ramsey email, because if the Financial Aid Office needs stuff from you, that’s where they’re going to email it.

b.      Check in with your FA office at least once a year: Even if’s just to stop by and say “hi, just checking I’m all good, and nothing is missing”. Financial aid is ALWAYS changing, so unless you work for that office, don’t ever assume you know what’s going on.

c.       Be nice to the people at the window: I’ve had my fair share of cranky financial aid people, so I know how it goes, but remember…. you get more bees with honey. Meaning, if you ever need someone to help you out, they’re more likely to consider you a priority among many if you’re nice and respectful.


3.       Once I’ve done the FAFSA, I don’t have to do it every year….right?


a.       Wrong!! You MUST do the FAFSA EVERY year that you’re enrolled in school if you want financial aid. TRiO sends emails every year when it’s “that time”, so again, check your school email! The reason you have to do it every year? Because life changes. You or your family may experience a job loss, and you may be eligible for more money.


4.       Who sets the rules about financial aid?


a.       Nine times out of ten, the government sets the rules, not the school. The school may have their own policies or procedures about how to turn in documents to their office, or what forms you need to fill out to get your aid, but more times than not, our hands are tied. We handle A LOT of money; millions of dollars a year. With that kind of money, the government is going to place A LOT of rules on us in how we should be handling it. So, if there is something that annoys you about financial aid, try not to blame the messenger. We’re doing the best we can.

An example of one of the crazy government rules we have to follow? If you get more federal aid than your bill and you get a check for the extra, if you don’t cash it after 180 days, we HAVE to return it to the government. We can’t let it just sit in space.


5.       What should a student/parent do if their financial status changes in the middle of a year or semester (loses job, etc.)?

a.       Contact the Financial Aid office. There is this thing called a Special Circumstances Application, where you petition your award letter be potentially adjusted to reflect your new income. A lot of times this is a timing thing, so they may not be able to do anything right away, but ask what your office’s rules are concerning how to petition.


6.       Should we take out all the loans available? Do we have to?


a.       You should only be taking out loans for what we in my world call “qualifying education expenses”. This means tuition, fees, books, living expenses (like rent and food), and even child care. However, and this is a big HOWEVER, don’t max out your loans if you don’t absolutely, positively have to. This money isn’t free (obviously), and although the amounts you’re borrowing look manageable now, they add up, FAST. Trust me. I took MANY a trip to Florida in grad school, and those trips are the reasons why at age 29 I still go to the $3 movie theater.


7.       If I fill out the FAFSA, I am applying for loans. Correct?


a.       Sort of. The first “A” in FAFSA does stand for “application”, but there are a few more steps you need to do to actually request and take out the loans. You must complete the Loan Entrance Counseling and fill out the Master Promissory Note (MPN). The MPN is your way of saying “yes, I agree to pay these loans, and here are two names of people, who if I skip the country, know where you can find me”. So, you haven't taken out a loan until you have finished the required paperwork.


b.      At ARCC, you don’t need to do these two things EVERY year (just the first), but you do need to do a third step each year, which is to log onto your e-services and request a specific dollar amount of loans you’d like for the academic year (both fall and spring). Have your TRiO advisor help you if you get lost!


8.       Why is it a good idea to pay interest on my loans while I’m still in school?


a.       One word: capitalization. What this means is, the unsubsidized loans, those that accumulate interest WHILE in school, will, at the very end of school, add on to the total you took out in loans. Then that NEW total, will incur interest. So you’re accumulating (adding) interest on your interest.


9.       What is a subsidized loan?


a.       A subsidized loan is a loan given to you by the government, where they pay the interest on the loan while you are attending school. NOTE: You MUST be enrolled at least half-time, which is 6 credits or more. This is not an interest free loan; you DO pay interest on the loan after you’re done with school.


10.   Why do they do loans a semester at a time?

a.       We give aid to students one semester at a time because due to federal regulations, we can only award students aid if they’re enrolled. What does that mean exactly? We can’t give you aid for spring in the fall, because we can’t verify that you are actually going to be enrolled in spring. That would be super illegal of us, to give you money for something you haven’t started.


11.   Why should I do my FAFSA ASAP?

a.       You should do your FAFSA ASAP because there may be pockets of money you are eligible to receive that are a first come, first serve basis. At ARCC, they have funds from the government called the SEOG grant. That is federal money that goes to the neediest of students, and once it’s been awarded and runs out, there is no more.


12.   Can I get financial aid for summer semester? (Note: Summer is considered part of the same school year as the previous fall and spring.
Thus, Fall 2013-Spring 2014-Summer 2014 is one financial aid year.)

a.       Summer semester aid is such a pain in the butt. When I was a TRiO advisor I HATED that the FA office couldn’t simply tell me if a student had summer aid or not. The answer was always “we’ll have to see”. Now that I work in a financial aid office, I kind of get why they were so hesitant.

b.      You can only receive aid in the summer if you haven’t used all your aid over the school year. Each year you have a fixed amount of aid that can be used. If you use it all over fall and spring, most times, there isn’t any left for summer. Even loans? Yes, even loans. If you use your entire eligibility over fall and spring, you don’t automatically get more for summer. Summer is typically an out of pocket expense UNLESS you were part time or ¾ time during the year, didn’t use all your aid, and didn’t max out your loans. And even then, you need to be in at least 6 credits to get loans for the summer. ALWAYS talk to your TRiO advisor to see if taking two classes over the summer is a good idea. Summer classes are accelerated, which means they move fast, and just because you have aid to do it, doesn’t mean it would be smart for you in other ways.


13.   Are the loans offered through FAFSA better than just going to a bank? Why or why not?

a.       My opinion; Stafford Loans (the loans given to you through the FAFSA) tend to be a better deal than a private loan from the bank. They may have lower interest rates (may not, you’d have to check that out for yourself), but the loans through the government have some pretty flexible repayment options. Meaning? You can choose a 10 year repayment, a 20 year repayment, you may qualify for income-based repayment (if you don’t have THE job right out of college and don’t make a lot just yet), etc. Ask your TRiO advisor for more details on the different repayment options.


14.   Should I consolidate my loans or not? Why?

a.       Consolidating your loans means you take all the loans you took out and combine them into one lump sum, and make one payment on your loans a month (as opposed to potentially a few different payments to different lenders). So that is the good part of consolidation; less things to worry about as your loans are all in one place, with one servicer.

b.      The only real downside is if you had different interest rates on your loans. So if some of your loans only had a 4% interest rate and some had 6.8%, they’ll average the rates on ALL the loans and that will be your new interest rate on all your consolidated loans. You may lose out on a lower interest rate on some of your loans to have them all in one place.

c.       For me? I consolidated. I didn’t have very many with a low interest rate, and I wanted them all in one place. My co-worker didn’t consolidate because she had quite a few loans with a lower interest rate, so it was financially better for her to NOT do it.

*If you consolidate, be sure to be aware of the repayment schedule: Consolidation might cause the loan(s) to be in repayment right away instead of being delayed.


15.   Why is it called ‘financial aid’ when some of it is in the form of loans?

a.       Because without the loans, you probably wouldn’t be able to go to school. So the loans, even though you have to pay them back, still aided you in being able to go to school at all.


16.   What is a grant?

a.       A grant is free money given to you based on most likely economic need that does not need to be returned. Disclaimed: It’s only free if you actually go to class. If you get a grant, and then fail out of your courses, odds are you’re going to have to pay a portion back to the government. So yes, grants are GREAT, but know that with free money, it’s not necessarily strings-free. You have to perform in your classes and do well to keep getting the grants.


17.   I am not 24, but I have no contact with my parents and live on my own. Am I considered independent?

a.       No, you’re not. Unfortunately, not speaking to your parents and even supporting yourself isn’t enough to make you independent on the FAFSA. There is a way to petition this though. You would be seeking to be approved for something called a “Dependency Override”. Each school is a bit different in how they work this, but generally you’ll need to write a personal statement explaining the situation and then have TWO legit references attesting to the fact that you have been supporting yourself for a while and do not have communication with your family. These references have to be legit, meaning, a school official or a social worker. It can’t be your friend who knows you don’t talk to them. It may be a family member (like an Aunt or Uncle), but again, that second reference needs to be an Official of some department somewhere.


18.   Do I just say I want a work-study job and they give me one?

a.       No. You may be eligible to receive work study money, but unfortunately there are not enough jobs on campus for every person who wants a job, so you must apply to an open position like you would any other job. Talk to your TRiO advisor about this: they can help you search open positions as well as help you get a resume together.


19.   Explain what’s wrong with this attitude: “I’m just going to take out all these loans, they won’t be due until I’m done with school and I’ll worry about it then.” Related: "They offered more than I asked for! Sweet! I’ll take it all!"

a.       Ugh, BAD IDEA. Just because you have loans, doesn’t mean you should take them. It’s not free money, and you do have to pay it back. And my guess is you won’t be making much straight out of college. And even if you are, having tons of loans really makes your paycheck seem much smaller. Loans can come to bite you in the butt, meaning it may have you putting off getting married, buying a home, traveling, etc. It seems like a great idea at the time, but trust me, from personal experience, having too many loans for no good reason SUCKS. My loan payments are more than my monthly budget for my cell phone, utilities, and cable/internet COMBINED.


20.   Does my family have to contribute their EFC as shown?

a.       No, they don’t. An EFC is an expected family contribution. Meaning, you did your FAFSA, and the government comes back and says “Given what income you reported on the FAFSA, we think you and your family should be able to pay X amount towards your schooling”. Most of the time, the EFC is more than you actually have, and it’s annoying. But that EFC is what they use to award you stuff like the Pell Grant and Minnesota State Grant. It’s an expected family contribution, not a required family contribution.

Thanks, Shannon, for all the great advice!

Check out these calculators to help you see how much your loans will 'cost' you:

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