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It is a daunting task to analyze, interpret, and implement federal financial aid regulations these days. Hopefully the information I provide will help you understand and locate the financial aid you need to earn your online degree.
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Darn it! Luckily, I noticed that the eLearners blog mentioned the Department of Education's article. They stole my thunder! Just kidding. This expands on that some, but also throws in my two cents. The U.S. Department of Education has completed a study that finds that online learning has its definite advantages. Now, I have to throw in the caveat that the Department of Education included only a small number of independent studies that met a strict criteria (not defined). The winner of the study appears to be "blended learning", where online learning and face-to-face instruction are combined. The positive results appear to be relevant to all disciplines, graduate and undergraduate. However, the study does identify time as a chief element of the success of online learning. Even though the study says online tests don't enhance learning, learner activity and self-reflection with online learning does impact what the student learns. Individuality is strengthened through online learning, as well as flexibility, visualization, and experiential learning. While the study appears to support online learning, it's important to remember that distance education isn't easy. And it requires adequate technology. I received my Master's Degree in Instructional Design and Technology (IDT), which was mostly online coursework. It was nothing to spend 30 hours per week on the Internet, posting messages and submitting reports. However, I loved the fact that I could pursue my education at my own pace, even though I had deadlines. The hardest part was participating in live discussion forums because it was difficult to coordinate everyone's schedules. I am one of those people who challenge the Department's findings where "blended learning" is the best form of education. I believe that online learning is just as successful. What's amazing is that online learning has been around for 20+ years, but has only gained popularity in the last 10 years. Where else can soldiers, students abroad, or men/women working full time with families, etc. get an education? I know I couldn't take time off of work to attend a classroom for hours a week to get my degree. Look for online learning to become the forefront of education. With regard to financial aid, the Department of Education has changed their tune about how online courses are treated. Schools have the option of treating online classes as a "regular" course, but it's up to the individual school.
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Schools will often establish their own policy on what's considered an average amount of hours that undergraduate students take (graduate level has different levels). For example, my school lists tuition and fees on students' award letters based on an average of 15 semester hours of tuition and fees per semester, even though 12 hours is considered full time. That's because the average amount of hours our students take to advance class level is 15 hours per semester. Your school may have a similar policy. However, the Department of Education does define a minimum amount of hours a student takes per term to be considered full time. The minimum depends on the student's program (bachelor's, certificate, etc.). - For semester, trimester, or quarter hours, a student must be enrolled at least 12 semester or 12 quarter hours.
- 24 clock hours per week if the program is on clock hours.
- If courses don't follow any of the above, but instead are a series of courses or seminars, the minimum hours for full time enrollment is equal to 12 semester or quarter hours over a maximum of 18 weeks.
- Some programs award credit hours for courses completed, but the coursework does not follow semester, trimester, quarter, or clock hours. These courses usually fluctuate depending on when the student begins a revolving program. It's a little confusing, but minimum full time enrollment is calculated by taking the number of weeks of instruction in the term divided by the number of weeks of instruction in the academic year, multiplied by the number of credit hours in the academic year. Example:
- 14 weeks of instruction in the term
- 28 weeks of instruction in the academic year
- 32 credit hours in the academic year
- 14 divided by 28 X 32 = 16 minimum hours to be full time
- Correspondence coursework. This is really tricky because schools may or may not consider online coursework a correspondence course. For years, online coursework was considered correspondence coursework and nothing more than a half-time status could ever be considered. However, for 2008-09, the Department of Education began allowing schools to consider online courses as regular courses, but not all schools may have chosen to do this.
Check with your school to determine how online courses are treated.
Nothing is easy! And schools vary as much as individual programs. It's always a good idea to check with your financial aid office to determine what's considered full time, if you are expecting financial aid as a full time student.
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Determing the Expected Family Contribution and federal financial aid eligibility through the FASFA is complicated process. So many times a parent will call me and say something like, "we make $62,000 a year, so what do we qualify for?" Sadly, it isn't that easy. Our government has nearly perfected a confusing and highly technical calculation, called the Federal Formula, to determine what students qualify for in financial aid. If your financial aid administrator had to perform these calculations by hand, it would be much longer before you'd ever receive an award letter. Luckily, schools have the electronic resources to make these calculations. So what is in the formula that you don't see on the FAFSA? I've listed some behind-the-scenes allowances that are used in the formula: - State and other Tax Allowance. This allowance is a percentage of the parents' total income and calculates the approximate amount of state taxes that were paid in state taxes for that calendar year. It's important that your parents' state of legal residence is reported accurately, as changing their state of legal residence could change your financial aid eligibility.
- Parent's Social Security Tax Allowance. The Federal Formula will exclude a certain portion of parents income based on their age. It used to be that student's reported their parents' age on the FAFSA, but that changed a couple of years ago and now you report the year they were born. Historically, the older the parent, the more income is protected.
- Income Protection Allowance. The government has created a formula that protects a certain amount of income that is used for daily living expenses, and is based on your household size and number in college. This income is not used in determining financial aid eligibility. The formula protects the following percentages of income:
- 30% for food
- 22% for housing
- 9% for transportation
- 16% for clothing and personal care
- 11% for medical
- 12% for family consumption
- This is a good place to mention that school's cannot look at your family's mortgage and home costs because it's already been considered with the 22% for housing. With medical, if your family paid large medical costs in the tax year of the FAFSA., the school may be able to make an adjustment to your financial aid eligibility if the amount paid exceeded the 11% already figured in. You will need to contact your financial aid office to see if a review is warranted.
- Employment Expense Allowance. This is an additional allowance for students with two-parent or single parent households where the parents work. The additional allowance takes into consideration extra expenses for housekeeping services, transportation, clothing, and food away from home. Basically, this allowance considers the fact that additional expenses are required for parents working outside the home.
The same allowances are given to students, although the percentages may vary. The Federal Formula also excludes a percentage of the parent and student assets. This is all probably vague and confusing, as it takes a seasoned financial aid professional to understand it all, but my reason for this post is provide you with some insight on how your financial aid eligibility is calculated. Believe me, I wish it were as easy as taking the family income and looking at a chart!
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This post is written for those of you who are required to file the FAFSA as a depedendent student. In other words, you must report your parents' information on the FAFSA. It is not uncommon for your parents to have a change in marital status, either before or after you have filed the FAFSA. Let me first say, your parents are your biological or parent through adoption and the stepparent if your parent is remarried. The stepparent must be used even if (s)he is not supporting you financially. However, the same rules apply to independent students. It's just that the split of information is between student and spouse. Divorce or separation: - If your parents are divorced before you file the FAFSA, you will use the parent who you lived with the most out of the last 12 months prior to completing the FAFSA. If you didn't live with either parent, you then calculate to determine who provided over 50% of your support the last time you lived with a parent. Your parents may have filed a joint tax return for the year you are required to report tax information on the FAFSA. If this is the case, separate your parents' incomes and report on the FAFSA only the parent's tax information with whom you lived. You may be required to submit tax information to your school to verify the one parent's figures.
- If your parents divorce after you file the FASFA, contact your financial aid office to make the necessary changes to use only the parent's information with whom you lived the last 12 months before you filed the FAFSA. Your school will need to collect the necessary documents to verify your one parent's status, which may include a copy of divorce decree and tax returns.
Separation (legal or otherwise): - If your parents separate, it's not necessary that it be done legally. If your parents have established separate residences, they are considered separated.
- In some cases, parents are legally separated through court documents, but continue to live in the same household. If this is the case, your parents are still considered separated and you use only one parent's information on the FAFSA. You will need to determine which parent provides over 50% of your support.
- The same way of reporting parent information applies as the explanation of divorced parents above.
Common-law marriage: - Some states recognize common-law marriage, while others do not.
- If your state does allow common-law marriage, your parents need to complete the FAFSA as married.
- Termination of their marriage or living situations applies as outlined in the divorced parents section.
- If your state does not allow common-law marriage but you live with them equally, you will need to determine which parent provides over 50% of your support (could be based on each parent's income). You will use only that parent's information on the FAFSA, and divorce or separation will not apply.
Death of a parent; - First of all, I hope none of you experience a death of a parent (or spouse). I know how hard it can be, as my children lost their father to cancer this January.
- If you lose a parent, take the time you need, but contact your financial aid office to let them know of the change in your parents' status. Your school can make corrections to your FAFSA to remove that parent's information and recalculate financial aid eligibility with the surviving parent's tax information.
- You will probably be asked to provide the tax return and a copy of the death certificate.
Any one of these situations can dramatically affect your financial aid, so don't be embarrassed or afraid to contact your financial aid office. Everything that is submitted to your financial aid administrator is confidential.Timing is everything, so be sure to report any changes during the academic year for which you are attending and have filed the FAFSA. If you wait too long, it may be too late to make any changes.
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Changes in federal regulations for financial aid almost always begin July 1, and this year is no different. I've posted about many of these situations in the past, but I want to remind you of the federal changes that will take place next month. - Lower interest rates!
- Interest rates on federal subsidized Stafford Loans will drop from 6 percent to 5.6 percent.
- Borrowers who have loans issued prior to July 1, 2006, will see a 1.7 percent point reduction.
- You will be paying less in interest when you go into repayment.
- The current fees taken out of your student loan disbursement is 2 percent. Beginning July 1, loan disbursements will have only 1.5 percent taken out for fees. Thus, you will receive more of your loan disbursement.
- New repayment options:
- The new Income-Based Repayment Option will enable students to cap their monthly Stafford loan repayments to no more than 15% of their discretionary (net) income. Keep in mind that discretionary income is based on 150% of the poverty line. And, after 25 years, the balance of your loan will be forgiven. This will greatly benefit low-income salaries. You will need to work with your lender.
- What will end? Students will no longer be able to apply for an economic hardship if their student loan debt is greater than 20% of their monthly income or 220% of the minimum wage rate or poverty line. Boo.
- Children of Soldiers grant is implemented to provide maximum Pell Grant eligibility for a student whose parent or guardian was a member of the Armed Forces and died while serving in Iraq or Afghanistan after 9/11/01. The student has to be under age 24, and a student at the time the parent or guardian died. However, the Department of Education has to work with the Department of Defense to identify these students, and I don't have confidence (sorry) that students will be identified any time soon.
- The Post 9/11 GI Bill takes effect. This is a very detailed program that I won't go into here, but you can get information at the Veterans Administration website.
The most significant of federal changes is definitely the veterans benefits. However, there are changes that will benefit students who take a student loan to pay for college. In addition, the Pell Grant for 2009-10 has been increased to a maximum of $5,350 for eligible students.
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