The Hunt for Student Loans, Grants, and Scholarships Begins

If you plan to attend college for the first time in 2011 or have a family member who will, you’re about to embark on student financial aid season.

If you’re looking for money for college and want to apply for financial assistance, your first stop should be the Free Application for Federal Student Aid, also known as the FAFSA. All federal student loans, federal grants, and other forms of federal student aid are tied to this form.

Federal Student Aid

The FAFSA can be filled out and submitted online at www.fafsa.ed.gov. The FAFSA is available free of charge, and submission is also free. The federal deadline for submitting your FAFSA is June 30.

You don’t need to know which college or university you plan to attend in order to fill out or submit the form, but you will need to refer to your 2010 tax return. If you’re a dependent of your parents, you’ll need to have the 2010 tax return of your custodial parent(s) or the parent who claims you as a deduction, even if this parent doesn’t plan to help you pay for college.

Once you submit your FAFSA, the Department of Education will generate a Student Aid Report (SAR) that summarizes your and your parents’ financial information. You can choose which schools receive your SAR, and you can add schools to this list at any time.

The schools that receive your SAR will analyze your financial information and generate a financial aid package based largely on the school’s cost of attendance and the determination of your ability to pay. (Some schools also offer non-need-based financial aid, which is awarded on the basis of merit rather than on your financial need.)

Federal grant assistance is reserved for low-income and financial needy students. Most students, however, will qualify for federal college loans.

Federal Stafford student loans are available in both need-based and non-need-based versions. Need-based subsidized Stafford loans are reserved for students who demonstrate financial need. Non-need-based unsubsidized Stafford loans are available regardless of financial need. There’s no credit check or co-signer required for Stafford student loans; you take out these loans in your own name.

State Financial Aid

Some states also use the FAFSA to determine your eligibility for state student loan and grant assistance programs. Although the federal deadline for submitting the FAFSA is June 30, many states have earlier filing deadlines, with some falling as early as Feb. 15, 2011.

Other states have no specific application deadlines but award state-funded student aid on a first-come, first-served basis, processing college aid applications only as long as there are still state funds available to distribute.

Parent Loans

The federal government also offers parent loans, known as PLUS loans, for parents who want to help their undergraduate student pay for college.

Although the Education Department doesn’t require you to have filled out a FAFSA in order for your parents to apply for a PLUS loan, many schools will require it. Such a school will not approve or certify an application for a PLUS parent loan until a completed FAFSA form is on file for the student.

As with federal student loans, repayment on federal PLUS loans can be deferred until you, the student, graduate or leave school.

The 1–2–3 of Getting Financial Aid for College
1) Complete Your FAFSA — Carefully

Filling out the FAFSA can be time-consuming, and it requires you to have a good deal of documentation on hand.

Since you’ll be submitting your FAFSA to the federal government, just like a tax return, it’s highly inadvisable to misstate or misrepresent your financial information on the FAFSA in any way. Irregularities in a FAFSA form are flagged and must be corrected before the form can be processed, delaying your financial aid application.

If you’re awarded grants, student loans, or other financial aid based on false or incorrect information that you submitted on the FAFSA, you may be required to repay any over-allocation of financial aid immediately. If the misstatements are determined to be deliberate or egregious, you may be subject to fines and other sanctions.

2) Search for Scholarships

While your FAFSA is being processed, begin hunting for scholarships. Scholarships are available for virtually all types of students in almost every field of study. Some scholarships are need-based, others are merit-based, and some are a combination of both.

Since scholarships provide you with award money that doesn’t need to be repaid, like a student loan, you can think of scholarships as “free money” for college.

Use an online scholarship search engine that keeps an updated database of scholarships and lets you search that database for free. The best online scholarship search sites routinely list millions of scholarship listings with billions of dollars of award money available.

3) Only Use Private Student Loans as a Last Resort

Once you receive your school financial aid package, make sure to take advantage of all your federal and state student aid options before you turn to higher-cost financial options.

Specifically, you should maximize your federal student loans before turning to the non-federal private student loans offered by banks and other for-profit private lenders.

Federal college loans offer fixed interest rates that are generally lower than the variable interest rates offered by private student loans. Federal loans also offer more flexible repayment options than the typical private student loan program. You should only turn to a private college loan when all your other federal and state student loan options have been exhausted.

Edvisors Network / Student Loan Network Holiday Party 2006


Image by Christopher S. Penn
Photos from the Holiday Party at Fleming’s in Boston.

All photos copyright Christopher S. Penn and the Financial Aid Podcast. Licensed under Creative Commons NONCOMMERCIAL no-derivatives by attribution.

New Repayment Break on Student Loans Begins July 1

It’s not an easy time to be graduating from college with student loans. With the unemployment rate soaring toward 10 percent and the average starting salary for college graduates down 2.2 percent this year, student loan borrowers — whose average debt from student loans tops ,000 — are now having an even tougher time affording their student loan payments.

The good news? Starting July 1, 2009, graduates with federal college loans may be able to qualify for a new government program that can reduce the monthly payments on their student loans based on their income.

Income-Based Repayment for Federal Student Loans

The income-based repayment program, created by Congress in 2007 as part of the College Cost Reduction and Access Act, will cap a borrower’s monthly student loan payments at a percentage of her or his income, when the borrower’s income is at least 50 percent higher than the current federal poverty line for the borrower’s family size.

These income-based student loan payments will be calculated as 15 percent of the amount by which a borrower’s adjusted gross income exceeds 150 percent of the poverty line.

(For individuals, the 2009 poverty line is ,830 in all states except Alaska and Hawaii. The complete federal poverty guidelines for 2009are available on the website of the U.S. Department of Health and Human Services.)

For example: 150 percent of the current individual poverty line of ,830 is ,245. If a borrower’s annual adjusted gross income is ,000, the monthly payments on her or his eligible student loans would be capped at 9.44 — 15 percent of the difference between ,000 and ,245, divided by 12 months. If a borrower’s annual adjusted gross income is ,000, the monthly payments on any eligible student loans would be capped at 6.94 (,000 – ,245, multiplied by 15 percent, divided by 12).

Income-based monthly payments will be adjusted annually, based on a borrower’s federal tax return from the previous year. As a borrower’s income rises, the income-based repayment cap will also go up. If the income-based repayment cap reaches a level higher than what a borrower’s monthly payment would be under a standard 10-year student loan repayment plan, the borrower will no longer qualify for income-based repayment for her or his student loans.

Borrowers whose adjusted gross income falls below 150 percent of the poverty threshold won’t be required to make any payments on those student loans that qualify for income-based repayment.

Even if no payments are due, however, interest will continue to accrue on those college loans. Unpaid interest will also accrue if a borrower’s income-based monthly payments aren’t sufficient to cover the full monthly interest on the qualifying college loans. Any accrued unpaid interest will be added to the student loan principal and capitalized when the borrower no longer qualifies for income-based repayment.

Subsidized Interest and Student Loan Forgiveness

For those borrowers who hold subsidized student loans or a federal consolidation loan that included subsidized Stafford loans or Perkins loans, the government will cover any unpaid interest on those subsidized loans (or on that portion of a student loan consolidation that’s comprised of subsidized loans) for the first three years that a borrower is in income-based repayment.

The longest that a borrower can remain on the income-based repayment plan is 25 years. After 25 years of income-based payments, the government will forgive any remaining principal and unpaid interest — although borrowers should note that under current tax law, this forgiven student loan debt would be taxable.

Borrowers who are employed full-time in qualifying jobs in the public service sector may have their remaining student loan debt forgiven after just 10 years in the income-based repayment program, and this forgiveness would be tax-free, thanks to a ruling from the U.S. Treasury last year.

Qualifying for Income-Based Repayment

To find out if you qualify for income-based repayment on your federal college loans, you’ll need to contact your lender and provide information about your financial situation — you’ll need to demonstrate “partial financial hardship,” as defined by federal regulations.

Only federal Stafford and Grad PLUS student loans in good standing, along with consolidations of these college loans, are eligible for income-based repayment. Federal Perkins loans are eligible only if they’ve been included in a federal student loan consolidation. Other college loans are ineligible:

Private student loans. The income-based repayment program applies only to federal student loans. If you’re having problems meeting the monthly payments on your private student loans, you should contact the lenders to see if they’re willing to work out more affordable repayment plans for you. Keep in mind, though, that private student loans typically have less flexible repayment options than federal student loans.
Federal PLUS loans. If your parents took out PLUS parent loans to help you pay for college, they won’t be able to take advantage of income-based repayment on their PLUS loans. Consolidation loans that included PLUS parent loans are also excluded from income-based repayment. Any Grad PLUS loans you took out as a graduate student, however, as well as consolidations of Grad PLUS loans, are eligible.
Defaulted student loans. Your student loans don’t have to be new to be eligible — even long-time graduates may be able to qualify for income-based repayment on college loans taken out years ago. But you can’t be in default on your loans. To qualify for an income-based repayment plan, any federal college loans you have in default will need to be rehabilitated first.

The hostile takeover of the student loan industry by the empire (cough) I mean federal government!
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Improving Sales Productivity Begins and Ends with the Sales Manager

So you want to improve your sales team’s performance.

There are so many places to try and squeeze additional performance improvements out of your team. The question is…where do you start?

Do you start with better tools like Sales Force Automation (SFA) or Customer Relationship Management (CRM)? Maybe implementing opportunity, account, and territory management methodologies would work. How about improving sales skills? You could train them in value/relationship/consultative/collaborative/strategic selling or negotiation. The truth is if your company is weak in any of these areas you could experience improved performance by addressing them head on.

I can hear some of you groaning already. I know you invested thousands, or hundreds of thousands of dollars to implement new tools, processes, methods, and training before, but it didn’t stick or you got marginal returns on investments.

Sales Productivity Secret #1

No matter what you choose to improve, if you don’t focus on the Sales Managers first the improvement initiatives will only deliver short term results.

The Sales Managers are the key to sustainable performance improvement.

Why?

Because they are responsible for hiring, training, developing, directing, planing, coaching, communicating expectations, measuring success, and managing change on a daily basis. This is where the rubber meets the road!

I have worked with hundreds of Sales Managers from small businesses to fortune 100 companies over the last 5 years and the vast majority of them were great salespeople that got promoted to Sales Manager. Most of them have spent years struggling to develop the heart of a manager. Most have developed their management systems and skills through trial and error or imitating previous managers.

Each quarter brings constant pressure to hit the numbers and each year the pressure mounts as their companys’ raise the bar. Sooner or later the relentless drive to bring in the numbers causes the Sales Manager to fall back on what they know created success for them in the past. Instead of leading and developing the sales team they become “super closers” that get the job done by setting the pace, directing activities and closing sales.

So what’s wrong with that?

If your company does not require the sales manager to carry a book of business (they have a personal quota or list of accounts to call on) then they are doing the salesperson’s job. The very skills that made the Sales Manager such a great Salesperson are the obstacles to developing an Elite High-Performance team.

The Sales Manager’s role should be to develop a management system that continuously improves the performance of themselves, the team and the individual sales professionals, in addition to managing the business.