7 Things You Need Before You Fill Out the FAFSA

If you need financial aid to help you pay for college, you must complete the Free Application for Federal Student Aid (FAFSA®). The 2016–17 FAFSA is available on January 1, 2016, at 12 a.m. Central Time. You should fill it out (for FREE) on the official government site, fafsa.gov.

 

To speed up the FAFSA process, get prepared early. Here is what you’ll need to fill out the FAFSA:

1. Your FSA ID*

On May 15, 2015, we changed the way you log into the FAFSA. You now need an FSA ID, instead of a PIN, to log in and sign your FAFSA online.

Anyone who plans to fill out the 2016–17 FAFSA should create an FSA ID as soon as possible. In some situations, you may need to wait up to 3 days to use your FSA ID after registering. If you want to avoid FAFSA delays, register for an FSA ID now.

If you are required to provide parent information on your FAFSA, your parent will need to register for an FSA ID too. Because your FSA ID is equivalent to your signature, parents and students each need to create their own FSA IDs using separate e-mail addresses. Parents should not create an FSA ID for their child and vice versa.

2. Your Social Security number*

You can find the number on your social security card. If you don’t have access to it, and don’t know where it is, ask your parent or legal guardian or get a new or replacement social security card from the Social Security Administration. If you are not a U.S. citizen, but meet Federal Student Aid’s basic eligibility requirements, you’ll need your Alien Registration Number.

3. Your driver’s license number

If you don’t have a driver’s license, then don’t worry about this step.

4. Your tax records*

Use income records for the tax year prior to the academic year for which you are applying: so if you are filling out the 2016–17 FAFSA, you will need 2015 tax information. If you haven’t filed your taxes yet, don’t worry! You can still fill out the FAFSA now. Just estimate the amounts using your 2014 tax return and make sure to update your FAFSA once you file your 2015 taxes. After you file, you may be able to import your tax information electronically into the FAFSA using the IRS Data Retrieval Tool.

5. Records of your untaxed income*

This includes variables that may or may not apply to you, like child support received, interest income and veterans non-education benefits. Parents can find specific details here. Students can find details here.

6. Records of all your assets (money)*

This includes savings and checking account balances, as well as investments like stocks and bonds and real estate.

7. List of the school(s) you are interested in attending

Two-thirds of freshmen FAFSA applicants list only one college on their applications. Don’t make this mistake! Be sure to list any school you’re considering, even if you haven’t applied or been accepted yet. The schools you list on your FAFSA will automatically receive your FAFSA results electronically. They will use your FAFSA information to determine the types and amounts of financial aid you may receive. If you add a school to your FAFSA and decide not to apply, that’s OK. The school likely won’t award you aid until you’ve been accepted anyway. You can list up to 10 schools on your FAFSA. If you’re applying to more than 10 schools, you can add more later.

TIP:  To be considered for state aid, several states require you to list schools in a particular order (for instance, you might need to list a state school first). Find out whether your state has a requirement for the order in which you list schools on your FAFSA.

*If you’re a dependent student, you will need this information for your parent(s) as well.

Nicole Callahan is a Digital Engagement Strategist at Federal Student Aid.

The Parent’s Guide to Completing the FAFSA From Start to Finish

 

The Parent’s Guide to Completing the FAFSA From Start to Finish

Although a student’s Free Application for Federal Student Aid (FAFSA®) is the student’s responsibility, parents take a large role in the process when a student is determined to be dependent. If you’re getting ready to help your child apply for federal student aid on the 2016–17 FAFSA, here’s what you should be doing over the next few months:

Before the FAFSA

  • Learn the basics of the federal student aid programs (grants, work-study, and loans) at StudentAid.gov/types. Federal aid is intended to help cover the student’s cost of attendance (tuition and fees, room and board, books and supplies, and other education expenses.)
  • To familiarize yourself further with your child’s federal student aid options, read Do You Need Money for College? at StudentAid.gov/needmoney.
  • Encourage your child to maximize any available free money to help pay for college. There’s information and a free scholarship search at StudentAid.gov/scholarships.
  • Understand whether your child needs to provide parent information on the FAFSA. StudentAid.gov/dependency will help you determine if your child is dependent or independent.
  • Understand who counts as a parent for purposes of filling out the FAFSA. StudentAid.gov/fafsa-parent shares the definition of “legal parent” and discusses which parent’s information should be reported on the FAFSA when the legal parents are divorced or separated and not living together.
  • You and your child should get FSA IDs. An FSA ID is a username and password that you’ll be using to sign the FAFSA. You and your child each need your own FSA ID—and you each need to create your own for privacy purposes and because the information is easier to remember if you create your own. (Note: Only one of a student’s parents needs to sign the student’s FAFSA, so only one parent needs an FSA ID.)
  • You and your child will each need to gather these documents in preparation for the FAFSA:
    • Your Social Security number
    • Your Alien Registration number (if you are not a U.S. citizen)
    • Your 2015 federal income tax returns, W-2s, and/or other records of money earned*
    • Bank statements and records of investments (if applicable)
    • Records of untaxed income (if applicable)
    • An FSA ID to sign electronically

*Note: You may be able to transfer your federal tax return information into your FAFSA using the IRS Data Retrieval Tool (IRS DRT) once your tax form has been processed.

Filling Out the FAFSA

  • Completing the FAFSA is a question-by-question guide to the FAFSA. It offers help, hints, and definitions in case you get stuck on any of the questions.
  • Encourage your child to fill out the FAFSA before state and school deadlines, which may fall as early as February 2016. Students will be able to file a 2016–17 FAFSA beginning on Jan. 1, 2016.
  • Make sure your child goes to fafsa.gov to fill out the application.
  • The FAFSA is your child’s application, so keep in mind when it says “you,” it means “you, the student.”
  • If you haven’t done your 2015 taxes before your child fills out the FAFSA, don’t worry. You can estimate the amounts, perhaps using your 2014 taxes to guide you.
  • If you’ve already done your taxes before your child fills out the FAFSA, use the IRS DRT to automatically insert tax information into the FAFSA.
  • If your family’s income has had a sudden drop (for instance, if a parent lost a job) that isn’t reflected in your 2015 tax information, gather documentation so that your child can present the situation to the financial aid administrator at the school.
  • If you want to understand where your Expected Family Contribution comes from, take a look at the EFC Formula workbook at StudentAid.gov/resources#efc.
  • At the beginning of the application, your child will be asked to create a Save Key, which is a temporary password that lets you return to a partially completed FAFSA. If you and your child are accessing his or her FAFSA from different locations, your child should do his or her part and then share the Save Key with you. You’ll need to enter it to get access to your child’s FAFSA.
  • Be sure you or your child sees the confirmation page pop up on the screen so you’ll know the FAFSA has been submitted.
  • Read the FAFSA confirmation page carefully. There are a few differences between the e-mailed confirmation (which arrives later) and the one you see at the end of the application, so consider printing or saving the confirmation page before you exit.
  • Depending on your state, you may see a link on the FAFSA confirmation page to your state’s financial aid application. This will allow your child to transfer his or her information directly into the state aid application.
  • If you have more than one child attending college, select the option on the confirmation page to transfer your parent information into the other child’s FAFSA.
  • If you need help filling out the FAFSA, read the “Help and Hints” located on the right side of any page within the fafsa.gov application; click “Need Help?” at the bottom of any page; or chat (in English or Spanish) with live technical support staff by clicking the “Help” icon at the top of any page, then selecting “Contact Us,” “Federal Student Aid Information Center,” and then “Chat with Us.”

Help Options on the FAFSA

After the FAFSA

  • Both you and your child will receive e-mails letting you know the FAFSA has been processed, assuming you both provided e-mail addresses on the FAFSA. It takes about three days for the FAFSA to be processed and sent to the school.
  • Double-check the information you reported on the FAFSA. You can make corrections if necessary.
  • During the winter or spring, your child will receive aid offers from schools. You can visit StudentAid.gov/fafsa/next-steps/accept-aid for more information on how to help your child understand and compare the types of aid as he or she decides what aid to accept and what to turn down.
  • Encourage your child to read all communications from the school carefully and to supply any additional information, forms, or signatures needed by the deadlines the school sets.

Courtney Gallagher is a junior studying English at Westminster College in Missouri. She is an intern for the Content Development team in the office of Federal Student Aid at the U.S. Department of Education.

Photo by Getty Images.

Your Federal Student Loans Just Got Easier to REPAYE

girl at computer

Beginning today, Federal Direct Loan borrowers can take advantage of a new repayment plan: REPAYE (the Revised Pay As You Earn Plan).

Some of you may be familiar with the Pay As You Earn (PAYE) Repayment Plan, which caps payments at 10% of a borrower’s monthly income and forgives any remaining balance on your student loans after 20 years of qualifying repayment. But this plan is only for recent borrowers.

REPAYE solves this problem. Like the name implies, REPAYE has some similarities to PAYE. First and foremost, REPAYE, like PAYE, sets payments at no more than 10% of income. However, REPAYE—unlike PAYE— is available to Direct Loan borrowers regardless of when they took out their loans.

Should I switch to REPAYE?

If you can’t afford your monthly payment under your current repayment plan, you should consider REPAYE or one of the other income-driven repayment plans. These plans can offer needed relief by ensuring that you will never pay more than a certain percentage of your income. If you can afford to pay more on your loan, you should, since this will save you more on interest costs over the life of your loan.

If you’re pursuing Public Service Loan Forgiveness, you should consider REPAYE. REPAYE is an eligible repayment plan for the Public Service Loan Forgiveness (PSLF) Program. If you’re working toward PSLF and considering consolidating your loans in order to qualify for REPAYE, you should read this first.

If you’re currently on Income-Based Repayment (IBR) because you weren’t eligible for PAYE, you should consider whether REPAYE might be a better option for you. REPAYE could lower your payments by one-third, from 15% to 10% of income.

Before making your decision, use our repayment estimator to compare what your monthly payment would be under REPAYE and all of our other plans.

Under any income-driven repayment plan, you’ll need to “recertify” your income and family size each year.

How is REPAYE different from the other income-driven repayment plans?

So, you already know that your payment under an income-driven plan is a percentage of your income. But REPAYE is different from the other plans. Here are a few differences:

There’s no income requirement to enter the plan: Unlike with the PAYE and IBR plans, borrowers don’t have to show that that their income is low compared to their federal student loan debt in order to enter REPAYE. In simple terms, that means that the amount of your debt and your income level won’t keep you from qualifying.

Borrowers with only undergraduate loans will have a different repayment period than those with graduate loans: Income-driven repayment plans forgive any remaining loan balance after a specific number of years of qualifying repayment—either 20 or 25 years, depending on the plan. REPAYE is a little different than the other income-driven repayment plans. With REPAYE, if you’re only repaying loans you received as an undergraduate student, you’ll repay your loans for up to 20 years. However, if you’re repaying even one loan that you received as a graduate or professional student, you’ll repay your loans (including any loans you received as an undergraduate) for up to 25 years. Of course, this difference doesn’t matter if you later qualify for Public Service Loan Forgiveness, since your loans would be forgiven after 10 years of qualifying payments.

Married borrowers’ payments are calculated differently: The other income-driven repayment plans use the combined income of you and your spouse to set your payment amount only if you file a joint federal income tax return. If you and your spouse file separate tax returns, your payment amount is based on only your income. REPAYE (with limited exceptions) uses the combined income of you and your spouse to set your monthly payment amount, regardless of whether you file a joint tax return or separate returns. This could increase your monthly payment amount. For more information, read our Q&A.

REPAYE payments are not capped at the 10-year standard payment amount: Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. However, this isn’t always the case with the PAYE and IBR plans. Under PAYE and IBR, your payment will never be higher than what it would have been under the 10-year Standard Repayment Plan, no matter how much your income increases. With REPAYE, there’s no cap on your monthly payment amount. Your payment will always be 10% of your discretionary income, no matter how high your income grows. This means that if your income increases significantly, your REPAYE payment could be higher than what you would have to pay under the 10-year Standard Repayment Plan.

REPAYE provides a more generous interest benefit: If your payment doesn’t cover all of your interest, REPAYE pays more of the remaining interest than PAYE or IBR. This can help prevent your loan balance from ballooning and limit the total cost of your loans.

What else should I consider before applying?

Determine whether you have Direct Loans before attempting to switch to REPAYE. If you’re not sure which type of loans you have, you can log in to StudentAid.gov to find out. Loans labeled “Direct” qualify for REPAYE, loans without the “Direct” label don’t qualify for REPAYE unless you consolidate them. You can apply for a Direct Consolidation Loan on StudentLoans.gov.

Special considerations for borrowers who are currently on IBR:

  • If you don’t have Direct Loans, but you’ve been repaying your other loans under IBR for a while and you’re thinking of consolidating to take advantage of REPAYE, it’s important to understand that you’ll lose any credit toward IBR loan forgiveness that you received before consolidating—you’ll have to start over with a new 20- or 25-year repayment period on the Direct Consolidation Loan. So, carefully consider whether having a lower monthly payment amount matters more than the additional time you may spend repaying your loans.
  • Any outstanding interest will be capitalized (added to your loan principal balance) when you leave IBR.

How do I apply for REPAYE?

You can apply for REPAYE—or any other income-driven repayment plan—on StudentLoans.gov. We’ve made some improvements to the way the electronic application works, so give it a spin.

Looking for the lowest monthly payment? With four income-driven repayment plans, it’s easy to overlook a plan or confuse a feature of one plan with another. Let us do the hard part for you. If you’re looking for the lowest monthly payment, there’s a box you can check on the application to request that your loan servicer evaluate you for all income-driven repayment plans, and put you on the plan with the lowest initial payment.

Where can I get more information?

There’s more to know about REPAYE than what you see in this blog post.

Have a question that our resources can’t answer? Contact your servicer. They’re the best option for individualized advice.

A Guide to Reporting Parent Info on Your FAFSA

If you’re planning to go to college in fall 2016, you will definitely want to complete the Free Application for Federal Student Aid (FAFSA®). Not only does the FAFSA give you access to grants and loans from the federal government, but many states and schools also use information from the FAFSA to award their financial aid.

If you are considered a dependent student for the purposes of the FAFSA, you’re required to provide information about your parent(s) on the application. (Note: The dependency guidelines for the FAFSA are set by Congress and are different from those used on tax returns.) You might be wondering which parent’s information to report or what you should do if your parents are divorced or remarried, or if you live with another family member.

Don’t worry; we can help you figure out whose information to include. For a quick visual reference, check out our infographic, Who’s My Parent When I Fill Out the FAFSA?

Who's My Parent When I Fill Out My FAFSA? Graphic

Click to enlarge

Or, if you want more information, here are some guidelines. Unless noted, “parent” means your legal (biological or adoptive) parent.

  • If your parents are living and legally married to each other, answer the questions about both of them.
  • If your parents are living together and are not married, answer the questions about both of them.
  • If your parents are divorced or separated and don’t live together, answer the questions about the parent with whom you lived more during the past 12 months. If you lived the same amount of time with each parent, give answers about the parent who provided more financial support during the past 12 months or during the most recent 12 months that you actually received support from a parent. If you have a stepparent who is married to the legal parent whose information you’re reporting, you must provide information about that stepparent as well.

The following people are not considered your parents on your FAFSA unless they have adopted you: grandparents, foster parents, legal guardians, older brothers or sisters, and uncles or aunts.

Curious about what information you and your parents will need to provide on the FAFSA? Learn more about the FAFSA and how to fill it out at StudentAid.gov/fafsa.

If you still have questions or are unsure what to do if your parents are unable or unwilling to provide their information for your FAFSA, you can get more information at StudentAid.ed.gov/fafsa-parent.

Tara Marini is a data and communications analyst, and Cindy Forbes Cameron is a lead communications analyst, at the Department of Education’s office of Federal Student Aid.

The FSA ID: Your First Step to Getting Financial Aid for College

Do You Have An FSA ID Yet?

We all know college is super expensive, and I’m sure that you, like me, would welcome any and all help in paying for it. Luckily for us, that’s where the government comes in. “But how do I get them to help pay my tuition?” you may ask. While I (unfortunately) can’t guarantee you any money, I can tell you a good way to go about getting some of that financial help: Fill out your Free Application for Federal Student Aid (FAFSA®). To do that, you are going to need an FSA ID.

What is the FSA ID?

The FSA ID recently replaced the PIN as the way you log in to certain U.S. Department of Education (ED) websites, including fafsa.gov. It consists of a username and password and is basically the electronic equivalent of your signature. It’s easy to set up, and you can get one on a variety of ED websites. (I would recommend StudentAid.gov/fsaid because there is also a lot of good information and advice about student aid and the FSA ID there).

Incoming College Students

Everyone who will be in college next year and plans on applying for federal financial aid should get an FSA ID. If next year will be your first year in college, just go ahead and create your FSA ID and use it to sign your FAFSA. What happens next is that ED checks your information with the Social Security Administration to make sure it matches. That takes about one to three days. During that time, you will only be able to use your FSA ID to sign your new FAFSA (that’s the main thing though, so don’t stress). Then, after the Social Security Administration match is done, you should receive an e-mail letting you know that you’ll now be able to use your FSA ID on a number of ED websites.

I know that applying for federal student aid can be a stressful experience, but don’t worry! The FSA ID is easy to figure out. You can go to StudentAid.gov/fsaid and it will provide some super helpful information such as what you should gather beforehand, and a link to create your own FSA ID—plus it will walk you through the entire process.

To get an FSA ID, you’ll need this information:

  • your Social Security number
  • your full and correct name
  • your date of birth

Current College Students

If, like me, you are already in college, you probably filled out your previous FAFSA using a Federal Student Aid PIN. If you’ll be returning to college next year and are applying for more federal student aid, you will need to get an FSA ID—the PIN won’t work anymore. When creating your FSA ID, there will be an option to enter your PIN and link the two. Even if you’ve forgotten your PIN, you can answer the challenge question you created while creating your PIN and still be able to link your PIN to your FSA ID. You can find more information about all this at StudentAid.gov/fsaid.

Linking your PIN can save you time because your information won’t have to be matched by the Social Security Administration if it was already matched when you created your PIN. If that’s the case, then your FSA ID is ready for full use right away—which means you’ll be able to sign a Master Promissory Note for a student loan, or fill out your Renewal FAFSA, right away.

If you don’t remember your PIN or didn’t have one, don’t worry. You can still create an FSA ID from scratch.

Some Tips About the FSA ID

  • Keep your FSA ID in a safe place and/or memorize it. It’s your legal signature. Keep it a secret.
  • One of your parents might need an FSA ID as well. If you’re considered a dependent student and need to provide information about your parents on the FAFSA, one of your parents will have to sign the application. He or she can sign electronically with his or her own FSA ID.
  • If you share an e-mail address with someone else, only one of you will be able to use that e-mail address to create an FSA ID. Each FSA ID can be associated with only one e-mail address. So, for instance, if you’re a dependent student, and you and your mom share an e-mail address, one of you should get a new e-mail address before creating an FSA ID.
  • Make your FSA ID early! Don’t leave it until right before your FAFSA is due. That adds a lot of stress (I would know!!!) that you don’t need.

Megan Friebe is a freshman at Michigan State University, where she spends her days studying public affairs and social policy, her evenings studying the same thing, and, if she’s lucky, her nights sleeping. She also manages to find time to intern with the Customer Experience team in the office of Federal Student Aid at the U.S. Department of Education.

#LatinosAchieve When We Believe in Them

Today, a high school education is simply not enough. The global, knowledge-based economy that we live in means that some post-secondary education, whether that be a 2-year degree, a 4-year degree, a certificate or a credential, is essential. Which is why we must invest in the educational future of our Hispanic youth. Hispanic youth are in large part the face of our nation and our next generation of leaders. So we need to invest in them if we want to be serious about our future. Although Hispanic high school dropout rates hit a record low at 13 percent in 2012, they’re still higher than any other demographic. Hispanic youth will represent 70 percent of population growth in our country between 2015 and 2060, and are rapidly growing faster than any other minority group. It is our duty to make sure that our next generation of politicians, teachers, CEOs, engineers and entrepreneurs are equipped with the skills they need to succeed.

Progress is being made but not nearly fast enough. And for me, this isn’t simply an intellectual matter. As a Puerto Rican, I’ve seen first-hand how the power of a great education can change lives across the country, as well as back home on the island that gave birth to my mother.

That’s one of the reasons why I’m so proud to lead First Lady Michelle Obama’s Reach Higher Initiative. We work to inspire young people to take control of their future by exposing students to college and career opportunities, making financial aid and college affordability a reality, supporting academic and summer planning, and investing in school counselors. We want young people, including Hispanics, to know that education after high school has to be part of their plan. That enrolling and completing college is essential to ensuring their achievement and success.

When speaking at the 85th Annual Conference of the League of United Latin American Citizens last year, the First lady spoke about the need for investing in education for Hispanic youth. She said, “As you know, too many young people in the Latino community simply aren’t fulfilling their potential… We have got to … reignite that hunger for opportunity — that hunger for education – across all of our communities. And we all have a role to play in this endeavor. Parents have to be reading to their kids from an early age and making sure they go to school every day and do their homework every night. Our young people, you have a role to play as well. You have to make education your number-one priority and be role models for those around you.”

The efforts led by the White House Initiative on Educational Excellence for Hispanics, including their nearly $340 million in public and private sector commitments and the U.S. Department of Education’s work to make college accessible and affordable are key to ensuring this population has the tools they need to achieve.

This issue requires all-hands-on-deck approach to make sure students and families are getting access to the resources and information to help make college a reality. That might be filling out the FAFSA, which gives students access to $150 billion in aid for college, or talking to your school counselor, who can help students or families navigate the application process. It also means taking rigorous, college-ready courses like Advanced Placement; and it means thinking about getting internships and mentorship programs that can help young people see the value of a college degree.

We also need to make the process easier. President Obama and the First Lady have been working hard to create and promote tools such as the College Scorecard to help make students find the best college value and fit. They also recently announced that starting in 2016, students can begin filling out the FAFSA three months earlier, so that financial aid can be secured earlier and in time to help make college decisions.

To the young Hispanics who are now in the swing of school, challenge yourselves to take your education seriously. Start talking to your parents about finances, take challenging classes, build strong bonds with your teachers and administration, join clubs and extracurriculars that will expose you to new things, and most importantly believe in yourselves. Believe that you can achieve and do whatever you put your mind to; starting with college. Because we do.

Eric Waldo is the Executive Director for the Reach Higher Initiative

Another Step Forward Under the Student Aid Bill of Rights

Earlier this year, President Obama unveiled a Student Aid Bill of Rights to ensure strong consumer protections for student loan borrowers and issued a Presidential Memorandum to begin making those rights a reality. Last month, as part of that directive, the Department of Education announced a number of new steps we are taking to help Americans manage their student loan debt, including:

  • Protecting Social Security benefits of Borrowers with Disabilities who may qualify for a loan discharge or other repayment options.
  • Changing the debt collection process so that it is fairer, more transparent, and more reasonable.
  • Providing clarity on borrowers seeking a discharge in bankruptcy.

Today, as another step forward in implementing the Student Aid Bill of Rights directives, Federal Student Aid (FSA) released the recommendations from an interagency task force on best practices in performance based contracting to better ensure that servicers help borrowers make affordable monthly payments. As directed by the Presidential memorandum, the task force reviewed input from its members in July. Now that these recommendations (pdf) have been finalized, they will inform the upcoming process of recompeting our servicing contracts prior to the expiration of the existing contracts.

Even ahead of that process, FSA has been taking steps to improve borrower service as it continues the transformation of the nation’s student loan program following the President’s landmark student loan reform.  Many of these steps are in concert with the recommendations of the interagency task force. Key steps include:

  • Ongoing development of an enterprise complaint system to track and support complaint resolution across all aspects of aid delivery, including servicing.
  • Targeted email campaigns to borrowers regarding available repayment options,  including campaigns related to IDR enrollment.
  • Enhanced performance metrics and incentive-based pricing for Federal loan servicers to ensure consistency and accountability while creating additional incentives to focus on reduced delinquency and default, more effective borrower counseling and outreach, and enhanced customer satisfaction.
  • Development and implementation of a robust enterprise data warehouse and analytics capability to support research of the portfolio.
  • Designing and implementing a quarterly delinquency reduction compensation program to provide additional incentives for success in reducing delinquency in payments among our largest servicers’ portfolios with the greatest number of at risk borrowers.
  • Increased focus on military service members, including a match with DOD to proactively provide service members with SCRA benefits,
  • Enhanced loan counseling and the ability for borrowers to select their repayment plan based on their individual circumstances during exit counseling.
  • Enhanced communication with and tools for borrowers including repayment calculators, loan consolidation application, and online application for income-driven repayment.
  • A pilot to test different approaches for curing delinquent loans.

We are also working with our partners at the U.S. Department of the Treasury and the CFPB to continually improve the federal student lending program. For example, we are working with Treasury and the CFPB on how to improve credit reporting for student loans. In addition, as highlighted in a recent CFPB blog, Education, Treasury and the CFPB continue to work together to ensure student loan borrowers are aware of and can access affordable monthly payments. For Federal student loans, FSA and its servicing contractors have been certifying and enrolling, on average, over 5,000 borrowers per day into IDR plans over the past year. Enrollment in IDR plans has increased more than 50% over the past year and is at an all-time high.

Helping Americans manage their student loan debt has been a core priority of this Administration. In the coming weeks and months, we’ll continue to carry out the steps the President laid out in March and to take additional action to make college more affordable and ease the burden of student loan debt.

Don’t Pay for Student Loan Debt Relief

Have student loans? You’ve probably seen social media ads, received emails, or even opened a piece of mail from companies promising to reduce your monthly loan payments or cancel your loans.

But here’s the catch. These companies are doing something you can do yourself, but they’ll charge you a fee.

The U.S. Department of Education provides FREE assistance to help you:

  • Lower or cap your monthly loan payment;
  • Consolidate your federal loans;
  • See if you qualify for loan forgiveness;
  • Get advice on getting out of default

Help get the word out, and help protect your friends and family from student loan scams. Watch and share the video below, and visit studentaid.gov/repay to learn more.

3 Important Financial Considerations for College Students

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The U.S. Department of Treasury recently released a report entitled “Opportunities to Improve the Financial Capability and Financial Well-being of Postsecondary Students.”  I read this report because I am an intern in the office of Federal Student Aid at the Department of Education, and I am working on various projects related to financial literacy for college students. I actually found this report to be a worthwhile read as a college student embarking on the daunting journey of funding my college education and managing my money while in school.

Despite the heavy financial burden, most of us understand the necessity of a college degree. Report after report make evident that education is one of the most significant factors in upward economic mobility. Still, college students face not only education loans but also consumer debt. There are so many important decisions that college students have to make in support of the ultimate goal to become financially independent. And, as tuition, books, housing and more only rise, the dream of financial independence has only become more difficult, and stressful.

Although I am no expert in financial literacy and financial aid, learning about responsible borrowing, careful budgeting, and repaying loans on time has helped lower my financial stress. The following are some simple tips I’ve learned that can alleviate financial stress and help college students manage their money.

1. Borrow responsibly. 

Federal Student Aid offers resources to help students understand the borrowing process. 

First, know how to read the financial aid package your school offers you. Be sure you can differentiate among grants, loans, scholarships, and work-study offers. You can do this by talking to the staff at your school’s financial aid office. Next, talk to your parents or those contributing to your education. Review the financial aid offer from your school, and look at your family’s finances, to decide which aid to accept or turn down. This is important in calculating how much you need to borrow in order to afford your education. You do not need to accept the full amount of loan money that’s offered to you; and understanding that concept will leave you with less debt in the future.

2. Budget carefully.

Budgeting is vital to lowering stress. By adopting responsible budgeting habits, you’ll learn planning skills to help manage multiple priorities and prepare for the future. Healthy budgeting practices provide dual opportunities for money-saving and time-management techniques. Budgeting is a great financial foundation and can be a stepping-stone to handling greater financial responsibility, leaving lifelong benefits.

3. Repay on time.

Repayment is the final step of the student loan process and lasts long after you graduate. If you do your research, the repayment process can go a lot more smoothly.

One way to reduce your stress is to understand the different repayment plans. You might find that you meet the criteria for making payments based on your income. Use the Repayment Estimator to help you understand the different repayment plans and decide which one is best for you. Then contact your loan servicer to see how to apply for the plan that best fits your situation.

Another thing to be aware of is that there are certain loan forgiveness options, including one for those who work full-time in public service. Knowing who qualifies and how to apply can ease the stress you feel about your debt as well.

Lastly, know that forbearance and deferment (ways to postpone or reduce your payments) are options if special circumstances arise. Understanding what’s best for your situation and applying in a timely manner is something you need to be aware of and talk to your servicer about.

As the report says, “Postsecondary education is essential to the economic health of our nation and to the economic opportunity of many Americans,” and each of our personal financial decisions contributes to that!

Megan McCusker is a sophomore at Loyola University Maryland studying History and Spanish. She served an intern for U.S. Department of Education’s Office of Federal Student Aid.

8 Things You Should Know About Federal Work-Study

22 1.19 work-studyIf you’re looking for another way to pay for college, Federal Work-Study may be a great option for you. Work-study is a way for students to earn money to pay for school through part-time on (and sometimes off) campus jobs. Work-study gives students an opportunity to gain valuable work experience while pursuing a college degree. However, not every school participates in the Federal Work-Study Program. Schools that do participate have a limited amount of funds they can award to students who are eligible. This is why it is so important for students to fill out the FAFSA as early as possible, as some schools award work-study funds on a first come, first served basis.
Here are 8 things you should know about the Federal Work-Study Program:

1. Being Awarded Federal Work-Study Does Not Guarantee You a Job

Accepting the federal work-study funds you’re offered is just the first step. In order to receive those funds, you need to earn them, which means you need to start by finding a work-study job. Some schools may match students to jobs, but most schools require the student to find, apply and interview for positions on their own, just like any other job. It is important that students who are interested in work-study or who have already been awarded work-study contact the financial aid office at their school to find out what positions are available, how to apply, and how the process works at their school.

2. Not All Work-Study Jobs are on Campus

The availability of work-study positions includes community service options with non-profit employers, which means some work-study jobs are available for off-campus work. An example might be reading or tutoring for elementary children at local public schools. If you are curious about securing a community service work-study position, contact the financial aid office or the student employment center at your school.

3. Work-Study Funds Are Not Applied Directly to Your Tuition

Unlike other types of financial aid, work-study earnings are not applied directly to your tuition and fees. Students who are awarded work-study receive the funds in a paycheck as they earn them, based on hours worked, just like a normal job. These earnings are meant to help with the day to day expenses that students have and are not meant to cover large costs like tuition and housing.

4. Work-Study Jobs May Be Limited

You may still be able to work on campus without work-study if your school does not have enough work-study funds to cover all on-campus student employees. Many campuses offer jobs for students with or without work-study. Check with the student employment office on your campus to find out what is available.

5. Federal Work-Study is not Guaranteed from Year to Year

There are several factors that can determine whether or not you receive work-study from year to year. These include your family income or financial need, whether you used the work-study funds that were offered to you in a prior year, or how much work-study funding your school receives that year. Contact your school for specific awarding criteria if you are interested in work-study. Typically, students who file the FAFSA early (in January/February prior to the academic year) and answer on the FAFSA that they are interested in Federal Work-Study will have a higher chance of being awarded funds from the program.

6. Pay May Vary

Work-study jobs vary in qualifications and responsibilities, so the pay will depend on the job that you are hired to do. Pay may also depend on your school’s policies and/or the minimum wage requirements in the state.

7. Work-study Earnings Are Removed From Your FAFSA Calculation for the Next Year

One of the benefits of earning income through a federal work-study position is that those earnings do not count against you when you complete the next year’s FAFSA. Be sure to answer the question regarding how much was earned through work-study on your FAFSA accurately. If you do not know the answer, you can contact the financial aid office at your school for help. Some schools will send you a notice in early spring regarding your earnings from the last calendar year to help you file your FAFSA.

8. Hours Worked May Vary

How many hours you work each week will depend on the type of job you get and your employer’s expectations. Most student employment positions, however, will work around your class schedule and only require between 10-20 hours/week, but again – that can vary!

Chandra Owen, Training Coordinator in the Office of Financial Aid at Michigan State University, Justin Chase Brown, Director of Scholarships & Financial Aid at the University of Nebraska-Lincoln, and Karla Weber, Senior Advisor in the Office of Student Financial Aid at the University of Wisconsin-Madison

 

7 Options to Consider if You Didn’t Receive Enough Financial Aid

The reality of college costs is that many families find themselves struggling to pay the entire college bill, despite having already filed the Free Application for Federal Student Aid (FAFSA) and receiving federal, state, and institutional financial aid resources. If you find yourself in this position, here are some ideas to consider to help fill the gap between what your financial aid covers and what you owe the institution.

Federal Student Aid image

 

TIP: The financial aid office at your college is a great resource. If you didn’t receive enough financial aid, contact your school’s financial aid office. They can help you explore your options.

Scholarships

For those heading to college this fall, most scholarship decisions for the academic year have already been made. However, we recommend you begin a routine of searching and applying for scholarships regularly. You should first consider scholarships local to where you graduated from high school or live; try community, religious, and fraternal organizations. You may also consider businesses in your community or those that employ your parent(s).

Then, look for scholarship resources available statewide, especially from organizations with which you may have been involved or companies in your state that are in the field for which you plan to study.

National scholarships can be very competitive, but don’t let that keep you from applying. Ask your financial aid office or academic unit about institutional or departmental scholarships (decisions may have been made for this year, but ask how to make sure you don’t miss deadlines for next year!). With scholarship opportunities, it’s always important to be careful of fraud. If you are ever concerned about the legitimacy of a scholarship, your school’s financial aid office might be able to help you make the determination.

Part-Time Work

You may have been awarded Federal Work-Study, which at most schools still requires you to find the work-study position yourself. This can help you cover some costs throughout the semester since these funds are paid as you earn them through working. If you were not awarded work-study funds, most schools have other part-time on-campus positions that can help you with some college costs. Working part-time on campus can be beneficial to your educational experience. Be cautious of working too many hours if you can avoid it. Ask your financial aid office or career services office how to apply for on-campus positions.

Payment Plans

Your school’s billing office, sometimes referred to as the bursar’s office or cashier’s office, may have payment plans available to help you spread the remaining costs you owe the school over several payments throughout a semester. The payment plan can help you budget the payments rather than paying in one lump sum, possibly helping you avoid costly late fees.

Special Circumstances Reevaluation

Sometimes a family’s finances are not accurately reflected on the FAFSA because of changes that have occurred recently, such as job loss, divorce or separation, or other special circumstance. Schools are not required to consider special circumstances, but those that do have a process by which you can petition for a reevaluation of the information on the FAFSA. This process may require you to submit documentation, and the financial aid office will recalculate your eligibility, possibly resulting in a change of financial aid awards.

Additional Federal Student Loans

If you’ve exhausted all your free and earned money options and still need additional funds to help you pay for school, contact your school’s financial aid office to find out if you’re eligible for additional federal student loans. For example, you might have reached a level of increased student loan eligibility if you completed coursework after your college awarded your aid.

Federal Direct PLUS Loans: Also, if you are a dependent student and still need assistance, your parent can apply for a Direct PLUS Loan. Some schools use the application on StudentLoans.gov and others have their own application. The PLUS loan application process does include a credit check. If your parent is not approved, he or she may still receive a Direct PLUS Loan by obtaining an endorser (cosigner.) If a parent borrower is unable to secure a PLUS loan, the student may be eligible for additional unsubsidized student loans of up to $4,000 (and sometimes more.)

Emergency Advances or Institutional Loans

Sometimes you may have college-related costs, such as housing costs or other living expenses, before your financial aid is disbursed to you. Your school may offer an option to advance your financial aid early or offer a school-based loan program. Ask your financial aid office if this is an option and always make sure you are aware of the terms and conditions (such as interest rates or repayment terms) of your agreement.

Private or Alternative Loans

Some private institutions offer education loans that do not require the FAFSA. While we recommend federal aid first, we realize it does not always cover the cost, especially for pricier schools. These types of loans will almost always require a cosigner and usually have higher fees or interest rates depending on your credit. We encourage you to first ask your financial aid office if they have a list of lenders for you to consider, but not all schools maintain such a list. If not, you can search for lenders on your own, but compare products before making your choice: look at interest rates, fees, repayment terms, creditworthiness requirements, satisfactory academic progress requirements, etc.

Before making any final decisions on how to fill the gap between your aid and your costs, it is always recommended that you meet with a representative in your financial aid office to determine what campus resources might be available before going out on your own. It might also be possible that you still have the time to change some of your choices before the semester begins: Can you change the type of meal plan you chose? The type of housing? The number of classes in which you are enrolled? Check with campus officials to see if you still have time to select a different, more affordable option.

Justin Chase Brown is Director of Scholarships and Financial Aid at the University of Nebraska-Lincoln.

3 Options to Consider if You Can’t Afford Your Student Loan Payment

Frustrated man - 3 Things You Should Do If You Can't Afford Your Student LoansThe U.S. Department of Education offers a number of affordable repayment options for borrowers who are struggling to pay back their student loans. The important thing to remember about all the options below is that it’s completely free to apply! Also, if you ever have questions or need FREE advice about your student loans, you can always contact your Department of Education loan servicer.

1. Switch Your Repayment Plan

You may be able to lower your monthly student loan payment by switching to a different repayment plan. Use this calculator to compare what your monthly payment amount could be if you switched your plan.

If you don’t pick a different plan when entering repayment, you are automatically enrolled in the 10-year Standard Repayment Plan. However, many borrowers don’t realize that you can switch your plan at any time by contacting your loan servicer.

One of the most popular options for borrowers who are looking to lower their payments is the income-driven repayment plans.

We offer three income-driven repayment plans:

  1. Pay As You Earn
  2. Income-Based
  3. Income-Contingent

Benefits:

  • Your monthly payment will be a percentage of your income. Depending on the plan, that may be 10% or 15% of your discretionary income, or something else. What you ultimately pay depends on the plan you choose and when you borrowed, but in all cases, it should be something you can afford.
  • Your monthly payment amount will be lower than it would be under the 10-Year Standard Repayment Plan if you qualify to make payments based on your income. In fact, it could be as low as $0 per month!
  • Any remaining balance on your loans is forgiven if your federal student loans are not fully repaid at the end of the repayment period (20 or 25 years).

Income-driven repayment plans are a great option if you need lower monthly payments. However, like all benefits, there are also costs. All of these benefits will ultimately increase the amount of interest you pay over time. The income-driven repayment plans also have tax consequences for any forgiveness received.

Apply for an income-driven repayment plan now

If one of the income-driven repayment plans is not a good option for you, we offer other options. Your servicer can help you identify the best plan to fit your needs.

2. Consolidate your Student Loans

Loan consolidation can simplify your payments by combining multiple federal student loans into one loan. Consolidation can also lower your monthly payment.

Benefits:

  • Can lower your monthly payment by extending your repayment period (spreading your payment out over more years). The repayment term ranges from 10 to 30 years, depending on the amount of your consolidation loan, your other education loan debt, and the repayment plan you select.
  • Will allow you to qualify for additional repayment options. If you have FFEL or Direct PLUS Loans, consolidating your loans into a Direct Consolidation Loan will allow you to qualify for additional repayment plans, such as the Pay As You Earn or Income-Contingent Repayment Plans, that you wouldn’t have qualified for if you hadn’t consolidated.
  • Your variable interest rate loans will switch to a fixed interest rate. It’s important to note that consolidation will lock-in interest rates on variable-rate loans, but will not lower them further. This would be a benefit if, like now, interest rates are low.

The benefits listed could provide relief to some borrowers. However, it’s important that you also weigh the costs before consolidating. For example, because you’re restarting and possibly extending your repayment period, you’ll pay more interest over time. Additionally, you may lose borrower benefits, such as interest rate discounts and loan cancellation benefits, offered with the original loans.

Apply for a direct consolidation loan now

3. Postpone your Payments

Under certain circumstances, you can receive a deferment or forbearance that allows you to temporarily postpone or reduce your federal student loan payments.

Deferment and forbearance may be a good option for you if you are temporarily having a difficult time paying back your student loans. Deferment and forbearance are not good long-term solutions. If you think you’ll have trouble paying back your loans for more than a year or you’re uncertain, you should consider an income-driven repayment plan or consolidation.

Benefits:

  • You do not need to make student loan payments during a deferment or forbearance.
  • The federal government may pay the interest on your loan during a period of deferment. This depends on the type of loans you have.

Again, deferment and forbearance are not good long-term solutions for borrowers who are struggling to pay back their student loans. Some reasons why:

  • With a deferment, interest will continue to be charged on your unsubsidized loans (or on any PLUS loans).
  • With a forbearance, interest will continue to be charged on all loan types, including subsidized loans.
  • The interest you accrue during periods of deferment or forbearance may be capitalized (added to your principal balance), and the amount you pay in the future will be higher.

If you can, you should consider making interest payments on your loans during periods of deferment or forbearance

To request a deferment or forbearance, contact your loan servicer

If you need help deciding which of these options is best for you, contact your loan servicer. They can help you weigh the different options based on your unique situation.

Nicole Callahan is a Digital Engagement Strategist at Federal Student Aid.