One of the most stress-inducing aspects of college these days is the price tag. Since I do not want to add any additional anxiety to the holiday season, this column will focus on the positive — several new financial aid options that may actually help ease the pain. Why not ring in the new tear with some cheer?!
First, let’s get the basics out of the way and summarize the way financial aid works; for the most part, the process and the application timeline are the same. Students and families should fill out a Free Application for Federal Student Aid starting on Jan. 1 of the high school senior year. It is important to submit this form as soon as possible since some funds are distributed on a first-come, first-served basis.
About 280 schools and institutions require submission of an additional form — the College Scholarship Service Profile. It is available online, and deadlines vary so check schools’ websites for more info. The process for Cal Grants happens fairly naturally because high schools submit GPA verification forms for students. If a student qualifies for aid they will be notified. The process for undocumented students also has remained the same. Fill out the Dream Act Application at https://dream.csac.ca.gov. For more details, refer to my December 2012 column at http://www.therightcollegeforyou.org/uploads/financialaid.pdf.
Ahh, now on to the new stuff! Here are the major developments:
1. Bipartisan Student Loan Certainty Act. Signed into law by President Obama on Aug. 9, this law states that direct student loan interest rates will now be based on the 10-Year Treasury note plus a statutorily defined “add-on.” It also sets a maximum allowable rate. Interest rates on new loans will be adjusted annually on July 1 but will remain in place for the life of the loan new. These rate changes are backdated to take effect for the 2013-14 year. A couple of noteworthy improvements are that students who would have only qualified for unsubsidized loans will now have a lower interest rate and parents will face a lower federal PLUS loan interest rate.
2. Middle-class scholarship for UCs and CSUs. Gov. Jerry Brown signed this into law on July 1. It will be phased in over four years starting in the 2014-2015 academic year. New, transferring and returning undergraduate students from families with income of up to $150,000 may be eligible to receive up to 40 percent of the amount of the institution’s systemwide tuition. New scholarship money is always a good thing! Check http://www.csac.ca.gov/pubs/forms/grnt_frm/middle_class_scholarship_faqs.pdf for more details.
3. Obama’s plan to make college more affordable. On Aug. 22, President Obama announced his plan to create and implement (by the 2015 college year) a new federal system for rating colleges on affordability, access and outcomes. Data such as tuition, graduation rates, and the debt and earnings of graduates will be analyzed. The results will be published on the College Scorecard. Check http://www.whitehouse.gov/issues/education/higher-education/college-score-card. The stated aim is to use these ratings as a basis for allocating financial aid toward high-performing colleges that provide the best value. Many of these proposals require the enactment of legislation, although some key elements, such as the establishment of college ratings, do not. How this would affect individual students remains to be seen but targeting aid to colleges that provide the best value is a laudable goal.
4. Pay as you earn. Another beneficial aspect of Obama’s plan is to help ease the burden of student loan debt. The proposal would allow all student borrowers to cap at 10 percent of their monthly income federal student loan payments. For more information, see http://www.whitehouse.gov/the-press-office/2013/08/22/fact-sheet-president-s-plan-make-college-more-affordable-better-bargain.
5. Oregon’s “Pay it Forward, Pay it Back.” Alas, this is not open to Californians, but let’s be happy for our neighbors. According to this law passed by the Oregon Legislature in July, students who attend state and community colleges do not pay tuition. Instead, they agree to commit a small percentage of their future incomes to repaying the state. If successful, this program may entice copycats … at least we can hope. http://www.nytimes.com/2013/07/04/education/in-oregon-a-plan-to-eliminate-tuition-and-loans-at-state-colleges.html. Not too shabby!
Other helpful resources
Aside from the new laws and proposals, there are a few other reasons to be thankful this holiday season. One is the net price calculator, which is required by the Higher Education Act as of October 2011. What this tool provides is a way for students to calculate an estimated net price of attendance at a particular institution based on what similar students paid in a previous year. Yes, you can actually get a sense of what a certain school will offer you in the way of financial aid before you apply. For more information, see http://netpricecalculator.collegeboard.org. Disclaimer: While helpful, it can be difficult to use.
Another source of financial (and emotional) support is the joint effort by the Consumer Financial Protection Bureau and the Department of Education to create the Financial Aid Shopping Sheet. They have put together a template that standardizes the financial aid award letters students receive. Let us rejoice! Students and families now have a clear, concise format to ease cost comparisons across institutions. Check it out at http://collegecost.ed.gov/shopping_sheet.pdf.
Until next time
Well, I hope that by describing some of the positive developments in the world of financial aid, I have given you a little relief that things will work out and some extra justification to go out and celebrate! Happy New Year.
— Jennifer Borenstein is an independent college adviser in Davis and owner of The Right College For You. Her column is published on the last Tuesday of the month. She lives in Davis with her family. Reach her at email@example.com, or visit www.therightcollegeforyou.org.
Free financial aid workshop
Do you need financial aid for college but don’t know what to do? Come to a free financial aid workshop.
When: 2-4 p.m. Sunday, Jan. 12
Where: Blanchard Room, Stephens Branch Library, 315 E. 14th St., Davis
What: Jennifer Borenstein, independent college adviser, will lead a free financial aid workshop open to anyone interested in learning more about financial aid options. She will explain changes in the process this year; the different types of federal, state and private aid options; and who is eligible and how and when to apply.
More info: Call the library at 530-757-5593 to sign up and get more details.