The Effective Ed Award

The Effective Ed Award “To Cash In or…” Presented at: edaward@nwrel.org Brandon Rogers Northwest Regional Educational Lab Portland, OR 97204 (503) 275-0760 The Bonner Foundation Princeton, NJ June 9, 2003 $4,725 = Average college tuition 2002-2003 Four-year private $18,273 Four-year public $4,081 Two-year public $1,735 • 38 percent of students attending fouryear schools pay less than $4,000 for tuition and fees. Almost 70 percent of students attending four-year schools pay less than $8,000 for tuition. • • 4 years tuition at Central Carolina Community College ($1,064 per year) plus $469 spending money. • 2 years tuition (almost) at the University of Florida ($2,581 per year) • 30 days tuition at Sarah Lawrence College ($29,352 per year) • In 1999-2000, 46 percent of all students attended public two-year colleges. The average tuition for a public two-year college is less than $2,000 per year. I’m an idealist. I don’t know where I’m going, but I’m on my way. CS • Three Options – Current Cost of Attendance – Prior Loan Repayment – Combination of the Above • Considerations – – – – – – – Inflationary Costs Full-Time v. Part-Time Other Financial Aid Types of Loans Interest Rates Income Deductions Matching Awards • Treated as Taxable Income • Seven Year Time Limit Key Terms • • • • • • • Free Application for Federal Student Aid (FAFSA) Expected Family Contribution (EFC) Cost of Attendance (COA) Need (COA – EFC) Resources or Estimated Financial Assistance (Financial Aid, Scholarships, Education Award) Award/Overaward Student Aid Report • • • • www.finaid.org www.students.gov studentaid.ed.gov www.fafsa.ed.gov Option #1: Current Costs • Ed Award is a “Resource” or estimated financial assistance • Ed Award can be used for Cost of Attendance (COA) • Ed Award/Stipend is exempt from Expected Family Contribution (EFC) Calculation • Can be used even for one class in non-degree program (but must be at an eligible school) = May reduce other aid = COA may include tuition, room/board, misc. expenses = Should not reduce need (Should not increase EFC) = COA may include only tuition/fees at less than ½ time attendance What’s the Worst…? “Sign and Send Mentality” Michael EFC = $0 COA = $12,066 Education Award (2) = $9,450 Award (Estimated Financial Assistance) Pell Grant $3,300 SEOG (Federal Grant) $300 WA State Need Grant (SNG) $2,538 Need Based Scholarship $3,000 Work Study $2,928 Total $12,066 Estimated Financial Assistance (Award) ≤ COA $12,066 = $12,066 Education Award Resource = $9,450 Award + Ed Award = $21,516 Overaward Status Year 1 Total Returned = $8,766 …That Could Happen? Year 2 EFC = $5,630 COA = $12,588 Award (Estimated Financial Assistance) Stafford Loan $3,500 PLUS $9,088 Total $12,588 Grants/Scholarships Lost = $9,588 Taxes Paid = $2,430 Total 4-Year Loan Debt = $21,204 Total 4 -Year Grants/ Scholarships Lost = $15,426 First Steps for Option #1 • Complete FAFSA • Review Award Letter • Determine if Ed Award Usage will Affect Other Aid • Learn about Worksheet C Get a PIN at www.pin.ed.gov Apply at www.fafsa.ed.gov First Steps for Option #1 First Steps for Option #1 Unlike Any Other Job Besides Work Study, AmeriCorps Wages Do Not Adversely Impact a Student’s Expected Family Contribution! AmeriCorps Benefits are Reported TWICE on the FAFSA: Once in Question #39 (Wages, salaries, tips, etc.) and Once More in Worksheet C! (Last Line) The FAFSA May Be Corrected: www.fafsa.ed.gov Cost of Attendance • COA may include tuition, room/board, misc. expenses • Some financial aid offices may treat ed award disbursement differently than student loan disbursement • In some cases, members might have more flexibility in using their ed awards if they choose to apply for a Stafford or Perkins Loan, and repay that loan amount with the ed award. Option #2: Loan Repayment Ed Award can be used to repay: • Stafford Loan • Perkins Loan • Federal Consolidation Loan • Supplemental Loans for Students • Health Professions Student Loans • Health Education Assistance Loans • Supplemental Loans for Students (discontinued) Repayment Considerations: „Subsidized‟ v „Unsubsidized‟ Principal v Interest Default Status Consolidation Considerations ($7,500 min., Program benefits such as deferment, point drops, etc.) Either Option: Taxation Advise Members, when possible, to request disbursement over at least 2 Calendar years (Jan-Dec) Members are taxed on the amount of the education award used in the calendar year which it is processed by the National Service Trust. Example: • Sally Vista receives $4,725 ed award in September 2003. She signs her voucher for $1,000 in October, and it is received and processed by the Trust in November. In 2004, when she completes her 2003 taxes, she will include $1,000 on her IRS Form 1040 for Adjusted Gross Income. Matching Awards www.lifetimeofservice.org - Financial aid resources - Tax resources - List of schools that match/augment the ed award - Information on how to advocate for AmeriCorps members in higher ed General Information: www.finaid.com - Scholarship resources - Information on scholarship scams Other Benefits • Certificated Learning Credits • Internship Credits • Prior Learning from Experience Credits • Credit for Service • State Residency - Check at the beginning - Each school/state has its own regulations - Understand the drawbacks Study Abroad • Regular study abroad programs as well as consortium agreements are www.fafsa.ed.gov/fotw0304/fslookup.htm also options. • Select the appropriate school year from the drop down box, • If a Stafford Loan can be choose „search‟ from the next borrowed, then the ed award drop down box, then click can be used to repay the „Next‟. In the drop down box loan. that says „State‟ select „Foreign Country‟. Over 500 foreign schools are Title IV eligible: Trust Information • • Trust Office Information The National Service Trust now has a toll free number available for members to call in and receive assistance. This number is staffed by live operators from 8:00-6:00 EST. Please call this number if you need assistance from the National Service Trust 1-888-5075962. For duplicate vouchers, and report a change of address, you can e-mail edawardvoucher@cns.gov. You may also use the number above to change your address and request duplicate vouchers. • Education Award information from the Corporation for National and Community Service may be found at: www.americorps.org/members/ • • Summary 1. 2. 3. 4. 5. Complete all required paperwork to receive your ed award voucher. Early. Complete FAFSA no later than midFebruary. Estimate tax info if necessary. Read instructions carefully, leaving no blanks. Answering yes to loan/ employment question does not obligate you to take those funds. Do not forget to fill out Worksheet C. Enter both your stipend and ed award that you redeemed in the previous year. Understand your specific school’s information and policies (what is their Title IV code, what other financial aid forms do they require, do they offer matching scholarships, residency, etc.) 6. Do not be guilty of ‘sign and send’. Do not trust that the financial aid office will automatically take care of everything for you. 7. If you use your ed award, you must report this to the school. But you do not have to use it if it will affect your other financial aid. 8. Distribute ed award over 2 or more calendar years to spread tax burden. 9. Continue to serve your community. 10. Repeat step #9, ad infinitum. A little motivation… • A little knowledge is a dangerous thing. Little knowledge is an even more dangerous. Do not allow frustration with a ‘process’ to ever dampen your spirit of service, or what you’ve accomplished. • Lacking in motivational quotes, I did come across one word that adequately embodies all of what you’ll need to deal with the ed award: • phlegm (CALMNESS) noun {U} FORMAL – the ability to stay calm and not get emotional or excited about things even in a difficult or dangerous situation. Adj. Phlegmatic. “Such phlegm in the face of adversity could only be admired.” Cambridge Dictionary Additional Reading • The Effective Education Award www.etr.org/NSRC/pdfs/fellows/rogers.pdf (warning: may cause drowsiness) For a link to Financial Aid in-depth issues www.ifap.ed.gov For a link to the authorization of the National Service Trust and AmeriCorps www4.law.cornell.edu/uscode/42/ch129.html • For a written history of the Corporation, including how the education award amount was determined, read The Bill, by Steven Waldman. Publisher: Viking Press; February 1995; ISBN: 0670853003 • •