First, it is critical to understand that only two of the federal loan programs are actually 'financial aid' for college. The Perkins and Subsidized Stafford loans are financial aid because the interest on the loan is paid by the federal government while the student is in college. In addition, the student receives a six month 'grace period' following graduation or separation from college, before the loan goes into repayment and interest begins to accrue. Borrowing in these two programs have increased 60% over the past six-year period. While this rate of increase is six times the rate of increase for the Pell Grant program, it is actually rather modest compared to the rate of increase in the other two federal loan programs for college.
It is essential for students and parents to understand that the Un-subsidized
Stafford Loan and PLUS Parent Loans are not need-based financial aid. This
means that students or parents are not required to demonstrate financial
need in order to receive these loans. Interest on these loans is not subsidized
by the federal government. One of the few advantages for these loans over
other commercial loans is that borrowers are allowed to receive a tax deduction
for interest paid. Since 1991-92 the Un-subsidized Stafford Loan program
has seen borrowing increase by a jaw-dropping 405%. The PLUS Parent Loans
program has gone up by 146% over the same period. Many fear this represents
desperation borrowing where at the last minute, student or family funds
fall short of college costs and these loans are the only option. Average
amounts borrowed in these two programs now exceed $5,000 per year. It is
not un-common to hear of students or parents borrowing $10-15,000 per year.
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Is there an option that allows students and parents to avoid excessive borrowing for college? Federal grants have not even kept pace with inflation. State grants are limited to lower income residents who attend college in-state. The best source of grants and scholarships are often the colleges themselves. 'Institutional grants and scholarships' are the largest and best source of college aid for many students. Many students are making their college selection based on the level of available institutional aid. Private scholarships can also provide an effective way to minimize borrowing for college. The message is, start early, exhaust all other options and borrow only as a last resort.
About four weeks after sending in the Free Application for Federal Student Aid (FAFSA), students receive back a Student Aid Report or SAR. This SAR is sent to allow students and their families to double-check to see if all their FAFSA data was correctly entered by the FAFSA processor. Families are able to make corrections to the SAR if they find errors or they can make changes to their original answers if new or better information is available. Copies can then be made of the SAR for any colleges where the student is seeking financial aid.
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TI
Total Income
ATI Allowance Against
Total Income
STX State and Other Tax Allowance EA Employment Allowance STI Student's Total Income IPA Income Protection Allowance AI Available Income CAI Contribution from Available Income independant student) DNW Discretionary Net Worth APA Education Savings and Asset Protection llowance PCA Parent's Contribution from Assets AAI Adjusted Available Income TPC Total Parent's Contribution FTI Family of Independent Student's Total Income TSC Total Student's Contribution PC Parent's Contribution SIC Dependent Student's Income Contribution SCA Dependent Student's Contribution from Assets |
Any numbers that follow these codes relate to the income
and asset data provided on the FAFSA form by student and family. The two
most important codes are TPC and TSC as they identify the total contribution
expected from student and parents, according to the formula. Don't forget,
these numbers are always negotiable with the college financial aid office,
based on special circumstances.
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