College Grant Money
College grant money is actually a type of student aid that is
awarded to deserving individuals. The Federal Government, nonprofit civic groups, and private institutions may offer these moneys to students
usually based on economic need.
It is expensive to get a
proper education. That’s why government is doing everything it can to help those students in need. By providing them with various student aids
from jobs to scholarships and college grant money, the government is in effect giving these students a chance to get the education they
deserve. But what is grant money? And how is it different from student loans and scholarships?
College grant money is
actually different from a student loan. One difference is that when you have qualified for a grant, you no longer have to pay back the money
you receive. On the other hand, when you qualify for a student loan, you are obliged to repay the money within a specified period, depending
on what has been agreed upon between you and your loan provider. Because of that, parents and students alike prefer college grant money to
student loan. College grant money is essentially free money.
To calculate the amount of
college grant money you receive, most colleges and grant programs factor in your parents’ income plus the average cost of college. The result
is then a basic estimate of how much money you ought to receive from your grant.
Most college grant money
programs fix a certain amount which they then send to the colleges and universities where the grant is offered. A student with a grant may
either receive the money in checks via posted mail or the college would automatically credit the amount to the student’s
account.
If you want to be considered
for federal financial assistance and receive free college grant money, you must complete the Free Application for Federal Student Aid or the
FAFSA. The quickest way to do this is online at the FAFSA.ed.gov website. The FAFSA can only be filed no earlier than January 1st
of the year you will be attending.
However, be wary of the
dates on which you will be filing for college grant money. Sometimes, the deadlines announced by the federal student aid programs and your
college of choice may differ. Just to be safe, file your application way before any of the dates.
Besides the FAFSA, there may
still be other forms you will need to submit. If you are an incoming freshman, you may also need to complete the CSS Profile Application which
is required in many private colleges. Your CSS profile will give administrators a broader set of data from which to derive your eligibility
for institutional need-based assistance. Generally, the Profile application becomes available in the middle of October. You can register and
apply online at CollegeBoard.org.
With the use of the
processed data from either the FAFSA or the CSS Profile, colleges determine your eligibility for college grant money by using your household,
demographic, and financial data as basis.
Quick Tips for Filing for Federal Financial Aid
(ARA) – Whether you’ll be sending your kids to college in 2008 or heading there yourself, you’ve no doubt already heard of the
FAFSA (The Free Application for Federal Student Aid). After all, it is one of the most critical financial aid forms a student will have to
complete.
Much like filling out a bank loan application, the FAFSA determines how much federal aid a student is eligible to receive (in the form of grants
or loans) based on U.S. Department of Education guidelines -- including information such as your family’s assets and previous year’s income.
“Although it is easier to file the financial aid application once parents have completed their taxes, the FAFSA can be filed using the best
estimate of your prior year’s income. Applicants will have the chance to update the information they initially provided at a later date,” says
Stephanie Behrends, spokesperson for 2nd Story Software, Inc., developers of TaxACT tax preparation software and online services.
Behrends continues, “Certainly, the state in which a student resides, choice of school and academic standing are components which contribute to
the total amount of aid a student will receive in the form of scholarships, grants and loans. However, it is crucial for students to understand
the chances of receiving federal aid are directly related to filing the FAFSA on time and the financial strength of their family, which is
calculated by using the information supplied on the application.”
The FAFSA measures your family’s expected contribution toward the cost of your education. For that reason, cash assets and having high adjusted
gross income (AGI) will greatly diminish the amount of assistance a student can receive. Nevertheless, a bit of planning prior to preparing the
FAFSA can help you save thousands of dollars toward the cost of a college or technical education.
If you are a student (or the parent of a student) seeking to maximize your chances of receiving federal aid, be vigilant by using the resources
available to you, which can help you to strategize and meet deadlines.
Behrends suggests, “Early tax preparation offers FAFSA filers a distinct opportunity to coordinate the lion’s share of financial information
required by applicants. Tax software, like TaxACT Deluxe, which contains a College Student Financial Aid Worksheet, is a valuable resource that
can help students and their parents apply for financial aid. Plus, tax software helps them take full advantage of various tax credits,
deductions and strategies, which can reduce the income reported to the IRS.”
While any decision should be made with your financial advisor or accountant, some worthy strategies FAFSA filers should
investigate to reduce cash assets and lower reported income include:
* Prepaying state taxes December 31. Paying a due amount by December 31 will reduce your cash assets and entitle you to an additional deduction
on your 2006 tax return.
* Maximizing retirement saving contributions.
* Making charitable donations.
* Contributing to a Health and Dependant Savings Account (flex spending). Flex contributions are deducted from your gross income -- greatly
reducing the amount of income you report to the IRS.
* Making purchases before the end of the year. Make a qualified energy efficiency improvement to your primary residence by December 31. You’ll
reduce the amount of cash you have on hand and, under the Energy Policy Act of 2005, you may get a tidy tax credit worth up to $500.
* Paying off /down loans. Making an extra payment toward the principal amount of your home loan. You’ll pay less interest and build a nest egg in
the form of home equity.
* Paying off bills. Paying for services upfront reduces cash assets and may entitle you to a discount. For example, many customers receive
rebates from their automotive insurance provider by paying for the year in full.
* Sell bad investments by December 31. You can deduct up to a $3,000 capital loss ($1,500 if you are married and file a separate return) to
offset capital gains.
Funding is on a first come, first served basis. File your FAFSA the second you are eligible -- the first minute of New Year’s Day -- January 1.
Not only will you increase your odds of getting federal aid, you may actually receive more financial assistance because the money pool has not
been diminished. However, be forewarned, if you attempt to submit before January 1, the application will not be processed.
Courtesy of ARAcontent
Parents - Paying for College? Do the Math First
(ARA) - In these challenging financial times, parents make certain sacrifices to ensure they can navigate the crunch and provide their children
with the things they need most. Given the frequent need for sacrifices when it comes to paying for college, parents owe it to themselves
to make sure they focus on value.
Securing the right education at the right price means “doing the math” to determine the real
cost of a college education. While the reality check may not be pleasant, it can lead to considerable money-saving decisions when it comes
to funding a child’s college education.
A few smart, simple rules can help families determine a realistic number to start budgeting for.
Math Rule 1 – Know Your Estimated Total Costs
Tuition is just one part of the total cost of college. It’s important to factor in books, meals, housing, transportation and other expenses (even
decorating the dorm room) when making a college financial plan. Your school should be able to provide helpful information on costs. Meanwhile,
here are a few insights that may help:
* Four-year public college – If you’re in-state, the average budget is about $18,000 per year, of which tuition and fees are $6,185. The average
out-of-state budget should be about $28,000, of which tuition and fees are $16,640. Students considering a public college should be mindful that
tuition and fees are approximately one-third of their total budget.
* Four-year private college – The average budget should be about $35,000 per year, of which tuition and fees are close to $24,000. Students
considering a private school should consider their tuition and fees as just over two-thirds of their total budget.
* Two-year college – The average estimated budget for a two-year college is about $13,126 per year. Tuition and fees are just $2,361 of that
amount. Students considering a two-year college should understand that tuition and fees are approximately 20 percent of their total budget.
Math Rule 2 – Know the Impact of One Percentage Point of Interest and Shop Around for the Best Rate on Student Loans
If, after determining the total cost, you and your child decide you need to borrow, keep in mind that even a small change in rate can make a
substantial difference in the overall cost of a student loan. For example:
* A $10,000 private student loan that has an average percentage rate (APR) of 8.69 percent will cost $20,512 in interest if you defer payment
until after graduation.
* Meanwhile, a $10,000 private student loan with an APR of 6.92 percent will cost $14,797 in interest if you defer payment until after
graduation.
In other words, a less-than-2-percent difference in the rate of interest on a $10,000 loan translates to a $5,700 difference in the amount you’ll
have to repay.
Math Rule 3 – Understand the Impact of Your Repayment Decisions
Using the same examples above, recalculate the interest payments if the borrower starts repayment on the student loan immediately.
* The first loan’s total interest owed is reduced to $11,056, a savings of nearly $9,500 in overall interest paid.
* The second loan’s overall interest amount paid reduced to $8,420, a nearly $6,400 difference.
Because payments need to be made consistently, it may not be realistic for many students to start repayment immediately. However, knowing that
interest accrues during the deferment period and that you have to make it up by paying it back later should help parents and students make
smarter borrowing decisions.
Student loan company MyRichUncle offers handy tools for prospective borrowers. One tool, called the APR Monthly Repayment Calculator, provides
student loan borrowers a new process where they can view examples of private student loans and repayment from several different vantage points,
including the cost difference between different repayment terms, different repayment options and the impact of different interest rates on the
overall cost.
For more information on student loans and for online tools, visit www.MyRichUncle.com.
Courtesy of ARAcontent
Seven Common Credit Myths Dispelled
(ARA) – With the economy reeling and home loan rates at a nine-month high, lenders are scrutinizing everyone’s credit history like never before.
Yet, many Americans don’t realize the impact of late payments on their credit score and their finances.
In fact, mortgage loan delinquency reached a national average high of 3.23 percent for the first three months of 2008, according to Trend Data
from TransUnion.
“Being knowledgeable about your credit standing is becoming increasingly more important by the day,” says Lucy Duni, vice president of
TrueCredit.com. “Businesses, ranging from insurance companies to wireless providers and some employers, are now reviewing consumer credit
information as a routine part of their application processes.”
When it comes to credit, knowing fact from fiction and understanding how to act is critical. Here are some common credit myths that may be
preventing you from engaging in effective credit management:
Myth: My score will drop if I check my credit.
Fact: Checking your own reports and scores is considered a “soft inquiry” and has no negative impact on your credit score.
Myth: Reviewing any one of my three credit reports occasionally will tell me everything I need to know about my credit standing.
Fact: Occasional monitoring will give an incomplete snapshot of your credit standing. You should, instead, check all three of your credit reports
and scores frequently throughout the year because the information and scores contained in each of those reports can vary at any given point in
time.
Myth: There’s only one score that all lenders use to determine my credit-worthiness.
Fact: There are literally hundreds of different scoring models used by lenders in the marketplace today.
Myth: Closing old credit card accounts will clean up your credit reports.
Fact: Some people advocate closing old and inactive accounts as a way to manage their credit. In most cases, closing your older accounts will
make your credit history appear shorter, which can negatively impact your overall credit standing.
Myth: Once you pay off a delinquent loan or credit card balance, the item is removed from your credit report.
Fact: Negative information such as late payments, collection accounts and bankruptcies will remain on your credit reports for up to seven years.
Certain types of bankruptcies stick around for up to 10 years. Paying off the delinquent account won’t remove it from your credit report, but it
will update the account to indicate it as “paid.”
Myth: If I don’t pay a medical bill on time because I believe it is incorrect, I can’t be held accountable.
Fact: If you fail to pay a medical bill in a timely manner, the delinquent payment may be reported as late to a credit bureau. If you believe a
medical bill you have received is wrong or was sent to you in error, it’s best to contact the provider to resolve or discuss the matter prior to
the bill becoming past due.
Myth: The “credit bureaus” report people as having either good or bad credit.
Fact: Credit reporting companies compile information that is provided directly and voluntarily by consumer lenders. If you have a credit card,
home or auto loan, or make other monthly payments, details of your payment track record on these are likely being reported by those parties.
For more details about credit myths, visit TrueCredit.com.
Courtesy of ARAcontent
 
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