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FINANCIAL AID 

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What's New in Financial Aid

The Financial Aid Process

Campus-Based Financial Aid

Federal Financial Aid Programs

Financial Aid from the Military

Easing the Cost of a College Education




What's New in Financial Aid

American Opportunity Tax Credit
Federal Pell Grant
Stafford Loans
Online FAFSA Applications
Income Based Repayment
Veteran’s Education Benefits
A Note of Warning

The cost of a college education may seem daunting. However, new federal programs and revisions to existing programs are providing more money for postsecondary education.

American Opportunity Tax Credit (modifies Hope Scholarship)

The American Opportunity Tax Credit (AOTC) is a new tax credit that modifies the existing Hope Credit for tax years 2009 and 2010, making education tax credits available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. In addition to tuition paid it also adds required course materials, such as books and supplies, to the list of qualifying expenses and allows the credit to be claimed for four postsecondary years instead of two.

Under the AOTC a taxpayer will be able to reduce his/her tax liability one dollar for each dollar of eligible credit. If the amount of the American Opportunity Tax Credit for which the taxpayer is eligible is more than the tax liability, the balance of the credit is refundable, up to a maximum refund of 40 percent of the amount of the credit for which the taxpayer is eligible. The maximum annual credit will be $2,500 per student. The full credit is available to individuals whose adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return.

Federal Pell Grant

The College Cost Reduction and Access Act of 2007 increases Federal Pell Grant funding by $11.4 billion over five years. For 2011-12 the maximum award will be $5,550.

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Stafford Loans

As a result of the SAFRA Act, which was part of the Health Care and Education Reconciliation Act, all new Stafford, PLUS, and Consolidation Loans will come directly from the U.S. Department of Education under the Direct Loan Program.

Students who have previously received a federal student loan from a private lender under the FFEL Program will need to complete a new promissory note to receive loans under the Direct Loan Program. Please check with the financial aid office at your school for specific instructions.

This change does not impact the process of applying for federal grants, loans and work-study or the amount of federal aid that students are eligible to receive. Students interested in receiving federal student aid should continue to complete a Free Application for Federal Student Aid (FAFSA) for each school year that they wish to be considered for aid. If you have any questions about applying for federal student aid, please contact 1-800-4-FED-AID.

Of good news to borrowers, effective July 1, 2006, the interest rate for unsubsidized Stafford Loans is a fixed 6.8 percent. Subsidized Stafford Loans originating in 2011-2012 will have a 3.4 percent interest rate. The Parents Loan for Undergraduate Students (PLUS) interest rate is currently set at 7.9 percent for Direct PLUS Loans, and 8.5 percent for FFEL PLUS Loans. For loans that originated after July 1, 2007, the maximum Stafford Loan for freshmen was increased to $3,500, while the maximum amount available for sophomores is now $4,500. The maximum loan for juniors and seniors remains unchanged at $5,500 per year.

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Online FAFSA Applications

Much of the information dispensed about financial aid programs today is done via the Internet. The federal government is a leader in this effort with its Web site Student Aid on the Web at www.studentaid.ed.gov. Here, students and families can get detailed information on all the federal financial aid programs and the application process.

Students can log onto www.fafsa.ed.gov to file the Free Application for Federal Student Aid (FAFSA), the only application allowed for federal financial aid programs and the one used by nearly all colleges to calculate institutional aid. The site also includes worksheets to help you calculate the answers for specific questions on the FAFSA. This preparation makes the actual application process much easier and faster.

A new feature on Student Aid on the Web is the FAFSA4caster, a free tool that allows students and parents to get early estimates of their eligibility for federal financial aid. One benefit to using FAFSA4caster is that when the student is ready to complete the actual FAFSA online, much of the information entered into the FAFSA4caster will automatically populate the FAFSA.

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Income Based Repayment

Income Based Repayment (IBR) is a new repayment plan for the major types of federal loans made to students. Under IBR, your required monthly payment is capped at an amount that is intended to be affordable based on your income and family size.

You may enter IBR if your federal student loan debt is high relative to your income and family size. While your lender will perform the calculation to determine your eligibility, you can use the U.S. Department of Education’s IBR calculator (http://studentaid.ed.gov) to estimate if you would likely benefit from the IBR plan.

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Veteran’s Education Benefits
Yellow Ribbon Program


The Yellow Ribbon GI Education Enhancement Program (Yellow Ribbon Program) is a provision of the Post-9/11 Veterans Educational Assistance Act of 2008. This program allows institutions of higher learning (degree granting institutions) in the United States to voluntarily enter into an agreement with the Department of Veterans Affairs (VA) to share the cost of tuition and fees that exceeds the tuition benefit cap set by the Post-9/11 GI Bill (generally the cost of in-state tuition and fees at the most expensive public institution in the state where the veteran is enrolled). VA will match dollar for dollar any contribution that participating institutions make to cover the remaining tuition expenses.

For more information visit www.gibill.va.gov.

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A Note of Warning

There is no Department of Education (DOE) program to replace loans with grants and there is no processing fee to obtain a Title IV grant from the DOE. Do not provide bank account or credit card information over the phone to unsolicited callers. To report fraud or to file a complaint, contact the Federal Trade Commission, 877-382-4357, or visit www.ftc.gov/scholarshipscam.

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