Why do you still have so much interest in my interest?

Hello all!

Just a quick note to share some information that may be of “interest” to you, specifically great news on student loan interest rates for 2020-21.

Interest rates going down, down, down…

You may know (or you may not know) that Federal student and parent loans (Subsidized, Unsubsidized, Parent PLUS and Grad PLUS) have interest rates that are fixed for the life of the loan. Each year when you borrow a loan, your interest rate for that particular annual loan is based on that fixed rate (and it will not change during the time that you pay that loan). This does mean that if you borrow one loan each year of your four year undergraduate career, you could have four different loans with four different interest rates.

Well, the interest rate is set annually based on (wonky stuff coming) the auction rate for 10 year Treasury bills in early May. And, guess what? We are in a tough economic time, so the T-bill rate is at an historic low, so that means student loan rates will also be at an historic low in 2020-21.

How low?

Subsidized Student Loan and Unsubsidized Student Loan interest rates for undergraduates will be 2.75% (down from 4.53% in 2019-20). Parent and Graduate PLUS Loan rates will be 5.3% (down from 7.08% in 2019-20). And Graduate Unsubsidized Student Loans will be at 4.3% interest rate (down from 6.08% in 2019-20).

Of course, remember that currently Federally held student loans have an interest rate of 0% through September 30 anyway, but this is a major reduction in rates which will leave this year’s borrowers feeling some economic impact from the pandemic throughout the lifetime of their repayment.

More information on these rates can be found at CNN or Forbes.

Graduating on to graduate school

“Graduate school? Really? But I just finished my undergraduate degree and now you want me to keep on going? Moneyman, what are you thinking?”

Great questions. And I’m here to answer them. Also the ones you didn’t ask: “How am I going to pay for it?” and “Shouldn’t I go out in the workforce first before I go on to graduate school?”

The choice is yours. Sort of…

In our current economic situation, some of you may be thinking that going on to graduate school after you finish your undergraduate degree is a good choice, and moneyman isn’t going to argue that! Especially if your chosen field is one where advanced degrees are a requirement for later promotions or for entry level interviews, a graduate degree now may be a wise investment.

If we look at data from the BLS (Bureau of Labor Statistics), we can see that a graduate degree pays off (on average) in two ways: increased weekly earnings, and lower unemployment. In fact, in 2019 the income difference between an undergraduate and a master’s degree was $236 per week (or about $12,300 a year). The difference is much higher for a professional degree, like a Law Degree or MD (an average of $686 more per week than an undergrad, or a total of $35,700 per year). Again these are only averages, but they are important to understand the financial potential impact of graduate education.

So if you want to go “back” to school to get your graduate degree, what should expect when it comes time to pay for it? Well, first, let me introduce you to an old friend — the FAFSA. The same form you have been using to apply for financial aid as an undergraduate is also required from you as a graduate student with a few important differences.

  1. You are automatically independent when you apply for financial aid as a graduate student. Even if you aren’t yet 24 years old, your FAFSA can be completed without parental information when you apply for graduate school financial aid (BUT — here is a warning — some law schools and medical schools may ask you to fill in the parental information anyway so that they can use this information to determine if you qualify for their scholarships).
  2. Your application for Federal financial aid will be for loans. The Federal government does not offer any widespread graduate scholarships (like the Pell Grant for undergraduates). Mostly you will do the FAFSA as the first step in qualifying for your Federal loans.
  3. Check to see if your graduate school requires any other financial aid application, either one of their own or using a third-party application system. If they do, fill it out since this may qualify you for scholarship or grant money.

You can likely pick up where I am going here. For graduate school, much of the money available is loans. In fact, you can take a look at Sallie Mae’s report on How America Pays for Graduate School and see that (at least in 2017) about 53% of graduate school costs were covered by student borrowing. The College Board’s Trends in Student Aid 2019 places the percentage paid through loans slightly higher (at 66%).

The “good” news is that between the Direct Unsubsidized Student Loan and the Graduate PLUS Loan you can qualify to borrow the entire cost of graduate education. In addition, there are minimal credit standards for these loans, so no cosigner will generally be needed unless you have an adverse credit history. Of course, these are loans that need to be repaid so you won’t want to borrow more than you can afford to repay.

But what if you want to minimize loans? Well, there is some better news here. Both the College Board and Sallie Mae agree; there is some grant and scholarship money available here (between 15 and 21%). Generally though these scholarships are based on merit and not need. In addition, some of these grants-in-aid may come with requirements for work (like teaching assistantships who lead undergraduate study groups as TAs, or research assistantships where graduate students serve as lab assistants or research fellows). Departments in graduate schools also often have funding sources of their own, so be sure to check with your department head (or better yet their administrative assistant) to see what other funding options are available.

As an example, take a look at UF’s and FIU’s webpages for graduate financial aid and you will see that they match the processes outlined above. And don’t forget the good advice moneyman offered you about private scholarships. Many private funders support graduate education, so make sure to apply for these opportunities.

There is no reason to put off graduate school, especially if you don’t have great luck right now in the job market. Of course, if you are working you also want to take a look at your employer’s benefit package — do they offer graduate school tuition for free? For example, Disney’s Aspire program offers free graduate degrees in a number of career pathways for hourly cast members (and the benefit is even extended during the current closure and furlough). Don’t forget that another great employer may be the university itself (and often tuition reimbursement or remission is a benefit of employment).

What questions about financial aid in graduate school are left unanswered? Let moneyman know by asking a question in the chat.

Please pass… the COLA.

Please pass

For many of you, final grades are in and the Spring semester has ended (in fact, some of you may already enrolled in Summer classes). Hopefully your Spring grade were what you wanted them to be and you are looking at a great end to your semester.

Pass the New Grading Options, please!

I recognize though that some of you may have had a difficult semester, especially with classes moving completely online, the changes in living and working situations, and the need to return home from your campus.

Remember, your grades have great impact on your eligibility for financial aid. Previously, I wrote about the Satisfactory Academic Progress (SAP) requirements for Federal Aid (and if you missed the post, I recommend going back and reading it). As a reminder, we look at three things when we examine your SAP:

  1. Your completion rate (Federally required to be 66.67% or above).
  2. Your cumulative GPA (required to be 2.00 or better).
  3. Your maximum timeframe (150% of the number of credit required for the degree program you are pursuing).

Also remember that if you were already on Financial Aid Warning or working under a Financial Aid Academic Plan while on Probation, you may find yourself with a need to appeal this semester because of your academic difficulties. In a previous post on the CARES Act, I indicated that this semester the Federal Government has offered an opportunity for colleges to ignore classes for which you withdrew if the reason was related to the pandemic. There has been no final guidance offered from the Feds on this yet however so if you withdrew from classes this semester and you are now on a negative SAP status (like Suspension), I would advise speaking to your financial aid officer and letting them know about the CARES Act exemption.

Even if you didn’t withdraw from classes, this is definitely a semester to write an appeal for consideration from the consequences of negative SAP. If your school processes appeals, they can let you know how they prefer these forms or letters to be submitted (ask them or look on their web page), but don’t give up! Of all times, we understand this last semester was tough on you; it was tough on all of us!

The COLA

I also wanted to share a little more advice in this post for those of you looking at post-graduation jobs. With the recent April jobs report showing losses in every part of the job market, it may seem like the most difficult time to be looking for work. That may be true, but the national story is not the story of every part of the country. State and local metro unemployment rates (not yet updated for April) show that different parts of the country have differences in their experience of job losses.

Graduation from college is a time in your life where you can reinvent yourself; this may be the time to think about moving to a new part of the country, or even a different part of the state. You may want to think about relocating to a major city or metro so you can experience urban life if you haven’t done so before, or you may want to try something different than your big city and find someplace more suburban or rural.

Before you run off to start your new life, though, you want to make sure you understand the difference in COLA!

No, not these kinds of COLA

When I say “COLA”, I mean a Cost of Living Adjustment. Think about it this way: a $30,000 income is very different if you earn that in Pensacola, FL vs. Manhattan (NYC), NY. In fact, to maintain the same lifestyle in New York City you would need to earn slightly more than $78,000 (more than twice as much).

Why is that? Well groceries, housing, taxes, transportation, health care – it’s all more expensive in New York City. You may have intuitively known that, but how do you put a number behind that analysis?

Here is where I can help. There are lots of great calculators online that can help you figure this out. Try CNN’s, or the one at Nerd Wallet, or if you know the area of work you want to do, you may want to try this one at salary.com.

Just don’t forget that costs matter. As you are comparing salary offers and trying to decide whether a move to a new city is worthwhile, check the COLA.

Upcoming Plans

Just a reminder that we have a few more topics in our exploration of life after college! Coming up in the next posts: applying for financial aid as a graduate student, creating a post-college budget, and managing those “adult” things — like an apartment lease, car loan, etc.

Feel free to post your questions and suggestions. I’m here for you!

Managing the Interzoom

Hey all. It’s been a few days. And during that time, moneyman has been spending a LOT of time on Zoom! (and Teams, and Skype, and GoToMeeting, and On24…). My entire day seems like a series of videoconferencing; so much so that some days it starts at 8:00 am and doesn’t finish until 6:00 pm.

Your parents will understand this reference!

This image might seem familiar to you too. Maybe you are participating in online classes this way, or maybe you’ve been talking with family or friends via Facetime or one of the web-based platforms that have seem to have taken over our ways of communicating with each other.

Chances are that if you are looking for a job right now, your entire interview process may be held via one of these platforms as well. Interviewing in person? That’s so 2019!

So what do you do? How do you prepare for an online interview? What traps should you look out for? Let’s continue our exploration of the job market for those of you who have graduated or are graduating that we started before with a focus on The Interview!

Securing an interview is the goal of your application, resume and cover letter. The interview is as much your chance to get to know the company as it is their chance to get to know you. With that said, it is very important that you take the time to prepare for your interview.

Some companies will use a preliminary screening interview with an HR (Human Resources) staff person, or an online interview tool (like HireVue or SparkHire). If you are asked to do an online pre-interview chances are it will be asynchronous (meaning you will be able to do this at a time of your choosing and there will not be someone else of the other end of the video connection). Your interview answers will be recorded and will be viewed by members of the committee to determine if they want to advance you to the next round of interviews.

Usually the 2nd round of interviews are done in person, although in our current reality they may be live interviews using a web-based meeting solution (like Zoom or Skype). This will allow you to connect with the hiring manager (the person ultimately responsible for making the decision about who to hire and quite possibly your ultimate boss) and the other members of the hiring committee.

Regardless of whether you will be completing a preliminary, first or (possibly) second round interview, there are some common tips or tricks moneyman recommends:

  1. Dress for the job. You want to look professional. Even if your interview is “just” online, make sure to wear a professional attire. Your appearance makes an impression, and proper dress and grooming are expected for a professional job. Of course, if you are interviewing to be a caterer, the attire is different than if you are interviewing to be a banker. Wear something appropriate.
  2. If you are doing your interview from home, make sure that you are in a private space with a neutral background, and make sure you won’t be interrupted. Let your spouse / roommate / parents / fur-baby know that you need some private time and cannot be interrupted. You definitely don’t want to have to end your interview or be pressured to rush to finish because you need to answer your door or let someone into your room.
  3. Find out who you will be meeting with. If you can, ask who the members of the interviewing team will be and get their names and their titles. There are a few reasons for this: you want to write a thank-you note after your interview (more on this later), AND you want to do some research on the members of the interview committee before you walk in to the room. Look for members of the interviewing committee on Facebook, Twitter, Instagram and LinkedIn. Do a Google search on them. Find out if they have been profiled in their company publications or if information about them is on the webpage. The reason for this is that it provides you a way to connect with each of them when they ask you a question (or when you answer one). For example, if a Ms. Jones is a member of your committee and you know that she enjoys watching college football, you may be able to connect this in some way to an answer you provide in the interview.
  4. Just as you are doing research on your interviewers, you should assume they are doing research on you. You need to go back through your Social Media feeds (Facebook, Instagram, Twitter) and remove those photos and posts you wouldn’t want your mom to see (and if you cannot or don’t want to remove them, mark them private). (Read this article for more information on what employers are looking for on your social media profile).
  5. Have a well thought out list of questions to ask your employer about the job and about the workplace (and make these more than just about the hours and conditions of work). This post offers 22 good questions to ask during an interview and while I support most of them, you need to make sure that the final question (what is referred to as “The Final Steps”) feels natural and not uncomfortable to you as you are asking it (for example asking about the next steps in the process may feel very natural, but asking what concerns the interviewers have about your fit for the job may not feel as comfortable).
  6. If you have your phone with you, silence it. Do not open your phone, look for notices, or pull it out during your interview. Doing so is a sign that you aren’t really interested in the job.
  7. Arrive early. If the interview is online, test your connection the day before and show up to the virtual meeting at least 10 minutes early. If your interview is in person, arrive 20 to 30 minutes early to the site, find parking and where you are going, and be in the interview room at least 10 minutes early.
  8. Be prepared for a writing test, or some aptitude test. Especially for entry-level jobs, it is possible that you could have a written test to check for your written communication. You may be asked to pretend to respond to a customer email, or provide an answer to a question in written essay form. Practice this beforehand by doing research on the company, industry and particular job for which you are applying.
  9. After the interview is over, thank the interviewing committee for their time. Don’t be afraid to take notes during the interview (ask if the committee minds if you do so first). Make notes about what individual interviewers have asked you, or particular responses that stand out to you. This way you can make sure to include this information when you write your thank you notes.
  10. Send thank you notes to every member of the interviewing committee. Make sure each email is individual and personalized. Reflect back on a question that particular interviewer asked you, or something they shared personally. Sadly, many candidates do not send thank you notes; this will make you stand out from your competition and will serve as another way for you to restate why you would be the best candidate for the job. Make sure to send these notes within the first 24 hours after your interview.

There are many more tips I could offer, but this is a good start. It is also wise to practice your interviewing technique with some friends or family members to get a sense of the rhythm of the interview. The University of Mary Washington in VA has a listing of some common generic interview questions you can use to prepare. While you don’t want to memorize specific answers to questions (this is not a dramatic performance), it is a good idea to think about how you might answer several of these in case they come up.

What questions do you have about interviewing? What horror stories can you share about interviews that have not gone well for you? What great tips do you have that I haven’t covered?

Next time we will talk about building your post-college budget and determining the difference in Cost of Living between two different metro areas.

When it rains, it doesn’t just pour… (More CARES Act News)

IMPORTANT NOTE: The guidance in this post was contradicted by later guidance from the Department of Education. See here for the most recent guidance. This post is left as it was originally published for historical purposes.

…Sometimes it seems like it might be a hurricane.

More television coverage than the Weather Channel

One day this week in moneyman’s hometown it rained. More than rain, it felt like a torrential downpour. Thunderstorms, tornado watch, lightning flashes and even some small hail. And that was just from some of the phone calls I was part of on Tuesday! The bad weather came through later in the week!

On Tuesday, the Department of Education released more information on the CARES Act emergency funding for students and institution (they have also started to refer to this funding by the name Higher Education Emergency Relief Fund – or HEERF – so we will be too). The information that was released contradicted some of the guidance that had been issued before (including the guidance I shared on the blog). So here is the latest update. Keep in mind this guidance is our best understanding at this time and could be contradicted by later issued guidance.

  • Although previous announcements indicated no limitation on which students could receive HEERF funds (“Recipient retains discretion to determine the amount of each individual emergency financial aid grant…” from the agreement), new guidance in the FAQs shows that the Department does not want international students or DACA / Dreamers to qualify for this funding.
  • To qualify for HEERF funding, students must have completed or been eligible to complete the FAFSA (and also meet all conditions for financial aid eligibility under section 484 of the Higher Education Act [HEA]). We’ll talk below about what that means, but for now it is important to know that if you want to qualify for this money you will need to complete the FAFSA.
  • Students who qualify for HEERF funding will receive this money as a cash grant from their school; the school cannot use the money to pay for tuition or school charges, although once you receive the funding, you can do what you want to do with it (including sending it back to the school to pay for your charges if you so desire).
  • Students who were exclusively enrolled in online programs will not qualify for HEERF funding. This does not eliminate students in online courses, just those for whom their entire program is online.

So you may be asking: moneyman, why do I care about any of this? Here’s why: if you have been impacted by the fact that your school’s campus(es) had to close and your classes have had to move exclusively online (and who hasn’t been impacted), you could qualify for a grant to help with your living expenses during this time. Remember from the CARES Act, the point of this $12B program (half of which was to go directly to students) was “to provide emergency financial aid grants to students for expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care).”

So how do you qualify? Wit the guidance provided on Tuesday, many schools are going to require that you file your FAFSA (or have already done so) and (as I said before) meet the requirements under section 484 of the HEA. What are those requirements? According to NASFAA’s COVID-19 HEERF page, these include:

  • Be enrolled or accepted for enrollment in a degree or certificate program. 
  • Not be enrolled in elementary or secondary school.
  • For currently enrolled students, be making satisfactory academic progress.
  • Not owe an overpayment on Title IV grants or loans.
  • Not be in default on a Title IV loan.
  • File “as part of the original financial aid application process” a certification that includes
    • A statement of educational purpose.
    • Student’s SSN.
  • Be a U.S. citizen or national, permanent resident, or other eligible noncitizen.
  • Have returned fraudulently obtained Title IV funds if convicted of or pled guilty or no contest to charges. 
  • Not have fraudulently received Title IV loans in excess of annual or aggregate limits.
  • Have repaid Title IV loan amounts in excess of annual or aggregate limits if obtained inadvertently.
  • Have Selective Service registration verified.
  • Have Social Security Number verified.
  • Not have a federal or state conviction for drug possession or sale, with certain time limitations.

Most of these items are covered by just filing a FAFSA and being an enrolled student, so if you are eligible to file a FAFSA and haven’t yet done so, you should now! Notice it says nowhere above that you have to have “financial need” for the funds. The HEERF funding is meant for “everyone” – as long as you aren’t an international or DACA / Dreamer student.

If you get the sense that moneyman is disappointed in this, you would be correct. It is very frustrating that the government added this limitation more than a week after the initial release of guidance which said none of this. I imagine many schools already had made plans on how to share this funding with all students regardless of citizenship status, and now they have to rework their plans (and come up with ways to support the students who don’t qualify under the new rules but still have significant needs.

So how do you ask for this money? This is going to depend by school. At some schools, you won’t have to ask; a small number of schools may just provide money to students who qualify. Most colleges are likely to have an application you will need to complete in order to request funding. FIU’s application is already live (although you must be able to log into their portal to see it). UWF already has their application live as well, although unlike FIU you will need to provide back-up documentation to support your request for funding.

From moneymman’s research, while some schools may ask for back=up documentation, many will just accept your application and your certification as your indication of your need for funds. These will likely be “small” grants (somewhere in the range of $500 to $1000) so many schools may not want to make it too difficult for students to apply. (And I know how ridiculous it is to say that $500 is “small” but when the Pell Grant is over $6000 at its maximum, this is much smaller in comparison)

So be kind to your schools if they haven’t placed their application online yet. We all just got final guidance on Tuesday. It’s been raining ever since.

“…Our Regularly Scheduled Programming”: Life After College

It’s a television cliche: “we interrupt this broadcast for the following breaking news announcement”. After three minutes of an update that you likely already knew because of your phone notification, another announcement: “we now return to your regularly scheduled programming, already in progress”.

If only it were so easy.

Sorry for the interruption!

With some states beginning to make first steps towards reopening (see South Carolina and Georgia), it may feel like we are starting to head back into regular schedules, but moneyman has his doubts. At moneyman’s employer, students will be taking courses online this summer, and it looks like staff won’t be returning to campuses until at least the end of summer. So is a return to normalcy really possible?

Some of you may not have a choice. If you are graduating from your undergraduate education you face a dilemma: enter into (what may be) a difficult job market, or begin graduate school. In the next few posts, I plan (key word here – plan – since breaking COVID-19 financial aid news could derail my plan) to talk about life after college. We are going to talk about building a budget, applying for financial aid as a graduate student, managing what might possibly be your first apartment lease, and how the cost of living may impact your city of residence.

But today I want to start by talking about jobs. In this environment, how do you go about looking for jobs? Where do you begin? How do you interview? What should you expect?

Let’s start with looking for work. In the “old days”, you used to be able to take a look at the “Help Wanted” section of the newspaper (particularly the Sunday edition) and look at all of the employers offering work. Obviously things have changed. Most employers list their jobs right on their websites (including, often, their salary ranges, their benefits and the particular job responsibilities). As an example, take a look at UF’s job page. While you will notice that at the moment they are in a hiring freeze, you can see the information about the staff and student positions or faculty and post-doc positions.

If you have a particular interest (say banking or higher education), chances are there is a website that collects job opportunities nationwide for you in your chosen field (see the links above). You may also want to look at professional associations (particularly national ones) who will often have their own lists of jobs (as an example: actuaries or financial aid officers).

Check out your campus career center. Some of them may have online tools that can connect your academic interest with live job postings (SJR State’s Career Coach page is a great example of a friendly tool that can help you explore options in their service area).

Also make sure to network with friends, family, former employers, faculty and your other favorite people to see what connections they might have. Networking with people you have met during your journey is always a great way to learn about new job opportunities.

Finally, never overlook the opportunity to do an informational interview. This is where you choose someone who has the kind of job you want to have, ask for thirty minutes to an hour of their time, and interview them about their history and experience. This is a great way to learn about the avenues into a career, and provides you some insight into what skills and talents you will need to build to be successful in your chosen field. Berkeley has a great page with suggestions on planning and having an informational interview! Their best suggestion: like I said above, reach out to those you know since there are likely many contacts you didn’t even know you had.

If you haven’t built a professional resume (or haven’t looked at it recently), now is the time do so. FSU’s Career Center has a list of online resources for great resume building. Here are some of moneyman’s tips:

  1. Be sure to get a professional email address. Nothing discourages potential employers more than seeing a resume with 2hot4words@xxxxx.com as the response address (read the article).
  2. Make sure to save your resume as a pdf, especially if you are using a font other than Times Roman or Calibri. You don’t want your beautiful professional resume (which is perfectly formatted) to be viewed in a messy unorganized manner. More on the choices in this article.
  3. Always write a cover letter. The cover letter is your chance to show how your experience on your resume perfectly matches what you read in the job description. Here is a great description of the pros and cons of the cover letter. A great cover letter matters!
  4. Like your essays in college, spelling and punctuation matter. Most managers make a decision within 10 seconds of seeing your resume and you want your resume to stand out, but not in a bad way.

OK so this post is running longer than I thought it would, so we will cover the job interview next. For now, where are you searching for and finding job postings? What are your favorite tricks to identify new opportunities?

“The greenbacks are coming, the greenbacks are coming…”

IMPORTANT NOTE: The guidance in this post was contradicted by later guidance from the Department of Education. See here for the most recent guidance. This post is left as it was originally published for historical purposes.

With apologies to Paul Revere. He was much more concerned with the Redcoats (aka the British). Today, we’re much more focused on the “greenbacks” – aka the moolah, the Benjamins, the bread, the dough, (I could go on like this for a while) – or to put it simply, the money.

“And the money came riding in…”

As in, when will the money from the CARES Act (which I discussed here) and how will students apply for it and receive it?

Well, your friend moneyman has some answers, and lots of questions. Here goes!

On Thursday afternoon, Secretary of Education, Betsy DeVos, released a letter to college presidents (and copied to Directors of Financial Aid and Chief Financial Officers) nationwide explaining that the Department of Education was putting a priority on delivering 1/2 of the Emergency Stabilization Funds that were promised by the CARES Act to schools. Which half? The half that is going to students!

If you remember, this money has to be spent on students to help with expenses related to their education moving online (from the Act – “…expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care).”)

So how much will colleges receive? Take a look at the list provided by the Department of Education to find your school to see how much your school is receiving (and remember that the list is in school code order). The list shows both the total allocation as well as the amount specifically for students. If you are interested to see how these amounts were calculated, you can find the answer here.

The amounts are large here, but what does it mean for an individual student? So while the agreements that schools have to sign to receive this money (and the money will be available as soon as Wednesday) are also published, there are very few limitations on how the school can award this money.

For example, students don’t have to file a FAFSA to qualify. You don’t have to show financial need, and you don’t even need to be a US Citizen (or Permanent Resident). These funds can be awarded by schools to any attending student therefore, and in addition any amount awarded doesn’t have to follow the normal rules for overaward (or scholarship displacement). So the money gets to go straight to the student and will have no impact on other financial aid.

There is also no limit or requirement placed on the amount of the award which a school can make for a student (although the Secretary recommends no more than the Pell Grant maximum – currently $6,195). The funds must be spent by the college within one year of the date they sign the acknowledgement form.

So to go back to the main question, how do students apply for these funds?

The Secretary doesn’t specify and schools can choose their own process. Schools can also decide how they want to apply these funds (tuition, technology costs, fees, textbooks, etc). This means that for students you are going to need to speak with your individual financial aid office to find out how they are planning on offering this aid, and that there may be a delay while your school figures it out.

At moneyman’s college we are carefully examining the rules and options for these funds and will probably have a combination of some kind of online application for funds, and some categories where we will automatically award funds to students. We will hope to have some decisions in the next week.

So if you are a student, and you need some emergency funds, moneyman’s best advice right now is to be in touch with your school’s financial aid office and let them know that you have need for funds. Ask if you can be placed on a waiting list, or if there is some kind of application you can add your name to. There will be more information coming from your school, you can be sure!!

In the meantime, what other questions do you have?

Expecting the Unexpected – in your PJs

Right now I’m going to guess that almost everyone who can is spending a lot more time in their “casual clothes”. So I’m not talking about those heroes of this new world we live in — the nurses, doctors, EMTs, grocery store workers, mail carriers, etc. — who still have to leave the house to go to work. But for many of us who can either stay at home to work, or for whom (unfortunately) work is not an option right now, I imagine our dressing patterns have changed.

In fact, the Washington Post recently featured a story they entitled “Business on top; pajamas underneath” all about the move to much more casual “work” attire.

Credit to @calebwallace_17 on Twitter

So maybe it isn’t PJs, but it counts.

Today what counts for this post is a financial aid PJ. And, no, I am not talking about money-themed bedwear, but rather what we call in financial aid a “Professional Judgment”.

When you apply for financial aid, you always use the income from the prior–prior year (so if you apply for the 2020-21 academic year, we use your income from 2018). Why is that, you ask? Well (I answer), remember that the FAFSA “goes live” as of October 1 the year prior to the start of the academic year (in this case, October 1, 2019) and we have to use the last completed income year as of the date the FAFSA goes live (which in this case would be the 2018 income tax year). [I wrote about the FAFSA in a previous post that will give you an overview of the form.]

So to visualize this, it might help to use the image below. You can see that the income you (and your parents?) earned from January to December 2018, for which you filed a tax return in April 2019, and then filed a FAFSA as early as October 1, 2019, is finally used to determine your financial aid for the 2020-21 academic year (with bills usually due in late Summer 2020 and early winter 2021).

The Application Cycle

So the income determining your financial aid earned as long ago as January 2018 can be used to determine the financial aid 20 months later (August 2020)? What? (insert screeching sound here) But what if your income has changed since then? What if you are unemployed or if (heaven forbid) a parent has passed away? What happens then?

Put on your pajamas, grab a snack, and let’s talk about PJs (Professional Judgments).

But first one more aside. There are lots of different kinds of Financial Aid Professional Judgments and we’ve reviewed one of them already here on the blog. When a student is otherwise dependent on their parent(s) for financial aid purposes (see the review of that here), there may be extenuating circumstances that convince a financial aid officer to declare the student independent (more on that process here). This is a kind of professional judgment (relying on the financial aid officer to determine if your circumstances warrant an override of the official definition of dependence) and financial aid officers have many other kinds of professional judgment they are granted.

Another kind of PJ (professional judgment) applies to the situation when a family has lost income (perhaps due to unemployment or to the death of a parent). While the FAFSA requires an analysis of 12 months of income, a financial aid officer is allowed to choose (in exceptional circumstances, and on a case by case basis) a different 12 months if the family’s situation calls for it.

So for example, if a family files the 2020-21 FAFSA using their 2018 income, but a parent loses a job in June 2019, the financial aid officer could use the 2019 income, the expected 2020 income, or the income from June 1, 2019 to May 31, 2020 (or indeed any other 12 month period they thought was appropriate). This flexibility is an option for financial aid officer (never a mandate) and each financial aid officer may make a different decision based on their professional judgment. But there are a few common attributes which, as a student or parent, you should know:

  1. The decision must be made on a case-by-case basis. For example, a financial aid officer cannot say that every one who lost a job due to the COVID-19 situation will be granted an override, but she could review each case one at a time and reach the same decision for each.
  2. The decision must be based on adequate documentation. The definition of adequate is left to the financial aid officer but almost always requires submission of information from a family documenting the condition which caused the request. This might include a notice of termination (job), unemployment compensation forms, a doctor’s note, or a death certificate. Again, the requirements can vary from officer to officer, although most will ask for a letter from the family explaining the situation and some type of third-party documentation.
  3. There is no mandate that a PJ be offered, but Federal Student Aid does encourage those of us in the financial aid offices across the country to take into account the situations many of our families are experiencing during difficult times.

Financial aid officers are not limited to just changing income information when they make a PJ on the FAFSA. Indeed they can override any data element on the FAFSA (and sometimes do) as a response to a family’s special circumstances (they cannot however change the EFC formula). Here are some examples I have seen:

  • Overriding a family’s cash/savings/checking amount when a family has sold a primary residence but hasn’t yet purchased a new one (remember that the value of a home is not reported on the FAFSA).
  • Adding to Federal Taxes paid to reflect a family’s additional medical expenses which were not covered by insurance.
  • Changing the number in family or adding to Federal Taxes paid to reflect expenses provided to support family members who do not reside with the family but for whom significant cash support is provided.

While these are just a few examples of Professional Judgment, the list of what a financial aid office can do is almost limitless. They can change any individual FAFSA element they want if you provide a documented rationale with the relevant third-party documentation. Remember, they can do it, but you have to prove your case. You have to explain what makes your circumstance unusual and unexpected.

Some colleges even have their policies written on their webpage with their requirements clearly laid out. Take a look at UCF’s PJ (Professional Judgment) web page or Pensacola State’s PJ Request Form.

Of course, you might want to put on your comfortable clothes before you read on!

See you next time!

Pound the Alarm (Coronavirus CARES Act)

Mad props to Nicki Minaj. That’s it. No other reason. Just love for her.

OK, well, I will say that if there is a big alarm bell for higher education, we pounded it these last few weeks! “Somebody call 911… shawty fire burning on the dance floor”. Never mind, that’s Sean Kingston.

Doesn’t matter what you call it; we’re in pretty urgent times. Can we all just hit snooze?

Regardless of the background music you have running in your head right now, it is pretty clear that we are in emergency times. Last week, the US Congress passed (and the President signed) the CARES Act (the “Coronavirus Aid, Relief and Economic Security Act”), also known as the $2 trillion relief package. There are some pretty important parts of this law and today’s post is going to review them (and what might have impact for you). If you want to read along in the final text of the law, feel free to do so — you can find the text here. Just keep in mind that the final bill is 335 pages long; I’ve picked out the important pieces for you and for higher education below.

First let’s talk about the individual taxpayer checks that are coming. Under Section 2201 of the Act (pages 55-60), a new program called “Recovery Rebates for Individuals” is created. Under this program, most taxpayers will be getting a stimulus check in the amount of up to $1200 per adult (with income caps) and $500 per child under the age of 17 in the household. CNN has a pretty handy calculator to determine how much you can expect in your stimulus check. Remember, this is based on your 2019 Adjusted Gross Income (if you already filed your 2019 Federal Income Tax Return) or your 2018 return. Since I know you read every blog entry with care, just a reminder that you can learn a lot more about Federal Taxes by visiting this section of the blog.

The next big item is the amount of Emergency Grant funds for colleges and universities. The Act sets aside about $12.5B in emergency funds for institutions to help students during this crisis; you can find the rules for this under Section 18004 (pages 287-288) of the Act. These funds can be used in the following manner: 1/2 MUST be used to help offset student expenses by providing direct grants to students, while the other 1/2 CAN be used to offset the institution’s expenses in moving to online education (including technology, payroll, etc). Individual colleges will see large amounts of money directed to them under this program; the American Council on Education ran an estimate of how much they think colleges will each receive (based on enrollment, Pell participation, and other data). These numbers are estimates only, but as an example USF (Main Campus) is expected to receive $29.5M, UCF to receive $47.6M, Miami-Dade College to receive $47.4M, Broward $27.5M, and so on. To be clear, these are only estimates and no final rules have yet been shared by the Department of Education (nor do we as colleges have this money yet since the law was just signed Friday) but we know that whatever comes this will be very helpful for you, our students.

And the bill goes on from there. Below I am going to highlight some sections of the bill, page numbers, and a brief description of the relief coming from this part of the Act. All of these are higher education changes:

  • Section 3503 (page 116) – waivers of matching requirements for schools for Campus Based Fund (SEOG and FWS). This means that schools do not have to match Federal awards in these programs with their own dollars (it has been a 75/25 match) allowing schools to use this money in other ways to help students. This waiver is for two years (2019/20 and 2020/21).
  • Section 3504 (pages 116-117) – use of Supplemental Education Opportunity Grant (SEOG). This section allows colleges and universities to use the funds awarded to them by the Feds in SEOG to now help both undergrads and grad students and to ignore the previous rules about awarding order (reserving this money for those who have Pell Grants first).
  • Section 3505 (page 117) – paying Federal Work Study (FWS) students. This section specifically allows schools to pay their FWS students if the campus has to close (although online classes are still being offered) and students cannot work any longer on campus.
  • Section 3506 / 3507 (page 118) – for students who withdraw, ignoring usage limits. Pell Grants and Subsidized Loans have aggregate limits so that once you use your limits, you can’t have any more Pell (or Subsidized Loans). Under this section if you withdraw during the period of national emergency, the Pell or Subsidized Loan you received won’t count against your limits.
  • Section 3508 (pages 118-119) – Institutional refunds and loan flexibility. Again this section is for students who withdraw during this emergency. Under this section, neither institutions nor students would have to return unearned aid to the government (like we usually do if you don’t attend at least 60% of the term). In addition, if a student withdraws, the amount of any Federal loan borrowed for that period would be cancelled.
  • Section 3509 (page 119) – Satisfactory Academic Progress. This section says that for students who withdraw due to the emergency, colleges can ignore the courses that they have withdrawn from in determining their completion percentage (which has to be above 66.6%).
  • Sections 3510, 3511, 3512 (pages 119-124). These cover foreign institutions, emergency waivers, and HBCU capital financing. Important for these schools, but not relevant to many of you students.
  • Section 3513 (pages 124-125) – Federal student loan relief. Under this section, Federal student loan interest rates are set to 0% and no payments are required for 6 months (until September 30, 2020). In addition, all forms of collection (wage garnishment, reducing tax refunds or other federal benefits) are halted.

There are some other Higher Ed sections but they are mainly technical (pages 125-130). The only one that may interest some of you is the waiver of teaching service for those receiving the TEACH grant during this time.

Sooooo…… lots of changes. When does this all go into effect?? Well technically as of the day the law was signed but we usually get some guidance from Federal Student Aid at the Department of Education on how to implement changes. We have no guidance or announcements yet on the CARES Act so stay tuned. There is a lot more to come.

For now, ask your questions. I’m sure you have some. I can’t promise answers but I will sure try!!

Why the sudden interest in my interest? (Coronavirus Update 2)

It has been quite a week. I’m sure you feel the same. I’m trying to balance my need to be updated constantly with the latest news with a desire not to be constantly inundated with what’s going on.

Last night I took a break and watched a great old movie. It was just the break I needed; light and comedic, and just fun. What are you doing to try to find time to balance? What tricks are you using if you are working out of the home (in a gas station, restaurant, grocery store) to relax, and if you aren’t able to work right now, what relaxation tip works for you? I’m interested!

Right now it may be hard to find balance. How are you doing it?

Speaking of interest, today’s update focuses on some interesting news: what is happening with student loan interest. As you may be aware, the President has put a temporary hold on interest for all Federally held educational loans (this includes Direct Subsidized Loans (in repayment), Direct Unsubsidized Loans, Direct PLUS Loans (both for parents and for graduate students) and Direct Consolidation Loans.

But what does this really mean for student (and parent) borrowers? And what do you need to do in order to make sure that your loans are taken care of during this crisis? Well, moneyman has you covered.

According to the announcement by Secretary of Education, Betsy DeVos, interest on education loans held by the Federal government will be set to 0% for a period of at least 60 days. This means that for students still in school, interest will not accrue for their Unsubsidized Loans. For students in repayment, their loans will still have the same monthly payment amount, but their regular monthly payment will be applied entirely to their principle.

For borrowers in repayment, there is an ability to suspend repayment by asking for a forbearance. This means that (especially if you are struggling right now or need some relief for payment) you can qualify for a suspension of payments and during the time of that suspension of payment no interest will accrue. You must request a forbearance from your servicer (the company that processes your payments); don’t simply stop making payments (although borrowers who are 31 days late or more will automatically be placed on forbearancee). If you are possibly going to qualify for Public Service Loan Forgiveness you also don’t want to stop making payments since you need to have 10 years of repayment (120 months) to qualify.

Well interest keeps on building in student loan interest so here is some breaking news. As I was working on this post, some details are coming out about the $2 trillion stimulus package passed today by Congress. According to CNN, the law includes a provision suspending student loan payments without payments for 6 month (through September 30). Stay tuned for more details as we know them. Another article specifies a few other financial aid related items which are part of this bill: 0% interest during these 6 months, the ability to keep unspent Pell Grant or student loans due to withdrawals, and the waiver of any penalties for further financial aid due to these withdrawals.

More information will be coming I am sure. For now, though, let me know how you are finding balance in these days. I will be watching some silly old comedies.