Sunday, August 06, 2006

NEW Student Financial Aid Breaks for Business Owners, Welfare Recipients, Military

Several aspects of the regulations for student financial aid calculations changed on July 1, 2006. If you own a business, if you receive some kinds of government assistance payments, if you are active military, then you need to look at these changes. Then you might want to change your financial aid application -- or, if you hadn't bothered before, you might want to apply now.

OK, first a little background. If you are a student this fall, any time after January 1 of this year you should have filled out a FAFSA (Free Application for Federal Student Aid). The goal of this application is to for the Feds to calculate your Expected Family Contribution (EFC). Your job is, as far as legally permissible, to minimize your EFC. The smaller the EFC, the more aid you can get. If you get loans, this could even be the difference between a subsidized vs. an unsubsidized loan. The subsidized loan is better because the interest is completely paid for you till you graduate.

Part of the FAFSA involves listing the assets of student and parents. In the past, if you had a business, you had to list the business as part of your assets. Business assets aren't counted as much as household assets are -- but still, higher assets of any kind results in higher EFC, which is bad.

Well, now I see this on the page of the 2006 changes on the FAFSA web site:

"Small Business - The net worth of a small business should not be reported if the family owns and controls the business and employs fewer than 100 full-time or full-time equivalent employees (FTE)."

This is really big news. If the student and/or parents own and control a small business, it might have tens of thousands (even hundreds of thousands) of dollars in assets. All of a sudden, these assets can now be completely left off the FAFSA. This could make an enormous difference in your financial aid.

So if you didn't know about the change, and if you listed any business assets when you filled out your FAFSA, you can change it to remove those assets, and thereby reduce your EFC. It is not too late to apply, or change your application, for this fall!

Other 2006 changes listed on that page give ways to reduce your EFC if you are active military, or receive government assistance. There are changes in the way you report things like 529 plans and Educational Savings Accounts, and there is also information about a new grant program for freshmen and sophomores.

1 Comments:

At 9:56 AM, Blogger 100Student said...

Hello,

I recently published an article on the dangers and benefits of student loans and other forms of college financial aid – here is a quote from it, in case you are interested:
Student loans repayment can be a real nightmare without adopting some strategies that would help the new graduates to organize their social and financial life. Here are some strategies they can use to do this:
- An additional part-time job;
- Freelancing is another option (meaning that they can do particular pieces of work for different organisations, without working all the time for a single organisation);
- They should try to keep their living expenses as low as possible (live in a smaller apartment, live with a roommate to share some of the expenses, find an apartment that is closer to the job, to eliminate the extra-expenses for transport etc.);
- To apply for forbearance (this is an immediate solution for hard times when the new graduate is in impossibility to re-pay the amount of money and the need for student loan consolidation becomes apparent; it is a temporary period, when the graduate can postpone or delay his or her re-payments until a later time on a federal or direct loan after the beginning of the re-payment, and when the student doesn’t qualify for deferral). The forbearance must be applied through the lenders of the loans.
- To consolidate the payments.
If you feel this help, please drop by my website for additional information, such as federal student loans information or additional resources on private student loans .

Regards,

Michael

 

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