My Loans Consolidated

It has been over a year that the US is in the crumbling economy marked by layoffs, battered college funds and shrinking private-loan availability. More and more families are now struggling to cover the cost of a higher education. Thousands of students are still waiting for available loans to pay for their education. Fortunately, there is help out there — and more of it in some instances.

Currently more families choose to obtain financial-aid packages which reflect their current financial situation and they do so by asking help from professional judgment reviews. By doing this, families can have their expected contributions recalculated based on what they’re making currently. Usually it is calculated based on prior year’s household income as aid and awards are usually based on. Once the families’ financial situation is reviewed, schools will then re-evaluate students’ financial-aid packages which may qualify them for even more aid including federal grants, loans and need-based scholarships.

According to FinAid.org, if your family has recently experienced layoffs or salary cuts, you will be a good candidate for an adjustment because that qualifies as an individual circumstance. Other families that might qualify are those who took hardship withdrawals from their retirement accounts to cover medical bills.

Although the Department of Education has encouraged colleges to make adjustment for students who need them, every school has different requirements. You can request for reviews over the phone and in person. However, it is best that you do it in writing.

Independent students who do not depend on their parent’s tax return have even an improved chance of getting an adjustment if they were laid off. This is because a federal provisions sets their income from work back to zero because of being laid off, in order to gain financial-aid. Normally, any income including unemployment benefits is always taken into account. Students who have found new jobs don’t qualify.

Federal Loans First

Because of state budget cuts or investment losses, universities were hurt badly. However, many of them are still helping families who are struggling to cover college costs by increasing need-based financial aid. According to the National Association of Student Financial Aid Administrators survey, 55% of colleges surveyed said they increased aid for the 2009-2010 academic year.

In the meantime, federal aid is increasing. The maximum Pell Grant was increased to $5,350 for the 2009-2010 school year, from $4,731 last year, and will grow to $5,550 for the 2010-2011 academic year.

The Hope Credit increased to $2,500, from $1,800, for the 2009 and 2010 tax years. The credit previously applied to the first two years of post-secondary education, but can now be claimed for the first four years.

Students should try and aim for grants and scholarships first before turning to loans. When grants and scholarships are exhausted, they should turn to federal loans before choosing private loans. This is because private loans are often much more expensive and do not have as many flexible payment options. On the other hand, federal loans offer a fixed interest rate and payment plans that allow for hardship deferrals and loan forgiveness.

In the next school year, private loans may be harder to come by because they are being offered by fewer lenders for the next school year.

Now, the online version of the Free Application for Federal Student Aid, or Fafsa, will be available on Jan 1, 2010. This is a great relief from the time-consuming hassle of filling out financial-aid forms. The application form will be accessible at Fafsa.gov and it will be much simpler and shorter. The new online application eliminates questions that don’t apply to the applicant, streamlines information input and provides faster estimates. By applying online, starting Jan 22, students will be able to import tax information from the Internal Revenue Service.

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