Beware Back-to-School Tuition Scams

College age girl on bench reading book at schoolBack-to-school season means a flurry of shopping — and a flurry of scams. Scammers know that students and their parents are caught up in a frenzy of preparations and errands and are, therefore, more likely to fall victim to schemes. As you get ready for school, look out for these scams targeting college students and parents of private school students that tend to peak before the start of the school year.

The tuition fee scam
How it plays out: A college student, or the parent of a private school student, receives a phone call from a caller introducing themselves as a secretary or administrator at their school, or their child’s school. The caller claims the student or parent owes tuition fees and will not be allowed to return to school for the coming semester unless the fees are paid. They may explain that a tuition check has bounced or that a credit card payment didn’t clear. Alternatively, the caller claims the student’s grant or scholarship was abruptly canceled and the student is now being billed for the full tuition fee.

The caller insists on being paid the outstanding sum immediately or the student will lose their spot in the school. The “secretary” or “administrator” provides the victim with detailed information for wiring money or dropping off the cash at a private address. Of course, once the money is sent, it will never be seen again.

Protect yourself: This scam is easy to spot because most schools will not insist on immediate payment, or payment through a wire transfer. If you receive a call like the one described above, ask the caller detailed questions about the school, their position and the money owed. If it’s a scam, the caller will not be able to answer well. You can also explain that you need to see the actual bill before making any payments, and that you’d like to pick up the bill yourself from the school. Finally, you can insist on calling the school directly to make the payment.

The student tax scam
How it plays out: In this scam, someone allegedly representing the IRS calls a college student at a public university and claims they neglected to pay their student tax. The caller explains that the student tax helps fund the university and that failure to pay this tax can result in disqualification from class and possible imprisonment. They will insist on immediate payment via prepaid gift card or wire transfer.

Protect yourself: You can spot this scam by remembering that the IRS will always first contact people by mail. Also, the IRS won’t insist on being paid through gift card or wire transfer.

The scholarship scam
How it plays out: A scammer reaches out to a college student telling them they’ve been guaranteed approval for a scholarship or grant. The only catch is that the student must pay a hefty fee to receive it. Unfortunately, the scholarship is bogus and, if the victim falls for the scam, they will never see that money again.

In a similar scam, a victim is instructed to pay a fee to a company that will allegedly file a Free Application for Federal Student Aid (FAFSA) form in their name. Of course, no FAFSA form will be filed, and the money paid for this “service” will go directly into the scammer’s pockets.

Protect yourself: Student scholarships and grants are designed to help students and their parents pay for education; they don’t charge for eligibility. If an alleged scholarship claims to charge a fee before granting approval, it is most certainly a scam. Also, no company will guarantee approval for a scholarship or grant; there is always a vetting process of some kind before eligibility is determined. Finally, there is no reason to pay to have a FAFSA form filed; it can be completed easily online here. For additional help, college students can contact the financial aid office at their university.

Scammers are out in full force before the start of the school year. Don’t let them make the grade! Stay alert and stay safe.

Your Turn: Have you been targeted by a back-to-school scam? Tell us about it in the comments.

Learn More:
scam-detector.com
mysuncoast.com
fraud.org

All You Need To Know About Applying For FAFSA

Young black mother helps her daughter fill out the online FAFSA documentsFree Application for Federal Student Aid (FAFSA) season is in full swing! Whether you’re a college student, a high school senior or you’re seeking financial aid for your college-age child, it’s time to fill out those forms. The rules and deadlines can be confusing, but we’re here to help. We have answered all your questions on applying for FAFSA.

When is my application due?
There are three FAFSA deadlines you need to know: federal, college and state. The federal FAFSA submission has one set date, while each college and state sets its own separate deadlines.

The 2020-21 FAFSA form became available on Oct. 1, 2019. This form is for the 2020-21 award year, which runs from July 1, 2020, to June 30, 2021.Online applications for this form must be submitted by 11:59 p.m. Central time (CT) on June 30, 2021. Any corrections or updates must be submitted by 11:59 p.m. CT on Sept. 11, 2021. You can look up the 2020-21 deadlines for your college and state using these links: College deadlines 2020-21, State deadlines 2020-21.

You can still submit an application for the 2019-20 FAFSA form, which became available on Oct. 1, 2018. This form is for the 2019-20 award year, which runs from July 1, 2019, to June 30, 2020. Online applications for this form must be submitted by 11:59 p.m. CT on June 30, 2020. Any corrections or updates must be submitted by 11:59 p.m. CT on Sept. 12, 2020. You can look up the 2019-20 deadlines for your college and state using these links: College deadlines 2019-20, State deadlines 2019-20.
Who is eligible for FAFSA?
To qualify for FAFSA, you must meet the following criteria:

  • Demonstrate financial need.
  • Be a U.S. citizen or an eligible non-citizen.
  • Have a valid Social Security number (unless you are from the Republic of the Marshall Islands, Federated States of Micronesia or the Republic of Palau).
  • Men must be registered with Selective Service.
  • Be enrolled or accepted for enrollment as a regular student in an eligible degree or certificate program.
  • Maintain satisfactory academic progress in college or career school.
  • Have a high school diploma or a recognized equivalent.

There are more eligibility requirements for FAFSA. You can view the full list of FAFSA criteria.

How do I apply for FAFSA?
You can now apply for FAFSA using the free myStudentAid app. If you use the app with an Apple device, be sure to disable the “smart punctuation” feature before filling out the form to avoid errors.

If you’d rather not download an app, you can also apply for FAFSA online at FAFSA.ed.gov.

You can still send in your application via snail mail, but this is not recommended for several reasons: The online applications are simpler to complete and generally have fewer errors because they only ask you relevant questions and are designed to detect common errors. Your application is also likely to be processed quicker when submitted online. Finally, when applying for FAFSA online, you will be given the option to have your IRS data automatically retrieved and then populate the relevant fields, significantly lowering your chances of errors in your tax reporting.

What are some common mistakes people make on the FAFSA form?
A careless mistake on your form can delay your application and limit your eligibility for aid. To avoid errors, be sure to read every question carefully and to review your application before submitting.

Here are some of the most common errors on FAFSA forms:

  • Leaving blank fields
    If a question does not apply to you, enter a “0” or write “Not applicable.”
  • Using commas or decimal points in numeric fields
    There is no need for either of these symbols; simply round to the nearest dollar.
  • Listing an incorrect Social Security number or driver’s license number
    Triple-check these numbers to ensure accuracy.
  • Using the wrong name
    Be sure to use your full legal name as it appears on your Social Security card.
  • Entering the wrong address
    Use your permanent address only to avoid confusion.
  • Forgetting to list your college
    Be sure to obtain the Federal School Code for the college you plan on attending and list it along with any other schools where you’ve applied for admission.
  • Forgetting to sign and date
    Don’t forget this crucial step!

Can I apply for FAFSA as an independent?
If for whatever reasons your parents are not paying any part of your college tuition, you may be able to apply for FAFSA as an independent. If you can apply as an independent, your parents’ income will not be considered when your eligibility is determined.

You may be able to apply for FAFSA as an independent if you meet any of the following criteria:

  • You will be 24 years of age or older by Dec. 31 of the award year.
  • You are an orphan (both parents deceased), ward of the court, in foster care or you were a ward of the court at age 13 or older.
  • You are a veteran of the Armed Forces of the United States or serving on active duty.
  • You are a graduate or professional student.
  • You are legally married.
  • You have legal dependents (excluding a spouse).
  • You are an emancipated minor or in legal guardianship.
  • You are homeless.

If you do not meet any of these requirements, consider contacting a financial aid administrator to discuss your options. The administrator may be able to provide a dependency override if you can prove you’re living or fleeing from an abusive or hostile home environment. They may also be able to deem you eligible for unsubsidized Stafford loans if you can prove your parents no longer support you financially. Finally, you may qualify for some education tax benefits, such as the Hope Scholarship tax credit and the student loan interest deduction.

The sooner you apply for FAFSA, the greater your chance at obtaining the limited financial aid offered by your college and state. Don’t delay; apply today!

Your Turn:
Have you filled out your FAFSA forms? Share your tips with us in the comments.

Learn More:
nasfaa.org
studentaid.ed.gov
fastweb.com
collegebound.net
studentaid.ed.gov/sa/eligibility/basic-criteria

FAFSA Changes

What to know about the new FAFSA schedule

The process for applyingfafsachanges_featured for financial aid has been changed, so if you are planning on filling out the Free Application for Federal Student Aid (FAFSA) soon, here is some information you need to know.

On Sept. 14, 2015, President Obama announced a new set of regulations that would change the schedule for applying for student aid through the FAFSA process. These changes will impact millions of students who will submit an application when the 2017-18 cycle begins.

Now, students who are submitting a FAFSA will have the opportunity to do so three months earlier than students in previous years could. Instead of submitting the 2017-18 FAFSA on Jan. 1, they will be able to get the process over with in the fall and submit it as early as Oct 1. There is no change to the schedule for the 2016-17 FAFSA, which became available Jan. 1, 2016.

“The earlier submission date will be a permanent change, enabling students to complete and submit their FAFSAs as early as October 1 every year,” states the website maintained by Federal Student Aid, an office of the U.S. Department of Education.

Families that have gone through the process in previous years now need to get used to this new schedule. Furthermore, it means that earlier income and tax information must be used when filling out the applicable financial information.

“For example, on the 2017-18 FAFSA, students (and parents, as appropriate) will report their 2015 income and tax information, rather than their 2016 income and tax information,” states the Federal Student Aid website.

This change doesn’t just mean you need to pay extra attention when reporting tax information; it has far-reaching implications for families looking to plan their taxes and educational finances most effectively.

“To secure the best aid offer, you may need to tweak the way you manage income and assets that have an impact on financial aid,” says Kaitlin Pitsker in an article from Kiplinger’s Personal Finance. “For example, if you plan to realize capital gains on your stocks or bonds, you’ll want to do so before January 1 of your student’s sophomore year of high school to avoid having the money count as income on the FAFSA – a year earlier than on the old timeline.”

Students frequently pay for school using a combination of sources. Money obtained through the FAFSA process is often supplemented by savings accounts from family members, such as 529 educational savings plans. Grandparents who hold 529 savings plans should be aware that the new FAFSA schedule also impacts them.

“Previously, withdrawals from such accounts counted as student income during the first three years of college,” states Pitsker. “Now, distributions made during the last two years aren’t reported on the FAFSA. So if you can, delay cashing in on the grands’ generosity until those final years.”

While adjusting to the new schedule, make sure to reach out to your financial institution for answers to any questions you have about paying for your child’s education. You can also refer to the table outlining these changes that is provided by the Federal Student Aid website at https://studentaid.ed.gov/sa/resources/2017-18-fafsa-process-changes-text.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Navigating the Free Application for Federal Student Aid Process (FAFSA)

A guide to some of the most important FAFSA questions

The heavy burdenFafsa_Featured of student loan debt that so many people in our country face is always in the news, so new students and their parents know exactly how important it is to minimize their costs. Obtaining financial aid is dependent upon filling out the Free Application for Federal Student Aid, which means there is a lot of pressure surrounding the task of filling it out correctly.

The first thing you should know is that the form is very important, and you should fill it out no matter what. This may seem obvious, since it is required for anyone who hopes to receive federal loans or grants or who may be admitted to a work-study program, but a surprising number of students do not submit the application at all.

“Unfortunately, the standard FAFSA has over 100 questions asking for everything from your net worth to your parents’ assets, causing many overwhelmed students to never complete it,” says Alexandra Rice for U.S. News & World Report.

The length of the application isn’t the only reason students might forgo submitting it. One of the most common reasons is that students think their parents’ income level is too high to qualify for financial aid.

“This is a costly misconception,” states Rice. “It’s important to be aware that many colleges offer merit-based aid that doesn’t even consider financial need; it’s based on achievements such as grades, SAT scores or athletics. In other words, the amount of money your parents make doesn’t matter for this type of aid, but you can’t get it if you don’t fill out the form.”

So when it comes time to fill out your FAFSA application, you should be aware of some of the most important questions and answer them carefully to help ensure you get the most aid that you are entitled to.

Kim Clark from Time Inc.’s Money.com points to questions 24 and 25, which deal with the education level of your parents.

“Don’t brag!” cautions Clark. “If either parent attended but did not graduate from college, then just click on high school. There are some extra scholarship programs for people whose parents never finished college.”

Question 31, dealing with work study, is another one to watch out for. You should answer yes regardless of whether or not you currently think you want to work while attending school. You aren’t obligated to take a work-study position even if you answer yes, and it keeps you in the running so your options are open when the time is closer and you can assess how you feel.

Not only do work-study jobs help you earn some money to put toward your tuition, but the income doesn’t impact your financial aid eligibility in future years. On the other hand, if you don’t try to gain a work-study position and later decide you need to work and take an off-campus job, those earnings could impact that future eligibility.

“Also, research shows that students who spend 10 to 15 hours a week on work-study jobs do better in college than those who don’t work,” states Rice.

Questions 41 and 42 deal with the student’s savings and investments, which have a big impact on how much aid you receive. It is important to pay extra attention to these questions in order to accurately calculate the exact sum of investments and savings that belong specifically to the student.

“Every dollar of savings in the student’s name reduces need-based aid by about 20 cents, while money in parents’ accounts — even if it’s designated for the student — reduces need-based aid by a maximum of 5.64 percent,” states Rice.

If you take the money that the student has saved up for college and contribute it to a 529 college savings account, you can make a big difference in how much need-based aid you are eligible for. This may seem strange, since that money is intended for the student to use during school, but 529 accounts are technically parental assets, which you will disclose in question 91.

“Notice that the question asks how much the student’s savings and investments are worth ‘as of today,’” states Rice. “That means you have until the day you fill out your FAFSA to move the student’s money into a 529.”

This brings us to question 91, which is where one of the most common and expensive mistakes can happen. That error is mistakenly reporting parental assets as too high by double reporting certain assets as being owned by both the parents and the child. If the student’s parents are divorced or if they meet other separation criteria, the student needs to include only the assets of the parent they live with most of the time.

Another important thing to keep in mind with this question is that retirement savings and the net value of your home are exempt according to FAFSA’s fine print. This means that while you do need to include the value of 529 savings accounts and other taxable investment accounts, you do not need to include pensions, 401(k)s, IRAs or the value of life insurance plans.

Even though college hasn’t started, this is one questionnaire that it truly pays to take seriously, so keep these tips in mind when it comes time to fill out your FAFSA application.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.