Learn from Marvin's Mishaps (continued)
Can it get any worse for Marvin?
Yes, it can, and it does.
In Marvin's second year of school, he is still listed as a dependent student. However, because he used both education awards the previous year, he needs to pay $2,430 in taxes.
Based on his income from the previous year, increased by $9,450 with his education awards, Marvin's Expected Family Contribution for his second year of school is now $5,630. In other words, despite his low-income history, he is now eligible to receive $5,630 less in aid than if he hadn't used his education awards.
What hurts Marvin the most in his second year of school is that he didn't fill out Worksheet C. If he had filled out Worksheet C and listed his AmeriCorps living allowance and education awards received the previous year, he would have been offered another terrific financial aid package.
Because he didn't know to fill out Worksheet C, Marvin is offered a combination of Stafford and parent (PLUS) loans that will gather interest while he's in college.
How much does Marvin lose in the end?
Marvin lost $6,138 in grants his first year and $6,588 his second year. This totals nearly $13,000 in school funds he would never have needed to pay back.
In addition, he would have ended his four years with approximately $12,000 in loan debt. He could have used his education awards to pay off much of that debt and could have finished his undergraduate career with a four-year degree and only $2,550 in outstanding loans. In the worst-case scenario, he ends college with no remaining balance in his education awards and more than $21,000 in loan debt.
How can you keep this from happening to you?
There are two tips that can help you navigate the national service waters. The first is simple, and the second is more complex.
Simple advice: FILL OUT WORKSHEET C. On the FAFSA, Worksheet C cannot hurt you; it can only help you. By filling it out, you can potentially get better aid than you might have otherwise. You can also help prevent the possibility of losing valuable aid and loans. Worksheet C takes a few moments to fill out. It's a no-brainer.
More complex advice: Marvin would have spared himself many headaches, even if he'd still forgotten to fill out Worksheet C, if he had
- Held on to his education awards
- Accepted the grants and Perkins Loans
- Used his AmeriCorps awards to repay the Perkins Loans at the end of his four years of college
However, as well as this strategy would have worked for Marvin, it might not work out for you.
College students come from a wide range of economic backgrounds, and the schools they choose to attend reflect a wide spectrum of costs. An AmeriCorps alum planning to attend a community college will have a FAFSA that looks drastically different from another heading to a private law school, where tuition alone exceeds the maximum in student loans available.
Since one-size-fits-all advice is hard to come by, we offer these three tips:
- Learn as much as you can about financial aid.
- Make an appointment to meet with a financial aid counselor to discuss your scenario. Take it as seriously as you would a job interview.
- Use this phrase (or a variation) to make sure the financial aid counselor understands your circumstances: "I have an AmeriCorps Education Award, but I don't want to use it if it might cause me to lose aid."
