Beware the financial aid information gap

There are two kinds of information gaps for students navigating through the frequently intimidating cost of going to college, says Nathan Daun-Barnett, associate professor and chair of the Department of Educational Leadership and Policy in the Graduate School of Education

The first information gap affects aspiring students hoping to get into colleges and universities and looking for money to make college more affordable and reasonable, says Daun-Barnett, whose has been instrumental in establishing College Success Centers at seven Buffalo public schools to help hundreds of low-income, underrepresented students navigate the college-choice process each year.

The second one is just as important and often overlooked, according to Daun-Barnett. This information gap affects students enrolled in higher education who have already been awarded and are receiving financial aid.

“The gap in information doesn’t go away when these students actually get to college,” he says. “There are different challenges students face then.”

He has examples. One of the graduate students working with Daun-Barnett dropped several courses this semester for health reasons.

“On that level, it made sense,” Daun-Barnett says. “But he didn’t think how it would affect his financial aid. You drop your classes, and you no longer have what is known as the cost of attendance, which includes tuition, fees, room, board, books and related expenses.

“We had given him a tuition waiver to cover the cost, and the government wanted the money back. He had qualified for financial aid through the federal government, on subsidized loans, and he’s no longer eligible. So these loans have to go back.”

Undergraduate students face similar risks. Each year, numerous UB students lose their New York State Tuition Assistance Program aid, he says.

“In the past, several hundred students lost their TAP each year,” Daun-Barnett says. “This year, the numbers nearly doubled. Part of that had to do with the way we changed our procedures. But some of it had to do with policy, and how complicated it is.”

TAP requires students receiving aid to complete at least 12 credits considered degree-applicable, according to Daun-Barnett. That means these courses have to apply to their major, or their overall degree program.  

So after two years of undergraduate work, students frequently don’t have much flexibility left in their schedules, Daun-Barnett explains.

“You really have to take everything toward your degree,” he says. “So if you don’t take 12 credits each semester toward your degree, you’re going to lose eligibility for TAP.”

“Five of my interns lost their financial aid like that, and these are folks who I am training in financial aid,” he says. “So understanding the implications of your non-monetary decisions is important as well.”

Hoping to bridge that information gap for students already enrolled in classes, Daun-Barnett compiled a quick list of important points to remember:

Financial aid advice for current undergraduates

• Be sure to apply for aid every year. You would be surprised how many students do not realize the federal and many state financial aid programs require annual applications to maintain aid support. The FAFSA (Free Application for Federal Student Aid) opens every year on Oct. 1.
• Only accept the loans you need. Occasionally, students will be eligible for loans that exceed the amount of aid they need to pay for college. Be wary of taking on the additional debt if you do not need it, especially if those loans are unsubsidized — meaning you begin paying interest as soon as the loan is granted. You do not have to take all that you are offered. You can work with a financial aid adviser to decline some or all of the offered loans.
• Be sure to have a strong academic plan. Many students are unaware that the aid they receive is contingent upon making progress toward their degree.  Most financial aid policy is written to ensure students finish their degree in four years, and because of that, changing a major or taking extra classes outside your major can impact your aid. There are two policies they should discuss with their academic advisers and/or their financial aid advisers: degree applicable credits and satisfactory academic progress.
• Be cautious when dropping classes. Dropping classes after the drop/add period may cost students money. If students drop classes after the drop/add period, they may lose eligibility for grants and loans, and may need to pay it back.  The college will keep the portion that is not refunded after the date, and the student will have to pay it all back to the state or the federal government. Check with your academic adviser before making any decisions on dropping a class to make sure it doesn’t negatively impact your progress or aid.
• Be aware of the fine print. Several financial aid grant programs are designed to encourage students to enter particular fields, or encourage on-time completion. In exchange, students are obligated to certain conditions.  Be sure you are aware of the requirements and you are willing to adhere to those expectations. For example, the Excelsior Scholarship requires 30 credits per year, and if you do not meet that requirement, you lose eligibility. And if you receive the funding but choose to take a job outside of New York State before your requirement to work here ends, the grant converts to a loan that you must pay back.
• Minimize your reliance on private loans. You should only take out the loans you need, and you should recognize that private loans tend to have higher interest rates. You may be required to pay on those loans as soon as they are issued.
• Educate yourself on loan-repayment options. The federal government has several programs that help students repay their loans, including the income-based repayment options. Under these terms, students must pay a certain amount, depending on their income after they graduate. Anything they owe on the principle after the terms of the loan is repaid by the federal government. Another program is the public service loan repayment option, which is for graduates who work in an approved public service agency. Students qualified for this may be eligible to have a portion of their loans repaid after 10 years.

Also, you should know how much you will need to earn in order to pay back your loans. Loan-repayment calculators can help with this. And all students should complete financial aid exit counseling when they graduate.