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Higher Education Reconciliation

These changes are the result of a new federal law that went into effect on July 1, 2006; read further to see if any changes may affect your student aid.

Active-Duty Military

Under the new law, if you are currently serving on active duty in the U.S. Armed Forces for purposes other than training, you are considered to be an "independent" student and will not need to provide parental information on your Free Application for Federal Student Aid (FAFSA).

If you are on active duty and have already provided parental information when you completed your FAFSA, contact your financial aid office to see if your information should be adjusted.

Simplified Calculation

If you (your spouse or your parents), received benefits in 2005 from certain federal benefit programs and have an income of $50,000 or less (your AGI in Q35 or Q73 or your earned income in Q38-39 or Q76-77 if not filing a tax return), you may qualify for an Expected Family Contribution (EFC) that does not count all of your income and assets.

The following benefit programs qualify you for the exemption:

  • Supplemental Security Income Program (SSI)
  • Food Stamp Program
  • Free or Reduced Price School Lunch Program
  • Temporary Assistance for Needy Families (TANF)
  • Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).

If you were a recipient of any of these benefit programs at any time during 2005 and have already completed your FAFSA, check with your financial aid office to find out if your information should be adjusted.

Asset Changes

College Savings Plans - The term "assets" has been expanded to include qualified education benefits. Previously a 529 plan, a prepaid tuition plan offered by a state, and a Coverdell education savings account could be reported as an asset of a dependent student or their parent. The new law requires college savings plans, to be reported as parent assets (Q82), not an asset of a dependent student. If you expect to receive tuition payments from a college savings plan for the academic year 2006-2007, your parent must report the value of the plan. The independent student should report this as their asset (Q44).

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) (Q45 or Q83).

If you think any of these changes will affect your eligibility for federal student aid, check with your financial aid office.

Drug Conviction Affecting Eligibility

Federal law now suspends federal student aid eligibility, for any student who has been convicted of illegal drug possession - especially if the conviction occurred when the student received federal student aid (grants, loans, and/or work-study). If you have a previous drug conviction and are not sure about how to answer question 31, we encourage you to complete the new 2006-2007 Drug Conviction Worksheet.

The answer from the Drug Conviction Worksheet should be used to answer question 31 on your FAFSA, Renewal FAFSA, or Correction to a processed FAFSA.

New Grant Program

The law also created a new student aid grant program called the Academic Competitiveness Grant (ACG). Congress has provided funding and the grants are available for the 2006-2007 award year. First-year undergraduate students will be eligible to receive up to $750. Second-year undergraduate students will be eligible to receive up to $1,300. The ACG eligibility criteria are listed below:

To be eligible for an ACG each academic year, a student must:

  • Be a U.S. citizen
  • Be Federal Pell Grant eligible
  • Be enrolled full-time in a degree program
  • Be enrolled in the first or second academic year of his or her program of study at a two-year or four-year degree-granting institution
  • Have completed a rigorous high school program of study (after January 1, 2006, if a first-year student, and after Jan. 1, 2005, if a second year student)
  • If a first-year student, not have been previously enrolled in an undergraduate program
  • If you're a second-year student, have at least a cumulative 3.0 grade point average on a 4.0 scale for the first academic year

If you have not filed a FAFSA or Renewal FAFSA, at the time that you complete your application, FAFSA on the Web will predetermine if you are eligible to answer the ACG questions.

If you currently have a processed FAFSA on file, you can select "Make Corrections" to a Processed FAFSA, select the ACG option, and the system will predetermine if you are eligible to answer the ACG questions.

You may also contact the financial aid office at your school for assistance regarding ACG.

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