<p>Here’s the first good summary I’ve seen of recent changes affecting financial aid due to the Higher Education Reconciliation Act of 2005, which went into effect in July '06.</p>
<p>From the FAFSA website:</p>
<p><a href=“http://www.fafsa.ed.gov/hera.htm[/url]”>http://www.fafsa.ed.gov/hera.htm</a></p>
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<p>Higher Education Reconciliation Act of 2005</p>
<p>Changes that may affect your student aid are listed below. 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.</p>
<p>Active Duty Military</p>
<p>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.</p>
<p>Simplified Calculation</p>
<p>If you (your spouse) or anyone in your household or you, your parents, or anyone in your parents household, received benefits in 2006 from certain federal benefit programs and have an income of $50,000 or less (your AGI in Q35 or your parent’s AGI in Q79 if not filing a tax return) or(your earned income in Q38-39 or your parents earned income in Q82-83 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.</p>
<p>The benefit programs that qualify you for this exemption are the:</p>
<pre><code>* 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).
</code></pre>
<p>If you were a recipient of any of these benefit programs at any time during 2006 and have already completed your FAFSA, check with your financial aid office to find out if your information should be adjusted.</p>
<p>Asset Changes</p>
<p>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 the student or their parent. The new law requires Coverdell savings accounts, 529 college savings plans, and the refund value of 529 state prepaid tuition plans to be reported as parent assets (Q88), not an asset of the student. If you expect to receive tuition payments from a college savings plan for the academic year 2007-2008, your parent must report the value of the plan.</p>
<p>If you are not reporting parental information and you (or your spouse, if married) own any of these accounts, you should report the value of the plan as your asset (Q44).</p>
<p>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 Q89).</p>
<p>If you think any of these changes will affect your eligibility for federal student aid, check with your financial aid office.</p>
<p>Drug Conviction Affecting Eligibility</p>
<p>Federal law now suspends federal student aid eligibility, for any student who has been convicted for the possession or sale of illegal drugs if the offense occurred during a period of enrollment for which the student was receiving 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 2007-2008 Drug Conviction Worksheet.</p>
<p>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.</p>
<p>New Grant Program</p>
<p>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 2007-2008 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:</p>
<p>To be eligible for an ACG each academic year, a student must:</p>
<pre><code>* 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 secondary school program of study (after January 1, 2006, if a first-year student, and after January 1, 2005, if a second year student);
- If a first-year student, not have been previously enrolled in an undergraduate program; and
- If a second-year student, have at least a cumulative 3.0 grade point average on a 4.0 scale for the first academic year.
</code></pre>
<p>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.</p>
<p>If you have submitted a paper FAFSA and have received your Student Aid Report (SAR) indicating that you may be eligible to answer the ACG questions, please call the Federal Student Aid Information Center at 1-800-4FED-AID.</p>
<p>You may also contact the financial aid office at your school for assistance regarding ACG.</p>