A r c h i v e d  I n f o r m a t i o n

FOR RELEASE

March 11, 1998

Contact: Stephanie Babyak and Jane Glickman (202) 401-1576

 If you thought you missed the boat to apply for financial aid for college this fall, there's still time. In fact, right now is the peak application period, according to the U.S. Education Department, the largest source of financial help for college.

A college education or advanced training has become a necessity for many to succeed in today's advanced, competitive economy, and if you want to go back to school, learn a new skill, take a course at the local community college, or finish that degree -- federal financial aid is available. The first step is simple -- apply!

U.S. Education Secretary Richard W. Riley notes that many families don't apply because they incorrectly believe that either they make too much money to qualify for aid or that they can't afford to go to college. AI always encourage families to apply for financial assistance because they may be surprised at the aid available to pursue their education goals, whether for career training or a bachelor's or graduate degree."

This year, more than $40 billion in federal grants and loans will be awarded to more than 8 million students out of 10 million applicants. At a minimum, almost all students are eligible for loans without a federal interest subsidy but often with rates lower than commercially available loans.

• Applying for federal aid is free. Filling out the Free Application for Federal Financial Aid (FAFSA) is the first step in the process. Students can obtain a FAFSA at high school guidance offices, libraries, or by calling the Federal Student Aid Information Center toll-free at 1-800-433-3243. Most other state and institutional aid eligibility is determined by the FAFSA, so students should start there. Students are also encouraged to talk to the financial aid directors at the schools they hope to attend to learn about financial aid packages and other sources of assistance.
• Electronic filing is faster, less error-prone. An estimated 12 to 14 percent of paper applications are returned for errors, adding time to the application process. By filing electronically, students can avoid delays. The software immediately identifies errors -- only a .2 percent error rate -- and allows for on-the-spot corrections. FAFSA on the Web is now available to students to apply electronically through the Internet at www.fafsa.ed.gov Access to FAFSA on the Web includes: the international and domestic versions of Netscape Navigator 3.0-3.04, Netscape Navigator 4.0-4.04 and Internet Explorer 4.0.

• Other important tips to follow:

• print carefully and clearly using only blue or black ink or pencil; no other colored ink accepted;

• have the student's Social Security number ready;

• use W-2 forms and carefully estimate tax information if federal income taxes have not yet been filed;

• be aware of deadline dates for the schools to which you are applying. While students have an 18-month window to apply for federal aid, some schools have early filing dates for their own institutional aid that may be based on federal aid eligibility (a list of state deadlines is included in the FAFSA instructions)

• some schools use only the federal form. Others have a separate form for institutional aid so be sure to check with the school;

• when answering the question, Ahow many students in the family are attending college?" be sure to include self, parents, and siblings even if attending school part-time in 1998-1999;

• the forms are processed by computer so do not attach additional materials and write only in the marked spaces on the application, never in the margins;

• be sure to sign the application or separate signature sheet for electronic filers and have a parent sign if required.

In addition to federal grants and loans, families can take advantage of education tax credits beginning this year: the $1,500 HOPE Scholarship for the first two years of college or vocational school; and the $1,000 Lifetime Learning tax credit for those beyond the first two years of college, or taking classes part-time to improve or upgrade their job. These credits will be able to be claimed by eligible taxpayers when they file their 1998 tax returns. When fully phased in, 12.9 million students are expected to benefit from the education tax credits -- 5.8 million claiming the HOPE Scholarship and 7.1 million claiming the Lifetime Learning Credit.

President Clinton has also proposed several improvements to current law to simplify the aid application process and promote fairness and savings. The administration's recommendations for the reauthorization of the Higher Education Act now before Congress would, among other things: increase from $1,750 to $3,500 the threshold above which dependent student earnings are factored into the families' expected financial contribution; allow changes to asset calculations in determining financial need in order to protects low-income applicants but not penalize those who have saved for college; reduce loan origination fees for all borrowers in 1999 and eliminate them by 2003 for subsidized borrowers; ensure comparable treatment of home owners and renters and treat personal savings accounts and employer-provided retirement plans equitably; greatly simplify the application process by allowing families to use the information on the previous year's tax returns rather than estimating income and tax information that must be verified later.

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