Monica Kiley
Staff Reporter

Being able to afford college for many students means relying on federal government loans, and for some NIACC students and their parents it just got a little tougher.

The U.S. Senate recently voted, by a two-vote margin, in February, to raise the floating interest rate of the popular Stafford Loan.

As part of a $40 billion budget cut over the next five years, $12.7 billion of those dollars are going to be paid by college students and their families. That's nearly one-third of the budget cut. The measure also cuts nearly $13 billion from the federal loan program.

"I don't think it's fair to our students and their families to carry the burden of cleaning up the country's budget deficit," Mary Bloomingdale, NIACC's director of Financial Aid, said.

Nearly 40% of NIACC students utilize Stafford Loans, according to Bloomingdale.

NIACC has given out over $3.3 million dollars in loan money so far this year, she said.

On July 1, 2006, the Stafford Loan floating rate of 4.7% will go to a fixed rate of 6.8%. That's nearly a 28% increase.

The popular Parent Plus loans many parents utilize will rise from a variable interest rate of 6.1% to a fixed rate of 8.5%. According to Bloomingdale, there is a glitch in the law right now.

Only the interest rate on the Plus loan will lock in at schools that are FFELP (Federal Family Education Loan Program) lending schools and not Direct lending institutions.

NIACC is a Direct lending school.

This budget cut will also cut one percent of campus based aide, including the Perkins Loan that supplements millions of college students, although Congress is extending the reauthorization of the Higher Education Bill for the third time until March 1.

What does all this mean?

Although the amount does not seem too drastic to any one college student, the Wall Street Journal said an undergraduate with $20,000 in student loans, estimated to be the average debt for undergraduates upon graduation, will pay $2,000 more in interest over a ten-year life of a loan if consolidated after the July 1 deadline.

Consolidating student loans now is a decision many students will resort too, locking in the smaller interest rate on their loans.

In doing that, students must realize that they give up the luxury of paying their loans after graduation. Consolidating now means that repayment begins immediately.

If students wish to consolidate their loans, Bloomingdale recommended students contact Direct Loans at (800) 848-0979. "Our students need to become more involved politically," Bloomingdale said. "So our elected officials hear their concerns and needs."

Becky Arey
For the Logos

In 1965 the government made student loans available, a short time after that they introduced PLUS loans, (Parent Loan for Undergraduate Students). What this means is that if parents of undergraduate students are willing to pay for the student's education, the government gives them an option of getting the money without taking out a home equity loan or borrowing from their retirement fund at a lower interest rate.

NIACC uses Direct PLUS Loans in which students borrow the funds directly from the federal government and not a bank.

"At the present time there are under 5% of students' parents that opt for PLUS loans, in part, due to NIACC being a lower cost college and because parents may not be aware of PLUS loan options," Mary Bloomingdale, director of Financial Aid and scholarship programs for NIACC, said.

Another option is FFELP loans, (Federal Family Education Loan Program). This program is again meant for parents of undergraduate students but the funds come from a bank.

"Current interest rates on PLUS loans is a fixed 6.1% but interest rates FFELP loans is a variable 6.1%, in which the interest rate varies based on interest rates of Treasury Bills, but this may change on July 1, 2006 due to legislature," Staci Schiller, student loan division of Wells Fargo Bank, N.A., said.

Changes are in the process of being made to PLUS loans. As of July 1, 2006, look for both the PLUS and FFELP loan rates to be both 8.5% fixed interest rates.

"Legislation has now opened up PLUS loans to graduate students as well, for themselves to borrow so PLUS loans will not be limited to undergraduate student's parents," Schiller said.

There are some differences between the PLUS and student loans. "PLUS loan repayment begins 60 days after the total distribution of the funds, whereas student loan repayment is deferred until six months after the student graduates from college," Bloomingdale said.

PLUS loans may be tax deductible, but people need to check with their tax adviser.

When parents apply for a PLUS loan a credit check is done, but it is not as stringent as getting a home or personal loan because debt to income ratio is not calculated, it merely depends on the credit score of the applicant.

Students don't qualify for a PLUS loan. "Students whose parents are denied for a PLUS loan can go back and be subsidized for an additional Stafford loan. Students and parents need to remain in contact and work with financial services," Bloomingdale said.

Andrew Smith
For the Logos

With the rising cost of higher education, some colleges are turning to fixed tuition as a way to control the ever-rising out-of-pocket expenses to college students.

There are a number of private universities turning to fixed tuition as a way to make their schools more attractive to students.

The way fixed tuition works is, if a student attends a college, that student has the opportunity to lock in that tuition for all four years.

However, this security doesn't always come without a price.

Some schools such as New Saint Andrews College in Moscow, Idaho, charge a fee to lock in tuition for a four-year degree, and the fee is almost always nonrefundable.

According to an article on Bankrate.com by Lucy Lazarony, "8 Offbeat Ways to Pay for College," there are a number of fixed tuition colleges in the U.S., including Baylor University in Texas, Concordia University in Illinois, and Huntington College in Indiana.

These schools also usually have provisions for transfer students to lock in the rate they start at. These schools all offer specifics on their fixed-rate tuition plans on their respective Web sites.

Dr. Karen Pierson, vice president for Student Services at NIACC, said that the private universities probably use fixed tuition to make their schools more attractive to students and parents by giving them the security that their tuition would not increase.

"Every college student should look at what they get for what they pay," Pierson said.

She added that college students should look at how much debt they will accumulate at the end of their education because that should be a major factor in the selection of a college or university.

She also said that while the idea had been suggested, it is doubtful that NIACC would ever go to such a plan because the tuition rates don't increase enough from year-to-year for fixed tuition to make much of a difference.

Andrew Smith
For the Logos

While education costs rise across the board, how does NIACC stack up compared to the Regents institutions?

According to a series of charts provided by Vice President for Student Services Dr. Karen Pierson, in the late 1990s NIACC tuition was only $866 cheaper than the Regent's institutions (University of Northern Iowa, University of Iowa, Iowa State University).

That gap stayed below $1,000 until after 2001. In 2002, the gap shot up to $1,486 and has been increasing ever since. This past school year the gap was almost $2,500.

Pierson said that while this makes NIACC more attractive, the college would still like to cut the cost. The college has tried to keep the tuition costs in the middle of the pack compared to other community colleges.

Pierson said that while NIACC would like to be the cheapest community college, the level of state support isn't enough to keep all of NIACC's programs up and running with a lower tuition level. She added that the college tries to keep tuition as low as possible. "Our goal is to do more tuition discounting than we do," Pierson said.

Most of that discounting would come from an increased number of scholarships; most would be similar to the President's Scholarships and others that are currently offered.

When calculating tuition Pierson said there are three main areas the college looks at. These include the amount of state support that will be given, whether or not the last year's costs were met by the revenue brought in, then they look for savings, such as programs that can be cut due to low enrollment and finally they look at where NIACC is compared to other schools.

After all items have been considered, recommendations are submitted to the Board of Directors, which has the final say on tuition costs.

Pierson also noted that in the past ten years there has not been a year when any of the community colleges in Iowa have frozen tuition costs; they've always gone up slightly.

Becky Arey
For the Logos

March 1 is NIACC's priority deadline for completing the student's Free Application for Federal Student Aid (FAFSA). Transfer students need to find out what the school's priority deadline is that they are transferring to, because it may be different from NIACC's.

It is extremely important for students to complete the FAFSA by March 1 and it needs to be received at the processing center by that date, not postmarked March 1.

"By completing the FAFSA it determines whether or not students are eligible to receive any type of financial aid assistance in the way of some grants and work study," Mary Bloomingdale, director of Financial Aid and scholarship programs for NIACC, said.

The priority deadline runs between January 1 and March 1.

"The most important thing is to apply early so you can receive as much money that is available when you are ready to enroll for classes," Bloomingdale said.

Students need to apply for financial assistance every year, and NIACC provides free assistance to students for completing the FASFA applications in the Admissions Office.

"Our service helps students on the front end of the FASFA form by taking the applications, the actual processing of the FASFA is done in the Financial Aid Office," Cindy Lind, Financial management adviser for NIACC, said.

Tools needed for completing the FASFA include the student and parent's 2005 Federal Tax return, W-2 forms and records of other income, current bank statements, and records of benefits from Social Security Administration, Department of Human Services or other agencies.

Students are encouraged to file online.

"Filing online is cleaner and there is less chance of making mistakes. 80% of all FASFA's are filed online," Bloomingdale said.

In order to file on-line, both the student and the parent need their own Personal Identification Number (PIN). The PIN will be used the entire time students are in school and is easy to obtain Ð at www.pin.ed.gov.

Students do not pay a fee to file the FAFSA, it is free. However, they need to make sure they are using the correct Web address. "The free Web address for FAFSA is www.fafsa.ed.gov," Bloomingdale said.

It is essential for students to file the FASFA form if they need any type of financial support for loans, grants, and work-study. Assistance is available to students either in the Financial Aid Office or in the Admissions Office.

"We are here to help our students in any way," Bloomingdale said.

Monica Kiley
Staff Reporter

Want more money back this year on your tax return? There are ways for students to achieve this. The Hope Tax scholarship offers a tax credit many students don't know about or how to get.

To be eligible for the credit, a student must qualify in several areas.

First, the student must not have had expenses used to figure a Hope credit from any two earlier tax years.

Second, the student has not completed the first two years of postsecondary education prior to 2005, generally the freshman and sophomore years.

Third, students must have been enrolled at least part-time.

Finally, the student was free of any federal or state felony conviction for possessing or distributing a controlled substance.

If a student takes out a loan to pay for higher education, those expenses may qualify if the student is required to pay back the loan. The credit is claimed in the year in which the expenses are paid, not the year when the loan is paid back.

Generally the credit can be claimed if all three of the following requirements are met.

Students pay qualified expenses of higher learning. Parents pay the qualified expenses of higher learning.

Finally, the eligible student must be the filer, a spouse, or a dependent for whom the filer claimed an exemption on the tax return.

Married students filing separately are not eligible.

If the student is listed as a dependent on another person's return, such as the parents', then the student is not eligible. If the student or the individual's spouse was a non-resident alien and elected not to be treated as a resident alien for tax purposes, he or she is not eligible.

Students may not claim the credit if they claimed the lifetime learning credit or tuition and fees deduction in 2005.

The amount of credit a student can claim is determined by the amount paid for qualified tuition and related expenses and the amount of the student's modified adjusted gross income.

This and many tax credits may be available to students.

However, deciphering them can be difficult. It may be to the student's benefit to have a qualified tax professional prepare the return to ensure receiving all qualifying tax credits.