Numerous scholarships, grants, and loans are also available exclusively for members of the military and their family members.  Applicants for all of our programs must plan to attend an accredited college or university during the school year as a full-time student. All loans, grants, and scholarships are designated for students seeking their first undergraduate degree. No loans, grants, or scholarships are applicable toward graduate study.  There is one online application for all scholarships, grants, and interest-free loan programs.  A few of these are described below; for information on these and other programs, visit the MOAA website.

American Patriot Scholarship

As a result of the terrorists’ attacks on Sept. 11, 2001, the MOAA Scholarship Fund established the American Patriot Scholarship to help children of uniformed services personnel-officers and enlisted- who died while in Active service as a member of the Regular, Guard or Reserve Forces.

The amount and number of grants awarded to students is based on the amount of money raised each year from public and private donations made to MOAA. For the 2009-2010 school year, over 50 students whose parent died while in Active service are receiving a $5,000 grant. Each student is eligible to receive the American Patriot Scholarship for up to five years of undergraduate study at an accredited 2- or 4-year college or university of their choice, but will be at least $2,500.

To qualify, a student must be a child of a member of the Uniformed Services who died while in Active service. They must be under the age of 24 at the time of application. The maximum age for students who are serving or have served in the Armed Forces before completing college will be increased by the number of years served, for up to five years of service or 29 years of age. Military academy cadets are not eligible for this program

General John Paul Ratay Educational Fund Grants

These $4,000 grants are limited to children of the surviving spouse of retired officers.  A student cannon receive both a MOAA loan and a Ratay grant.  Students applying for a loan who also meet the criteria of the Ratay grant automatically will be considered.  No separate application is required.

Interest-Free Loan and Grant Program

Interest-free loans, MOAA’s main program, are renewable annually for up to five years of full-time undergraduate study. Assistance is available only to students who have not yet earned an undergraduate degree. The interest-free loan and grant program provides $5,500 loans, which are renewable for up to five years of undergraduate study. Students selected as loan recipients and their their military parent must sign a promissory note before funds can be disbursed. Loans are disbursed in two increments: one-half by early August and one-half by mid-December.

Designated Scholar Program

Loan recipients are automatically considered for this program.  It replaces the $5,500 interest free loan with a $5,000 interest free loan and a $500 grant.  No special application is necessary.

In addition to the programs mentioned above, there are also numerous scholarships and grants available for each branch of the military.  Some examples include the Army Scholarship Foundation (www.armyscholarshipfoundation.org), and Navy-Marine Corp Relief Society Education Programs (www.nmcrs.org/education).   More information can be found on these and other scholarships through MOAA’s Scholarship Finder at www.moaa.org/scholarshipfinder.

Generally speaking, for 2009 individuals are allowed to gift $13,000 ($26,000 for married couples) per year with out incurring Gift Taxes.  A special provisions does allow a donor to contribute 5 years worth of annual gifts ($65,000) at one time to a 529 plan (Contact MTR Financial Services, LLC for more details)

The definition of qualified expenses for 529 Saving Plan account distributions may vary from state to state, but usually include tuition, fees, books, room, and board.

The definition of qualified expenses for Prepaid Tuition Plan account distributions will vary from state to state, but normally is limited to include tuition and fees only.  Room and board may be included as well; check with plan administrator for verification.

Even if you are still a few years away from the first college tuition bill, there are a few steps you can take, some seemingly counterintuitive, to increase the chances of receiving some sort of financial aid.

About two years before your child is expected to attend college consider how you might reposition your assets so they are more favorably viewed on the applications for financial assistance.  Why start so soon?  The amount of aid you’re eligible for in a given year is based on the previous year’s income.  Controlling your assets and the receipt of income will have a significant impact on your aid eligibility.

For example, capital gains count both as an asset and income and could have a devastating impact on your eligibility.  If you are able to defer income at work, consider doing so for the years your child is in college.  Another option is to reduce your reportable assets.  It may not make sense to pay off that car loan or credit card balance when tuition bills are on the horizon, but it may actually be a wise decision.

Why?  By paying off that car or credit card you simultaneously lower your reportable assets, such as stocks and cash holdings, and increase your financial need.  Parents with $20,000 in the bank and a $10,000 credit card debt will appear to have more resources than parents with $10,000 in the bank and no credit card debt.  In the end, the parents have the same amount of money, but to the financial aid people they have less.Another strategy to increasing your aid eligibility is to pay attention to who owns what assets.  Asset ownership is critical in determining how much financial aid a student receives.  College-aid officials assess up to 35% of a student’s assets versus only 5.6% of a parent’s holdings.  Therefore, make sure your 529 Plans, Coverdell plans, etc. are in the parent’s names.  Prior to 2006, prepaid tuition plans, including the Independent 529 Plan, were considered an available resource to students and therefore had a more negative impact on financial aid eligibility than a 529 Savings Plan.  However, recent laws passed by Congress treat all 529 plans as parental assets.  Now, no more than 5.6% of your 529 college savings will be sued to assess need if you apply for financial aid under federal guidelines.

It always pays to save, but just be careful how you do it.

The Federal Supplemental Educational Opportunity Grant (FSEOG) program is for undergraduates with exceptional financial need. Pell Grant recipients with the lowest expected family contributions (EFCs) will be considered first for a FSEOG. Just like Pell Grants, the FSEOG does not have to be repaid.

You can receive between $100 and $4,000 a year, depending on when you apply, your financial need, the funding at the school you’re attending, and the policies of the financial aid office at your school.

If you’re eligible, your school will credit your account, pay you directly (usually by check), or combine these methods. Your school must pay you at least once per term (semester, trimester, or quarter). Schools that do not use semesters, trimesters, or quarters must disburse funds at least twice per academic year.

FSEOGs have a few limitations that Pell Grants don’t. For one, the amount of your FSEOG can be reduced if you receive other forms of student aid. Also, each school receives a limited amount of FSEOG money; when it’s gone, it’s gone. That’s why it’s very important to apply for financial aid as early as you can. You’ll have a better chance of obtaining FSEOG money if you’re eligible for it.

As nervous as college freshmen may be, their cash-strapped parents are probably trembling more.  Disciplined savings using any or a combination of the options mentioned above may not cover the full expense of a college education.  As they have for the last ten years, college costs rose faster than inflation this year.  For the 2009-10 school year, a college freshman can expect to pay anywhere between $15,000 and $60,000 for a full year of tuition, room and board, books, etc.

But many college students don’t pay full sticker price.  63% of students receive some form of aid, either loans, grants, or both, according to the National Association of Student Financial Aid Administrators.

This year’s College Board data on financial aid show that almost $143 billion in student aid was distributed in academic year 2007-08-almost $10 billion more than the previous year. In addition, students borrowed almost $19 billion dollars from nonfederal sources to help finance their education.  On average, undergraduate students received an average of $8,896 in aid in the form of grants and tax benefits.  Graduate students received an average of $20,320 in aid.

College financial aid departments will require the Department of Education’s Free Application for Federal Student Aid (FAFSA) form, available at www.fafsa.ed.gov, which provides financial details of the parents and student.  It is important to file the FAFSA form early as some grants are given on a first-come-first-serve basis.

Financial aid is intended to make up the difference between what a family can afford and what college costs. The federal government and all public college financial aid offices use a “need formula” that analyzes a family’s financial circumstances and compares them with other families.  The results will vary by college and by state, but the Expected Family Contribution (EFC) formula assumes family contributions are met with savings, income and borrowing.  If a shortfall of college funds does exist, financial aid is awarded. This aid can be in the form of grants, loans, and work-study programs.