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The Effective Ed Award – Answering Your Questions

September 5, 2012

Thanks to everyone who joined us last month for our August 2012 Professional Development Webinar: The Effective Ed Award. You can rewatch and listen to the webinar here.

Many Alums during the call and on social media asked great questions to our panelists Jerry & Cindy from the National Service Trust and the two speakers have gotten back to us with answers to your questions related to taxes, loan forberance, and general practices for using your Ed Award.

Thanks to Jerry & Cindy for their guidance in helping Alums and current members navigate through their Ed Award questions and thanks to all the attendees and listeners of the webinar!

Ed Award Distribution

  •  Why is the ed award disbursed in two separate payments instead of a lump sum?

There is a federal requirement that any payment greater than $10 has to be split.  This only applies to the payments that are sent for education expenses, this does not apply to loan payments.

  • If you have 2 ed awards, will it therefore be split into 4 payments based on what was just said about the requirement to split payments?

The payments are not split based upon the number of education awards.  The payments are split at the time any payment request is processed.   Each request made from an education award to pay for educational expenses that are greater than $10 will be split.  If you have 2 education awards that are each $5550 and your eligible educational expense happens to be $$30,000.  You can make the entire amount of both award available with one payment request and the total authorized amount of $11100(ed award 1 and 2) will be split into two disbursements of $5550.  If you submit a request for a lump sum payment to your qualified student loan the payment will be disbursed as a single $11100 payment.

Loan Payments

  •  Are the loans I qualified for through FAFSA considered private?

FAFSA is the “Free Application for Federal Student Aid”, the loan that are issued are federal student loans and thus qualified student loans.  Private loans are the loans that the Federal Government or State Agency have not guaranteed.

  •  Are you able to use the Ed Award to pay off private loans?

No, the education award can be used to repay state issued loans or federally secured loans such Perkins and Stafford loans.

  • Can the award be directed to be applied directly to principal rather than to the net terms of the loan?

Any request for specific application of funds to your loan must be made through your lender or loan servicer.  The lender or loan servicer may honor your request but they usually reserve the right to apply the fund how they see fit.

  •  If you have graduated can the award be applied to stafford loans?

Yes, a Stafford loan is a qualified loan.

  • How long does it usually take to process a loan payment to a lender? Do you suggest contacting the lender to let them know payment will be through the ed. award?

The process depends on how long it takes the lender to certify the request.  Once we receive completed paper vouchers they have to be processed within 30days.  Request that are submitted through My AmeriCorps are automatically setup for payment once the lender certifies the request.

  • I will be deploying before my year is up. I have already talked to my VISTA leaders about it, and my position will be available when I come back and I’ll be able to finish my year of service. Will the temporary leave of absence from my service affect my ed award?

The National Service Trust cannot confirm that you will be eligible to receive an education award it is best to continue the conversation with your VISTA leaders.  However, if the full time commitment days are not meet then the amount of the education award may be reduced.

Loan Consolidation & Forbearance

  • What if you applied for the limited time Special Direct Consolidation loan back in May? I am currently waiting for that to go through. Should I wait until everything has been consolidated before making the Interest Reimbursement request or should I do that now?

You may want to submit the request now.  Once loans from different loans servicers are consolidated it can be difficult to get the loan servicer to provide the information you need.

  • What if I’ve already consolidated my loans? Have I forfeited my interest reimbursement?

No, you still need to make the effort to submit the request to your lender.  You may not experience any difficulties; we just want to make sure you are better prepared in case you do.

  • I sent in my request for forbearance several days after I started my service in Feb. and it still says “pending.” Do I have to contact my college?

Yes, you will need to contact your college and inform them of the pending action.

Interest Reimbursement

  • Do we have to use our award to get our interest repaid?

No but you must earn an education award to get the appropriate portion of interest that accrued during your term of service paid.  The paper process and the electronic process have separate forms for interest accrual requests.

  • I was not aware that AmeriCorps would pay off the interest that accrued during my service year. I paid over $300 so far in interest. Can AmeriCorps refund me for those payments as well as the other interest that has accrued?

AmeriCorps cannot refund you the interest payments that you have already made.  You are still entitled to have the interest that accrued during your term of service applied to your loan.  You will need to contact your lender to see how the fund will be applied.

  • Do AmeriCorp member doing quarter time receive interest reimbursement?

Yes, as long as you earn an education award.

  • I’m a VISTA, so we don’t have a number of hours so much as I’m to do a full year. Does that mean I would receive a 100% interest reimbursement?

Yes, as long as you meet the requirements  and earn an education award

Taxes Related to Ed Award

  • Is it more beneficial for tax purposes to spread out the award money or to use it all at once?

Make sure to consult a tax professional before you use the award to know the tax brackets.  To truly understand you options you have to take into account information that we are not privy to.

  • Is there a resource to find out how much $$ would bump us into the next tax bracket?

Make sure to consult a tax professional before you use the award to know the tax brackets

  •  Do we owe taxes on the ed award in the year we receive it or in the year we use it?

The tax liability is incurred when the education award is disbursed.

School Related Costs

  •  How do I use the Ed Award for educational costs other than tuition (books, laptop, etc)?

Eligible Cost of Attendance is determined by your school using the guidelines set forth by the Department of education.

  • Does it cover books for a class that I am taking that is paid for already?

If you school determines that books are covered under the cost of attendance it is possible to have the education award pay for books.  Keep in mind that the education award can only be applied to unmet costs.

Eligibility of Schools

  •  Where can you find out if a school is Title 4 or GI eligible?

See here for Title IV and here for GI eligible

  • If an institution isn’t registered for us to use our education award there, can we can request the institution to sign up with Americorps to receive ed awards?

Yes.  However, they may not do so if there are only a few AmeriCorps member/Alum attending.  You should still submit your request through the My AmeriCorps system as we will attempt to get the schools to register also.

Payment for Certification or Training

  •  Can you use the Ed award for other trainings or certifications?

Any member that earned an education award between October 1, 2009 and December 22, 2011 can use their education at institutions that have be approved by the Department of Veterans Affairs.  Any member that earned an education award on or after December 23, 2011 has to be a U.S. Veteran to use the education award at the same institutions.

  • Can the ed award be used for certification processes like ESL certification?

Yes, if these certifications can be found at qualified institutions that will consider the member to be enrolled at the institution when taking the training or certification.

  • Is there a list of accepted certifications/trainings that the ed award can be used towards?

The listing of accepted certifications and training can be found at the following websites: See here for Title IV and here for GI eligible

  •  Is it possible to use the ed award to pay for a work/study program abroad?

Yes, as long as it is a Title IV school and the school considers the member to be enrolled in the institution.

Transferring the Ed Award

  •  What is the process for transferring your award to a child?

The first step in the transfer process is that the member must be sure that s/he is eligible to transfer his/her education award.  If the member has any questions regarding his/her eligibility, they should contact the National Service Hotline (1.800.942.2677).  If eligible, the member will need to go online and register or log into his/her My AmeriCorps account.

After logging in, the member will notice that on the home page there is an option to create an award transfer request located in the upper left hand corner.  When the member selects create award transfer s/he will be directed to another page where s/he is prompted to enter required personal information, the transfer amount and the recipient’s information in the transfer request.  After the information has been entered the member will need to certify that the data entered is correct, then click submit.  If the member has entered the recipient’s email address, the system will generate an email to the recipient instructing him/her to create an AmeriCorps account or to log into his/her established account so that recipient can accept the transferred award.

Once the recipient has logged on or created an account, they have the option to accept the full amount of the award, a partial amount or they can choose to decline the full award.  If the recipient decides to accept a portion of the transferred award, s/he cannot request the remaining balance to be re-transferred back to their account at a later date.

If the member revokes the award, the member cannot request to re-transfer the award to another recipient or the same recipient from which the award was revoked except in the case of death of the recipient. The member cannot transfer one award to multiple recipients – only one recipient per transferred award.

Senior or Retired Alums

  • For alums who are retired, what are educational travel opportunities?

The only program that is available of hand is Road Scholars.  There may be other opportunities available.

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