Completing the FAFSA: How Your Dependency Status Affects Your Aid

If you’re going to college, completing the Free Application for Federal Student Aid (FAFSA) is an important first step in funding your education. Last year, over 18 million people completed the FAFSA, and the federal government disbursed over $120 billion in federal student aid, reported the U.S. Department of Education.

However, completing the FAFSA for the first time can be overwhelming. One of trickiest aspects is figuring out whether you’re a dependent student or qualify as an independent student. Filing the FAFSA as an independent person can have a big impact on how much aid you receive.

Here’s what you need to know before choosing your dependency status.

Why your dependency status is important

The federal student aid program distributes grants, scholarships, and federal student loans based on the information you provide on the FAFSA.

Your dependency status can affect how much aid you receive. The government assumes that dependent students have the support of their parents. Because of that, dependent students are sometimes expected to cover more of their school’s cost, while independent students might get more aid and grants.

Your status also changes how you complete the financial aid application. Depending on whether you complete the FAFSA as an independent or dependent student, you will be asked to provide different information.

If you’re a dependent student, for example, you will need to include information about your parent or guardian’s financial situation. Providing that information doesn’t mean your family has to pay for your schooling; the government asks for it to get a better idea of your available resources.

If you’re an independent student, you can enter just your information and skip the parent section.

When to file your FAFSA as an independent student

Filing the FAFSA as an independent student doesn’t depend on how close you are to your parents. Instead, there are 10 questions you can answer to decide what dependency status you should use:

  1. Will you be 24 or older as of Dec. 31 of the school year you’re applying for aid?
  2. Are you working toward a master’s or doctorate degree?
  3. Are you married or separated, but not divorced?
  4. Do you have children who get 50 percent or more of their financial support from you?
  5. Do you have dependents, other than a spouse or child, who lives with you and gets 50 percent or more of their financial support from you?
  6. Since the year you turned 13, did your parents pass away? Or, did you spend time in foster care or as a ward of the court?
  7. Are you an emancipated minor or in a legal guardianship?
  8. Are you a self-supporting youth that is homeless or at risk of becoming homeless?
  9. Are you currently serving on active duty in the U.S. military?
  10. Are you a military veteran?


The U.S. Department of Education also has a handy infographic that can help you decide your filing status.

FAFSA independent student infographic

Image credit: Federal Student Aid


If you answer “no” to all of these questions, you are likely a dependent student and will have to provide your parents’ income on the FAFSA. If you said “yes” to one or more, you might be an independent student and can enter just your income on the application.

Completing the FAFSA as an independent isn’t something you should decide to do on a whim; the rules around dependency status are strict. Answering with incorrect information might result in less aid than you need.

How to prove your FAFSA independent status

If you’re declaring yourself as an independent student on the FAFSA, the government might require you to provide proof of your status.

The school financial aid office will review the information you provided. If you are eligible for only unsubsidized loans, you do not need to go through verification. However, if you are eligible for both unsubsidized and subsidized loans, the school has to confirm your status.

If you have to verify your information, your school will send you a letter detailing what documents you need to provide, what the deadline is, and what the outcome might be if you cannot show proof.

You might be asked to provide extra documentation about the following factors:

  • Tax information: If there are concerns about your adjusted gross income, you might be asked to provide a copy of your tax returns.
  • Household size: You might be asked to submit a document stating your household size and sign it.
  • High school completion: The school can ask for proof that you graduated from high school. You can submit a copy of your diploma, final transcripts, or a copy of a homeschooling credential.
  • Military service: If questioned about your service, you can direct the financial officer to your contact at your local Veteran’s Affairs office.
  • HomelessnessYou could be asked to provide the name or number of a homeless youth liaison, a Runaway and Homeless Youth Act provider, or a Department of Housing and Urban Development provider.
  • Foster care: You will likely need to submit the name of the social worker who managed your case.

Once the school is satisfied with the information you provided, they will complete a verification form and submit it to the Department of Education. Based on your situation, your financial aid counselor might adjust how much aid you will receive.

What to do if you have no contact with your parents

Though the government tries to set clear guidelines around the FAFSA’s dependency status, some situations fall into a distinct gray area. For example, if you left home because of an abusive environment or are completely estranged from your parents, you might need to take extra steps.

The Higher Education Act allows financial aid administrators to override the system on a case-by-case basis if there are special circumstances.

To do so, complete and submit the FAFSA with just your information. After doing this, you won’t find out your Expected Family Contribution (EFC) right away. Instead, you’ll need to contact the school’s financial aid office to explain your extenuating circumstance.

The financial aid office will review your information. They might ask for proof of your situation, such as legal documents, letters from a counselor, or a note from a social worker. After reviewing your application, the administrator will decide whether to override your status and label you as an independent.

Filing the FAFSA

Filing the FAFSA is an essential first step toward going to college. But in some situations, completing it can be especially complex.

Your status as a FAFSA independent student can require extra documentation and discussions with the financial aid office. Being prepared ahead of time can streamline the process and help you get the assistance you need.

If you need help completing the FAFSA, this guide can answer all of your questions.

The article Completing the FAFSA: How Your Dependency Status Affects Your Aid originally appeared on

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6 Last-Minute Strategies to Pay for College

With college classes starting soon, ideally you’ve made all your payments and are ready to settle in. But if you’re still looking for financial aid to help cover your tuition, you’ll have to move fast. Here are six strategies recommended by people who specialize in college admissions.

  1. Contact your school’s financial aid office

Call your school today to discuss your options with a financial aid officer, who can lay out funding options or direct you to the school’s payment plan, if available.

“They want the student, they’re expecting the student, they have the deposit, they’re holding a dorm for them, so they have a huge incentive to work things out for the student,” says Donald Heller, provost and vice president of academic affairs at the University of San Francisco.

Confusion around borrowing money and questions about how to finance a degree can scare people off, says Ofelia Morales, director of financial aid at the University of Colorado, Boulder.

“Why not come to the people who understand it and can help guide you?” she says.

  1. Submit a student-aid application

If you haven’t already, fill out and submit the Free Application for Federal Student Aid, or FAFSA, which is used by the federal government, states and schools to determine what kind of aid might be available to you.

Since you’re submitting it close to the start of the fall classes, you may have missed out on certain grants, scholarships or need-based aid, but federal loan options are still available. The student aid award letter you receive from filing the FAFSA will detail what federal loans you may qualify for. The sooner you apply, the better the chances that you’ll receive any aid that’s on the table. Let your school’s financial aid office know that you have submitted the FAFSA and keep in touch once your award letter arrives.

  1. Appeal your financial aid offer

If your family’s finances have taken a hit since you received a financial aid award, let your school know, since you could be eligible for more aid.

“They should be honest,” says Lisa Sohmer, an independent college consultant in Los Angeles. “They should say, this is what happened — ‘my mother left her job’ or ‘the family relocated’ or ‘my sibling had a health crisis’ — or whatever it is that caused the sudden inability to pay the bill. Find out if there’s anything the financial aid office can do to help.”

  1. Find scholarships

Look for scholarships with deadlines that haven’t passed, or ask the financial aid office if your school has scholarships that haven’t yet been awarded. Occasionally, a scholarship will remain open because an applicant has yet to meet the criteria, Heller says. You can find scholarships and deadlines at the U.S. Department of Labor’s CareerOneStop scholarship finder.

  1. Consider private student loans

Federal subsidized and unsubsidized student loans come with borrower protections and income-driven repayment options that private loans don’t offer, so the federal options should be exhausted first.

Private loans usually require a co-signer and typically carry higher interest rates than federal subsidized loans, but the private-loan option may be necessary to close a funding gap. You can borrow private loans from banks, credit unions and online lenders. College admissions experts advise to borrow no more in student loans over the course of getting your degree than you anticipate making in your first year’s salary.

  1. Plan long-term options

If you’re still left with a money gap after trying other options, consider deferring your start date for a term or a year to maximize your financial aid. To decide if this will help your financial situation, find out what you may have been eligible for had you submitted a FAFSA on time.

“Ask ‘What would my aid package look like if I did this earlier?’ and ‘Would it be possible for me to do that for next year?’” says Karen McCarthy, director of policy analysis for the National Association of Student Financial Aid Administrators in Washington, D.C.

But those who work in college admissions say you also need to think beyond last-minute funding and consider whether your school is affordable in the long run.

“Financial aid are presented as one-year deals, so students tend to think of them as one-year problems,” says Bart Grachan, interim associate dean for progress and completion at LaGuardia Community College in Queens, New York. “So if they have cobbled all kinds of resources — ‘I have this emergency funding, this local scholarship, grandma kicked in $2,000’ — they need to multiply out the next four years and ask themselves, is that sustainable?”

Anna Helhoski is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @AnnaHelhoski

The article 6 Last-Minute Strategies to Pay for College originally appeared on NerdWallet.

Ask Brianna: Should I Borrow Money From Family and Friends?

“Ask Brianna” is a column from NerdWallet for 20-somethings or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to

Anyone — even a good planner — can end up in a financial jam. Maybe you need to move unexpectedly the same month your car gives out. An inauspicious mix of circumstances is why I won’t shut up about emergency funds, savings accounts that you use solely for, yes, emergencies. (A plane ticket to the Bahamas when you’re feeling burned out at work is, unfortunately, not an emergency.)

But maybe you don’t have one of these accounts yet, or it won’t cover the amount you need. Borrowing from family or friends might appear to be the next best option. Consider the risks carefully, though, and review alternatives, like a personal loan from a credit union. Here’s how to decide whether borrowing from those close to you is a savvy solution or a recipe for resentment.

Asses your relationships

In your 20s, if you have a strong, communicative relationship with your parents, they may seem like an obvious go-to.

But before asking, consider any cues that your request might put a financial strain on them, says Erin Lowry, author of “Broke Millennial.” Maybe they’ve mentioned furiously saving for retirement or that they still have a pricey mortgage. Or they might be budgeting for other major expenses, like a sibling’s upcoming wedding.

Involving friends in your money woes is a major risk. They don’t have to love you unconditionally, and you might lose their respect if you don’t pay them back. Elijah Kovar, a financial adviser at Great Waters Financial in Richfield, Minnesota, says he’s lent money to friends about a dozen times and has been repaid once.

“The biggest problem with it is less of a financial problem. It’s a relationship problem,” he says. “It can hurt the person’s view of you and your reputation with them.”

Decide whether you’re willing to put that friendship on an awkward footing during the time it takes you to repay, and maybe long afterward.

Make a specific payment plan

The amount you need will dictate whether borrowing from family and friends is a wise choice and how structured the repayment plan will be.

Some family members might not want to be repaid for a one-time request of a few hundred dollars, and taking them to dinner in the future will suffice, Lowry says. In most cases, though, and especially for larger amounts, be realistic about how soon you can repay and show a commitment to doing so by a specific date.

Create a written agreement outlining the repayment plan, perhaps tied to your pay schedule or an expected bonus or tax refund. Offer to include interest, even if the lender declines, says Diane Gottsman, an etiquette expert and author of “Modern Etiquette for a Better Life.”

Borrowing money invites a potential shift in the power dynamic between you and the lender. But when you make a repayment plan and communicate regularly, it’s inappropriate for the lender to bring up the loan in every conversation or in front of others, Gottsman says.

Explore low-interest alternatives

If you decide borrowing from the people in your life isn’t worth the risk, you might look next to credit cards. But if you don’t have a long-term plan to eliminate the debt, interest could make it bloom into a bigger problem.

With a credit score of 690 or higher, you may qualify for a 0 percent interest credit card, which could give you some breathing room — but don’t carry your balance beyond the interest-free period. Another option, especially if your credit score is below 690, is to check out personal loans from your local credit union. You’ll need to become a member, but you’ll benefit from comparatively low interest rates. Federal credit unions cap loan interest rates at 18 percent, according to the Credit Union National Association.

Learn from the process

If you borrow, think of the experience as motivation to build financial security. Pad your savings by cutting back on unused subscription services, pricing cheaper cellphone plans or putting away a portion of your next bonus. Having an emergency fund — ideally with six months’ worth of basic expenses — will not only mean freedom from having to borrow money. Using your own savings to cover unforeseen costs can also be an empowering “I did it!” moment, encouraging you to keep up the good money habits.

Brianna McGurran is a staff writer at NerdWallet. Email: Twitter: @briannamcscribe.

This article was written by NerdWallet and was originally published by The Associated Press.

The article Ask Brianna: Should I Borrow Money From Family and Friends? originally appeared on NerdWallet.

How Bad Grades Could Put Your Financial Aid on the Chopping Block

Some college students might justify a slip in their grades by saying a 2.2 GPA student earns the same degree as 3.8 GPA student.

But getting decent college grades matters. In fact, earning at least average grades is one part of making “satisfactory academic progress” (SAP), a key element of financial aid eligibility.

So if you’re one of the 86 percent of college students who, according to the National Center for Education Statistics, rely on financial aid like grants, scholarships, or student loans to pay for college, do your homework on SAP.

Why you should care about satisfactory academic progress

Federal financial aid refers to all funding the Federal Student Aid Office provides to help college students cover their costs.

Although financial aid is widely available to students, it’s not exactly a free-for-all. Students must meet certain eligibility requirements, including maintaining SAP.

To the Federal Student Aid Office, achieving satisfactory academic progress shows you’re putting federal financial aid to good use. It also demonstrates whether you’re staying on track to attain a college degree — or just wasting taxpayers’ money.

How to maintain satisfactory academic progress

For many students, losing out on financial aid leaves them with no way to pay for college courses, which can be a real problem.

When it comes to college tuition, students pay, on average, $9,410 for in-state tuition at public colleges and a whopping $32,405 at private colleges. And that’s before adding in other education-related expenses like books, supplies, transportation, and room and board.

If you lose financial aid eligibility, you’ll have to figure out how to cover your college costs on your own. Spoiler alert: Your range of options will be limited. You’ll probably have to pay for college costs out of pocket or with private student loans.

Here’s how you can maintain SAP and your financial aid eligibility.

1. Understand and meet the necessary standards

Satisfactory academic progress is a set of standards that measure a student’s progress through a college-level degree, certification, or training program.

Meeting or surpassing SAP standards shows you’re advancing through a program of study at a decent pace and performing adequately.

Here are the main components of maintaining satisfactory academic progress, per the Federal Student Aid Office:

  • Earn good grades: Generally, you’ll need to have at least a C average or a cumulative GPA of 2.0 or higher on a 4.0 scale, according to Fastweb.
  • Complete a sufficient number of classes, credits, or hours each enrollment period: You’ll typically be required to pass at least two-thirds of the credits you attempt each semester.
  • Complete your degree or certificate in a timely fashion: According to the Federal Student Aid Office, you’ll need to work toward “successfully completing your degree or certificate in a time period that’s acceptable to your school.”

The above standards are good guidelines, but the phrase “acceptable to your school” is key.

Essentially, colleges set their own SAP guidelines, which often vary by school, department, major, or type of degree. For instance, although a 2.0 GPA is the minimum for most bachelor’s degrees, many graduate programs require that students earn a 3.0 or higher.

It’s also important to note that specific scholarships and tuition assistance programs might have stricter academic performance requirements. You should be aware of such conditions for your scholarships to ensure you’re meeting them.

2. Earn good grades

Failure to meet satisfactory academic progress is one of the most common ways students lose financial aid eligibility.

That’s why it’s important to understand how your college defines satisfactory academic progress. Review your registration and orientation materials, search your college’s website, or visit the financial aid office in person to find out.

Most students who don’t meet SAP requirements fail because of their falling GPA, according to Fastweb. So if you find yourself struggling with coursework, don’t let yourself flounder; be proactive.

Here are a few ways you can catch up and keep up:

  • Let your professors know you’re struggling but want to do better. They can offer direct help and point you to other resources to improve your academic performance. Also, take advantage of office hours.
  • Check out on-campus labs to get feedback on projects or learn challenging concepts outside class hours. When I found myself out of my depth in a college calculus course, the campus math lab was a lifesaver. It kept me afloat and helped me earn a decent grade.
  • Many colleges offer free tutoring programs, which you can use to get more one-on-one help.
  • Sign up for a study skills course or see if your college hosts seminars on this topic.
  • Develop study skills and effective time management on your own. Get started with this guide to study skills from MIT. You also can check out this professor’s 10 tips to get better grades in college.

On top of grades, you need to make sure you’re passing your courses and staying on track to graduate with as few credits as possible. That way, you avoid wasting tuition money on credits that don’t count toward your degree.

3. Take warnings and academic probation seriously

Most colleges won’t pull your financial aid as soon as your grades start falling. Instead, they usually will notify you with a warning that you’re close to failing the SAP guidelines. They also might put you on official warning or academic probation, depending on your school’s policies.

Although you shouldn’t panic if you’re put on probation, you should take these alerts seriously. After you receive a warning or are put on probation, make it your No. 1 priority to improve your academic performance. Revisit the tips above to boost your grades.

Some schools also will set requirements for students on probation. You might need to meet with a college advisor, for instance, or write an essay outlining your plan to address issues that are holding back your progress. Make sure you fulfill any and all conditions your college sets forth to get out of academic probation.

Whatever your circumstances and regardless of whether you’re likely to be granted an appeal, start talking to your college advisors and financial aid officers. You’ll need their help to discuss your options and find a way forward.

4. Submit a satisfactory academic progress appeal

If you’ve already failed to make satisfactory academic progress in a given semester or enrollment period, your school will suspend your access to financial aid immediately. Your financial aid also will be suspended if you fail to turn your grades around after ending up on probation.

However, there could be hope. Many colleges allow students to submit a satisfactory academic progress appeal. If emergency circumstances played a role in your poor academic performance, definitely consider this option.

“Reasons for appeal usually include the death of a member of your family, your illness or injury, or other special circumstances,” according to the Federal Student Aid Office.

Your school will have its own process for receiving satisfactory academic progress appeals, so find out what that is. This guide to writing a successful SAP appeal from Wayne State University might be a good place to start.

Don’t let your academic performance fall by the wayside

As a student, you should do everything you can to meet satisfactory academic progress requirements and keep yourself in good academic standing.

If you’re falling short, take action right away. It’s much easier to course correct before your financial aid is suspended. And should you lose financial aid eligibility, find out how to regain it and work toward this goal.

Although getting satisfactory academic progress back on track can be hard, with some patience, creativity, and a big reality check, it can be done.

The article How Bad Grades Could Put Your Financial Aid on the Chopping Block originally appeared on

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Budgeting for New Homeowners: Plan for Additional Expenses

The stress and excitement of buying a house has come and gone — it’s time to hang a welcome sign and call it home.

But a new journey in budgeting begins once you’ve paid the closing costs and tipped the movers. Now it’s time to learn to budget as a homeowner.

If you’re new to budgeting, buying a home marks a good time to start. The 50/30/20 budgetingapproach is a good foundation, where 50% of your household income goes to needs, 30% to wants and 20% to debt repayment and savings. See how your income breaks down using a budget calculator or a budgeting worksheet with pencil and paper.

Even if you’re not new to budgeting, there are many additional things to consider now that you own a home. Start with the following.

Account for new regular expenses

You may have already been covering household expenses, such as electricity and water bills, at another residence, but be prepared for many other regular homeownership costs — beyond your mortgage payment. Here are expenses unique to homeowners.

Real estate taxes and homeowners insurance: These are typically, but not always, included in your monthly mortgage payment. Even if you have a fixed-interest mortgage, your payment can fluctuate from year to year because of changes in taxes and homeowners insurance premiums.

Homeowners association: If you live in a planned neighborhood, you’ll likely be part of a homeowners association, which comes with dues that can cost several hundred dollars a month. Even if your HOA fees are due annually, earmark the amount each month so you’re not hit all at once.

Home maintenance and upkeep: Taking care of repairs and updates can get expensive. Whether you plan on staying in your new house forever or selling it some day, you’ll want to stay on top of maintenance. Rob Jones, a certified financial planner with Hutchins & Haake CPAs in Overland Park, Kansas, recommends that homeowners set aside 1% to 2% of the value of their home each year for upkeep. If your home is older and may need more repairs, plan on the higher side of this range.

Anticipate bigger project costs each year

Estimating just how much you’ll spend on home maintenance is difficult. The 1% to 2% range is a good place to start, but high-value repairs may push your annual home maintenance spending over this range.

When you revisit your expenses annually, think about upcoming expensive projects. For instance, you may have a 20- or 30-year-old roof, or a deck that may need replacing every decade or so. Include these projected expenses in your budget in addition to the 1% to 2% for general maintenance.

“These things shouldn’t be a surprise,” Jones says.

Revisit your savings and life insurance

You may already have an emergency fund, life insurance policy and retirement account in place, but a review would be good in light of your recent purchase.

Emergency fund: In a perfect world, it contains enough cash for you to cover living expenses for three to six months. With homeownership, your living expenses — or those considered “needs” in your budget — likely have increased.

Life insurance: If you want your life insurance to cover your entire mortgage and several years’ of living expenses in the event of your death, you may need to purchase a higher amount. Make sure you’re getting the best value by pricing at least two different-sized policies — one that would cover only your new liabilities (the house) and one that would cover your home and any existing policies.

Retirement contributions: Will your current retirement contributions cover your new household expenses after you leave the workforce? You may want to allocate more, particularly if you’ll still be paying a mortgage when you hit retirement age.

Know where your mortgage fits in debt priorities

Your mortgage is likely your biggest debt, but that doesn’t mean it’s the biggest priority. In judging debt as good or bad, your mortgage — like student loan debt, typically — is one of the good guys. A home loan generally comes with a lower interest rate and allows you to purchase your largest asset, one that will hopefully grow in value over time.

Before you make extra mortgage payments or tack a few hundred dollars onto your regular monthly bill, eliminate these debts if you have any:

  • Credit cards
  • Payday loans
  • Title loans
  • High-interest personal loans

Start thinking of making extra payments on your mortgage only after all toxic debt is eliminated, your retirement is on track and your emergency fund has ample cash.

Be proactive when faced with challenges

Life happens, and there may come a day when you struggle to make your monthly payment. If this occurs, be proactive. Consider refinancing your mortgage at a lower interest rate if you anticipate difficulties ahead. If you’ve been on time with payments, you may also qualify for the Home Affordable Refinance Program, or HARP, through the federal government.

“Don’t let your lender have to come find you because you haven’t made your payment,” Jones says. “Call them and tell them what’s going on — they don’t want to have to foreclose on homeowners.”

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @ElizabethRenter.

The article Budgeting for New Homeowners: Plan for Additional Expenses originally appeared on NerdWallet.

5 Debt Questions You’re Afraid to Ask

Talking about debt can be awkward or embarrassing, leaving you to worry in silence about your own rising balances or a family member’s finances.

Here are answers to some questions you might hesitate to ask.

Will my debt ever get so old that I won’t have to pay it?

Not really. Many debts that might be worrying you — credit card balances or medical bills — have a statute of limitations. It varies by state, but generally is three to six years from the first missed payment or most recent payment. Most negative marks fall off credit reports after seven years.

But you still owe the debt. And debt collectors can seek payment, even though they can’t sue you.

Tip: There are a few ways to handle old debt, but tread carefully or you may accidentally reset the statute of limitations, which leaves you open to a lawsuit.

Will I get stuck with family members’ debt after they die — or vice versa?

It depends on the debt and how connected family members’ finances are.

Assets left behind after death may have to go toward paying off debt. Most times, any debt left over when that money runs out is a creditor’s loss.

In some cases, though, a family member might have to pay. Co-signers, such as on joint credit cards, mortgages or other loans, are on the hook for any remaining balance. And in community property states, the surviving spouse is responsible for marital debts.

Tips: Be careful about co-signing on credit accounts. And have enough life insurance to cover your debt.

Can I be arrested for debt?

Technically, no. Federal law bars debt collectors from threatening you with arrest or jail.

But debt collectors can sue for payment, and about 90% of people they sue don’t appear in court. That leads to a default judgment ordering repayment, and some collectors have used arrest warrants to get consumers to comply with such orders. That’s uncommon, though. Usually, courts order payment from your wages or bank account.

Tips: Know your rights when dealing with debt collectors, and never ignore a court summons.

Is there a maximum amount of debt I can take on?

The short answer is no. Lenders may offer more credit than you have the ability to pay back.

Tip: Debt can help you accomplish goals like owning a home or building a business, but be realistic about what you can repay.

Will bankruptcy erase all my debt?

Alimony and child support obligations can’t be erased in bankruptcy. Student loans, tax debt and judgments can be difficult to eliminate, as well.

Tip: If you’re struggling with overwhelming debt, consult a nonprofit credit counselor and bankruptcy attorney to see if bankruptcy might make sense.

Sean Pyles is a staff writer at NerdWallet, a personal finance website. Email:

The article 5 Debt Questions You’re Afraid to Ask originally appeared on NerdWallet.

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Ask Brianna: How Can I Eat Well and Stay Fit on a Budget?

“Ask Brianna” is a column from NerdWallet for 20-somethings or anyone else starting out. I’m here to help you manage your money, find a job and pay off student loans — all the real-world stuff no one taught us how to do in college. Send your questions about postgrad life to

This week’s question:

I’m trying to eat better and exercise more, but I don’t have a ton of money in my budget to spare. How can I live healthily on the cheap?

Committing to wellness doesn’t have to be the pricey endeavor that leggings retailers and fancy salad shops want you to think it is. Cooking dinner at home instead of eating out, for example, was associated with healthier diets and lower spending on food overall, according to a recent study from the University of Washington School of Public Health.

If you’re used to springing for fast food or ordering a lot of takeout, it’ll take dedication to start planning meals and cooking for yourself. Working out cheaply or for free will also require researching options and discovering what you enjoy. But you’ll feel stronger and more in control of your health — and budget — so give these strategies a try.

Know what ‘healthy’ means

First, understand what counts as “healthy.” Working within guidelines can help you realistically build exercise and a nutritious diet into your lifestyle. That will prevent you from overspending on boutique gyms and organic produce you don’t need and can’t afford.

The MyPlate Checklist Calculator from the U.S. Department of Agriculture offers personalized guidelines for the amount of fruit, vegetables, grains, protein and dairy to eat per day. Use the nonprofit Environmental Working Group’s Shopper’s Guide to Pesticides in Produce to decide which fruits and vegetables to splurge on. The “Clean Fifteen” lists foods least likely to contain pesticides, which means you can select their cheaper, non-organic versions.

Adults should do aerobic exercise (like walking, swimming, biking or running) at moderate intensity for a total of 150 minutes per week or at vigorous intensity for 75 minutes per week, according to the U.S. Department of Health and Human Services. Two or more days of muscle-strengthening activities, such as push-ups, crunches or yoga, are also recommended.

Start small and shop with intention

You probably won’t develop a suitable, convenient and cheap eating and exercise regimen overnight, so start small. Look for ways to add fruits and vegetables to meals you already eat, says Jessica Matthews, senior adviser for health and fitness education at the American Council on Exercise. If you eat eggs every morning, she says, throw in some chopped mushrooms or spinach.

To save money on groceries, start by planning two dishes for the week, says Erin Chase, founder of the blog $5 Dinners. She recommends looking at grocery store sales and building your meals around a protein — a meat or meat alternative — that’s on sale that week. Write a shopping list with your daily basics plus the ingredients for your two recipes, and minimize impulse buys.

“Give yourself enough structure so you’re not wildly overspending, but allow yourself three or four new things to try — as long as you know you’ll eat them,” she says.

Craft your own workouts

Gym memberships cost an average of $54 a month in 2015, according to the most recent data from the International Health, Racquet & Sportsclub Association, a fitness club trade group.

But you may not have that much to spare, or maybe the gym isn’t your thing. Opt for at-home or other do-it-yourself workouts using free resources. The website for the American Council on Exercise has a library of step-by-step workout tutorials you can search by muscle group or experience level. If you enjoy fitness classes, you can find free online classes at sites like DoYogaWithMe.

To stay motivated, add workout blocks to your personal or work calendar; set specific, attainable goals; and make a plan to stay accountable with a friend. Maybe you and a work colleague will train for a 5K run together and do muscle-strengthening exercises twice a week.

If 30-minute workouts don’t fit your schedule, try for three 10-minute bursts of exercise throughout the day, Matthews says. Whether you choose hiking or at-home Pilates videos, make it something you like, not what you think you’re supposed to do, and stick with it.

“What is it that interests you most?” Matthews says. “The way that people see the best results is by doing something consistently.”

Brianna McGurran is a staff writer at NerdWallet. Email: Twitter: @briannamcscribe.

This article was written by NerdWallet and was originally published by The Associated Press. 

The article Ask Brianna: How Can I Eat Well and Stay Fit on a Budget? originally appeared on NerdWallet.

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What Would You Give Up to Be Debt-Free?

Looking to get out from under a mountain of credit card debt? You’ve likely come across an aspirational story or 12 while clicking around.

They usually go like this: Penny-pinching Peter rid himself of an enormous amount of debt by cutting out small treats and giving up Netflix. But will abstaining from $12 avocado toast and missing out on the latest season of “Orange Is the New Black” do the trick for you?

Or you read about those who sleep in their cars for a year, shower at the gym and consume only discarded ketchup packets. That might not work for you, either.

Defeating debt is a delicate balance: You need to figure out where you can cut — and how long you can live that way.

We crunched the numbers for some common budget cuts, and some extreme ones, and then tested how long they’d take to offset $15,000, a nice round number close to the average credit card debt in the U.S., according to a NerdWallet study.

Cuts that really make a difference

Starting small can ease you into the habit of budget cuts. But forgoing little luxuries alone often won’t be enough to make a meaningful difference in debt. For instance, brown-bagging your lunch cuts out the average $5 fast food tab every workday. Great start, you’re saving $105 a month — but at that rate it would take you nearly 12 years to save enough to pay off $15,000.

Getting more serious, you could take on a second job, figuring that wiping out debt is worth sacrificing some of your free time. An extra 10 hours of work a week could earn you an additional $314 a month, based on the federal minimum wage. At that rate, you’d be up to $15,000 in four years.

The most extreme measures put you on the fast track to paying off debt — if you’re willing to make the lifestyle sacrifices. Moving in with family or living out of your car are drastic options, but ditching rent on a one-bedroom saves $810 a month on average. That adds up to $15,000 in just a year and a half.

See for yourself

Playing around with different combinations of budget cuts gives you valuable insight: You might be inspired to go big and defeat debt quickly, or you might decide to preserve some little luxuries and accept a longer timeline.

NerdWallet’s debt-free calculator lets you test cuts to your monthly budget and see how long various combinations would take to offset your current debt. Or, pick and choose from this table detailing average savings and timelines:

Action Average monthly savings* Average annual savings* Years to offset $15,000 debt
*See how we got the numbers in the Methodology section.
Give up Pandora $4.99 $59.88 250.5
Give up Spotify $9.99 $119.88 125.1
Give up Netflix $9.99 $119.88 125.1
Drop collision and comprehensive car insurance $43 $516 29.1
Get cheaper phone $45 $540 27.8
Cancel cable TV $50 $600 25
Cancel gym membership $58 $696 21.6
Give up coffees $76.65 $919.86 16.3
Slash entertainment spending $76.83 $921.96 16.3
Skip vacations $97.17 $1,166.04 12.9
Stop eating lunch in restaurants $105 $1,260 11.9
Stop buying new clothes $153.83 $1,845.96 8.1
Halt 401(k) $254.89 $3,058.68 4.9
Get second job $314.17 $3,770.04 4
Rent room on Airbnb $440 $5,280 2.8
Share housing $470.50 $5,646 2.7
Move in with parents or live in car $810 $9,720 1.5
Sell car, use public transit $816.42 $9,797.04 1.5


Getting a sense of what you can live with clears the way to the next step: picking the right path to paying it off. Strategies such as debt consolidation and targeted payments — the “debt avalanche” and “debt snowball” techniques you can use — may speed up the process or reduce the amount of interest you pay.

And if your repayment timeline is stretching past five years even with major austerity measures, it’s time to look at debt relief options such as debt management plans or bankruptcy. Most people want to pay what they owe, but there comes a time when trying to dig your way out is really just digging yourself deeper.

Sean Pyles is a staff writer and Daniel Tonkovich is a data analyst at NerdWallet, a personal finance website. Email: Twitter: @SeanLoranPyles


Calculator figures the time needed to save enough money to pay off a target amount but does not incorporate interest. Average monthly savings and sources:

Give up Pandora: Pandora Plus, $4.99. Source: Pandora

Give up Spotify: Premium, $9.99. Source: Spotify

Cancel Netflix: Standard plan, $9.99. Source: Netflix

Drop collision and comprehensive car insurance coverage: Blended savings from dropping collision, comprehensive, $43. Source: NerdWallet

Get a cheaper phone: Unlimited plan, $80; Small plan, $35. Source: Verizon (largest carrier)

Cancel cable TV: Cheapest Comcast bundle with at least 10 channels vs. comparable internet-only deal, $89.99 vs. $39.99, Bay Area, first year of service only; monthly savings $50. Source: Comcast

Give up gym membership: Average membership, $58. Source:

Give up coffees: Starbucks grande latte, $3.65 per weekday; monthly savings $76.65. Source:

Slash entertainment spending: Annual average spending on fees/admissions, $569, entertainment equipment/services, $353; monthly savings $76.83. Source: Bureau of Labor Statistics

Skip vacations: Two trips a year at average expenditure for domestic trips of more than 1 day away from home; monthly savings $97.17. Source: Bureau of Labor Statistics

Stop eating lunch in restaurants: Average fast food meal, $5 per weekday; monthly savings $105. Source:

Stop buying new clothes: Average spending $1,846 a year on clothing, shoes, associated services. Monthly savings $153.83. Source: Bureau of Labor Statistics

Stop 401(k) contributions: Average 6.8% deferral rate, median weekly earnings for full-time workers $865; monthly savings $254.89. Sources: VanguardBureau of Labor Statistics

Pick up a second job: 10 hours a week at $7.25 federal minimum wage, monthly pretax total $314.17. Source: Department of Labor

Rent out a room on Airbnb: Median earnings $440 a month. Source:

Live with a friend / get a roommate: Median 2-bedroom rent $941; monthly savings $470.50. Source: Census Bureau, 2015 American Community Survey

Live with parents or sleep in car: Median 1-bedroom rent, $810. Source: Census Bureau, 2015 American Community Survey

Sell car, use public transit: Average savings for car payment, gas, insurance, parking vs. average monthly transit pass (proceeds from car sale not included); monthly savings $816.42. Source: American Public Transportation Association

The article What Would You Give Up to Be Debt-Free? originally appeared on NerdWallet.

3 Money Tools to Save You From Yourself

Dipping into your savings is like fast food: It’s convenient and tempting, and it might leave you a little queasy the next morning.

Doing so can also eat into your financial goals, whether that’s a big trip abroad or a simple emergency fund. You can, however, avoid scratching that spending itch with these tools, which can help keep your savings intact.

  1. Certificates of deposit

Certificates of deposit typically provide a better return than standard savings accounts, and they rarely charge monthly fees.

More importantly, CDs encourage you to play keep-away with yourself. When opening a certificate, you decide how long the bank gets to hold on to your money. That’s called the term length. If you want access to that cash before the term is up, the bank will likely charge an early withdrawal penalty, which is typically a certain number of months’ worth of interest.

It might not seem like it, but the bank is doing you a favor. In theory, that penalty should make you think twice before withdrawing money early. This, in turn, helps ensure that money continues earning interest at the bank.

  1. Prepaid debit cards

Chasing a savings goal can lead you down a long and winding road, and obstacles like bank fees and mounting debt might knock you off course altogether.

Prepaid debit cards can help you stay on track. They work much like standard debit cards, with one key difference: You can spend only the amount you’ve deposited. This setup cuts down on pricey overdraft fees. Plus, you won’t rack up fresh debt the way you might with a credit card.

You can then redirect those savings to an emergency fund, which you can tap in the event of a sudden dishwasher outage or some other unexpected expense — instead of, say, withdrawing CD funds early and triggering fees.

Like most things, though, prepaid debit cards aren’t perfect. Using one won’t boost your credit score, and there’s typically a monthly fee. Still, they’re a solid option for people whose spending habits regularly eat into their savings goals.

  1. Checking and savings accounts at separate banks

Despite mobile banking’s redeeming qualities, it is the ultimate bad-decision enabler. Checking account running low before a big night out? A few swipes are all it takes to dip into that vacation fund.

Having a separate savings account at a different bank should make savings-to-checking transfers slightly more tedious, as they can be slower and might incur fees. That’s a good thing in the long run, because it might dissuade you from making those types of transfers. To further bolster your savings, have a portion of your direct deposit go into that account so that cash is stashed away automatically and regularly.

Although curbing your spending has a lot to do with the decisions you make, the above tools can alleviate some of the pressure. Taking advantage of one or more can help you keep you financially healthy.

Tony Armstrong is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @tonystrongarm.

The article “3 Money Tools to Save You From Yourself” originally appeared on NerdWallet.

Do You Owe Taxes on Your College Scholarship?

There’s nothing like your first-ever paycheck to teach you about the reality of taxes. And as we get older, the many ways our money goes to the government become even more apparent.

But what about college scholarships? Surely the money you received to pay for your education can’t be taxed, right? The truth is, it could be.

To find out if this could happen to you, check out the information below and see which rules apply to your college awards and whether your scholarships are taxable income.

Are scholarships taxable? It depends

So, are scholarships taxable income? The answer lies in what type of scholarship you have. Below are the tax implications for college scholarships, as explained by the IRS.

Scholarships covering tuition at an eligible educational institution: not taxable

According to the IRS, an “eligible educational institution” is defined as follows:

  • The main purpose is formal instruction.
  • It regularly maintains a faculty and curriculum.
  • It normally has an enrolled student base where it performs instruction.

Additionally, you must be a candidate for a degree at such an institution. That means your school has to offer the credits necessary to get that degree. That said, schools offering a training program for a “recognized occupation” can also qualify for tax-free scholarships, so it’s best to check with the school in question if you think you fall into this category.

If your school fits this description, then your tuition scholarship isn’t taxable. But the funds need to meet a few other criteria.

If you use your scholarship for expenses other than tuition, such as room and board, it might be taxable. Likewise for payment for services you agree to do for the scholarship, such as teaching or conducting research.

Scholarships covering non-eligible educational institutions: taxable

If you’re thinking of using scholarship money to take classes for fun, you might want to reconsider if you don’t want to pay taxes on your college scholarship.

According to the IRS, “a scholarship or fellowship grant is tax-free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution.”

If not, you’ll have to include your scholarship money on your taxes as income.

Scholarship funds that exceed qualified education expenses: taxable

Room and board can be a pricey part of the college experience, so it might come as a surprise that scholarship or grant funds used for that purpose could be taxable. The same goes for any funds that exceed the cost of your tuition.

Scholarships and grants can have parts that aren’t taxable and parts that are. That’s why you need to know about “qualified education expenses.”

Qualified education expenses include the following:

  • Tuition
  • Fees
  • Course-related required expenses, such as books and supplies

Expenses that aren’t qualified seem to be whatever happens outside the classroom, including room and board and travel. Scholarship funds used for those expenses would be taxable.

Scholarships covering payment for your services: taxable

There are times when a scholarship or grant comes with a stipulation requiring you to work for it — by teaching or conducting research, for example.

In those cases, you’ll most likely have to treat payment for those services as taxable income.

But there are exceptions to this rule.

If your services are being paid for by the National Health Services Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program, then you’re not required to treat that payment as taxable income. The same goes for services paid for in work-learning-service programs, as defined in Section 448(e) of the Higher Education Act of 1965.

Veterans benefits: not taxable

If you’re a veteran, the IRS doesn’t consider funds you get for education or training to be taxable income. That said, the IRS does caution you to be aware of the tax implications of any other grants or scholarships you receive.

You can find out more about education benefits for military members, including student loan forgiveness and repayment programs, via the U.S. Department of Veterans Affairs.

Other scholarships and grants: it depends

What about the other ways you might receive funds for your education? Consider the following:

  • Athletic scholarships
  • Fulbright scholarships
  • Need-based education grants

According to the IRS, all of the above “are tax-free to the extent used for qualified education expenses during the period for which a grant is awarded.”

Are your college scholarships taxable? Here’s what to do

If any or all of your scholarships are taxable, the first thing to do is find out how much of the amount is taxable. You can do so with the help of this worksheet from the IRS.

You can find instructions on how to report the taxable amount on your taxes here. The process differs depending on which tax form you use.

Even if your college scholarships are taxable, avoiding debt is key

If you just found out that your college scholarship could be taxable, you might be feeling a bit frustrated right now. After all, that money is supposed to help you with school, not cost you more money.

There’s good news, however. If you do your taxes properly, it might not cost you much. Here’s an example scenario:

  • You find out that $15,000 of your annual college scholarship is taxable.
  • You work part time and earn $3,000 per year.
  • Add your taxable scholarship money to your annual income, and you have $18,000 of income to report.
  • If you file as a single person in your tax bracket (not that of your parents), this number puts you at a 10 percent tax rate.
  • You’ll owe $1,800 in taxes this year.

Keep in mind that although you can pay these taxes in your own bracket, your parents still can claim you as a dependent (as long as you don’t claim any tax exemptions).

Although $1,800 might sound like a lot, even if you owe that much every year and graduate in four years, then you have to pay only $7,200 in taxes on your scholarship money. Compare that to the average student loan debt, which was $37,172 for the class of 2016.

What’s more, you can sign up for a payment plan on your taxes if you need to — and the interest rates on an IRS payment plan likely won’t be nearly as high as student loan interest rates can be.

In the end, if you take on as little student loan debt as possible, you’ll get a much fresher start after college.

The article Do You Owe Taxes on Your College Scholarship? originally appeared on studentloanhero.

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