Financial Aid with Brian Johnson
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Matt: Welcome to Bellingham Technical College’s Money$marts Podcast. I’m your host, Matt Benoit and each episode we will talk with BTC students, staff, community professionals and financial experts about financial literacy and wellness in order to help listeners navigate resources in the community and empower themselves, financially. Today, I’m here with Brian Johnson from BTC student funding. How are you?
Brian: Good thank you. How are you today?
Matt: Excellent. I’m doing well. So, as of July 2018, what’s your position at BTC here.
Brian: Currently, I am in the position of Interim Director of Workforce Funding and Student Support.
Matt: Okay. And overall, how long have you been at BTC?
Brian: I have been at Bellingham Technical College for about nine years and I have worked in that time with different grants at BTC as well as in Workforce Funding and the Financial Aid area. 
Matt: Excellent. So, how do you personally work with students to help fund their education?
Brian: So my role takes on different aspects at different times but part of what I personally like to do is help connect students to resources. So the resources are already there and out there. It’s just a matter of connecting them with those resources so I like to help share information and bring the resources to the students and the students to the resources, so in that sense I am a middle person connecting people and the people that I work with. I also try to troubleshoot problems as they arise. So, I help students come up with next steps that they can act on.
Matt: Okay. Now, whether you come to the students or they come to you what are some of the main questions that students have about their financial aid?
Brian: Students often wonder about timing, when is their financial aid going to be released to them and how does that work. They also wonder what the disbursement system is like how does the money actually get to them if they have it available and how does that work with tuition and fees. They also wonder about what they can use their financial aid for and ask questions about that. They also sometimes wonder about changes in their schedule or enrollment and how that effects their financial aid eligibility. And of course the most common one is if they can get more financial aid of some sort and that comes up regularly.
Matt: So, in talking about possible enrollment changes, how does that effect your financial aid?
Brian: It does depend on the kind of funding that the student has but a lot of funding sources will rise or fall depending on how many credits the student is enrolled in. So, especially grants, anything that says grant at the end is a type of funding that is given by the government and it will rise or fall depending on whether the student is going full time or part time. And so if a student changes their enrollment, that can effect how much financial aid grant money they may be eligible for. If they have already received those funds then they may have to repay some of it if they dropped to a lower enrollment level.
Matt: So, once students receive their financial aid money, what exactly are the parameters on what they can use it for?
Brian: So usually students that have financial aid, whatever kind it is, it will automatically go towards tuition and fees first - so if there’s still an amount owed there that what it’ll go toward. The amount that gets dispersed to students, they can to use to help generally with anything that’ll help them get through college so that can include living expenses and transportation as well as food and lodging. Anything that will - they need for college such as books and supplies. What they can’t use the funds for is luxury items and travel expenses, those sorts of things are not required – anything that’s not required for them to get through college.
Matt: Ok. Yeah, so that 55-inch flat screen is not essential…  
Brian: Right
Matt: Now, a lot of students are of course familiar with FAFSA, the Free Application for Federal Student Aid. Why is it so important to fill one of those out?
Brian: It’s important, partly because of that first word, free. It’s an opportunity to apply for funding that doesn’t have much risk to it. You share a little of your information and it gets processed through the department of education and sent to whichever colleges that you list on the FAFSA, on that application, and they can take a look and consider your eligibility and offer you a financial aid package.
Matt: So, in addition to FAFSA, there’s a state level financial aid which is WASFA. So, who qualifies for that and what does it provide you with?
Brian: Right, so both the FAFSA and the WASFA are both applications for financial aid. The WASFA is through Washington State whereas the FAFSA is through the federal government. The reason that they have the WASFA is for students that may have trouble providing enough documentation to show their status currently living in the United States, and so they can fill out the WASFA and still potentially qualify for some types of funding. Particularly, ones that come through the state of Washington or potentially for some scholarships.
Matt: Now when you’re filling out your FAFSA, it can be a little confusing. What are some common challenges that students face when they’re trying to fill this out.
Brian: These days, there is something called the Federal Student Aid ID, known as the FSA ID, so that can be a challenge – it’s usually just a one-time set up, so students sometimes have challenges setting it up if they are a dependent student, mostly students that are under age 24 they may also need to have one set up for their parent. So, that can be a challenge to get those set up properly. And interestingly enough there’s a parent number one and a parent number two on the FAFSA and so sometimes those will get switched around, that can be a challenge. It’s important to sort that out. They also have challenges related to, sometimes just the parent and family situation. Sometimes parents are not so cooperative with being willing to share their information for the FAFSA, for the application. Generally, unfamiliarity can be an issue. So sometimes students just aren’t familiar with financial forms or with the computer interface or both. So that can be a challenge if they are just not used to working on computers.
Matt: So, when students do receive a financial aid award or package, what kind of awards can they expect to get?
Brian: There are quite a few and of course, it depends on eligibility and availability. So students commonly receive Pell Grant funds if they have enough demonstrated financial need. Those ones are from the federal government and they are available for everyone who has need. Demonstrated need. Then there are also state funds and the most common form of that is the Washington State Need Grant. That one is one that is available to students who have demonstrated need but the funds are more limited so eventually they run out. So the people that apply early and get their follow up documents in early are most likely to receive those funds. Beyond those two, which are probably the most common, there are also student loans, which are available to students if they choose – of course, those are always optional to request. And then there are some other smaller funding sources that are available to students pretty commonly. In Washington State we have a program for students that sign up in middle school and commit to go to college when they graduate – within a year or so after they graduate – and that’s called College Bound. So sometimes students are eligible for those funds. There’s also a supplemental educational Opportunity Grant, which is through the Federal Government that is very limited, but some of the early appliers can get that as well.
Matt: Obviously, even with financial aid there are some students who still wind up having unmet need after receiving financial aid packages. And when we, just to be specific here, when we say unmet need we mean that, you know, they still have costs that grants or scholarships are not covering. There’s a hole there. So what do you usually recommend for students who have unmet need?
Brian: Good, so that’s the kind of troubleshooting and question and problem solving that I work with on a regular basis. Often times, it depends on what the student already has in place but typically the things we would look at would include WorkForce Funding Programs, so those are a series of programs that students that have certain qualifications for certain government programs can get additional funding for their college education through those programs. We also encourage looking for scholarships. Scholarships are one of the more underutilized but available funding sources out there because students sometimes don’t put the effort in of just even a few hours of searching for scholarships when it could mean hundreds or thousands of dollars of additional funding. And so, usually it’s worth putting in at least a few more hours potentially of scholarship search to see if it’s possible to get more scholarship funds. Student loans, if the student hasn’t requested those already, they’re sometimes available. Most students qualify for at least some student loans through the federal student loan program and some students also can qualify and if needed get student loans through an outside banking institution. So, we’ll talk about that. Sometimes part time work is an option, not for all programs but students can get part time jobs to help supplement their income and cover their expenses while they’re in school. Sometimes we’ll talk about the option of waiting for a while and saving up some more money. Overall, financial aid has to make sense of the big picture. The student has to have a plan in place that will get them through financially, through their college education. And sometimes even considering another school. They may have a different funding source in house that might overall offer a more attractive financial aid package to the student.
Matt: Now obviously, you mentioned student loans and for a lot of people that’s a, that’s a phrase that just creates a lot of anxiety, perhaps. 
Brian: Right.
Matt: But do you recommend that students get student loans if they need them.
Brian: So, student loans are there as a tool and they are available for help. We recommend not taking them if it’s possible, if it’s a feasible way around that. We would recommend to avoid taking student loans however they are there as a government tool that is a sense agreed upon by all of us as a country that we want to make this available as an option to students to help them through their education. And the big picture I encourage students to consider, what is their strategy long term. So not to just take student loans but to be strategic about it. And to consider what their likely earnings might be in the future for instance and how long that would possibly make for them to repay those student loans.
Matt: Now, Of course, there are two types of loans, there are subsidized and unsubsidized loans, so, what’s the difference?
Brian: Two main differences between the subsidized and unsubsidized student loans, subsidized generally just means help, so the government helps the student by taking care of the interest while they’re in college. The other part about the subsidized student loans is that students need to qualify financially; they have to have demonstrated financial need, so not every student will qualify for the subsidized student loans whereas almost everyone can qualify for at least some unsubsidized student loans.
Matt: In case there is someone a little unfamiliar with the exact concept of interest how would you define interest on a student loan?
Brian: Right, so interest is the amount of money that an organization or an individual charges for you to have the use of that money for as long as you have it. And that amount of money that they’re charging, the interest will continue to build on itself on the main part of what you borrowed, which is the principle for the time that you have that money until you pay it back.
Matt: Are the interest rates different between a subsidized and unsubsidized loan? 
Brian: That’s a good question. Currently and recently they are not. They are the same interest rates for both. Currently for the 2018-2019 school year, it’s 5.05 annual percentage rate. And those can change year by year, but they will stay the same for the lifetime of the loan whether its subsidized or unsubsidized.
Matt: Most people obviously, are concerned about repaying those loans post-graduation but can you get a head start on that? Can you start paying while you’re still in school?
Brian: That’s right. You can pay on student loans while you’re still in school, there’s no penalty for paying on the federal student loans and you can do that at any time along the way when you’re able to help reduce the overall end amount of the loan funds that you’ve borrowed. And another thing that sometimes people don’t realize is that they don’t have to take out the full amount of student loans available to them. The student gets to choose the amount. 
Matt: Okay. Now, if someone is in a position where they can get a head start on paying off those loans do you normally advice that?
Brian: Generally, that’s a good strategy if possible. You have to look at the bigger financial picture and consider what the strategy and plan is. Sometimes, students may have different kinds of debts besides just student loans. In which case it may be to the advantage of the student to pay other loans first if their interest rates are higher.
Matt: In other words, prioritize your debt if you have it.
Brian: That’s correct.
Matt: So if students are taking out student loans, how to you advise them to take those out and repay them responsibly? What are some good loan repayment strategies? 
Brian: So, one good idea, which in the loan entrance counseling – that is required they cover this one, is to pay off the interest as it is building along the way so that it doesn’t continue to build up on itself with the compounding interest effect. So by paying even during the time that the student is in college that can keep the overall amount at the end of repayment at a lower amount. So, keeps the interest from building up. So, that’s one good strategy for student loans. Another for repaying student loans is to not be afraid to interact with the government authorized loan servicer. But to keep actively engaged with them about where things are at and if – sometimes there’s a tendency among students or former students to try and ignore student loans and hope that they go away. That’s not usually the best strategy. Usually it’s better to keep in communication with the loan servicer and they can work with the student to help come to a solution.
Matt: You, obviously have been through the process yourself at one point or another, most of us have. When you were in college, did you take out student loans?
Brian: I ended up not having to take out student loans when I was in college. My wife did. So, for a master’s degree that she was going after she ended up, we ended up together with about $20,000 in student loan debt. So, we overall, had a good experience with them. It took us a while to pay off, I think about 10 years, but, and there were a couple times that we needed to take advance of communicating with the loan servicer and getting a deferment where we didn’t have to make payments for a while in a period where we had reduce payments when one or both of us were transition through different jobs. So, it was really helpful for us to stay in contact with the loan servicer.
Matt: Okay. So when we bring up student loans that makes a lot of people a little bit nervous, especially they are just about to get out of college and they know they’re going to have this amount to repay in addition to starting their life, looking for a new job in their chosen field. So, how do you think we can maybe talk about student loans in a way that is less scary? How can we see them as an investment or a tool for funding our future more than, let’s say, you know, this ball and chain we’re going to have to carry around post-graduation?
Brian: Part of it is education we want to make information about student loans as available as possible. It’s also about being clear and neutral. With students we try to encourage them to look at the facts and not try to color them too much one direction or another, they have pluses and minuses and so you can consider each of those. For long term, I think one helpful approach is to consider strategy and let that take prescience over fear and so by considering it in a strategic plan, that helps take away some of that level of fear and help people to approach it with a more level headed understanding of what the implications are for student loans.
Matt: And that’s one of the things that we’ve talked about on multiple episodes of this podcast is the idea of having a plan and if you have a plan you’re going to feel more in control of what you’re doing and that fear that you might have over a financial issue is going to be lessened. 
Brian: That’s right, yeah. Usually if there’s fear related to finances that tends to indicate that there’s an aspect of finances that is, in a sense, controlling you. Whereas if you have a plan and a strategy, then you can be the one in control. 
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Matt: There you go. Thank you so much, Brian for being here on this episode of the BTC Money$marts podcast. In the near future look for more episodes full of stories, tips, tricks and strategies for financial literacy. This podcast is produced by Cheryl Kennedy with music courtesy of Bensounds.com. I’m Matt Benoit, see you next time!