Changes in Financial Circumstance

The majority of financial assistance is need-based. The FAFSA form collects data primarily on your financial resources for the previous year. We realize that a family’s income is not always the same from one year to the next and that circumstances beyond a family’s control may inhibit its ability to contribute to educational expenses.

Changes in Financial Circumstances

We welcome the opportunity to discuss a substantial change in your family’s status since filing your aid application and the FAFSA. Such circumstances may include marriage or divorce, loss of income, high medical or dental expenses (not covered by insurance) or a catastrophic expense.

If you or your family experience a significant financial change (such as those listed above), you should submit a letter explaining the situation and any pertinent documentation to support an explanation of the situation. This documentation should be addressed to Office of Student Financial Aid.

The financial aid office will review the submitted documentation and determine if there can be a recalculation of your original EFC (Estimated Family Contribution). If there is a recalculation that results in a decrease in your EFC, additional aid will be considered on a funds-available basis.

Tax Credits and Deductions

There are a number of tax advantages related to educational expenses. The following is general information and not tax advice; we provide this information to educate you about what tax advantages may be available to you. You should consult a tax professional about your particular situation and follow that professional’s advice when filing your taxes and claiming any credits or deductions.

Tax Credits

The American Opportunity Credit was set to expire in 2010 but was extended to 2011 and 2012. It allows taxpayers to take up to a maximum credit of $2,500 for education expenses for each qualifying student.. The full credit is available to individuals with a modified adjusted gross income of $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. A taxpayer whose modified adjusted gross income is greater than $90,000 ($180,000 for joint filers) cannot benefit from this credit. The tax credit can be applied towards four years of post-secondary education instead of two and adds required reading materials and a computer (if it is needed as a condition of enrollment or attendance at the educational institution) to the list of qualified expenses. You should check with your tax advisor for guidance and more complete information about the tax benefit.

Generally, to take the American Opportunity Credit for a student, all of the following must apply:

  • As of the beginning of the tax year, the student had not completed the first four years of postsecondary education as determined by the eligible educational institution
  • The student was enrolled during the tax year in a program that leads to a degree, certificate, or other recognized educational credential
  • The student was taking at least one-half the normal full-time workload for his or her course of study for at least one academic period during the tax year
  • The student has not been convicted of a felony for possessing or distributing a controlled substance

If all of the above conditions are not met, you may be able to take the Lifetime Learning Credit for all or part of that student’s qualified education expenses instead.

A Lifetime Learning Credit of up to $2,000 can be claimed for qualified education expenses paid for all students enrolled in eligible educational institutions. It is most useful for graduate students, part-time students and those who are not pursuing a degree because there is no limit to the number of years the lifetime learning credit may be claimed for each student. The amount of the credit equals 20 percent of qualified expenses paid, up to a maximum of $10,000 of qualified expenses per return. The amount of your credit is gradually reduced if your modified adjusted gross income is between $50,000 and $60,000 ($100,000 and $120,000 if you file a joint return). You cannot claim a credit if your modified adjusted gross income is $60,000 or more ($120,000 or more if you file a joint return).

Generally, you may claim the Lifetime Learning Credit if you meet all three of the following requirements:

  • You paid qualified education expenses of higher education
  • You paid the education expenses for an eligible student
  • The eligible student is yourself, your spouse or a dependent you claim as an exemption on your tax return
  • Education credits are claimed on IRS Form 8863

Please note: You cannot take both the American Opportunity Credit and the Lifetime Learning Credit for the same student in the same year. However, if you pay for qualified educational expenses for more than one student in the same you, you can choose to take the American Opportunity Credit for one student and the Lifetime Credit for the other student. You should consult a tax adviser for guidance on this and all other tax matters.

Tax Deductions

Taxpayers not eligible for the American Opportunity or Lifetime Learning Credits may be eligible for a Tuition and Fees Deduction. The qualified expenses must be for higher education. This deduction, reported on IRS Form 8917, can reduce the amount of your income subject to tax by up to $4,000.

Generally, the tuition and fees deduction may be claimed if you meet all three of the following requirements:

  • You paid qualified education expenses of higher education
  • You paid the education expenses for an eligible student
  • The eligible student is yourself, your spouse or a dependent you claim as an exemption on your tax return

You cannot claim the Tuition and Fees Deduction if any of the following apply:

  • Your filing status is married filing separately
  • Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption.
  • Your modified adjusted gross income is more than $80,000 ($160,000 if filing a joint return)
  • You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes
  • You or anyone else claims an education credit for expenses of the student for whom the qualified education expenses were paid

Withdrawals and Leaves of Absence

Students who need to withdraw or take a leave of absence may do so for academic, discipline, personal or medical reasons. If you are receiving federal financial aid and withdraw or take a leave of absence, you may be subject to the federal Return of Title IV Funds and state financial aid return policies. Students must notify the financial aid office about any change in enrollment, whether due to withdrawal from a class, a leave of absence or withdrawal from Hebrew College. The withdrawal or leave must be done officially in writing using the appropriate form.

Nonattendance does not constitute official withdrawal. If a student stops attending class and does not officially withdraw, that student will fail to earn a passing grade in at least one course over an entire term. Hebrew College must assume that the student has unofficially withdrawn. For this purpose, nonpassing grades are defined as W, I, PI, NG or F. Unofficial withdrawals will be determined within 90 days of the end of the term. Federal financial aid recipients will have their awards reviewed and recalculated, causing a reduction in aid awarded.

Remember that if you are not enrolled at least half-time for more than six months, your student loans will go into repayment.

Federal Return to Title IV Aid Overview

The Office of Student Financial Aid is required by federal law to recalculate federal financial aid eligibility for students who withdraw, drop out, are dismissed or take a leave of absence prior to completing 60 percent of a term. The student’s eligibility for the funds received from federal Title IV financial aid programs must be recalculated in these situations. Recalculation is based on the percentage of earned aid using a federally mandated formula.

Federal Return of Title IV Funds Formula

  • Percentage of earned aid equals the number of days of the term completed up to the withdrawal date, divided by the total days in the term. For unofficial withdrawals, the withdrawal date used for aid recalculation is the midpoint of the term. Any break of five days or more is not counted as part of the days in the term.
  • Funds are returned to the appropriate federal program based on the percentage of unearned aid using the following formula: Aid to be returned equals 100 percent of the aid that could be disbursed, minus the percentage of earned aid, multiplied by the total amount of aid that could have been disbursed during the term.
  • If a student earned less aid than was disbursed, the institution and/or student will be required to return a portion of the funds that were disbursed to the student. Therefore, when it is necessary to return Title IV funds to the U.S. government, if the funds were already disbursed to the student, the student may be required to return those funds to the government. If a student earned more aid than was disbursed, the institution would owe the student a post-withdrawal disbursement that must be paid within 120 days of the student’s withdrawal.