Education Award

A $1,000 AmeriCorps Education Award (also called the Segal AmeriCorps Education Award) is available to NC-ACTS! AmeriCorps members upon successful completion of their term of service and must be used within seven years. Remember, the Education Award is not cash paid directly to a member. The National Service Trust is the office at the Corporation for National and Community Service that administers the education award program.

Overview

To qualify for an education award, you must successfully complete the required term of service. “Successful completion” means completing the requirements of the program, including meeting the minimum 300 service hours, participating in a minimum of two reflection sessions and completing the online Exit Survey.  Once you have completed your Exit Paperwork, the NC-ACTS! Program Director will notify the Trust that you have successfully completed the service and are eligible for an award. Within a week of notification that you are eligible for an award, you should be able to access your award using the online system.

Click on a link below to go to a section containing additional information.

1. How can I use the Education Award?
2. What are qualified loans?
3. What are qualified institutions of higher education?
4. What are qualified expenses to attend schools?
5. Does the Education Award impact financial aid?
6. Payment of Accrued Interest
7. Accessing the Online Payment System
8. Income Taxes

How can I use the Education Award?

You can use your education award in the following ways:

1. To repay “qualified student loans”

2. To pay for CURRENT educational expenses a “qualified institution of higher education”

3. To pay expenses incurred while participating in an approved school-to-work opportunities program.

You must use your education award within seven years of the completion of your term of national service. It can be divided up and used any way you choose, as long as it is for authorized expenditures. For example, a portion of the award could be applied to repay existing qualified student loads and the remainder saved to pay for authorized college costs in the future.

What are qualified loans?

You can use your education award to pay qualified student loans you have or may acquire. The original legislation governing the education award defined “qualified student loans” basically as student loans backed by the federal government, except for loans in your parents’ names. Later legislation expanded the types of loans considered to be qualified to include loans made directly to AmeriCorps members by the Alaska Commission on Higher Education and loans made directly to members by a “state agency” which cover all or part of their cost of attendance. For purposes of the AmeriCorps education award, the term “state agency” includes state institutions of higher education. For example, any loan, including short-term loans, made directly to you by a state institution of higher education to cover all or part of your Cost of Attendance is a qualified loan and you may repay such a loan with your AmeriCorps education award.

The legal language the defines “qualified student loans is stated here: any loan made, insured, or guaranteed pursuant to Title IV of Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), other than a loan made to a parent of a student pursuant to section 428B of the Act, and any loan made pursuant to Title VII or VIII of the Public Service Act (42 U.S.C. 292a et seq.); loans made directly to students by the Alaska Commission on Postsecondary Education; and any loan determined by an institution of higher education to be necessary to cover a student’s cost of attendance at such institution and made directly to a student by a State agency.

If you do not know if your loans are qualified, you should ask your lenders. For federally-backed student loans, there should be a citation on the loan papers referring to Title IV of the Higher Education Act. For loans made by a state agency, the state agency should be listed as the “maker” of the loan on the Promissory Note. The “maker” of every loan is the entity that originally issued the loan to the borrower. The maker of the loan does not change, even if another loan company purchases the loan. Thus, a promissory note is the best evidence of who originally made to loan.   When a loan is refinanced or consolidated, the new loan must meet the definition of “qualified student loan” in order for a payment to be made using an education award. The original loan no longer exists.

There may be student loan programs offered by organizations that are not qualified. You must be sure to confirm with your loan holders that the loans are qualified and meet these definitions. A debt resulting from charging tuition on your credit card is not a qualified student loan. (However, you may be able to be reimbursed for current educational expenses that you paid for.)

Examples of Some Common Qualified Student Loans:
Federal Student Loans: Subsidized and Unsubsidized Stafford Loans – Supplemental Loans to Students (SLS) – Federal Consolidated Loans – Guaranteed Student Loans (former name for
Staffords) – Federally Insured Student Loans (FISL) – Direct Subsidized & Unsubsidized Stafford – Direct Subsidized & Unsubsidized Ford Loans – Direct Consolidation Loans – National Defense Student Loan – National Direct Student Loans – Perkins Loans – Health Education Assistance Loans (HEAL) – Health Professions Student Loans (HPSL) – Loans For Disadvantaged Students (LDS) – Nursing Student Loans (NSL) – Primary Care Loans (PCL) - Loans made directly to students in degree programs by a state college or university.

What are qualified institutions of higher education?

You can use your education awards to pay for current educational expenses at qualified institutions of higher education. For purposes of the education award, a “qualified” institution is one that participates in the U.S. Department of Education’s student assistance program – i.e., it has an agreement with the U.S. Department of Education whereby students at the school are eligible to receive at least some type of federal financial assistance to attend the school. These are sometimes called Title IV schools. This assistance can be in the form of a Pell Grant or one of the loans listed in the “qualified student loan” section. You do not have to apply for financial aid to use your education award, but the school must be one that participates in the federal student aid program.

A school may be accredited and even offer graduate degrees. However, unless it is a Title IV school the education award, by law, cannot be used there. (“Title IV” refers to the section of the Higher Education Act that authorizes the federal student aid program). It is not possible to tell if a school is Title IV merely by the name of the school. Most post-secondary educational institutions in the United States are Title IV schools. Thousands of technical and trade schools are Title IV as well. Art schools, beauty schools, and truck driving schools may be Title IV. In order to become a Title IV school, and institution has to meet certain requirements and obtain an agreement with the US Department of Education. This agreement is called a Title IV Program Participation Agreement.

To Find Out if a School is Qualified…

US Schools
You can ask your financial aid office if the school is a Title IV institution. If it is Title IV, you can use your education award there. If the financial aid or admissions office says they are not sure or they do not know, it is likely that the school is not Title IV. Another way to find out if the school is Title IV is to see if students who attend the school are able to get Pell grants, Perkins Loans, or Stafford Loans to attend the school. (These are examples of the most common types of Title IV assistance). If they are, it is a Title IV school.

Another way to tell if a school is qualified, visit the National Center for Educational Statistics IPEDS College Opportunities On-Line website at nces.ed.gov/ipeds/cool. Enter your choices in the appropriate fields. Most importantly, check the “Title IV participating” box.

Foreign Schools
The education award may be used to attend many schools outside the United States. If you’re interested in using your education award to attend a foreign school, you should always check to see if the school qualifies before enrolling.  If a foreign school participates in the U.S. Department of Education’s Federal Family Education Loan (FFEL) Program, the AmeriCorps education award can be used there. You can find out if a particular school participates in the FFEL Program by calling the Department of Education’s toll-free number given above. If you call this number you should ask if the school “participated in the FFEL Program.” This number is not for questions concerning using the education award because they will not be able to answer those questions. It is to see if a foreign school participates in the FFEL programs, which therefore makes it a “qualified” school for the purposes of the education award. You should have the name and location of the school before making the call.

Another way to approach attending schools overseas is to obtain a qualified student loan to attend foreign school and use the education award to repay the loan. The loan would be paid like any other qualified student loan.  Finally, many qualified U.S. post-secondary institutions offer education opportunities abroad. As long as you are considered by the qualified U.S. school to be a student at the school and the payment goes to the U.S. school, this is an allowable use of the education award.

Qualified expenses to attend schools

The AmeriCorps education award can be used to pay “current educational expenses.” “Current educational expenses” are expenses that were incurred by you after you first enrolled in an AmeriCorps term of service. The award cannot be used to pay for expenses that pre-date your involvement with AmeriCorps.

Degree or Certificate Program
If you want to use your award in a degree or certificate program, it can be used to pay some or all of your Cost Attendance. The term “Cost of Attendance” (COA) was developed by the U.S. Department of Education for use by Title IV schools. It is the school’s estimate of what it will cost for a student to attend that school for a specific period of time (usually a school year), using regulations established by Congress and the U.S. Department of Education. For a full-time student, it can include tuition and fees and allowances for books and supplies, room and board, transportation, and other expenses. The COA is utilized by schools to calculate the amount of education award that each AmeriCorps member is eligible to use. It is important to note that every Title IV school determines the COA for its students – this is not an amount determined by you or the Trust.

The AmeriCorps education award can be used for that portion of the COA that has not already been covered by other sources of financial assistance, such as scholarships, loads, grants, and tuition or fee waivers. For example, if a school has determined that the COA for an academic year is $12,000 and the student is receiving $8,000 worth of scholarships and loans, the student would be eligible to use up to $4,000 of his or her education award to pay the remaining COA. In other words, $8,000 of the $12,000 of expenses has already been covered, leaving $4,000 not covered. You can find out from the school’s financial aid office your Cost of Attendance. 

Schools are allowed to include the cost of a computer in determining the COA for some students. The school’s financial aid office will know if, following the U.S. Department of Education’s  regulations, the cost of a computer can be included in a student’s COA. It may depend upon the course of study and the number of credits the student is taking.

The education award is subject to the same general rules that the school has regarding reimbursing students for other financial aid they receive for non-instructional expenses. A school that receives a check from the Trust may keep the amount that is owed the school (such as tuition, fees, and if applicable, dorm fees) and may release to you any of the COA allowances due you – e.g. allowances for books, transportation, and off-campus room and board (if applicable). This reimbursement can be handled in a variety of ways – some schools write students checks while others establish accounts in the students’ name. Some schools handle book and supply purchases by issuing students vouchers that can be used at the school’s bookstore.

Non-degree and Non-certificate Courses

You are not limited to using your education award only for courses that are part of a degree certificate or other credentialed program. You can use your education award to pay for all courses at the school in which you are enrolled as a student, such as an adult education course, as long as the school is a Title IV school. The school must consider you to be a student in some capacity at the school. Examples of expenses for non-credit courses that are eligible to be paid using an education award are tuition, books, and fees.

Book Stores and the Education Award
The Trust cannot make payments to bookstores based upon a Voucher and Payment Request form being completed solely by the bookstore. By law, a payment for current educational expenses must be made to a qualified school. School bookstores are unable to monitor the amount of financial assistance a student is receiving and cannot determine if the education award will cause a student to exceed the COA. Therefore, the Trust will not pay vouchers that are completed by bookstores unless the school’s financial aid office has verified that the information is accurate (i.e., that the COA will not be exceeded with this payment).  If it is the school’s desire, the payment can be sent to the attention of the school’s bookstore, rather than to the Student Accounts or similar office at the school. But the check will still be made payable to the Title IV school and sent to the attention of the bookstore.

Institutions Matching the Education Award
A growing number of institutions of higher education are offering to match the education award, or are making other financial aid benefits available to AmeriCorps alumni, such as scholarships, tuition waivers, and in-state tuition. Attending one of these institutions can increase the value of your education award. For a listing of institutions that offer these benefits visit http://www.americorps.org/for_individuals/alumni/ed_award_match.asp.

Does the Education Award impact financial aid?

Figuring out when to use your education award and how it will affect your financial aid (for degree and certificate programs) can be complicated.  Currently, for some student loans the education award is considered in determining the amount of student aid for which the student is eligible and for other loans is not taken into consideration. The U.S. Department of Education has developed guidance for financial aid officers on how the AmeriCorps education award should be handled.

This guidance is included in the most recent Student Financial Aid Handbook for financial aid administrators. Financial aid officers should be familiar with how the education award is to be treated when determining the eligibility for and the amount of any financial aid for which an AmeriCorps member qualifies.

Payment of Accrued Interest

During a forbearance based on national service, interest continues to accrue on the loan. However, you are eligible to have the National Service Trust pay all or a portion of the interest that accumulates on your qualified student loans while you were earning your award. These payments are made above and beyond the $1000 education award and will not be deducted from your education award accounts. To be eligible to have this “accrued’ interest paid, the loans must have been in a forbearance or deferment status during the service periods and you must have successfully completed your term of service. The portion that the Trust pays is based on a formula contained in the regulations that govern the National Service Trust.

The Trust will only pay interest on qualified student loans, as described earlier. Ask your loan holder if your student loan qualifies for other kinds of forbearance. Like payments made from your education award, payments for interest are considered taxable income in the year the payment is made and will be reported to the IRS.

Process for Getting the Interest Paid
You will need to set-up an account through the online payment system (described below) Once you sign in you will see a box called Interest Accrual. Click on the box and follow the instructions.

Accessing the online payment system

In order to access your education award, you must fulfill all program responsibilities and complete your exit paperwork.  While you can establish an online account anytime during your term or service, it will only show a $0 balance until you are officially exited.  To establish the account you must go through the My AmeriCorps portal. We highly recommend viewing the My AmeriCorps Powerpoint with screenshots before proceeding.

This page will take you to the step by step instructions for establishing the account.

Income taxes

Both interest payments and payments from education award accounts have been determined to be taxable income. They are included as income in the tax year the payment is mailed to the school or loan company.

The Trust will report to the IRS the total of all payments that were made on your behalf. An IRS form 1099 (Miscellaneous Income) will be mailed to you in January following each year in which a portion of your award was used. This form will let you know the total amount of your payments from the previous year. Please be sure to make any address updates to your online account.

Your tax burden may be mitigated somewhat by federal income tax laws regarding educational credits and deductions for student’s loan interest payments. You should contact the IRS or your tax advisor for additional information.