Needing financial aid vs. deserving financial aid: there is a difference

Continuing a discussion I’ve been running for the past few days about assistance programs:

Do you need financial aid to help pay household bills or family expenses?

Do you deserve it?

The answers to those two questions, by the way, are not the same.

Need-based formulas are intended to determine which individuals and families are in the most dire financial straits.

It’s usually a quick and easy process: here are the income numbers, household size, and sometimes financial asset reports. Do you meet them?

It does no good to argue who “deserves” income-based help through desirable behavior, as public assistance discussions often digress into, because those programs aren’t written that way.

If you met the income to household size criteria, you’d be eligible too. End of story.

The programs that are directed to families who deserve help have more detailed review criteria or are meant for specific circumstances. They are meant to direct the funding to whom sponsors or legislators would most LIKE to help. Some of those programs, by the way, are taxpayer-funded.

They also can involve more time and effort to apply for.

But it should be pretty clear that more financial resources will become available to you if you meet the criteria typically requested in the “Do you deserve it?” category.

Do you need it?

These programs are primarily income based.

Publicly funded programs that fall under this category include:

• Federal school lunch program. Eligibility is based on household size as compared to household income. The chart is easy to find on the U.S. Department of Agriculture web site, and most schools send a copy home with the student enrollment forms at the start of the year. A family of four in Michigan (and most of the U.S.) would be eligible for reduced-price school lunches with annual income of $42,643 and eligible for free lunches with annual income of $29,965.
• Food stamps also known as Supplemental Nutrition Assistance Program. Food stamps are accessible in Michigan via the Michigan Bridge Card, so that’s how many Michigan residents refer to the service. To be fair, the details have been tweaked in recent years as state officials try to direct these funds to the neediest families – as in, making the rules friendlier to working parents, less friendly to college students. But program eligibility is still based on income, expenses and assets.
• Federal Pell Grants. This is free money to attend college, up to $5,550 a year. You have to fill out the Free Application for Federal Student Aid to find out if you are eligible. As a practical detail, this funding goes to the neediest students as one study has determined that the majority of the students who received Pell Grants a few years ago had adjusted gross household income of $50,000 or less.

Privately funded programs that fall under this category include:

• The Personal Caring Ministry and Extra Blessings programs. These privately funded, volunteer-run, programs in the Monroe, Mich., area, are giveaways of personal care products such as toothpaste, soap and shampoo to families who are receiving food stamps. This article for The Monroe Evening News explains the programs and how they work.
• Lifeline Telephone Services. There are a number of programs funded by the communications companies that will provide landline or wireless phone service at huge discounts to families who receive government assistance. I’ve written about them before, but Julie’s List also has a good explanation.
• Comcast Internet Essentials. If your child receives free or reduced-price school lunches, you may qualify for Comcast’s reduced-price Internet service for home.

Do you deserve it?

These programs are meant for special circumstances, which may or may not have anything to do with actual income. But they are generally meant for those whose behavior is considered desirable — such as earning good grades in school or paying bills on time.

Publicly funded programs that fall under this category include:

• Earned income tax credit. You might think of this as a “need-based” program, and yes, it is income based. But I call this a “Do you deserve it?” credit because this federal income tax credit is for those who are have income from a job.
  
• Unemployment benefits. Technically, this service is made possible in part by employers who pay taxes into the unemployment system. But most people see it as a public resource and some of the money that has been made available in recent years did come through federal resources. Remember that you can only receive those benefits if you lose a job for reasons out of your control. Those who are seeking extended benefits also have to prove they are still actively looking for a job. Therefore: this program helps only those who meet the definition of deserving help.
• Michigan’s Hardest Hit Homeowners Program. This is a program made possible through U.S. Department of Treasury federal funds, meant to help Michigan homeowners “who are at high risk of default or foreclosure.” You cannot have cash available “for use equal to or more than six months of mortgage payments.” The reason I  count this as “Do you deserve it?” program is you must have experienced that hardship “based on an involuntary loss of income;” and you cannot have a conviction within the past 10 years on a financial-related felony.
• Home Affordable Refinance Program. There are multiple programs that fall under the Making Home Affordable program, all of which are meant to help reduce the possibility of foreclosure. But the Home Affordable Refinance Program is specifically written for “deserving” families because of this clause: “Eligible homeowners who are current on their mortgages but have been unable to take advantage of lower interest rates because their homes have decreased in value, may have the opportunity to refinance.”
• Parent Plus Loans. This is a federal loan program intended to help parents pay for college expenses. It is not need-based at all, although you are expected to fill out the Free Application for Federal Student Aid. The reason I count this as a “Do you deserve it?” program is that parents who apply must not have an “adverse credit history.” The details are explained at FinAid.org but basically, the criteria means, do you pay your bills?

Privately funded programs that fall under this category include:

• College scholarships. More than 150 scholarship announcements regarding students in Monroe County, Mich., who have earned money for the 2012-13 school year have arrived to The Monroe Evening News in the past few weeks. And that’s not the entire list as some sponsors never send out press releases in the first place. The vast majority of the scholarships that local students win are based on good grades, community service, or a combination of both factors. Financial need, when that is considered in scholarships, would be in addition to the overall discussion of “does this student deserve help?”.
• Military discounts. It’s increasingly popular in recent years for businesses in civilian communities to pick up on an idea that has been seen in military towns and give “thank you” freebies or discounts to active duty military, veterans and military families. Those perks are most commonly seen at Veteran’s Day, but others are year-round – look up my military archives for those discussions.
• Senior citizen discounts. They’re not as common as they used to be, but they still exist. One example is Food Town in Monroe, which gives 10 percent discount to senior citizens on Wednesdays. And if you get an AARP card, you might find that to be pretty useful when traveling and sometimes also on health expenses. The rationale is: You deserve a perk for having had so many birthdays!