The Financial Aid Basics
In recent years, the job market has become increasingly competitive and a college education is a must. Unfortunately, the price tag on most universities and colleges has risen astronomically. Don't despair. Your career education is well within your reach. By conducting the right amount of research on student financial aid, you will find that your options are plentiful.
The following series of articles cover the basics of financial. Articles go over the different types of aid available, how to avoid scams, web resources, and many other vital student aid information.
Types of Financial Aid
Almost all students need some form of financial aid to successfully complete their post-secondary education program. However, there are so many different types of financial aid available it is hard to know which is best for you and at times can be very confusing. While there are several types of aid, most types can fit into one of four categories; scholarships, grants, work-study and loans.
Scholarships
There is nearly an endless amount of scholarships available to apply for. The key here is not only to do your best job applying but also to effectively search for scholarships that you are most qualified for. Check with your college or university first to see what scholarship opportunities they have. Then search the web for local, state and national scholarships that you would be a good candidate for. One search tool is ScholarshipExperts.com, which has been voted by Forbes magazine as the best scholarship website every year since 2003. ScholarshipExperts.com even has listings of weird and wacky scholarships for those who do not necessarily have high grade point averages or trophies but who may have other more unusual characteristics or talents.
Grants
Grants are a form of financial aid that never has to be repaid and are therefore highly coveted. On the federal level there are many types of grants. The Federal Pell Grant is one of the most broadly awarded although only undergraduates are eligible. The amount of the grant is based on need and cost of attendance with the maximum Pell Grant award for the 2008-09 award year (July 1, 2008 to June 30, 2009) being $4,731. Another, the Federal Supplemental Educational Opportunity Gran t (FSEOG), is for undergraduates with exceptional financial need. This grant is only awarded to those students with the lowest Expected Family Contributions (EFCs) and offers up to $4,000 per year.
There are also more specialized types of grants such as the Academic Competitiveness Grant that was recently created in the 2006 - 2007 school year for those students with high grade point averages and excellent academic performance records. Also the National Science and Mathematics Access to Retain Talent Grant , sometimes called the National SMART Grant, is available to third and fourth year undergraduates majoring in the sciences. A new grant instated just this year, the TEACH Grant , is for undergraduate or graduate students who will go into teaching in the public school system after graduation.
For more information or detailed eligibility requirements for federal grants you can check out the website of Federal Student Aid , an office of the U.S. Department of Education. Also it is important to note that each state has several grant programs as does nearly every post secondary institution and these options should be thoroughly explored in addition to federal grant opportunities.
Work-Study
The Federal Work-Study (FWS) program awards campus based part time jobs to students who have financial need. These jobs offer a set amount of hours but provide a flexible schedule that accommodates a student's need for study time. If possible the program will encourage and facilitate students doing work related to their course of study. Earnings vary and undergraduates are paid by the hour and graduate students are paid either by the hour or on salary depending on the nature and type of work. All institutions participating in this program must pay working students at least once per month.
Federal Loans
Loans must be repaid and terms on loans vary greatly and are sometimes complex. In general there are two types of loans; federal and private. Federal loans will always have more favorable terms for you than private loans and should be considered first. Here is a breakdown of all the federal loans.
A Federal Perkins Loan has a very low-interest rate of only 5% and is available to undergraduate, post baccalaureate, and graduate students with a preference to students with exceptional financial need. Undergraduates can borrow up to $4,000 per year and graduate students can borrow up to $8,000 per year.
Stafford Loans come in a few different forms and are one of the US Department of Education's largest aid programs, as nearly every student is eligible for at least one type of Stafford loan. Stafford loans come subsidized (interest does not accrue while in school) or unsubsidized (interest accrues from the day the loan is disbursed), and which one a student is offered is dependent on need.
There are two basic types of Stafford loans; Direct Stafford loans and FFEL Stafford loans, either of which can be subsidized or unsubsidized. The loans themselves are very similar, the only real difference being that under the Direct Loan Program, schools get the funds for the loans directly from the U.S. government. But not all schools participate in the Direct Loan Program, and so then funds for the loan are lent from a bank, credit union, or other lender participating in the FFEL Program. Interest rates for both of these loans are variable and are reset in July of each year, however the interest rates will never exceed 8.25%.
PLUS Loans are available to parents supporting dependent students and graduate students with good credit histories. However, repayment begins on the date of the last disbursement of the loan. Interest rates are fixed and range from 7.9% to 8.2%.
Private Loans
Finally, as far as loans, you do have more options than just federal loans. Most students with credit worthy cosigners can apply for and receive private loan funding. While private loans (sometimes called alternative loans) can help bridge the gap if other forms of more favorable aid fall short they should always be a last resort. Interest rates on these loans vary vastly by lender and can sometimes be reasonable and not much higher than federal loans but sometimes can be as high as 18 - 20%, which is right on par with the interest rates charged by most credit card companies. Rates can also be variable or fixed and the interest rate you are given is dependent on your credit and your cosigner's credit, the lender and the state of the economy in general.
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How to Apply for Financial Aid
Applying for financial aid can seem like a daunting task, however taking time to prepare to apply by gathering the necessary documents and understanding how the process works as a whole can help you substantially. The Free Application for Student Aid (FAFSA) is a single comprehensive application that assesses your eligibility for all state and federal grants, work-study programs and loans and has a streamlined application process that is the same for all students. Here's what you need to know about applying using the FAFSA.
Timing
You cannot submit a FAFSA application before January 1st for the following academic year. However you should apply as soon as possible after January 1st because the federal and state governments allocate funds based on how much they have in reserve. As more and more students apply after January 1st less funds are available. This essentially means the earlier you apply after the New Year the more likely you are to receive more aid and vice versa. The official deadline for applying is usually sometime in July for the coming academic year, but remember if you wait until then you will most likely not get as much aid than if you applied back in January. Many students set aside some time over their Christmas break to get everything ready to apply as soon as possible.
What You Will Need to Apply
The FAFSA requires you to input a lot of information about your personal life and finances, and if you are a dependent student, information about your parent's personal lives and finances. It will help you tremendously if you have all the required information before you sit down to apply. The FAFSA website has a printable checklist of all the documents you will need.
Also, if you apply online (highly recommended) you will need to sign your application. You can print and mail a signature page, but this takes longer than signing electronically. For security purposes signing electronically requires all students to obtain a pin. A pin can be obtained from FAFSA's special Pin Website, and can be immediately emailed to you so you can sign your application. Applications cannot be processed until they are signed.
Applying
It cannot be stressed enough to apply online if you are able to. There is a printable application that can be mailed in however for applications to be processed they must be free of errors. The FAFSA is somewhat complex and very often paper applications are mailed back to students who did not fill them out correctly. The FAFSA online is a much easier, step-by-step way to approach the application, and their online system catches any errors or unfilled information before it is submitted for processing. Applying online will save you time and far simpler to do.
When you apply online, simply follow the instructions that guide you through the process. Even though applying online is much easier there may be some questions that you are unsure of how to answer. If this becomes the case you can save your application and call 1-800-4-FED-AID, and there will be a helpful representative that can clarify a question's meaning for you.
Complete All Other Requirements Set by Your School Some schools require students to complete their own financial aid application, however this application is typically much more simple. However, if you forget to complete it the processing of your FAFSA application may be delayed. Check with all schools you are applying to and see if they have this requirement.
Interpreting Your FAFSA Results
About 2 to 3 weeks after you submit your application on the web (4 to 6 weeks for paper applications) you will receive a Student Aid Report (SAR). The SAR contains what the federal government has determined to be your Expected Family Contribution (EFC). The EFC is how much money your family is expected to contribute to your education. The EFC is then subtracted from the Cost of Attendance for your school, and the remainder is your financial need. The lower your EFC the more money you will likely receive and vice versa. The government and your school will try their very best to meet your financial need completely with an aid package.
In early to mid April you will receive an award letter from all the schools you have applied to, detailing what types of aid you can receive and how much. Most schools require you to sign a document accepting, declining or reducing loan amounts. If you are using federal loans for the first time you will also have to sign a promissory note and this document will be mailed or emailed to you shortly after your award letter. Grants are already accepted for you and if you receive a work-study offer a coordinator from your school will contact you about accepting a position and your duties and work schedule.
Review your award letters carefully. Ideally your full need will be met and your entire cost of attendance will be covered.
Other Options
All students should apply for private scholarships, however, each individual scholarship has its own steps for applying and set of criteria for evaluating candidates. FinAid, a public service site that is recommended by the U.S. Department of Education, has a long list of free websites that will allow you to search for scholarships and learn tips on how to get scholarships.
Private loans are another option if the government and your school do not meet the full cost of your attendance. However private loans usually have much higher interest rates and less favorable terms for you so should only be considered as a last resort. How to apply for private loans depends on the lending company, but most consist of a basic application and a credit check on both you and your cosigner.
Article References
FAFSA
Pin Website
FinAid
The U.S. Department of Education
Understanding the Importance of the FAFSA
The U.S. Department of Education's Federal Student Aid program ensures that all students who meet certain financial eligibility requirements receive assistance in order to help them pay for college. According to the U.S.D.E.'s website, Federal Student Aid programs are the largest source of student financial support in the country, and disburse more than $80 billion per year to eligible individuals.
The Federal Student Aid office works with postsecondary institutions as well as banks and other lending establishments in order to back loans for students. The program also helps to fund grants, which is money that is not required to be paid back after graduation. The Free Application for Federal Student Aid (FAFSA) is a form which asks questions about a student and parents' finances, future plans for school, and other basic information in order to determine eligibility for federal loans and grants.
Determining Eligibility
There are certain basic criteria that a student must meet in order to be eligible for federal aid. A candidate must be a U.S. citizen or eligible non-citizen, have a social security number, possess a high school diploma or GED, and must have been accepted into an accredited postsecondary institution. In addition, the applicant must not be in default on a previous student loan, must demonstrate a need for financial assistance, and males aged 18 to 25 are required to be registered with Selective Service. The amount and types of aid a student can receive depend upon a number of factors, including his or her enrollment status, year in school, anticipated cost of tuition, and expected family contribution.
Disqualifying Factors
Certain drug-related offense convictions may bar an individual from receiving federal aid, especially if the act occurred while the student was enrolled in school and receiving financial assistance. The Federal Student Aid website provides more detail regarding this potentially disqualifying factor.
Another issue which may prohibit a student from receiving federal monies is being in default on a previous student loan, being in arrears on payments, or owing a refund on a federal grant.
In addition, if a student cannot demonstrate an economic need for financial aid, the individual may not be eligible.
The Benefits of Student Aid
Federal Student Aid makes it possible for millions of people to attend college every year. Repayment of student loans with interest usually begins within six months after graduation from college.
How to Apply
The first step in applying for student aid is preparation. FAFSA's website provides tools for determining dependency status, a worksheet which serves as a rough draft of the actual FAFSA form, the necessary school and program codes, and a list of application deadlines so that you can know when you need to apply for funding.
Once you are ready to go ahead with the application, you can fill out your FAFSA online, obtain a PIN, and sign the form electronically via FAFSA's website. You can also log back into your application in order to make corrections, check your application status, and view your student aid report.
Article Resources:
U.S. Department of Education: Free Application for Federal Student Aid
Back to the TopWhat Factors are Affected by Your Financial Aid Status
With the cost of college tuition and online education constantly on the rise, it is no surprise that many students want or need to seek out financial aid to help them pay for their higher education. Almost every student who fills out a Free Application for Federal Student Aid (FAFSA) form will find that they are eligible for some sort of financial aid. Most federal aid programs are awarded on a first come, first serve basis. The loan and grant programs that make up most financial aid are usually need based as well. There are a few general factors that are taken into account when calculating how much aid a student receives, and each school has their own individual set of requirements for continuing eligibility.
Basic Requirements
To be eligible for any kind of federal financial aid, you must be a US citizen. You must have earned a high school diploma, GED, or demonstrate your ability through a state-sanctioned placement test. All male students seeking federal financial aid must register for the draft with the Selective Service. Anyone seeking federal financial aid must not be in default on a previous student loan or owe repayment of any sort to an educational institution. Students who have been convicted of possession or sale of any controlled substance under the Controlled Substances Act are ineligible for federal financial aid. Finally, students must be enrolled as a regular student at an accredited institution, and not be receiving any sort of financial aid from outside sources. For more information about the specifics of requirements for federal financial aid, visit www.fafsa.ed.gov .
Credit Enrollment
Many institutions will require that you be enrolled at least half-time for courses to qualify for federal financial aid. Classes that are dropped or audited are rarely admitted as courses for the purposes of federal financial aid. If a student is enrolled full-time but drops below half-time then any Federal Stafford loans that have been granted to the student will be canceled and returned to the lender. If you are thinking about taking anything less than a full course load but are still seeking federal financial aid, be sure that you do not fall below the minimum level of credits per semester.
Eligibility of Programs
If a student wishes to seek federal financial aid for their education, the student must be enrolled as a matriculating or degree seeking student at their institution. If the student isn't enrolled and working in a program towards a degree, it is likely that he will be ineligible for federal financial aid.
Withdrawals and Course Cancellations As mentioned before, with many types of federal student loans it is required that a student maintain at least a half-time course load. If you have enrolled in a full course load but find that you need to drop out of a course or two, be sure to talk to your school about withdrawing from the courses. If you withdraw with a “W” designation, the courses from which you've withdrawn will still count towards your enrollment requirements. Make sure to check the terms of your financial aid package first, but this option should be available to anyone with a Pell Grant, SEOG Grant, Federal Work Study, PLUS Loan, or a Stafford Loan.
Academic Progress
Most universities and distance learning programs will require that their students maintain a minimum standard of academic progress to keep their financial aid eligibility. There are a variety of standards that different schools use, but most will look at GPA, the ratio of attempted to completed course credits, and a maximum time frame for the degree program.
Article Resources
Back to the TopHow Marriage Affects Financial Aid
You may have heard the rumors flying around about marriage and financial aid, that getting married will make you eligible for more financial aid, or that it will prevent you from getting aid you would otherwise receive. Most financial aid advice is geared towards students who are still living with their parents, so what's a married person to do? Or, if you're thinking of getting married anyway, is it time to elope?
What Changes?
First of all, marriage does not create a penalty with regard to financial aid. Financial aid is based on your expected family contribution (EFC), which is influenced by many factors, such as household income, how many people in the household are attending college, and how many dependents there are. Aid is based on finances, not on marital status. Married students may receive the same need-based financial aid that an unmarried student would receive.
Although marriage means that your parents are not automatically included as a financial resource, your spouse's income would have to be reported just as your parents' income would. Whether you file your tax returns separately or jointly does not matter for the purposes of financial aid; your spouse's income will need to be reported no matter what. Make sure that your tax returns and your FAFSA (Free Application for Federal Student Aid) both reflect the same financial information.
Many students also wonder how financial aid is calculated if they are planning to marry within the year. Unless you are married on the day you complete your FAFSA, you do not count as a married student.
Will I Get More Aid?
The misconception that being married somehow means that you'll receive more financial aid most likely arose because young married couples tend to make significantly less money than their more established parents. If both spouses were full-time students, for example, they would have very little income to report and would have a low EFC. However, an unmarried student may very well be eligible for just as much financial aid if his parents earn little or if he has a sibling who is also attending college.
Financial aid also depends partly on the school that you attend and how that school chooses to allocate its resources. That is why it is generally advised that students should complete the FAFSA well before the deadline (especially when first applying to college, in order to compare aid packages from different schools).
Married Scholarships
There are also some special scholarships available to married students. Spouses of military members may be eligible for funding from the National Military Family Association Joanne Holbrook Patton Military Spouse Scholarship Program. In addition, many religious colleges provide aid for married students, or other resources such as special housing. Specific scholarships for married students are sometimes available through your college itself or via state programs.
Although it might seem that financial aid information is directed mostly towards unmarried students, be reassured that there is just as much funding available for married students as there is for anyone else.
Article Resources:
The National Military Family Association
The U.S. Department of Education
The FAFSA
How to Avoid Financial Aid Scams
Students and parents looking for ways to pay for school are scammed for over 100 million dollars every year. Many of these financial aid scams put on faces that look legitimate, but the people running them take people`s hard-earned money and never give a dime to help with their educational needs.
One of the avenues through which scam artists trick college bound students is via scholarship scams . The most common way people are scammed is through fee-based scholarship applications. Know that if an organization wants to give a scholarship, it will not ask the recipient to pay any money in exchange. Scholarships and grants are free money, there is no payment needed. Some scholarship scams collect money and run with it, while others collect a large amount of money and then give back only a small portion of the proceeds. Both of these tactics are illegal, and both are something to watch out for. Even such organizations that offer to match students with scholarships for a fee are not legitimate.
Another common financial aid scam is called advanced-fee loan marketing . Scam artists will place an advertisement out there saying they offer an unusually low interest rate on school loans. What these ads don't say up-front is that there is an application fee or a certain amount of `down payment` that students must fork over to guarantee the loan. These are all bogus ways for people to scam hard-working individuals who just want a way to pay for school.
The best tip that will help keep you from being a victim of these kinds of scams is: Don`t ever pay any money to get money for school.
Back to the TopResources for Financial Aid Assistance
Scholarship Experts : Scholarship Experts provides a database of free scholarships. You must first register an account and then simply begin looking! Forbes describes Scholarship Experts as, "The best scholarship search engine we've found!"
Federal PELL Grant : The Pell Grant is a need-based grant for low-income, undergraduate students. There are 5,400 participating institutions.
Federal Supplemental Educational Opportunity Grant : Like the Pell Grant, the FSEOG Grant caters to low-income families and students. There are currently 4,000 participating schools.
Federal Academic Competitiveness and National SMART Grants : The National SMART Grant is given to students who took difficult math and science classes in high school. It aims to support the global economy through encouraging the growth of math and science.
TEACH Grant : The Teacher Education Assistance for College and Higher Education Grant Program gives students who intend to teach in public and private schools up to $4,000 per year.
Federal Student Aid : Federal Student Aid is awarded each year by the government to thousands of students. The following site has information on various kinds of aid, repayment tips, and frequently asked questions.
Federal Work-Study : Federal Work-Study is a program sponsored by the Federal Government that allows students to work at campus jobs while attending school in order to help pay for their education. To qualify for this, you must fill out the FAFSA.
Perkins Loan : The Federal Perkins Loan is awarded to low-income students. There are currently 1,800 participating schools.
Stafford Loan : The Stafford Loan is a fixed rate loan for undergraduate and graduate students. Stafford loans are one of the most common types of loans given to students.
PLUS Loan : The PLUS Loan is specifically for parents who are paying for their college education. PLUS Loans have flexible repayment options, 0.25% interest rate discounts, and a fixed interest rate.
The U.S. Department of Education : The USDE has all the information you may need on financial aid, accreditation, and repayment options.
FAFSA : The FAFSA may well be the most important application you fill out for college. Without it, you are completely ineligible for any Federal financial aid.
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