Financial Aid Planning Guide
Financial aid is highly important to most students needing assistance to pay for their education. According to the National Post-secondary Student Aid Study (NPSAS), 65.7% of graduating seniors from 4-year colleges have some debt, with an average debt of $19,237. Most students who choose to further their education and pursue advanced degrees have even more debt with an average that ranges anywhere from $27,000 to $114,000. With figures as high as these it makes very good sense to learn how to make the most out of all of your financial aid options.
You will need to estimate your expenses to determine how much aid you require. Be realistic about how much you will need to live while in school and leave some room for sudden and unexpected expenses that could arise. FinAid.org is a non-profit public service site, recommended by the US Department of Education, and has several types of financial aid calculators to help you accurately estimate your needs.
ScholarshipsEvery student should apply for scholarships as early as possible as they are the best way to pay for college. It looks great on your resume when you list the scholarships you have earned and is money you do not have to pay back. There are thousands of scholarships available. However, applying to them takes forethought, time and effort. Start your scholarship search early and apply to as many as possible. Check with your college or university as most have their own scholarship programs, and then search the web for local, state and even national scholarship opportunities that you are qualified for. One search tool is Scholarship Experts, which has been voted by Forbes magazine as the best scholarship website every year since 2003.
FAFSANext all students should apply for need-based aid with FAFSA. The FAFSA is a single comprehensive application to receive aid from federal and state governments. This one application determines your eligibility for a large and wide variety of aid. However, while FAFSA awards aid in many forms, grants and scholarships are far more desirable than loans which you will need to pay back. If you are financially able, only accept the most favorable aid that you are given.
GrantsFor instance, grants are a form of gift assistance with no obligation for work or repayment. Grants are awarded on several need-based factors and if you receive them, are your best options through FAFSA. Work-study is another coveted form of aid although it means working part time while attending school. This is your second best option if you are able to work and are awarded a work-study package. Even though you must work, the part time jobs offered are often easy to do and accommodating of a student's hectic schedule.
LoansIf you need more aid and have to consider loans, federal loans (which you also apply to through the FAFSA) are the best choice. While there are many types of federal loans they all fall into one of two categories; subsidized and unsubsidized loans. Subsidized loans do not accrue interest while the loan is in school, grace, or deferment status. If you must accept a loan these are the best types to have.
Unsubsidized loans require the student to be fully responsible for paying the interest regardless of the loan status. Interest starts to accrue the day the loan is disbursed. Ultimately this means you will owe more money after you graduate.
Apply for private loans only when truly necessary. Private loans (sometimes called alternative loans) can help bridge the gap in your finances if scholarships and federal aid packages do not cover your expenses. However, private loans can have drastically higher interest rates than federal loans and should only be accepted once all other options have been exhausted. Most major banks offer various private student loans. Be sure to shop around and find the best interest rates and terms. Although this takes time and effort, especially since loan terms can be very complex, remember that just a fraction of a reduction in an interest rate will save you a lot of money over the life of the loan.
One Last Piece of AdviceFurthermore, while in school make sure to keep up your grades. Poor academic performance can cause scholarships, grants and other highly favorable forms of aid to be revoked or not offered in subsequent semesters. Also if you have accepted loans save all associated paper work such as interest statements, promissory notes and other documents. This will help you keep track of how many loans you have taken out and will be important later on when you are subject to repayment terms or if you choose to consolidate.
Article ReferencesNational Post-secondary Student Aid Study (NPSAS)
http://nces.ed.gov/surveys/npsas/
Scholarship Experts
http://www.scholarshipexperts.com/
FinAid
http://www.finaid.org/calculators/
FAFSA
http://www.fafsa.ed.gov/
U.S. Department of Education
http://www.ed.gov/students/landing.jhtml
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