Tackling the Financial Aid Process
The college financial aid process may be daunting but understanding the stages of the application process, learning the terminology and seeking help from school counselors can help to eliminate any confusion and stress.
Your financial aid package may list a combination of scholarships, grants and loans from state, federal and private organizations. It’s important to understand the differences among these types of aid, so that you can make informed financial decisions. Having this knowledge will help you to understand your financial aid package and determine what your out-of-pocket expenses will be.
Apply for as many scholarships as possible, as awards can reach tens of thousands of dollars. Unlike loans, scholarships never need to be paid back; they are awarded by colleges and universities as well as private oirganizations. You can receive scholarships based on your financial need or academic and personal achievements.
Similar to scholarships, grants do not need to be repaid. Grants are usually awarded to students’ financial need and/or background from the state and federal government as well as colleges and universities.
You may be eligible to receive federal grants if you meet certain requirements. Federal grants are given for the following situations:
- low income status
- military background
- high-demand teaching field
- pursuit of professional health degrees
State governments offer a variety of financial aid grant opportunities. Aid for Pennsylvania students comes from the Pennsylvania Higher Education Assistance Agency (PHEAA). In order to receive aid from PHEEA, you must be a Pennsylvania resident and attend a postsecondary school in Pennsylvania. PHEEA offers grants for students who meet certain criteria, including:
- low income status
- physical challenges
- enrollment in targeted-industry programs
- military background
FEDERAL WORK STUDY
Federal work-study awards are need-based and offer the convenience of on-campus work. These programs provide part-time employment while enrolled in school. Some schools that participate in the Federal Work-Study program award funds on a first come, first served basis so remember to apply for financial aid early.
You will likely need to take out some loans to help pay for your education and these must eventually be paid back to the organization from which you borrow. There are three main types of loans: federal, state and private. One of the major differences between these loans are the varying interest rates.
Interest is a percentage of the loan amount that continues to accumulate while until the loan is repaid.. It is an additional cost that must be paid along with the loan amount borrowed. If you take out a loan with a high interest rate, you might end up spending hundreds or even thousands more than you originally planned. Be sure to research loan interest rates and repayment plans before making a final decision, as this can help to keep your final repayment costs low and prevent unnecessary spending once you graduate.
Federal loans are great options because they have low interest rates and do not require a co-signor. They are offered by the federal government and have fixed interest rates that will not increase over time. Some federal loans even offer an interest-free deferment grace period while you are enrolled in school at least half-time and immediately after graduation. There are three main types of federal loans: subsidized, unsubsidized and Perkins.Subsidized Loans
Your school determines the amount of your subsidized loan based on need and grade level. The interest on the Subsidized loan is paid by the U.S. Department of Education while you attend school at least half-time, and during the six-month grace period after graduation. After that time, you will be responsible for paying back the loan and interest assigned to the loan.Unsubsidized Loans
Unsubsidized loans continue to accrue interest throughout your time in school. The unsubsidized loan amount for which you qualify will be listed in your school’s financial aid package.Perkins Loans
Perkins Loans are based on your financial need and the availability of funds at the college you attend. The maximum amount you can receive per year is $5,500. This loan does not need to be paid back until nine months after you graduate or cease to be enrolled at least half-time. At that time, you will begin to be charged a 5-percent interest rate.
State loans may be an option for you, depending on where you live and where the school is that you want to attend. In most cases, qualifying conditions are similar to those of federal loans, but you’ll need to follow up with your home state’s department of post-secondary education to see what programs are available to you.
Private loans should be taken only if absolutely necessary. They are offered through private organizations such as banks and credit unions. When selecting private loan organizations from which to borrow, pay careful attention to their interest rates. Many organizations have fluctuating interest rates that increase as time passes. They often advertise low interest rates, initially, but enforce steep increases later on. Beware of these scams!
If you do decide to use a private loan to fund your education, be sure to check the repayment options and any fees before signing anything. Federal and state loans usually don’t require repayment to begin until after your graduate, but this is not always the case with private loans.
You should apply for financial aid regardless of your perceived need. Many types of financial aid, including state and federal grants or loans, can only be received if your FAFSA, (Free Application for Federal Student Aid) is completed. Loans and scholarships from private organizations have their own separate application processes.
What is the FAFSA?
The FAFSA is a tool that is used by the government to determine your financial need. You will be required to submit your family’s tax and financial information when completing the application. Colleges and universities use your FAFSA to determine your financial aid package.
When do I apply for FAFSA?
The FAFSA must be completed each year you are enrolled as a student in order to receive aid. The re-application is necessary only to reflect any financial changes that might have occurred in the previous year.
The FAFSA can be completed as early as October 1 in the year prior to starting school and is open until June 30 after the academic year is complete. For example, the FAFSA for the 2018-2019 academic year will open October 1, 2017, and must be completed by June 30, 2019.
Although FAFSA offers a large application window, some states have earlier deadlines for state aid, and some federal funds are limited. It’s important to apply as early as possible to ensure the best opportunity to receive aid.
How do I apply for the FAFSA? Is there a charge?
The FAFSA can be completed online. Some scamming sites try to charge families to access the FAFSA or to help fill out the form. Avoid these! It’s called the Free Application for Federal Student Aid for a reason. If you need extra assistance while completing the application, contact your school’s financial aid office.Follow these tips to avoid common FAFSA mistakes:
- Separate FSA IDs should be created for you and your parents.
- Keep a record of login IDs and passwords (you’ll need them again each year).
- Be sure all sections of the FAFSA are completed correctly before submitting (especially social security numbers)
- List the codes for all of the schools to which you are applying.
- Both you and parent will need to sign using their own FSA ID.
What will I need to fill out the FAFSA?
Complete your FAFSA at a time that is convenient for you and your parents. Completing the application takes patience and cooperation. Be sure to have your tax information and your parents’ tax information in hand while you complete the application. You will use tax information from two years. For example, if you’re applying for financial aid for the 2018-2019 academic year, you will use 2016’s tax information. You also will need your and your parents’ social security numbers.
I don’t think I’ll qualify for aid, so why should I apply?
Always complete the FAFSA! It serves as a reference for financial aid counselors to determine financial aid that you qualify. If you have any financial concerns or a change in circumstances, financial aid counselors will need to review your FAFSA in order to update your financial aid package. Without a completed FAFSA, it is very difficult for the financial aid office to judge your eligibility for aid, including institutional scholarships. Completing t the FAFSA early will prevent future stress and complications, and you may be surprised by the aid you receive!
Tips for comparing packages
- Use a financial aid comparison tool. Some schools provide worksheets to help compare packages from various schools. Similar tools and calculators can be found online.
- Make sure you understand what the total cost will be for each school. Some schools list a comprehensive fee (tuition + room and board) while others list tuition and room and board, separately.
- Look at the amounts for each category. See how much scholarship, grant and loan money you are receiving from each school. The out-of-pocket cost for one school might appear to be less expensive because the package contains more loans and less scholarship/grant money.
After the FAFSA is submitted, you may be selected for the verification process. About one-third of applicants are selected for the verification process each year. If you are selected, you will be notified, and you will be required to submit additional information. If you have concerns about your FAFSA submission, contact the financial aid counselors at your college of interest. They can check to see if it has received your information and help you troubleshoot issues along the way. In addition, some private schools may also require you to complete the CSS Profile to be considered for institutional aid. Check with your school to determine if this is required. Students who wish to receive Federal student loans will be required to complete Federal loan forms before the loan(s) can be disbursed. Your school will instruct you how to complete these forms.
Applying for financial aid may be a stressful and confusing process. There are plenty of resources for you and your family as you navigate through the financial aid process.
HIGH SCHOOL COUNSELORS
Your high school guidance counselors are there to help you begin your transition to college. They can provide you with financial aid information from colleges and point you toward additional resources.
FINANCIAL AID INFORMATION SESSIONS
Many high schools host informational financial aid nights to discuss the various aspects of the financial aid process. These sessions provide an opportunity for you and your family to receive advice from professionals and have your questions answered. It’s also comforting to see other families who are going through the same process!
FINANCIAL AID OFFICE
Counselors understand this is a new process for you and your family, and they are there to help you through it. If you need individualized assistance, you can contact the financial aid office at your college of interest. You will be assigned a counselor who will address your specific questions and concerns. They can review your financial aid package in detail and help you to understand what your out-of-pocket expenses will be.
Remember, you are not alone in this financial aid process. All students applying for college are going through the steps right along with you, and counselors are there to answer your questions and make the process as simple as possible. Make a plan with your parents to pull together financial information. Sit down together to review the options. The sooner you start the process and the more organized you are, the less stressful it will be. In the end, as scholarships, grants and loans come into view, making your education possible, you will be glad you made financial aid a priority in your college journey.
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