Paying for College
The
US Census Bureau has stated that college graduates earn an average
of $1 million more during their careers than high school graduates.
That is a nice payoff for attending college. College graduates are half as likely to be
unemployed, and may earn as much as $30 for every $1 invested
in higher education. The
question that lingers in most of our minds is how to pay for
college?
Anyone
who has looked into attending college knows that the costs do
not stop at tuition. You are responsible to pay for your books, fees,
labs and room and board. When
all is said and done the figure can be unimaginable. Luckily the states and governments have made
it so that everyone has a chance to go to college without the
burden of payment. Many
forms of financial aid are available to those who qualify.
Financial aid is offered in many different options. There are loans, grants, and scholarships.
Each one is applied for in a different way and has its
own benefits.
Scholarships
are the most attractive form of financial aid to most people
since they do not need to be paid back.
Scholarships are generally known as “free money” which
is used to pay for your education. Clubs, businesses, schools, and organizations
often provide them. Scholarships
are not only rewarded for academics.
The majority of the time scholarships are rewarded for
athletes, or people studying a specific field.
Some scholarships are even for a specific race or because
of the area one lives in! Although finding out about scholarships often
takes a little research, it will definitely pay off.
Grants
also do not have to be repaid.
There are government-funded grants that are referred
to as the Federal Pell Grant. These grants are awarded to undergraduate students
only. The federal government
guarantees that every school will be able to have enough funding
to allow all eligible students the opportunity to obtain this
grant. Other grants that are available to students
come from state governments, organizations and schools. A grant is considered to be a gift to students
who demonstrate a financial need based on formulas. To find out more about grants that can be offered
to you, please contact your school’s financial aid office.
Costs of
Colleges on Average
| Annual Cost |
2 year public college |
4 year public college |
4 year private college |
| Tuition |
$2,000 |
$5,000 |
$20,000 |
| Out of district state charges |
N/A |
$7,000 |
N/A |
| Books and supplies |
$750 |
$850 |
$900 |
| Room and board |
$5500 |
$6500 |
$7500 |
| Transportation |
$1100 |
$1000 |
$1100 |
| Other expenses |
$1200 |
$1100 |
$1100 |
| Total |
$10,550 |
$21,450 |
$30,600 |
*All figures are based on averages
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Applying for Financial Aid
Applying
for financial aid may seem difficult but once you know what
steps to take, it is really quite simple.
We will go through each step and explain the process
in detail. The following
paragraphs are an overview.
You will still want to see an advisor at the school that
you plan to attend to get their advice on any questions not
answered in this newsletter.
Your
first step is the FAFSA, which stands for Free Application for
Federal Student Aid. This must be completed and turned in no later
than the first day of your class.
Ideally you should get this in as soon as possible.
Federal
Eligibility Requirements
- Must
be a U.S citizen or non-citizen with a valid SSN
- Males
between 18-25 must be registered for Selective Service
- Must
have a high school diploma or GED
- Must
be enrolled and seeking a degree through an eligible program.
Information
Required:
- SSN
- Drivers
License Number
- Income
tax returns
- Records
of untaxed income
- Current
Bank Statements
Avoid Common Errors
- Read
instructions carefully.
- Do
not leave any field or question blank; instead insert a 0
or N/A.
- Double
check for accuracy
- Make
sure all required signatures are there.
- For
online help simply go to www.fafsa.ed.gov
Step
two is receiving and understanding your Student Aid Report,
which is often referred to as a SAR.
Your SAR will arrive four to six weeks after submitting
your FAFSA. Your SAR is simply a review of what you submitted
on your FAFSA. On this
SAR you will notice something in the upper right hand corner
that is usually referred to as an EFC.
EFC stands for expected family contribution.
This figure is what your family is expected to pay toward
your education. This will be used to figure out how much financial
aid you will qualify for. The
schools that you listed on your FAFSA will each receive a copy
of this. Make sure you check with the schools to make
sure they have received this so that it can be processed. You will also want to review this yourself and
make sure that no errors were made.
Assuming everything is correct, you can send copies to
other schools you are interested in attending.
You
are now going to receive award letters.
An award letter is letting you know exactly what they
will reward you. It is usually the breakdown of grants, federal
or state aid you are eligible for.
You will need to go through each letter and determine
what the best route for you to take is.
Some
questions to consider:
- Is this package the same every year you attend
the school?
- Are grants and scholarships renewable each year?
- Is money from the grants or other aids decreased
each year?
- Is there a certain grade point average that is
expected and if so what?
- Is there a penalty or loss of money if you receive
outside scholarships?
Now,
if you decide to accept one of the offers from your award letters
but are still short on money, you must now apply for a loan.
There are so many options available to you so you want
to make sure you explore them all and make the best decision
for your needs. Your
school will often help guide you through this.
The
Federal Government has a couple different options that are available
to you. These options are subsidized and unsubsidized
Federal Stafford Loans, Federal Perkins Loans, and Federal Parent
Loans for Undergraduate Students.
Prior to applying for any of these loans you must first
complete Entrance Loan Counseling.
The school of your choice will be able to direct you
as to which loan is best and how to apply for it.
Assuming
that you do not qualify for federal loans you will then need
to apply for a private loan. These are offered through private lenders or
banks. Most offer competitive
interest rates and terms. It
is important to compare a lot of different offers.
Make sure that the lender is aware that the loan is for
school. They offer better rates and terms. The loan goes into what is referred to as deferment.
This means that you do not have to make payments until
you have finished school.
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Comparing Loans Options
| Loan Type |
Grace Period |
Length
of Repayment |
Repayment
Plan |
| Federal Stafford Loan |
6 months |
10 years |
Level, Graduated, Income-Sensitive, Extended |
| Federal Perkins Loan |
9 months |
10 years |
Level, Graduated, Income-Sensitive, Extended |
| Federal Consolidated Loan |
None |
30 years |
Level, Graduated, Income-Sensitive, Extended |
| Federal PLUS Loan |
None |
10 years
|
Level, Extended |
| Alternative/Private Loans |
Varies by lender |
Varies by lender |
Level, Graduated, Income-Sensitive, Extended |
*Information
taken from Yahoo Finance
Terms and Definitions
Academic period: A time that school is measured by; commonly referred to as a semester,
or quarter. This time has a start and end date.
Accrued interest: The daily interest that has been added to your unpaid loan.
Aid eligibility: The difference between the cost of school and the family contribution;
also known as financial need.
Alternative Loans: Private loans that will cover costs that government funded programs do
not.
American College Testing: A standardized test that measures a student’s educational
development.
Application: Consists of personal information and details
and terms of the agreement.
Borrower: The person obtaining the loan. This person is responsible for all agreed to
terms.
Bursar’s Office: The department within the college that is responsible for collection
of funds within the school.
Campus based aid: The school is given a fixed amount
by the federal government to give to qualifying students.
Credit based loans: A loan that is made by credit
worthiness.
Data release number: A four-digit number that is given to you by the department of education.
It will be on your student aid report.
Default:
Failure to comply with the terms in your note.
Deferment:
A time when guidelines are met during which the borrower does
not have to make monthly payments.
Emergency loan programs: A program that
the schools offer which is short-term low interest payment loans.
Federal Loans: Loans guaranteed by the U.S government.
Federal Pell Grants: Designed by the federal government
to help needy students pay for college.
Financial Aid: Financial assistance in the form
of scholarships, grants, work-studies and loans.
Grant: A form of financial aid that does not have to
be repaid.
Holder: The institution that owns the loan.
Loan: Money borrowed for a specific reason. It is then repaid over time with interest.
Master Promissory Note: A legal agreement
that the borrower must sign which states terms of repayment
and any interest that must also be paid.
Satisfactory Academic Progress: An eligibility
requirement for borrowers to receive financial aid.
Tuition:
Costs associated with the school.
Questions and Answers
What are the guidelines to be eligible for financial
aid?
- You must have a high school diploma or GED
- Be a US citizen or eligible non citizen
- Males between the ages of 18-25 must be enrolled
for Select Service
When should I begin to apply for financial aid?
One
year before you begin college.
Make sure you research all your options and complete
your FAFSA form since that can be turned in January 1.
What documents do I need to complete and sign to get
a loan?
- A statement of Education Purpose
- A Certification Statement on Refunds and Default
- An Anti-Drug Abuse Act Certification
- A Statement of Updated Information
- A Statement of Registration Status
- A Promissory Note for the loan
Where can I get a FAFSA form?
- High
School guidance office
- College
Financial Aid office
- www.fafsa.ed.gov
- The
public library
Will the information on my FAFSA be kept
confidential?
Yes.
The information on your FAFSA will not be released to anyone
without your authorization.
I plan to go to school part-time. Am I eligible for financial aid?
Most
financial aid is awarded to students that take 6 credit hours
per semester.
After I filed my FAFSA my family’s financial
situation changed. What
do I do?
You
should wait until you receive your SAR and then contact your
schools financial aid office.
Do not file another FAFSA.
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