Financial Aid Guide for College Students
Pretty much every kid in school aspires to go to college someday. Getting a college education is a surefire way to a secure future since most graduates end up in jobs that pay well. It is no secret that tuition fees are incredibly expensive.
Financial aid is sought after by college students every year in numbers unfathomable. Student loans is one route that students take to afford a price so great. While these loans give kids a shot at a quality education, they end up facing the ramifications of taking out a student loan for a long time.
Families explore a range of strategies and methods to pay for their kids’ college fees and do not rely on their savings entirely.
College Scholarships and grants are also important streams of money that could make a considerable addition to your fees.
Let us learn more about financial aid and how it works.
What is Financial Aid and how does it work?
Financial aid, quite true to what it sounds like, is money that will help you to cover all your college expenses. Money that you receive as financial aid can be devoted to paying your tuition fees, your accommodation expenses, your stationery and books, etc. This aid comes in a range of forms and from a number of sources, which we will learn about in depth later. In short, financial aid is money to help you pay for college.
A candidate seeking financial aid must start by applying for it. Your application will stand as a display of your ability to pay your college fee. Your aid will be given to you based on your application. You may accept or reject the aid awarded. You might also want to make applications to other scholarships and grants.
How do you apply for Financial Aid?
What is FAFSA?
You might hear the term “FAFSA” get thrown around a lot and might wonder what it is. FAFSA stands for the Free Application for Federal Student Aid. It is an application that has to be filled out and the information that you provide in it will determine what amount of financial aid you are eligible to get.
The FAFSA is instrumental in informing students of their eligibility for a range of financial aids such as federal student loans, grants, private aids, etc.
The FAFSA, although a vital tool, is not the ultimate way to qualify for financial aid. For unmarried students under the age of 24 who are seeking financial aid whose parents do not support them monetarily, Stafford loan programs may be the way to go.
Otherwise, you may look into private aid options.
But since working with the FAFSA is a free and efficient process, it is advisable for everyone to fill it out since it can help you find a really good amount of financial aid from places you might have ignored or not thought about.
Some things you will need..
- Social Security Number: Your parents’ SSN has to be presented along with yours. If you happen to be an immigrant student with a DACA status, you are permitted to use your SSN. Undocumented students often do not qualify for federal aid.
- Student Aid Pin: This is also known as your Federal Student Aid PIN. This is an important credential of identification.
- Your tax records
- Records of your untaxed income
- Details of all your assets: Any valuable property that could be helpful in repaying your educational debts
- Present a list of all the colleges that you wish to attend: Your FAFSA details will automatically go to these schools and you will be informed of any school-based aid.
- Your driving license number
Students are not permitted to receive more financial aid than what they need.
College Scholarship Service
Students may have to fill out another form called the College Scholarship Service Profile. This is used by colleges to decide how they can award their own aid. This is quite an elaborate form and enquires quite a lot when compared to the FAFSA. You must produce detailed reports of your assets, etc.
Sources and Types of Financial Aid
Sources of Financial Aid
- College-based Aid and Scholarships: These scholarships and grants are merit-based and are offered by institutions. Undergraduate and graduate students may avail such aid. These streams of aid need not necessarily take into account the students’ need, but do look at their achievements and services. If a student’s work is deemed to be meritorious, they may be awarded any amount of aid. This need not be repaid provided all the qualifications are satisfied.
- Federal Educational Aid: This is provided by the US Department of Education. Grants, loans and work-study programs are considered to be federal aid.
- State-based Financial Aid: Students can explore financial offered by the state government. Most scholarships and grants need not be repaid.
- Nonprofits and Private Organizations: There are a range of private and nonprofit organizations that offer scholarships. They offer a mixture of need-based and merit-based financial aid that students can pursue. Some organizations seek out kids belonging to a particular ethnic group.
Types of Financial Aid
- Scholarship: Scholarships need not be paid back. And they are awarded for a range of reasons. Some scholarships are offered to students in a particular stream of study. Students with lesser income may qualify for scholarships better.
- Grants: While scholarships are often merit-based, grants are mostly need-based. The similarity between scholarships and grants is that they both need not be repaid after a student graduates. Grants can be availed at the federal and state level. Also some private organizations give out grants. Grants are also given based on services or achievements.
- Federal Student Loan: The federal government gives out student loans to qualifying students to cover their college expenses. Federal student loan interest rates are much lesser than those offered by private student loans.
Federal student loans come with a number of special benefits and their repayment plans are very flexible.
- Private Student Loan: Private student loan lenders offer private student loans. Often, federal student loans and aid will not be sufficient to cover all the expenses for a student. So students look into private options to bridge the gap. It is advisable for students to exhaust their federal options before venturing into private loans. This is because federal rates and repayment terms are very convenient for students on average.
- Work-Study Opportunities: Students can even look into opportunities to work and make some money as they study. Part-time jobs are provided to students by work-study programs, both federal and private. Jobs are provided based on a first-come, first-serve basis. Students may opt to work in a field that they are studying in.
How do Schools deal with Financial Aid?
Usually schools have their own specifically structured process when it comes to handling financial aid for students. Schools often award financial aid commensurate to the tuition fee that they charge.
Some universities offer to take care of the full financial cost with aid, but some include loans in the aid while others do not. These unis also take into consideration a student’s family’s financial status at times. Most of the time, universities hike the financial aid offered to students as they progress through the course’s years in order to balance out the gradually increasing annual tuition fees.
Receiving your Financial Aid
This is the final step to getting your financial aid, but you must be careful at all times. You have the option to either accept or reject the financial aid offered to you.
Receiving your Financial Aid Letter form your college
You will receive a letter addressed to you from your college. This letter will give you details about the amount of financial aid that you are eligible to receive. It will also mention the type of aid that you will get, a loan or a scholarship or a grant.
This letter comes with a deadline within which you must respond. You are to contact the financial aid office in your school if you accept and enquire further about how and when your aid will reach you.
If you have any scholarships that you received elsewhere, you must report this to your school.
Understanding Different Types of Financial Aid
Understand the difference between the various types of financial aid available. It is crucial to first seek out aid that need not be repaid, such as scholarships and grants.
When it comes to student loans, as already mentioned, federal student loans are preferred over private student loans. This is because of their comparatively lesser rates and flexible repayment options.
Subsidized loans can give students an additional edge over unsubsidized ones since the interest for these are paid by the government for the duration that the student is in school.
The following are some factors that you need to be educated on before taking out a student loan:
- Repayment plans: A repayment plan specifies the terms, amount to be paid, interest rate and the duration of your repayment for you. Students are free to explore and find plans that best fit their bill. Make sure you pick a plan that permits you to make affordable payments on a regular and timely basis. Look into income-based repayment plans where a part of your income will be taken on a monthly basis, reducing hassles on you. If you find yourself temporarily unable to make payments, you can also think deferment or forbearance. This will pause your repayments for a short while.
- Interest rates
- Cosigner terms and release policies
- Consolidation and Refinancing: Consolidation is merging all of your federal loans into one in order to make a single, efficient payment. Refinancing is when you take out a new loan in order to pay off all your old loans and continue repaying your student loans via repayment of the new one with hopefully better rates and terms.
- Other fees
- Student Loan Forgiveness: Loan forgiveness can be granted to students who choose to pursue specific career fields or come under unfortunate circumstances. Learn more about forgiveness on student loans to understand if you could qualify.
Graduate Program Financial Aid
Graduate students can avail federal financial aid for their education via one of the following routes: Direct Federal loans, Federal Perkins loan, TEACH grant and work-study programs. Enquire about your eligibility from your school’s financial aid office.
Students are also encouraged to look for other organizations that come forward to offer scholarships and grants and apply for them.
Most of these loans qualify for the Public Service Loan Forgiveness program for specific study programs. Students and their applications will be required to satisfy certain qualifications.
International Students Financial Aid
Students from different countries are more likely to find more financial aid in their home country than elsewhere. International students are advised to approach their local advising center for education and search for financial aid. They can also contact private organizations, community setups, businesses, etc. for learning about what financial aid they may qualify for.
International students may also use their scores from entrance exams such as GRE, GMAT, TOEFL, etc. in order to receive financial aid as such scores are a good measure of how meritorious and capable the students are. Fulbright scholarships are offered to such students by the U.S. Department of State’s Bureau of Educational and Cultural Affairs. They are required to hold a J-1 visa.
Most international students pursuing their education in the US are not eligible for federal aid. Contact your US embassy to enquire further about what government offered aid you may qualify for.
Enquire your college’s financial aid office to see what college-specific financial aid you may qualify for.