Paying for college As you probably have discovered, college can be an extremely expensive adventure! It's really important to "do the math" when looking at aid packages from the various colleges you are considering. A big aid package from one college may "sound" good, but if there are lots of loans involved, it may not be as good as other aid packages. Scholarships are LOTS better than loans. Certain loans are better than other loans. The better your grades, the more scholarship money you are likely to be offered. There is much to consider. The first step you have is completing the FAFSA. (Click →HERE← for more infomation on completing the FAFSA.) Find some private scholarships to which you can apply. The more you can try to receive, the better. Below are some general websites with information, plus specific information on scholarships, loans and work study. Contact us at CAP@tecareorg if you want more help understanding this info. We'd be glad to help!
SCROLL TO THE BOTTOM OF THIS PAGE FOR SOME GREAT LINKS TO WEBSITES THAT CAN HELP WITH FINANCIAL AID QUESTIONS.
Financial Aid for college - link to explain how to apply for the Federal Student Aid, how you qualify, etc. (FAFSA info); the main FAFSA info is at www.fafsa.ed.gov/. Be sure to check out the FAFSA4caster to determine an early estimate of your eligibility for federal student aid.
You Can Do It - a great website by PHEAA that helps you understand loans, grants, and financial aide in general.
Expected Family Contribution
The Expected Family Contribution (EFC) is a number determined by formula after you submit your FAFSA. The EFC gives colleges the number of what families are able to pay, but many colleges—particularly public/state institutions—simply do not have the financial resources to meet the needs of families. Students are seeing these financial gaps get bigger and bigger from public institutions as their state and federal funding is threatened and/or declines. This is where private schools are able to do a better job. No public or state-funded institution can claim to meet 100% of student need, however, many private institutions are able to do just that, or at least come closer. So that is why it is important for students with solid academic records to apply to both public and private institutions. Private schools obviously cost more in terms of sticker price, but in many instances can offer more financial support and make the education more affordable. It all varies by school, but when possible students should explore both types of schools for financial purposes.
How Financial Aid is calculated
Cost of attendance (COA) minus Expected Family Contribution (EFC) equals financial need. This formula is the starting point to calculating your financial aid package. COA is an estimate of what it will cost you to go to school, in most cases for two semesters or three quarters. COA is more than just tuition & fees, it includes room and board, books and supplies, transportation, and miscellaneous personal expenses.
The financial aid office at your school will determine how much financial aid you are eligible to receive.
Schools will first award need-based aid, such as grants and subsidized loans, before awarding non-need-based aid, such as unsubsidized loans. The total amount of aid you will be awarded, in almost all cases, cannot exceed your COA.
There is not a standard award letter, so while some letters you receive may look similar, others may look completely different. Certain schools may send you a paper letter or award packet, while others may provide the information electronically. Many schools may also send you a Shopping Sheet, which is a standardized format letter that provides personalized information on financial aid and net costs, as well as general information on institutional outcomes, such as graduation rates and loan default rates.
Because these letters/notifications may look different, you should be careful when comparing them. You may be awarded the same amount of federal aid from school to school, but it would not be uncommon to see varying award packages depending on the schools you are applying to. Here are some tips to help you compare.
NOTE: Often times a student’s financial need is higher than the need-based awards a student is eligible to receive. Therefore, just because a student has high need, does not mean they will only be awarded need-based aid. Other factors must be taken into account, such as cost of attendance.
COMPARING FINANCIAL AID OFFERS
Once you get into several schools, pay attention to your e-mail inbox. That's where you often will find your financial aid offer from each college. Analyzing different aid packages can seem like a lot of math —but it’s important stuff. Check out these four steps to make this analysis simpler.
1. Make sure you know what you’re looking at.
The financial aid offer (sometimes called an award letter) typically comes in an e-mail from the college’s financial aid office. The offer includes the types and amounts of financial aid you’re eligible to receive from federal, state, private, and school sources. Be sure you understand what each type of aid is and whether it needs to be paid back. Hundreds of colleges nationwide have signed on to present financial aid offers in a standardized format known as the Shopping Sheet. The Shopping Sheet is a standardized award letter template that makes it easy to compare financial aid offers from different schools. In addition to providing personalized information on financial aid and net costs, the Shopping Sheet also provides general information on the college, like graduation rate and loan default rate.
2. Find your out-of-pocket cost to attend.
Next you’re going to want to see what you’ll be paying out of pocket for each school. Basically, your out-of-pocket cost (also known as net cost) is what it’ll cost you to attend minus the financial aid you receive that you don’t have to pay back, like grants and scholarships.
To find this amount, start with each school’s cost of attendance. Cost of attendance is a jumble of different expenses, from tuition to fees. It even factors in a food allowance, but this is standardized across students, so it won’t take into account quirks like your $170-a-year Pop-Tart habit. It may also factor in transportation, but clearly those costs will vary greatly depending on where you live compared to the college. And that money is NOT part of the basic education cost. From there, you want to subtract the free money (like grants and scholarships you were awarded) to come up with your out-of-pocket cost. This is the number you’ll want to compare across schools. Good news: If your college presents its aid offer as a Shopping Sheet, this will be calculated for you!
Compare your aid offer with other schools’ offers.
Here’s the crux of the decision, where you pit aid offers against one another to see which school will be the most affordable. Your aid offer is unique to you and each school you apply to, so your aid amounts will vary from school to school. Obviously, cost of attendance will vary, too. This means that you’ll definitely find some discrepancies in what you’d pay out of pocket at the schools that admit you.
Finally, it’s time to analyze the colleges a little more deeply to make sure you’re getting the most bang for your buck. Measures like graduation rate and income after graduation are great indicators of a college’s value. These benchmarks can help you come to a decision on where to enroll, especially if you’re down to just a few colleges with pretty similar net costs of attendance. Even if one college’s cost is a little higher, it might be worth paying a little more out of pocket if it means massively larger benefits later down the road. All this information is consolidated in the College Scorecard search tool.
The College Scorecard’s information is valuable no matter where you stand with your aid offers. College is a big investment, so you want to make sure that the school you pick is a good fit for you no matter what. But the resource comes in extra clutch when comparing aid offers doesn’t give you a clear winner.
Understanding Tuition Discounts
The nation’s colleges and universities frequently raise their tuition costs, continuing a practice that is making higher education becomes less and less affordable.
According to a report released in October 2016 by the College Board, tuition, fees, and room and board at private colleges rose 2.6 percent to $45,370 this academic year. In-state students at four-year public colleges saw their cost go up 1.8 percent, to $20,090, mostly in response to further funding cuts from state lawmakers. It won’t be long before middle-income families and their rising student debt will be priced out of college completely.
However, many families do not realize that private colleges offer deep discounts from their sticker price in the form of merit scholarships and other non-need based awards. Only the elite, highly selective colleges (Ivy’s, etc.) refrain from awarding these tuition discounts.
A recent study by the National Association of College and University Business Officers found that over 50% of incoming freshmen received these tuition discounts that reduced their tuition by as much as 40%. In many cases, these institutional funds lowered private college tuition costs into the same price range as public universities.
Why do colleges offer tuition discounts? It allows them to:
Increase ratings average
Boost net revenues
Improve the diversity of the student body
Attract legacies (students of alumni)
Attract students from wealthy families (increase alumni contributions)
Attract better students
Compete with public university prices
Increase freshmen class size
Understanding how and where to find those colleges that offer money inducements can give students an opportunity for a quality education while reducing their overall college costs.
Here’s How It’s Done
When the college sets a sticker price for their tuition, higher income families naturally pay full tuition, while lower income families are subsidized with financial aid. This is how the system has worked for years and colleges use this method to attract a more socio-economic group of students.
In reality, though not all higher income families pay full tuition and not all lower income families will be offered enough financial aid to pay for college.
Colleges actually put incoming freshmen into pools and set a range of tuition prices based on those pools. Each family is put into a pool based on the amount of income and assets they show on the FAFSA and/or PROFILE financial aid forms. Then the college uses a mathematical process called “financial aid leveraging” within each pool to attract and enroll the best students into their college while using the minimum amount of financial aid to do it.
In other words, they will take a $40,000 scholarship that they normally give to a needy student in a lower tier pool and break it into four scholarships of $10,000 each for wealthier students in an upper tier pool. These wealthier students would probably go elsewhere without the $10,000 tuition discount.
“Financial aid leveraging”“ is a game colleges play, and they play it very well. And if you know how to play the game, you can avoid paying the full sticker price, even if you’re a millionaire.
How You Can Get Your Share of College Tuition Discounts
Institutional aid is not guaranteed. Students wishing to be considered for institutional aid must position themselves correctly to be recruited by private colleges. Proper positioning begins early in high school and involves the following seven factors:
Good grades are self-explanatory. The presumption is that good grades in high school will mean good grades in college and ultimately graduating from college and becoming an alumnus. A student should have a minimum of a 3.0 GPA in high school to be in the running for a tuition discount.
2-SAT/ACT Test Scores
The SAT/ACT college prep test scores are merely qualifiers, but colleges have no other way to compare the academic abilities of a student from Ohio with a student from California. A student should have a minimum of 24 ACT or 1250 SAT test score to be in the running for institutional aid.
3-Solid Resume of Achievement
Throughout their high school years, students should build a solid resume of achievement and list any civic groups or community service projects that they were involved in. This will demonstrate to the colleges that the student is well rounded and is active in student affairs outside of normal studies. Treat this exactly the same as preparing a resume for a job! Send a resume with the application to each school.
4-Apply Early in the Academic Year
Apply to the various colleges early in the senior year of high school (September-December). The rule of thumb here is the earlier the better! Remember, once a particular school begins to fill the upcoming year’s freshman class, the need for a private college to offer institutional aid diminishes.
5-Apply to Schools that Recruit the Same Students
Private colleges compete with each other for the same students and are more likely to give significant institutional aid if they know the student is also applying to a competitive school.
6-Apply to Schools that Have a Low Yield Factor
Number of students actually enrolled ÷ number of student admitted = YIELD
Look to apply to colleges that have a high amount of students that are admitted, but a lower number that actually enroll. Enrollment is key to a college’s survival. Many colleges select students for admission to their school only to have them enroll and attend another. Private colleges have a constant battle to fill seats every year. The second-tier private colleges are even more challenged because they must compete with the low cost of public universities and the popularity of the elite private (Ivy League) schools. As a result, the student has a high probability of receiving institutional aid from private colleges with a low enrollment yield percentage.
7-Apply to 6-8 Colleges
Students should apply to a minimum of 6-8 colleges. At least four should represent private colleges that compete with the student’s first choice college. Applying to several colleges gives the student the opportunity to receive institutional aid from one college and use that award to ask for a similar, or better, award from the college the student would prefer to attend.
The bottom lines is… there’s really two prices for college that families pay:
one price for families that have a financial game plan, and
a higher price for those who do not.
NICCP Blog, Oct 2016
Financial Aid and the Ever Important Student Aid Report (SAR)
In the spring families start to receive their Student Aid Reports (SAR). Banks do not issue loans without ensuring credit worthiness, employers do not hire employees without proper qualifications, and colleges do not give out scholarships and grants without proper financial documentation. The SAR is a very integral part of that financial aid documentation. As such, it’s really important to understand how it works.
The SAR summarizes the information the family provided on the FAFSA and indicates the family's official Expected Family Contribution (EFC). The financial aid office(s) will then use the information from the SAR to prepare a custom financial aid package based on the types and amount of aid for which the family is eligible. Common questions about SAR include:
How and when will I get my SAR?
Whether you receive your SAR online or on paper depends on whether you provide an email address on your FAFSA. If you provide a valid email address, you’ll receive an email with instructions on how to access an online copy of your SAR.
If you don't provide a valid email address on your FAFSA, you will receive either a SAR or SAR Acknowledgement via postal mail.
The SAR lists your FAFSA information and provides space for you to make corrections. You will receive a paper SAR if you file a paper FAFSA and don’t provide an email address.
The SAR Acknowledgement lists your FAFSA information, but you’ll need to make any corrections at the FAFSA website at fafsa.gov. You’ll receive a SAR Acknowledgement if you file an electronic FAFSA and don’t provide an email address.
If you have an FSA ID (username and password) and your FAFSA has been processed, you can log in at the FAFSA site to view SAR information regardless of whether you filed the online or paper FAFSA or provided an email address or not. The school(s) you list on your FAFSA will have access to your SAR data electronically within a day after it is processed.
What information does a SAR contain?
If your application is complete, an Expected Family Contribution (EFC) will display in the upper right-hand corner of your SAR. If your application is incomplete, your SAR will not include an EFC, but it will tell you what you need to do to resolve any issues.
The SAR also contains a four-digit Data Release Number (DRN), which appears on the first page in the upper right corner of the paper SAR and SAR Acknowledgement. On the electronic SAR the DRN is located in the box that contains the Application Receipt date, below the EFC. You will need the DRN if you choose to allow your college or career school to change certain information on your FAFSA.
What am I supposed to do with my SAR?
When you get your SAR, review it carefully to make sure it’s correct and complete. The school(s) you listed on your FAFSA will use your information to determine your eligibility for federal—and possibly nonfederal—financial aid. A school may ask you to verify the accuracy of the data you provide on the FAFSA, so you need to be sure the information is correct.
If you don’t have any changes to make to the information listed on your SAR, just keep it for your records.
So that’s it. Follow these simple guidelines and you can pretty much ensure this very important part of the financial aid process will go smoothly. Then once your SAR is accurate and complete and you are eligible for federal student financial aid, each school in which you were admitted will send you an award letter.
GRANTS AND SCHOLARSHIPS FOR COLLEGE
There are a lot of different forms of grants and scholarships available for students in helping to fund their college education. There are government grants, college grants, and private scholarships. The advantage of grants/scholarships is that you do not have to repay them! Be careful especially with college-related grants ---- often they are offered as 4-year scholarships BUT are dependent on the student maintaining a certain GPA. Many many colleges offer aid based on grades - so the better your grades (both in high school AND in college), the more your aide package may be. Some government sources of grants are explained below.
The Federal Pell Grant Program provides need-based grants to low-income undergraduate and certain postbaccalaureate students to promote access to postsecondary education. Students may use their grants at any one of approximately 5,400 participating postsecondary institutions. Grant amounts are dependent on: the student's expected family contribution (EFC); the cost of attendance (as determined by the institution); the student's enrollment status (full-time or part-time); and whether the student attends for a full academic year or less. The Pell Grant is capped for all students. The maximum Pell grant for the 2016/2017 award year (July 1, 2016, to June 30, 2017) was $5,815. Students MUST apply to FAFSA in order to qualify for a Pell Grant. For more details about the Pell Grant click HERE.
FSEOG - Federal Supplemental Educational Opportunity Grant - The FSEOG Program provides need-based grants to help low-income undergraduate students finance the costs of postsecondary education. Students can receive these grants at any one of approximately 3,800 participating postsecondary institutions. When making FSEOG awards, the institution must give priority to those students with “exceptional need” (those with the lowest Expected Family Contributions, or EFCs, at the institution) and those who are also Federal Pell Grant recipients. Awards run between $100-$4000/year, depending on need, the amount of other aid you get, and the amount of funds available in your school. These grants run out quickly - so the sooner you complete the FAFSA application - the more likely you will receive this help. Click HERE for more details on this grant.
PHEAA stands for Pennsylvania Higher Education Assistance Agency. PHEAA administers the PA state grant program, which offers financial aid (in the form of grants) to qualifying students. You must have filled out the FAFSA first to become eligible for a PHEAA grant. These grants have higher awards if you are attending a college in Pennsylvania, because they are a state-based form of assistance. Go to http://www.pheaa.org/index.html for MUCH more information about PHEAA.
Does PHEAA offer any summer school tuition assistance?PHEAA can offer summer grants for some students. Students must be taking at least 6 credits, be a PA resident, making satisfactory academic progress, and have the FAFSA form filed. Students will have to make the payments first as the grants may not be known prior to the time the bills are due. To apply go to www.pheaa.org - under “most popular places” click on PA State Grant Program – then Summer State Grant. Complete the grant on-line.
3 Facts Parents and Students Need to Know About How Colleges Award Scholarships
For most families, it’s puzzling how colleges decide which students get scholarships, as well as the amounts of those awards. Anecdotally, parents hear of seemingly average students getting impressive awards while they know of cases where brilliant students have ended up getting stiffed by schools.
How colleges and universities dispense scholarships and grants will actually make sense if you appreciate that these institutions are businesses. Their No. 1 priority is the well-being of their own institutions, and schools use their financial awards as a way to further their institutional goals.
One way that schools protect their own interests and help their bottom line is by not dispensing scholarships when they don’t have to do so. As you’ll discover, the wealthier the school, the more likely the purse strings will remain pulled tight. If you want to better understand the motivation of schools, there are three things to keep in mind about institutional scholarships and grants.
Fact No. 1: Merit scholarships are not just for ‘A’ students
Many parents worry that their children must be stellar students to receive scholarships from schools.
This widespread assumption has created tremendous pressure on students to be perfect. In reality, about two-thirds of students who attend either a public or private college or university don’t pay full price thanks to federal and state grants as well as institutional awards. At private colleges and universities, nearly 89% of students receive scholarships and/or grants from the schools themselves.
At an historic level is the average tuition discount that freshmen are capturing at private schools. It’s now at 53%. Here’s an example of the average discount: If the tuition at a private school were $40,000, the student receiving the average discount of 53% would pay just $18,800.
Fact No. 2: The most accomplished teenagers don’t always get the top scholarships
The awards that a top student receives will depend upon the financial ability of their parents and where they are applying to college. While the vast majority of students at private schools receive price discounts, this is not true at many of the most highly ranked and wealthy private institutions.
To illustrate this phenomenon, below is the list of institutions where, in 2015, the percentage of students who receive price breaks is far lower than the average of 89%.
Percentage of students receiving institutional grants
Boston College 44%
Dartmouth College 44%
Emory University 45%
Reed College 46%
Duke University 47%
Johns Hopkins University 47%
Washington University inSt. Louis 47%
Claremont McKenna College 49%
Columbia University 49%
Swarthmore College 49%
Haverford College 50%
University of Pennsylvania 51%
Stanford University 53%
California Institute ofTechnology 54%
Amherst College 57%
University of Notre Dame 58%
Rice University 60%
Reason for the lower percentage of grants
Elite schools like the ones above are in high demand by wealthy families and take advantage of this reality. These schools are deluged with high-income applicants, so they can create their freshmen classes with a large percentage of full-pay students. Parents of a child who gets into Harvard, Yale, or Stanford, for example, are going to be more willing to pay full price for a bachelor’s degree from these schools than they would at a school that isn’t a prestige name. Because of this strong demand, these institutions, including the ones in the list above, don’t have to award merit scholarships, or they can get by with offering a modest number.
Private schools that provide few or no merit scholarships can be excellent institutions for smart students who require a great deal of financial help to attend college. A student of modest means who gets into a school like Amherst, Johns Hopkins, or Yale should receive an excellent financial aid package.
You can’t assume, however, that all schools that provide few or no merit scholarships will automatically provide excellent need-based aid packages. Boston College, for instance, is typically not nearly as generous with its need-based aid packages as some other schools in its peer group.
High-income students who attend elite research universities and the most highly ranked liberal arts colleges will usually pay full price or close to it. This reality can pose a problem for smart teenagers aiming for elite schools, but whose parents have not saved enough to pay for a school that costs $65,000 or $70,000 a year!
Fact No. 3: Throwing a wider net will capture price breaks
The schools that provide most or even all freshmen with price discounts will typically be liberal arts and baccalaureate colleges, as well as master’s level universities, where there are few PhD programs. In contrast, the schools least likely to provide merit scholarships are research universities.
Colleges and master’s level universities have to work harder by offering discounts to attract students because they typically don’t possess the national brand names many research universities enjoy.
In its latest annual tuition study, NACUBO produced an eye-opening chart that illustrates just who is providing discounts to freshmen. At master’s level universities, the percentage of freshmen who received grants or scholarships was roughly 94% while it was 91% at colleges. In contrast, at research universities an estimated 66% of students received a tuition discount.
Schools where nearly all freshmen receive awards
Here is a small sampling of institutions where the majority of students received a price break in 2015:
100%: Allegheny College (PA), Berry College (GA), Drake University (IA), Hartwick College (NY), Xavier University (OH)
95%-99%: Hood College (MD), Kalamazoo College (MI), Lawrence University (WI), Roanoke College (VA), Seaton Hall Univ (NJ), Univ of Hartford (CT)
Appealing Your Award Package
The best time to try to ask a college for more financial aid is when the award letters come out. Some say colleges will never give a student more money than their first offer, unless the student can show that his or her family has financial hardships that don’t show up on their financial aid forms. But some will, so it's always good to at least ask! Here are some steps to consider when making an appeal:
1. Determine the “true cost” (total cost of attendance) at each college and decide which college offered the best award letter.
2. Determine how much the college was short of meeting 100% of the family’s financial need. This is the maximum dollar amount that you can appeal.
3. Determine if the family has “special circumstances”. These may include:
Death in the family
Disability or Injury
Sickness, medical, or handicap expense
Tuition for private high schools
Unusually high child care expenses
Unreimbursed expenses shown on IRS Form 2106
Unusually high income for the year
4. Always be sure to check with the school’s financial aid office (website) to see if it has an official appeals process. This can differ from school to school. For example, some schools prefer that you address your letter to the head of the committee overseeing the appeal letters and some may actually give you the name of a financial aid counselor to contact.
5. If possible, contact the college’s financial aid counselor in person:
If an appeal in person is impossible, make the appeal by telephone
If an appeal in person or by telephone is not possible, appeal by letter
6. Remind the financial aid counselor how much you truly want to attend that school, and explain why their college is your dream school.
7. When making an appeal, explain the circumstances that may not have been included in the original financial aid application. For instance, most applications rely on the previous year's financial statements, so if the family has suffered an income loss, and this loss wasn't considered when the school determined your financial aid package, then let the school know about this special circumstance.
8. Always send adequate documentation of the special circumstances and provide a paper trail. For instance, if your family recently had a divorce, send a copy of the divorce decree or filing.
9. Be sure the financial aid counselor knows about the packages that other schools offered. In some cases, a school can be swayed to offer you a financial aid package that is more in-line with what other schools offered. Some schools will not take this into consideration, but it doesn’t hurt to try.
10. Never use the words “negotiate” or “match” in the appeal.
College may be more interested in your appeal under the following scenarios:
Colleges with declining enrollments may be more willing to negotiate with a student because of their desire to fill empty seats.
Colleges may have scholarships for upper-middle class and wealthy families to attract good students and future benefactors.
Colleges may have special scholarships for minority students. A student should inquire at the college for these scholarships.
Colleges may have special scholarships for students of alumni or legacy students. A student should inquire at the college for these scholarships.
A college’s desire for cultural diversity in its enrollment may lead to increased financial aid offers for students who are from out of the college’s geographic region, or who are culturally different from its normal enrollment. Most colleges are unwilling to get into a bidding war with other schools, but they will match another school’s offer if the student has the right academic credentials and/or fit into a demographic category that the school is trying to attract.
TAKING OUT COLLEGE LOANS
There are many different types of loans for you to consider. You may be awarded government loans, or loans through your school. You may be eligible for a Plus Loan, or you may have to just take out a private loan though a bank or institution of your choice. Or of course you may see if you can find a friend or relative who would be willing to loan you money. All loans need to be paid back. And keep in mind that if you run into financial difficulty later in life, and need to declare bankruptsy, government loans are often NOT forgiven. So think carefully before you take out any loans!
As part of your financial aid package you may be offered a maximum amount you can borrow through the school. This does not mean you have to accept all of the money the school offers. Refer to your spending planto determine what amount will be sufficient, andmake sure to indicate that revised amount when you return your award letter. For some colleges, if a need comes up later in the academic year you can go back and ask to borrow some of what you originally declined. (Some colleges return unclaimed loan funds to a general pool so it would NOT automatically be available later. If you think this is a potential issue for you- be sure to confirm with your college.)
Below is a short description of the major types of college loans. For some additional Q&A on loans - click HERE. Subsidized vs. unsubsidized loans If you are awarded a loan as part of your financial aid package, you may be eligible for either subsidized or unsubsidized funds, or a combination of both. The big difference between the two is when the interest begins to accrue. For more details, click →HERE←.
Subsidized loansare awarded on the basis of financial need. You won't be charged any interest before you begin repaying the loan because the federal government subsidizes the interest during this time. You don't have to start to repay the loan until 6 months after you finish school. The 2016/2017 interest rate is 3.76%. Please note that this rate may change in future years - it is set each year. These loans need to be repaid starting about 6 months after graduation.
Unsubsidized loanscharge interest from the time the money is first disbursed until it is paid in full. The interest is capitalized, meaning that you pay interest on any interest that has already accrued. One way to minimize how much interest accrues is to pay the interest as it accumulates. The 2016/2017 interest rate is 3.76%. These loans need to be repaid starting about 6 months after graduation.
Perkins Loans The Federal Perkins Loan Program is a school-based loan program for undergraduates and graduate students with exceptional financial need. Under this program, the school is lender. Not all schools participate in this program. The interest rate for this loan in 2016/2017 is 5%. These loans must be repaid starting 9 months after leaving school and must be repaid within 10 years.
PLUS Loans PLUS loans are federal loans that graduate or professional degree students and parents of dependent undergraduate students can use to help pay education expenses. The U.S. Department of Education makes Direct PLUS Loans to eligible borrowers through schools participating in the Direct LoanProgram. The Dept of Education is the lender. The borrower must not have an adverse credit history. Loans have a fixed interest rate (7.21% in 2014/2015). The maximum loan amount is the student's cost of attendance (determined by the school) minus any other financial aid received. For more information go to http://studentaid.ed.gov/types/loans/plus. (SEE BELOW FOR MORE DETAILS ABOUT THESE LOANS.)
Private loans If you want to go to a bank or other institution and take out a private loan, that is always an option. You will need to qualify for this through whatever process the bank/institution uses. This may require a co-signer. It may take 30-45 days to determine if a person is approved, so the sooner you can start this process the better. If you are approved, you can set a closing date for a few days before the bill is due. (You don't want to start the loan any sooner than needed - why start the clock and start paying interest before you need to?) For most banks/institutions, the loan money would go directly to the family - then the family would use it to pay the bills. Some banks do loans specifically for college bills, others would do a general personal loan that could ideally be used for any purpose.
IMPORTANT TIPS and QUESTIONS:
You can decline loans in the fall and then ask for them to be reinstated for the spring term.If you receive a scholarship or some other source of extra assistance so you don't need the Stafford and/or Perkins Loans for the fall, then go ahead and decline them. That means you will be declining them for the year. Then if you need that assistance again in the spring - you can ask the financial aid office to reinstate them. Sometimes the Perkins Loans will run out of funding so you can't do this, but there will always be money for the Stafford Loan.
Do not take out more loans than you can pay back!Loans of $3000-$4000 per semester sound manageable, but if you take out this size loan EVERY semester for all 4 years - you are facing $24,000-$32,000 in loans upon your graduation. And many kids seem to need 5 years! Do the long-term math before you commit to a loan.
Keep copies of ALL loan documents - It is very important that you keep complete records of all your financial aid documents in a secure place. Start the first time you accept financial aid by putting togethera file folderthat includes copies of your promissory note and the award letter that indicates the amount you are agreeing to repay.Update your filewith each new transaction, andregularly review these documentsto help youkeep track of your debt. By keeping track along the way, you will know what payment you ultimately will be facing and then you can make an informed decision whether it is wise to accrue more debt. The amount of monthly payment that you will be comfortable with is a personal choice that only you can make, and having your information organized and accessible may help make that decision a little easier.
Should I apply for a loan?Sometimes - yes! This may sound opposite of what you'd think, but even if you don't think you would qualify for a loan - if you were denied enough aid, then go ahead and apply. For many colleges - if you apply for a loan and are denied the loan - then you may be eligible for more assistance from the school!! You just have to let the financial aid office know that you've been turned down for the loan. (Sometimes the extra assistance will be scholarships, sometimes it will be loans - but they'd be lower rate than private loans).
Can I agree to only a certain amount of the loan being offered, or do I need to take the whole thing? Before your loan money is disbursed, you may cancel all or part of your loan at any time by notifying your school. After your loan is disbursed, you may cancel all or part of the loan within certain time frames. Your promissory note and additional information you receive from your school will explain the procedures and time frames for canceling your loan. You don't have to borrow the maximum amount of federal student loans each year; you can request a lower amount through your financial aid office.
Can I postpone repayment of my Federal Perkins Loan? Yes but it's not easy. Under certain circumstances, you can receive a deferment or forbearance on your loan. During a deferment, you are allowed to temporarily postpone payments on you loan, and no interest accrues. You may receive a deferment under certain conditions, such as unemployment. Deferments are not automatic. You must apply for one through your school by using a deferment request form your school can give you. You must file your deferment request on time or you’ll pay a late charge. For more details on deferments, contact your Perkins Loan repayment office.
What if I'm not eligible for a deferment? If you are temporarily unable to meet your repayment schedule but are not eligible for a deferment, you can receive forbearance for a limited and specific period. During forbearance, your payments are postponed or reduced. Interest continues to accrue; you are responsible for it. Forbearance isn’t automatic either. You may be granted forbearance in 6 to 12 month intervals for up to three years. You must apply in writing for forbearance through the school that made your loan or the agency the school employs to service your loan. You’ll have to provide documentation to support your request for forbearance. You must continue making scheduled payments until you are notified that deferment or forbearance has been granted.
What is a good way to get a private loan? Credit unions are often good sources of private loans. There are often big penalties if you don't pay a private loan on time, but if you have good credit, these can work out.
Should I apply to more than one source for a loan? It can be good to apply to multiple sources for your loans. Then you can decide which would be the best deal for you.
PLUS LOANS - HOW THEY WORK
(FOR THE PARENTS TO READ!)
Your child is going to college or career school—that’s great! But you may have questions about how to pay for it. If your child hasn’t completed the Free Application for Federal Student Aid (FAFSA), get it done today. Completing and submitting the FAFSA is free and quick, and it gives your child access to the largest source of financial aid to pay for college or career school, including loans YOU (parents) can receive.
After applying for financial aid, your child may receive an aid offer from the school that includes grants, scholarships, school and state aid, and federal student loans. Those federal loans may include a Direct PLUS Loan that you (the parent) can get as a parent borrower. PLUS loans are an excellent option if you need money to pay your child’s education expenses, but you’ll want to make sure you understand the loan terms before you get one. Once you’ve taken out a PLUS loan, you must repay it, even if your child doesn’t complete their degree, can’t find a job related to their program of study, or if you or your child are unhappy with the education you paid for with your loan.
First, don’t assume the loan terms are the same as the federal student loans your child can receive. For a parent PLUS loan, you (parent!) are expected to begin making payments on the loan immediately after you’ve received the last disbursement—while your child is still in school. (There is an option to defer making payments and you can read more about that later in this post.) Also, a PLUS loan cannot be transferred to the student later. You, the parent, are responsible for repaying the loan. There’s more.
The additional key differences between parent PLUS loans and federal student loans for student borrowers include eligibility, interest rates, fees, the first payment due date, and repayment plans.
The eligibility requirements for Plus Loans and Federal Student Loans are not the same. To receive a PLUS loan, you must
be the biological or adoptive parent (or, in some cases, the stepparent) of the student for whom you are borrowing, and your child must be a dependent undergraduate student who is enrolled at least half-time at a school that participates in the William D. Ford Federal Direct Loan (Direct Loan) Program;
not have an adverse credit rating* (a credit check is required);
not be in default on any federal education loans and not owe an overpayment on a federal education grant; and meet other general eligibility requirements for the federal student aid programs.
*The credit check is completed as part of the application process. If you are found to have an adverse credit rating, you may still qualify for a PLUS loan, but there are additional steps you need to take first. If you are unable to get a PLUS loan, your child may be eligible for up to $4,000 in additional unsubsidized loans. You can contact the school’s financial aid office for more information.
The amount you can borrow in Direct PLUS Loans is generally more than the amount a student can borrow in federal student loans because you can use the loan to pay for education expenses not covered by other financial aid, which includes student loans. You can get a PLUS loan to make up the difference between your child’s cost of attendance and other aid referred to as “financial” or “unmet” need.
For example, if the cost of attendance (COA) at your child’s school is $25,000 for the school year and your child receives $15,000 in other aid, you can apply for a PLUS loan in the amount up of $10,000 or less.
If you do get a PLUS loan, it’s important to remember to borrow only what you need to for your child’s education expenses for the school year, and be sure to track the amount you borrow—loan balances can add up quickly. For instance, in the example above, if you were to borrow the maximum PLUS loan amount each year your child is enrolled, you could easily owe up to $40,000 in PLUS loans for one child (assuming your child is in school for four years). If you need help figuring out how much you’re eligible to borrow, contact your child’s school.
INTEREST RATES, FEES, PAYMENT DATES
The interest rate, the fees, and the first payment due date for a Direct PLUS Loan for parent borrowers are not the same as the federal student loans your child may receive. Here’s a quick summary:
Interest rates The interest rate is determined annually for new loans that are made between July 1 of one year and June 30 of the following year. The current interest rate for Direct PLUS Loans first disbursed on or after July 1, 2016 and before July 1, 2017 is 6.31%. The rate is set by federal law.
Fees You are charged a fee for each federal student loan you receive. The loan fee is a percentage of the principal amount of your loan. This fee is deducted before you receive any loan money, so the loan amount you actually receive will be slightly less than the amount you have to repay.
First Payment Due Date Generally, you’re expected to make payments immediately on your PLUS loan once it has been fully disbursed (paid out). However, you may request a deferment to postpone repayment until your child graduates, leaves school, or drops below half-time enrollment.
You don’t have to make any loan payments while your loan is deferment, but it’s a good idea to make (at least) interest payments during the deferment period because interest will still accrue on your loan. If you don’t make the interest payments, the interest will be capitalized (added to your loan principal balance) at the end of the deferment period, increasing the amount of interest you accrue and the total amount you owe.
There are fewer loan repayment plan options available to parent PLUS loan borrowers than there are available to student borrowers. For example, parent borrowers are eligible for one income-based repayment plan, the Income-Contingent Repayment (ICR) Plan, which bases your payments on your income, but only if you consolidate your loans into a Direct Consolidation Loan first.
The following repayment plans are automatically available for Direct PLUS Loans made to parents:
Standard — You’ll have fixed monthly payments for up to 10 years.
Graduated — Your payments will start off lower and then gradually increase, usually every two years. You must repay the loan in 10 years.
Extended — Allows you to repay your loans over an extended period of time, which is likely to lower the amount of your monthly payment. You can choose to make fixed or graduated payments. To be eligible for this plan, you must have more than $30,000 in Direct Loan debt, and you must not have already had an outstanding balance on a Direct Loan at the time you received a Direct Loan on or after Oct. 7, 1998.
If you already have a federal student loan and you are currently repaying it under one of these plans, you may be able to lower your payment by consolidating your PLUS loan. Consolidating your loans may extend the length of your repayment period and lower your monthly payment. Your new repayment period could range from 10 to 30 years depending on the amount of your consolidation loan, your other education loans, and the repayment plan you select. But, proceed with caution because increasing the length of your repayment period may also require you to make more payments and pay more in interest.
When you consolidate your loans, you will become eligible for the ICR Plan. If you select the ICR Plan, your payments will be the lesser of the following:
20 percent of discretionary income, or
the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income.
The ICR Plan also allows you to have the remaining balance on your loans forgiven after 25 years.
HOW TO APPLY
In most cases, you'll apply by going to studentloans.gov. Check with your finanical aid office to make sure you are appplying correctly for that school.
3. Select the type of PLUS loan you’re requesting: graduate student or parent. Before making your selection, you should know the following:
The award year the PLUS loan is for.
Parents should have the student’s information, including their date of birth and Social Security number.
4. Fill out the “School & Loan Info” fields.
5. In the section that reads “Loan Amount Requested” you will have a few options.
Selecting “I want to borrow the maximum amount for which I am eligible” will require you to select the loan period to which you’d like to apply the PLUS loan. This field may be different for each school.
Selecting “I would like to specify a loan amount” will require you to type in the amount and the loan period start/end dates. If your request exceeds the amount you’re eligible for, the school will contact you.
If you select “I do not know the amount I want to borrow. I will contact the school” then you should contact the school after your application has been approved, or the school may contact you.
6. Information about the PLUS loan borrower (the borrower is the parent of the undergraduate dependent student or the graduate/professional student):
Employer information if the borrower is employed.
7. Credit Check and Adverse Credit History PLUS loans are the only type of federal student loan that require a credit check. If you are found to have adverse credit history during the application process, you still have options.
Note: If you’re a parent applicant with adverse credit history and you’re unable to get a PLUS loan, your child may be eligible for additional unsubsidized student loans. Check with the financial aid office at your child’s school for details.
After finding out that you’re eligible for the PLUS loan, you’ll be required to sign an MPN and agree to the terms of the loan. Make sure you read your MPN carefully because it’s a binding legal document that lists all the conditions of your loan.
Graduate students: If it’s your first time receiving a PLUS loan, you’ll be required to complete entrance counseling. Confirm with your school to make sure.Note: If you have previously received a PLUS loan you may not have to complete another MPN. Check with your school to confirm.
Note: If you have previously received a PLUS loan you may not have to complete another MPN. Check with your school to confirm.
HOW AND WHEN WILL I GET MY LOAN?
The school will apply funds to the student’s school account to cover tuition, fees, room and board, and other school charges. If there is a remaining balance, the school will give it to the student to help pay for other education expenses. Parents who have been approved for a PLUS loan have the option of asking the school to pay the remaining funds directly to the student.
Each school has a different schedule for disbursing PLUS loans, so check with the school to find out when you should expect the funds.
8 Common Student Loan Mistakes
Mistake #1: Letting your contact information become out-of-dateGraduating and moving away from campus? Changing your cell phone number or e-mail address? Make sure you let your loan servicer know. Their services are provided free of charge, but they can only help you if they can reach you.
Mistake #2: Paying for student loan helpYou may have seen an ad on Facebook, or gotten phone calls or letters from companies offering to help you lower your payment or apply for loan forgiveness for a fee. If someone asks you to pay for these services, you are not dealing with the U.S. Department of Education or many loan servicers. Many don’t charge application or maintenance fees. If you’re asked to pay, walk away (or hang up). Contact your loan servicer for free student loan help.
Mistake #3: Choosing the wrong repayment plan (or not choosing a repayment plan)Your repayment plan determines your monthly student loan payment and how long it will take you to pay your loans back. There are several repayment plans, but your choice really comes down to what your goal is: to pay off your loan quickly or to have a low monthly payment. The 10-year standard plan will allow you to pay off your loan quickly and save you money in interest. An income-driven plan will allow you to have low monthly payments, but you will be in repayment for longer and pay more interest. If you take no action, you’ll automatically be placed on the 10-year plan. The best way to compare your options is to use a repayment calculator (you do not have to log in to get the basics here).
Mistake #5: Not setting up automatic payments. Never miss a payment! Sign up for automatic debit through your loan servicer, and monthly payments will automatically be made from your bank account. And, you’ll often get a 0.25% interest rate deduction when you enroll!
Mistake #6: Not paying extra (when you can)Interest on your student loan accrues every day. An easy way to save money is to pay extra whenever you can. You can pay off your loan faster if tell your servicer these two things:
The extra payments should not be put toward any future payments, and to
apply extra payments to the highest interest rate loan.
This will reduce the interest you pay, and over time, reduce the total cost of your loan.
Mistake #7: Paying late or missing paymentsLate or missed payments hurt your credit score and will affect your future ability to get loans for things like a car or a home. If you miss multiple payments and go into default, your wages could be garnished and your tax refund withheld. If you’re overwhelmed or can’t afford your next payment, contact your loan servicer as soon as possible. They can recommend options to reduce or postpone your paymentand keep your loan in good standing. The worst thing you can do it to just stop paying your loan.
Mistake #8: Postponing payments (without considering other options first)There are two ways you can temporarily stop (postpone) your payments: through a deferment or forbearance. They can be helpful solutions if you’re experiencing a temporary hardship, but they aren’t good long-term solutions because they don’t actually help you pay the loan back. In most cases, interest on your loan continues to accrue (accumulate) even while you’re not making payments. Eventually, it may capitalize (interest accruing on interest). When you resume payments (which you‘ll have to do) your loan balance will be higher than before.
For example, you may want to consider an income-driven repayment plan instead. Under these plans, if you’re single and make less than $1,486 per month, your monthly “payment” could be set at $0, which is technically what it would be with a deferment or forbearance. The benefit of choosing an income-driven plan over postponing payments is two-fold:
(1) Interest subsidies*, meaning if your payment doesn’t cover the interest that’s accruing on your loans, the government will cover some or all of that interest for you, and
(2) Loan forgiveness is built into the plans, so even if you aren’t paying your loan back as quickly, there is light at the end of the tunnel.
How to Borrow Money for Your Child’s College Education
Dummies.com - Posted on Jan 9, 2013
Parents, after you’ve tapped out all other options, borrowing money to pay for college is your last resort. Your student should exhaust her borrowing options before you consider taking on any debt to pay for her college education. Putting yourself into debt to pay for your child’s college education may have disastrous effects on your financial future — after all, there is no such thing as financial aid for your retirement.
The best way to fund college costs, if borrowing is necessary, is to have your child borrow the money herself. Through federal student loan programs and financing programs available through various institutions, students have a number of attractive options available to them to finance college costs. Help your student apply for financial aid and exhaust all other resources and options prior to going into debt to pay for her college education.
Your child can participate in work-study programs; do part-time work; acquire student loans, grants, and scholarships; attend college part-time while working full-time; or join AmeriCorps, the Peace Corps, or the military, all of which offer financial benefits for education.
Tuition borrowing options
If you must borrow money for your child’s college education, consider the list of primary resources:
Federal PLUS loan:This loan is the best of all these options. The Parent Loan for Undergraduate Students (PLUS) is a popular, accessible, and reasonably priced loan where parents (with decent credit) can borrow up to the full cost of a dependent student’s education minus any other financial aid for which the student qualifies. Repayment must begin within 60 days of receipt, and you may have up to ten years to repay the loan plus interest. For additional information visit the College Board online or call toll-free at 800-891-1253.
Home equity line of credit:The interest rate on the loan will be high, and borrowing against your home equity can put your home at risk of foreclosure.
401(k) plan loan:If your 401(k) plan has a loan feature, the maximum amount you can borrow is the lesser of $50,000 or 50 percent of your vested account balance. Contact your 401(k) administrator for details. When you borrow money from your 401(k), that money is no longer invested. Even if you repay interest on this loan, you aren’t getting the full benefit of your 401(k) plan investments. Also, the money you pull out of the 401(k) plan as a loan is pre-tax dollars, but the money you repay the loan with is after-tax. Wham! If you change employers while the loan is still outstanding and don’t pay the loan in full, it’s subject to a 10% early withdrawal penalty and taxation. Double wham!
Writing an Appeal Letter to Get More Money From a College
From the National Institute of Certified College Planners
THE APPEAL PROCESS
When a college's award letter does not meet the student's financial needs, either in the total amount of aid or the type of aid, the student can appeal the award to the college. Most colleges have an appeal process that allows students to request a review of their financial aid eligibility and corresponding financial aid award offer. Each college determines its own regulations for this process, and students should be aware of a particular college's procedures.
Planning tip: If the student does appeal an award letter, the student should be specific in requesting additional funds. The student should clearly state the reasons for the appeal, and request a specific amount of money. The student should write the request and submit any required documents with the letter of appeal. Then the student should contact the college’s financial aid administrator, FAA. It is preferable that the contact is made in person, but if this is not possible, the contact should be made by a telephone call. The "personal touch" is important to a successful appeal.
In the appeal letter, the student should ask the Financial Aid Administrator, FAA, to exercise "Professional Judgment." Professional Judgment is the authority given to the college FAA to change the family's financial and household data in any way that would more accurately measure the family's ability to pay for educational costs. If the student is to successfully appeal an award letter, the student must fully understand the concept and definition of Professional Judgment. Professional Judgment may only be made in special circumstances, and only when the family provides adequate documentation of these special circumstances.
Special circumstances can be elementary and high school tuition, unusual medical or dental expenses, dislocated or an unemployed worker, or unusually high child care expenses. It could also include circumstances such as divorce, separation, or the death of a parent or spouse after the application was filed. If these situations occur, the college's FAA must be contacted to see if the financial aid award can be increased.
Professional Judgment can also be used by the FAA in other situations as follows:
Adjust the college cost of attendance to take into account special circumstances such as medical needs or excessive travel costs.
Override the student's dependency status to make a “dependent student” an “independent student”.
Adjust the income and assets of a family located in a federally declared natural disaster area.
Example: A family, residing in a county that was declared a Federal Natural Disaster Area due to flooding, appealed the income and asset amounts reported on the FAFSA to the FAA at the college their child was attending. The family documented that the value of the building, which contained the family business, had been greatly reduced due to damage sustained during the flood. The family did not have flood insurance to cover the damage. Also, the family's income generated by the business assets would be greatly reduced during the upcoming period of cleanup and repair. The FAA agreed that this was indeed a special circumstance and adjusted the student's original FAFSA amounts and increased the amount of the original financial aid award.
Any other "special circumstance" that the family and/or its financial advisor can convince the FAA to adjust the EFC data elements.
Example: A parent was able to convince the FAA that his "un-reimbursed business expenses," should reduce his income because they were actually "out-of-pocket" expenses against his income.
Example: A parent was able to convince the FAA that the bonus he received from his employer was a one-time event and that it distorted his normal income level.
Example: Parents convinced the FAA that their income and expenses did not clearly indicate their ability to contribute to their child's college education The parents showed the FAA that their income was inflated due to a required retirement withdrawal for a parent who had been recently released from his job. They also proved to the FAA that they had excessive medical bills for a handicapped sibling.
Example: A student convinced the FAA that his employment income would be much less during college years than was reported on the FAFSA.
Planning Tip: The appeal of an award letter has a much greater chance of success if the student has the type of talent, such as academic, athletic, musical, etc., that the college needs to fill its enrollment needs. In the appeal letter, the merit of the student should be emphasized to the FAA. This is especially true at private colleges that seek to attract students with merit.
Dear Mrs. XXX, FAA
Carnegie Mellon University
Per our recent telephone conversation, enclosed is our Student Aid Report, and a copy of the award letter that we received from Case Western University.
As we discussed, our family's present financial situation is not good, and it would be very difficult for Heather to attend Carnegie Mellon unless there is a major reconsideration for financial assistance. Both my wife and I recently obtained new jobs in 2015, and are trying to catch up with the debt we incurred while unemployed over the past year. This has forced us to take a serious look at the Case Western Reserve Award as an economically viable alternative to Carnegie Mellon.
You stated that we should forward the attached documents to you personally and that you would review them and do everything possible to provide additional assistance for Heather.
As you know, Heather is a very talented young lady and desperately wants to attend your school; however, as the enclosed Case Western Award shows, other schools have committed substantially more money for Heather's education. However; Heather would dearly love to attend Carnegie Mellon. If there is any way you can meet Case Western's award, Heather will commit to attending your school for the 2016-17 season.
Please contact me as soon as possible so that we can make the appropriate arrangements for Heather's future.
Some Scholarships May COST YOU money!
Some colleges have hidden scholarship policies that state that any private, outside scholarship or grant won by the student, may reduce the college’s own free money by an equal amount. In other words, the student’s efforts to win a local scholarship competition resulted in a reduction of college’s offered financial aid. You need to understand this little-known ruling that states when students are awarded financial aid that exceeds their Expected Family Contribution (EFC), or financial need; then the college must reduce their offered financial aid by the same amount to avoid “over-awarding” the student.
But remember, everything can be negotiated (appealed) if you have a good student. If you are notified that your financial aid package is being reduced, ask the school to reduce the student loans, not the grants. Replacing student loans with a private scholarship will put more money in the client’s pocket, and allow the student to graduate with less debt.
Here are some other tips:
Research the college’s policy on private, outside scholarships. Some colleges will only distribute their own grants and scholarships to students who do not end up with private, outside scholarships. This is called a “wait and see” policy.
Some schools require a “minimum student contribution”, reducing the amount of aid the student can receive. If the family cannot afford this additional cost they may want to consider attending another college with a better financial aid policy.
Contact the private, outside scholarship provider to find out what costs their scholarship can cover. Some private, outside scholarships can be applied toward the entire cost of attendance; while others are restricted to tuition and fees only.
If the scholarship has restrictions, ask the scholarship provider if they can “forward” the scholarship to a future college year when the student’s loans automatically increase by contract.
Private Scholarships - The Top 10 Do's and Don'ts
Private scholarships are more readily available than you may think, especially in your local community. Most college scholarships and grants are available through the Federal and State governments, which are ultimately controlled by the colleges themselves. However, there are a few Private scholarships that are available through outside, private sources. These private scholarships are very competitive, and scholarship judges may spend just a few precious minutes or even seconds reviewing the scholarship application.
With such a finite amount of time to make a lasting impression on these important decision makers, it's crucial that the student makes the most of this opportunity. If not, the application may be on the fast track to the circular file.
Here are the Top 10 Scholarship Do's & Don’ts that you must know to increase your chances of winning a private scholarship:
Search in your own community first. Your community is one of the biggest sources of scholarships. Find out about these kinds of awards by contacting your local chamber of commerce, community chest, Rotary, etc. and by reading your community newspaper, or searching the Yellow Pages under Foundations.
Choose quality over quantity. You'll need to prioritize which scholarships to apply for. Instead of trying to apply to as many scholarships as possible, try to apply to the scholarships that best fit your strengths, interests, and qualifications.
Understand the purpose of the scholarship. Scholarships may be designed to encourage students to enter a specific career field, to reward students who contribute to their communities or to help underserved students enter higher education. Use this information to guide how you write your scholarship application.
Follow the directions. Make sure you take the time to ensure every “i” is dotted and “t” is crossed. Include all the information and forms requested and answer every question.
Write an essay that demonstrates why you should win. The scholarship application gives the scholarship judges a sense of who you are and what's important to you. Think about what skills and qualities the scholarship judges seek and then describe how you match them.
Proofread. No matter how strong of an applicant you are, it would be difficult for a scholarship judge to overlook spelling or grammatical errors. Proofread your application and essays carefully, and have your editors do the same.
Practice for interviews. Ask a friend or parent to do a mock interview with you to prepare for the real thing.
Ask your parents for help. Mom and Dad are capable of doing more than writing the tuition check. They can help you find scholarships, keep track of deadlines and give you feedback on your applications and essays.
Brag a little about yourself. You need to let your best self-shine through in your scholarship applications – don't be bashful about discussing your accomplishments.
Don't overlook your high school guidance counselor. Helping students pay for college is not their job, but you can take advantage of the knowledge they've accumulated over the years.
Don't ignore the Internet. Use the many FREE scholarship searches available on the Internet to find more scholarships.
Don't ignore small awards. When there are scholarships worth tens of thousands of dollars, you might think you shouldn't bother with the “small potato” awards. The truth is that a $1,000 scholarship is $1,000 less that you will need to come up with for college.
Don't think that you have to be an academic or athletic superstar to win. There are scholarships based on leadership, art, music, theatre, community service and more.
Don't be a victim of a scholarship scam. Never pay for an online private scholarship search. You can find private scholarships on your own, and applying for these private scholarships should always be free.
Don't use the shotgun approach. Remember that all organizations that award scholarships have different selection criteria. This means that the same application won't work for all of them.
Don't forget to answer the question in your essay. There's a reason why the scholarship organizations provide the essay questions. They want to know your answer. An essay can be very well written, but if it doesn't answer the question asked, then it's not going to win.
Don't wait until the last minute. You may think that you do your best work on the day before the deadline at 3 a.m., but if you review your work you'll probably see that you don't. Take the pressure off, and allow yourself more time to complete an application.
Don't turn in an application that is incomplete. Scholarship organizations receive far more applicants than they can support. Don't give them a reason to take you out of the running for not having a complete application.
Don't think that it's impossible for you to win. Every student who has won a scholarship has thought this. And guess what? They won, and you can, too!
7 Questions College Financial Aid Officers
Wish Parents Would Ask
US News and World Report, Sept 2014
Is there additional financial aid available? That question opens up so many more doors. I’m like JetBlue. I’m going to overbook. I might have 6,000 applications for admission. I’ll accept 3,000 and only want to enroll 1,100. When I go in and cancel aid for students who decide not to come here, I have the ability to go back and award more money. Making that call and having that conversation is critical. If you don't make that call, I assume you’re OK with your award.
What happens if my financial circumstances change during the time my child is in school? Families aren't only making a financial commitment for the first year, but three years after that. It’s good to know how a university will assist you if something bad happens, say, there's a loss of employment or death in the family. Some schools will say, "That’s the award we've given you and there's nothing we can do about it." Some schools will give you a period of time to appeal. Hopefully they will have the door open during the four years that a student is at his/her college and will re-evaluate financial aid from that time forward.
Do my taxes need to be submitted before I complete the Free Application for Federal Student Aid? I don't care what your neighbor told you, you can file the FAFSA without having your taxes completed. A lot of parents don’t understand that and they miss school deadlines and miss out on potential financial aid. You can use last year’s taxes or your W-2. Actually, the FAFSA has an answer that says, "Will File," letting everyone know that you’re doing this to meet a deadline.
How many years is my child's program of study and what will it take to graduate in four years versus five, six or seven? Obviously the fewer years it takes, the less borrowing, fewer tuition increases and fewer potential years of lost wages from not graduating and getting a job. Students often take all the loan funds offered to them, not realizing if they take longer to graduate they may run out of loan borrowing potential not only annually but on an aggregate level. They need to have a plan from the outset.
What happens to my child's financial aid after the first year? Go through your financial aid award line by line and ask, "What could stay the same? What could increase? What could decrease?" Someone might have a one-time-only award. If a school is giving you a scholarship or grant, ask, "What do I have to do to keep it? Maintain a certain GPA? Stay in a major?"
What percentage of graduates leave without debt? Often the media, when reporting average student debt, forget to report the percent of students graduating without debt. Generally a higher percent of graduating seniors without student debt means a more affordable institution. I’m not saying it’s the highest priority but it's certainly one of those points of information you should be aware of when considering your options.
What is the whole cost of your university? Many times cost is only communicated in terms of tuition and housing. The full cost of attendance is actually what it costs for a student to eat, live, sleep, breathe and attend the college or university for one academic year at a time. Simply put, families need to seek information and discuss what their student will actually spend, not just on tuition and housing, but on items including food, miscellaneous and personal expenses, all transportation expenses, campus and course fees, all books, supplies and equipment for all courses in order to be much more financially prepared for the college and university experience.
WORK STUDY VS GETTING YOUR OWN JOB
Many colleges offer Work Study options as part of their financial aid package. Some students mis-understand what this option means and think it means that they automatically will get a job when they arrive on campus. This is generally not the case. The idea of Work Study is that there are certain jobs that are ONLY available to students who qualify for Work Study, but students STILL need to apply to get one of these jobs. And there are often lots more students who qualify for Work Study than there are these special jobs. If you want to work while in college - then it's good to have these extra jobs available to you, but YOU still need to get out there and find the right job! And the sooner you do that, the better! Go to http://studentaid.ed.gov/types/work-study#what-kinds-of-jobs for more details on this program.
What if you are not a US Citizen and/or you don't have a green card?
Obviously if you or your family can PAY the college costs, or can get private loans or private scholarships - then anyone can attend a college in the USA. But if you expect to need some government assistance, it's harder. There are still some ways to receive assistance, even if you are not a citizen or you do not have a green card. Check this link for details on these options: http://studentaid.ed.gov/eligibility/non-us-citizens.
Determining Residency - are you in-state or out-of-state?
For state schools - the tution cost is often significantly different for in-state vs out-of-state students. To determine if you can be considered an in-state student - you must know the requirements of your state. It can also vary from school to school.
These residency requirements are often encoded in state statute, and vary significantly from state to state. But generally, a dependent student must have at least one parent who is a state resident for at least one full year before the student matriculated in college. (Arkansas requires just six months. Alaska requires 24 months. Tennessee does not have a durational component to their residency requirements.) The parent should be the student's source of financial support, but does not necessarily need to have claimed the student as a dependent on their income tax returns. (If the student receives substantial financial support from out of state, the student's state residency status may be questioned. This can include PLUS loans borrowed by a parent who does not reside in the state. Also, if the student's parents are divorced, residency is often based on the residency status of the custodial parent.)
CHOOSE THE RIGHT MAJOR! Between 2001 and 2010 the cost of a college education went from 23% of median annual earnings to 38%! During that same time debt per student has doubled. 2/3 of college students now take out loans. Those who earned bachelor's degress in 2011 graduated with an average of $26,000 in debt. Think about what major you are choosing when you calculate the amount of debt you might be required to pay. There are many jobs that won't make enough money in a year to allow you the funds to start to repay such a debt. It's a good idea to look at a debt calculator in thinking about your future expenses. One such calculator is can be found at Crown. Check our budgeting assistance page for other options for thinking about how to repay the debt. Contact us at firstname.lastname@example.org for assistance thinking this through.
CHOOSE THE RIGHT MAJOR: Here is a link to a great article about choosing the right major - from July 2013.
GRADUATE IN 4 YEARS! Try not to take 5 years to graduate from college! LOTS of schools now encourage the students to take an extra year to finish school, but of course that means a full extra year of tuition, room, and board! You miss a class here, you retake a class there, and before you know it - you have to take 5 or more extra classes, and need to attend an extra semester or more. You might need extra time in college for a number of reasons. If any of these happen - one much cheaper way to make up the credits is to go to a local community college during the summer. (Confirm first that the classes you want to take will transfer back to your main school.) Reasons you might need to take extra classes:
You changed your major and took classes that don't fit with your new major. (Or you didn't choose your major soon enough so you are behind in required courses.)
You had a personal issue and couldn't take a full load during a semester. (Colleges assume you'll take at least 15 credits/semester - this amount is needed to graduate. You MUST take 12 credits to be considered a full-time student. Sometimes students will drop a class and go from 15 to 12 credits. Of course at some point you have to make up that class!
You didn't do well in a class and have to retake it. Or you dropped a class that you were failing so it wouldn't pull down your GPA - but at some point you still have to take that class or those extra credits.
GET GOOD GRADES! Many colleges offer academic scholarships to students based on their grades. This can be true for students going into college as freshman (grades are based on high school results) as well as throughout your time in college. Doing well in school can save you thousands of dollars as you head to college!
CHOOSE THE RIGHT MEAL PLAN! All colleges offer a variety of options for meals for students who live on campus (and even for students who don't live on campus!). Generally the biggest meal plan available is a 19-meal plan. This means 3 meals a day M-F, and 2 meals/day on weekends. Often the next optiom is a 14-meal plan - where you get just 2 meals/day. The difference in cost for these 2 meal plans is often only $100-$200/semester. While you might decide to choose the lesser meal plan to save money, be sure to first think about your eating habits. It might actually cost you MORE to chose the smaller plan! Remember, you can always change your meal plan each semester!
If you ate 3 meals a day at home - chances are you'll do that in college as well.
If you pay for the 2-meal option, and then you go out to eat for that 3rd meal - it will likely cost you lots more money! Assume $6/meal x 100 days (a little over 3 months) - that's $600 IN ADDITION to your meal plan!!!!!!
If the dining hall is far from your dorm and/or classes, then it's likely you will not eat all your meals there, so that's a good reason to pay for less meals. Conversely, if the dining hall is close by, and the town and the various Subways and McDonalds, and other places are pretty far - then it's much more likely that you'll want to eat at the dining hall. Find these things out before you decide on your meal-plan!
HAVING TROUBLE PAYING BACK YOUR STUDENT LOANS UPON GRADUATION
If you’re having difficulty repaying your federal student loans, then you might want to consider a deferment or forbearance. These two temporary solutions allow you to stop making or, in some instances, to lower your monthly federal student loan payment. While both can be helpful solutions if you’re experiencing temporary hardship, they aren’t great long-term solutions because they can be costly, and if you aren’t careful, your loan balance could be higher when your deferment or forbearance period ends.
Before you apply, here’s some information that can help you decide if deferment or forbearance is the best option for you.
1. Should I choose a deferment or forbearance?
The two main differences between deferment and forbearance are
the situations under which you may qualify, and
whether or not you’ll be charged interest when you’re not making payments.
Most borrowers first apply for a deferment because it’s usually the best option and then if they aren’t eligible for it, their loan servicer (the organization that manages your student loan) may grant a forbearance.
See questions 2 and 3 for additional details.
2. Can I postpone my payments with deferment or forbearance?
3. How could a deferment or forbearance cause my loan balance to increase?
Whether your loan balance increases depends on the type of federal student loans you have, whether you are requesting a deferment or a forbearance, and whether you make any required interest payments during this time. Let me explain.
With deferment, the federal government pays the interest that is charged during a deferment period for certain types of federal student loans. For those loans that the federal government does not pay the interest charges, such as unsubsidized loans and PLUS loans, interest continues to accrue (accumulate) during deferment. Any unpaid interest that accrues during your deferment period is added to your loan balance. This is called capitalization.
With forbearance, the federal government does not pay interest charges for any type of federal student loan—ever. So, while you can stop making payments or reduce your monthly payment amount for up to 12 months, interest continues to be charged on all of your federal student loans during a forbearance period. Again, any unpaid interest that accrues during this time will be added to your loan balance.
4. Should I postpone my payments with a deferment or forbearance?
Just because you qualify to postpone your payments with a deferment or forbearance, doesn’t mean you should. Why? Because any unpaid interest (discussed in the previous question) that accrues during deferment or forbearance periods may be capitalized. So when you start making your payments again—which you eventually must do—your loan balance may be higher than it was before you got a deferment or forbearance, which may cause your monthly payment amount to increase. For this reason, a deferment or forbearance may not be the best option for you. There are often better options availableto help you make your monthly payment.
5. What are my other options?
Other options include changing your payment due date, switching repayment plans, or consolidating your loans. For example, just changing your repayment plan to an income-driven repayment plan could reduce your monthly payment to $0. Consolidating your loans could also lower your monthly payments by giving you up to 30 years to repay your loans. If you haven’t considered these options, you’ll want to review the options before you apply for a deferment or forbearance.
Ultimately, the decision to postpone or reduce your monthly student loan payment is yours, but for many borrowers it is absolutely necessary to keep a loan from going into default. Just proceed with caution and take some time to find out the best option for you and your financial situation. You can always contact your loan servicer to discuss the options. Your servicer will help you—free of charge!
National Student Services, Inc - offers insurance for student supplies/equipment such as phones and computers. If a family does not have renter's insurance and therefore no homeowner's policy that covers these important items - then this may be an option.
Money Geek - paying for college - this website offers various links and information that can help understand how to pay for college.
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