Financial Aid Facts


Your First Step - Completing the FAFSA
Tips for Completing the FAFSA
Important Dates to Remember
Receiving Your Financial Aid Reward Package
Negotiating Your Reward Package
The Different Types of Financial Aid
Education Loans

What You Need to Know about Paying for College

All the late night study sessions, weekend SAT prep classes and summer sports practices have paid off - you've been accepted to college! Congratulations!

Now that you're an expert in the application process, it's time to take those skills and use them to obtain the money you'll need to pay for the next four years. Below, we outline the steps you'll need to take in order to apply for financial aid.

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Your First Step: Completing the FAFSA

Five Letters That Could Mean Free Money

Almost as important as getting into college is figuring out how you're going to pay for it. Due to the rising costs of college attendance, parents and students are now looking to the federal government for a little help. The first and most important step in getting financial aid is to fill out the FAFSA. What exactly is the FAFSA? Well, the Free Application for Federal Student Aid (FAFSA) comprises the necessary forms you need to complete in order to see if you're eligible for any kind of federal financial aid. All schools rely on your completed FAFSA to calculate your financial aid package.

Filling out the FAFSA doesn't have to be confusing or frustrating. Below, is everything you need to know about the FAFSA. Read on!

Do I have to fill out the FAFSA?

Only if you want a chance at free money for college! The information provided on the FAFSA will help to determine your EFC, or Expected Family Contribution, for college. Basically, the EFC is the amount of money the government and school expect your family to contribute to your college education costs. Your school will use your EFC to calculate your need for financial aid and how much you are eligible to receive via a simple formula:

Cost of Attendance - Expected Family Contribution = Financial Need

(What? You thought it would be E=MC2?!)

How do I get my hands on the FAFSA?

You can pick up copies of the FAFSA from the public library, your college financial aid office or from your high school guidance counselor. To make life a little simpler, you also can apply online at www.fafsa.ed.gov. Filling out the FAFSA online minimizes application mistakes (the online application won't accept errors in completing the form). The online application also saves time by automatically skipping questions that aren't relevant to your situation. And finally, by taking advantage of the online FAFSA, you can receive your results in just two weeks, about half the time it takes to receive your response if you submit your FAFSA via mail.

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Tips for Completing the FAFSA

Between the SAT's, ACT's, college applications and scholarship entries, you've done your fair share of filling out long and tedious applications over the past couple of months. Don't worry -- you're almost done! Below are some tips from some experts that will make the FAFSA process easier.


Make sure you have all the necessary forms and materials ready when you sit down to fill out your FAFSA application. You will need to refer to them throughout the application process. Once you've gathered all the necessary documents, the rest should be easy. Here's what you'll need:

· The student's social security and driver's license numbers

· The student's and parent's current bank statements and parent's mortgage information

· Federal income tax returns for both the student and parent

· Records of the student's and/or parent's untaxed income, such as social security, veterans' benefits or welfare

· The student's W-2 forms and other records of money earned

Tip #2:

Read the questions carefully. Pay close attention to ensure that you are giving the correct data. When a question asks for "you" or "your" information, they are referring to the student. If they want your parent's information, the question will specify "parent."

Tip #3:

Read and answer every question. Do not leave any fields blank. If the question does not apply to your situation, answer "zero" or "not applicable." Blank spaces can be misleading and may adversely affect your award package.

Remember, the results of this application will determine how much financial aid you will receive for college. Take the time to review and understand the FAFSA. If you don't complete the FAFSA correctly, you could be missing out on valuable financial aid.

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Important Dates to Remember

Mark Your Calendar

There's no point in doing all the work and not getting your application in on time. Make sure you're aware of all the important deadlines to give you the best shot at receiving financial aid. Most applicants make the mistake of applying for aid after they have received their college acceptance letters. The good thing about the FAFSA is that you don't have to fill out a different one for each school. You can apply one FAFSA to any and all schools you wish to attend.

That said, you should be applying for financial aid around the same time you are applying for admission. Don't wait until you receive your acceptance letters. Your goal should be to submit the FAFSA as soon after January 1st as possible. But be careful, applications received before this date will not be processed and you will have to resubmit.

The FAFSA does specify an official deadline of June 30. However, to meet most state deadlines, you will need to get your forms in before March 1. Financial aid is awarded on a first come, first served basis. Funds are limited so to ensure you receive the best possible financial aid package, don't procrastinate! You will have better chances of receiving aid the closer to January 1st you apply.

Relax…the hard part's over!

Not only are you waiting to hear back from the college of your choice, but you also have to wait to see how you're going to afford it. Once you've submitted your FAFSA, results are typically returned within four to six weeks (unless you complete the form online, in which case you should receive results within two weeks). They come to you in the form of a Student Aid Report, or SAR.

The SAR will give you a summary of the information on your FAFSA, the amount you are expected to pay for educational costs, as well as the opportunity to correct any incorrect information. Make sure to review all the information on your SAR report. A failure to catch mistakes can cost you valuable money.

Your FAFSA results automatically will be sent to all schools listed on your application. Unless there are specific changes that need to be made, you won't need to forward an additional copy of your SAR to your school. Now, it's time to wait for that infamous financial aid award letter.

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Receiving Your Financial Aid Reward Package

Congratulations! You've won... a financial aid awards package

Great job on getting the FAFSA completed and submitted on time! As a reward, you will be sent your financial aid award package. This packet comes to you courtesy of your school and good old Uncle Sam (who may be your new best friend, depending on how much free money he wants to give you for college!). Your financial aid award package will outline what types of education funding you are eligible for, including grants and loans. Working with your school's financial aid office, you can determine your eligibility for both loan and non-loan programs.

It's not over yet. Time to make them an offer they can't refuse.

By now you're ecstatic to see the acceptance letters pouring in but not so excited with the financial aid award packages you're being offered. Don't panic! Just because a school doesn't offer you the money you were hoping for, doesn't mean that your chances of attending your dream school are out the window. The college accepted you because they believe you have something to offer and they won't want to lose you over money.

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Negotiating Your Financial Aid Package

Now's your chance to negotiate your financial aid package. This means you have the opportunity to introduce some factors that may not have been apparent in your original request for aid such as: unexpected financial situations, special talents or academic statistics.

Tips for Negotiating Your Financial Aid Package

· Your financial aid package is based on standard formulas and numbers. It doesn't take into account any personal circumstances that may change the amount of your Expected Family Contribution or EFC. It is your job to make your case for the financial aid officials. The best way to do this is in person.

· Make an appointment to speak to a financial aid administrator at the college's financial aid office. It's always best to negotiate in person. However, we know that in most cases, an in-person meeting may not be possible. As an alternative, try writing a letter to the financial aid office explaining why you feel you deserve more aid. Always follow-up with a phone call to make sure that your request was received and reviewed as well as to discuss your situation.

· When negotiating for more money, you need to be prepared to back up all your claims with paperwork, references, bank statements, etc. The more proof you can show, the better off you are. Colleges also may be willing to match financial aid packages from other schools. Let the financial aid counselors know that you have your heart set on going to their school but due to the lack of available aid, you will have to settle for your second choice. Ask if they can possibly match an award or at least raise your existing financial aid package.

· If you are planning to appeal your financial aid offer, do so immediately after you receive your award package. Remember that funds are distributed on a rolling basis and the longer you decide to wait the less money will be available.

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The Different Types of Financial Aid

Grants and Scholarships and Loans…Oh My!

There are basically three types of financial aid for college: Grants/scholarships; work-study loan programs and student loans. For most students, the lion's share of financial aid comes from student loans, but you should always investigate your "free money" options (grants/scholarships) and lowest cost options first.

Grants: C'mon and Take a Free Ride!

Grants are funds given to students who demonstrate the greatest need for assistance in funding their college education. These funds do not have to be repaid. Unfortunately, there are not enough grants to go around, so the reality is that most students will need to supplement any grants they receive with student loans. Now that you've had the reality-check, time to check out the two types of grants…

Need-based grants

These are awarded solely on the basis of a student's demonstrated need for assistance in funding his/her college education. The largest need-based grant is the Pell Grant, which is sponsored by the Federal Government. Pell Grants award gift money to eligible undergraduates each year in amounts ranging from $400 - $4000. In addition, students with exceptional need may qualify for the Federal Supplemental Educational Opportunity Grant Program (FSEOG). Individual campuses award these grants to those students who show the greatest need.

How to apply for a need-based grant

Apply for the Pell Grant and Federal Supplemental Education Opportunity Grant Program by completing and submitting your FAFSA form at www.fafsa.ed.gov. You also can ask your school's financial aid office for additional information.

Merit-based grants, a.k.a. scholarships

These monetary awards are given by associations, service clubs, companies, governments (state and federal), foundations and nonprofit organizations. Students win scholarships based on their abilities and achievements and often are asked to enter a scholarship contest by submitting an essay or other biographical background materials, including information on academic and extracurricular accomplishments/activities.

How to find the scholarship that's right for you

A good place to start is at the free scholarship search engine accessed through the Scholarship sidebar button above. Simply input some background information about yourself, your areas of interest, academic and extracurricular accomplishments and you will be matched with a list of potential scholarships that you may want to consider applying for. You also can check with your high school, the local school district, county department of education or local library to see if they offer a grants listing service, grants assistance office or other grants research materials.

Will Work for Tuition: Work/Study Programs

Work-study programs are another form of need-based federal aid for students. Those students who demonstrate financial need may be assigned a part-time job on campus in order to earn money for school. Work-study students earn at least minimum wage and receive the pay directly from the federal government. Ask your school's financial aid office for more information. An additional bonus: If you qualify for a work-study program, you may request a job assignment that relates to your major.

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Education Loans

So, you've received your financial aid award package and, well, it's not as rewarding as you'd hoped. You're not alone. Over the past decade, while the cost of attending a four-year college has skyrocketed, the average family income has not. Increasingly, parents and students are bridging this affordability gap with financial aid and student loans in particular. In 2001-2002, more than 5.7 million undergraduate students received almost $90 billion in financial aid, with student loans representing 54 percent of this aid ($48.6 million). Your financial aid awards package tells you which education loan programs you are eligible for. Here's how to make sense of the loan landscape…

Federal student loans are low-interest loans with deferred payment options and are not awarded based on credit history, but rather on need. Each college selects a federal loan program - either the Federal Family Education Loan Program (FFELP) or the Federal Direct Loan Program (FDLP). With FFELP, private lenders provide the loan funds. With FDLP, the government provides the loan funds.

Obviously, you want to obtain the loans with the lowest interest rates and the most options for deferring (delaying) payment until after graduation. The pick of the crop of these types of loans are subsidized and unsubsidized Stafford loans and Perkins loans.

Subsidized Stafford Loans

These loans are available through both FFELP and FDLP and to be eligible you must demonstrate financial need (via the FAFSA form) and be enrolled at least half time in an eligible program of undergraduate or graduate study. The best part of subsidized Stafford loans - in addition to the low interest rate - is that Uncle Sam pays your interest until you graduate.

Unsubsidized Stafford Loans

These low-interest Federal loans are not need-based and the student is responsible for paying interest on the loan from the date of origination. As with the subsidized Stafford, you must be enrolled at least half time in an eligible program of undergraduate or graduate study to qualify.

Stafford Loans by the numbers

If you are an eligible dependent student or a student whose parents are unable to secure a PLUS loan, you can borrow up to:

$2,625 freshman year
$3,500 sophomore year (after one year of completed study)
$5,500 junior, senior, fifth year
$8,500 graduate/professional students

If you are an eligible independent student, you can borrow up to:

$6,625 freshman year (if you combine subsidized and unsubsidized loans, no more than $2,625 may be in subsidized loans)

$7,500 sophomore year (if you combine subsidized and unsubsidized loans, no more than $3,500 may be in subsidized loans)

$10,500 junior, senior, fifth year (if you combine subsidized and unsubsidized loans, no more than $5,500 may be in subsidized loans)

$18,500 graduate/professional students (if you combine subsidized and unsubsidized loans, no more than $8,500 may be in subsidized loans)

The total outstanding debt allowable under the Stafford loan program:

$23,000 dependent undergraduate student

$46,000 independent undergraduate student (only $23,000 may be in subsidized loans)

$138,500 graduate/professional student (only $65,500 may be in subsidized loans)

With both types of Stafford loans, loan payments may be deferred until after graduation.

Perkins Loans

These campus-based loans are given to students who demonstrate significant financial need. Perkins loans feature low interest rates and are dual-funded by your school and the federal government. If you qualify, you may borrow up to $4,000 annually for undergraduate study - up to a loan maximum of $20,000 over the course of your college career. Perkins loan payments may be deferred until after graduation.

For more information on Perkins loans, visit the U.S. Department of Education Website Perkins page at http://www.ed.gov/prog_info/SFA/StudentGuide/2001-2/perkins.html

PLUS Loans

Each year, more than half a million students and their parents rely on Federal Parent Loans for Undergraduate Students (PLUS loans) to pay for school. These loans are available through the FFELP and FDLP. PLUS loans allow parents to borrow up to 100 percent of the costs (including tuition, room/board and other expenses) to fund their student's college education. To qualify for a PLUS loan, parents must meet some of the general requirements for federal student aid and pass a credit check or secure a creditworthy co-signer. These loans are offered at low interest rates that are adjusted annually, with a rate cap at nine percent. In addition, parents may apply for a PLUS loan retroactively to cover educational costs they've already incurred for the current school year.

Good luck!

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