A Comprehensive Guide to Financial Aid
By Thomas Broderick
College sure is expensive. How expensive is it, you ask? Well, the four-year tuition at America’s priciest schools exceeds the nation’s median home price. Yep, some college degrees cost more than houses. Fear not; most colleges are nowhere as expensive, especially public schools where you qualify for in-state tuition. Even so, rising prices mean that in 2019, even ‘cheap’ schools put a financial strain on students and their families.
That’s why you need to spend a LONG TIME researching which school can give you the best bang for your tuition buck. But that’s another article.
Today, I want to talk with you about financial aid and paying for school. Your financial aid journey begins the moment you start researching colleges. Use the following steps to ensure that you can attend the best school at the lowest out-of-pocket price.
Talk to Your Family
Your first step involves determining what, if anything, your family will contribute to your college education. Money can be an awkward topic, but you need to have an honest conversation. The earlier you do this, the sooner you know how much money you need to raise through grants, scholarships, and/or loans.
Fill Out the FAFSA
No matter the amount of money your family has set aside for college, your first stop for financial aid begins with the Free Application for Federal Student Aid (FAFSA). The FAFSA, a financial questionnaire, determines your eligibility for federal grants, loans, and work-study programs. You can learn more about each of these financial aid opportunities in later sections.
Take a minute to review some essential FAFSA information:
- Application Deadlines: You can submit the FAFSA for the 2020-2021 academic year between October 1st, 2019 and June 30th, 2020. Of, course, the sooner you file the FAFSA, the sooner you receive your results.
- Requirements: To apply, you must be a U.S. citizen or permanent resident.
- File as Independent?: Certain applicants under the age of 24 can file as an independent, meaning that the FAFSA does not consider their parents’ finances when making its determination.
- Materials: When you apply, you need you and/or your families tax returns for the previous year. You may need other records if your family has other investments such as stocks, a business, etc.
- Determination: The FAFSA doesn’t say whether you do or do not qualify for financial aid. It merely reports how much you or your family can contribute to your education in the coming year. FAFSA calls this amount your Expected Family Contribution (EFC).
- What this means is that at some cheaper schools you may not qualify for aid, but at more expensive schools, you do.
- Reapply: To qualify for aid under the FAFSA, you must reapply each year using a special FSA ID you receive when you first register. (Don’t lose this ID!)
Now that you know some FAFSA basics, let’s explore different types of financial aid. Each section begins with the kind of aid directly related to the FAFSA.
Research Scholarships & Grants
If your EFC qualifies you for aid at your college, you may receive a Pell Grant, approximately $6,000. A Pell Grant can go towards any education expenses if there is money left over after you pay tuition, fees, and housing. You can receive a Pell Grant for up to six years if you remain FAFSA eligible.
State Scholarships & Grants
Does your state have a lottery? If so, it might use some of that money to sponsor a lottery scholarship or grant program that pays a portion of your college tuition as long as you attend college within the state. To qualify, you may need to earn a specific GPA or standardized test score. Also, after you start college, maintain good grades to ensure that your scholarship renews.
Even if your state does not have such a program, other financial incentives at the state level may qualify you for special aid. Check with your school’s guidance counselor to learn about opportunities.
College-Specific Scholarships & Grants
As you research colleges, pay close attention to the financial aid they provide eligible students. Schools with large endowments often award generous financial aid packages to students with financial need or those with excellent academic records.
Private Scholarships & Grants
Finally, we arrive at what may be your most significant scholarship and grant opportunity. Navigating scholarships may seem like a daunting task, but like your college search, the effort will have positive results.
If you need some help getting started, focus on subject-specific scholarships and grants, especially if you plan to major in a STEM-related field. Subject-specific scholarships limit the application pool, increasing your chances. They also give you the opportunity to highlight your passions and academic achievements.
When it comes to scholarships and grants, you may come across many scholarship/grant hybrids. These awards have both academic and financial requirements. Some scholarships in this category take applications only from members of a specific minority group.
Consider Work-Study Programs
The FAFSA’s work-study program connects eligible students with part-time employment either on or off campus. This program caps the number of hours students work and imposes different rules for undergraduate and graduate students.
Many schools offer similar work-study programs to help students pay for college. In these cases, students work part-time for their schools. Some schools reserve work-study programs for students with financial need, while others allow all interested students to participate. In some cases, reimbursement may come in the form of tuition reduction or a meal plan. In these cases, students do not receive a traditional paycheck.
Be Wary of (Most) Loans
Federally Backed Loans
First off, there are two types of loans you may qualify for under the FAFSA:
- Subsidized Loans: These loans do not incur interest during your time in school.
- Unsubsidized Loans: These loans do incur interest during your time in school.
Subsidized loans are your best bet, as interest can add thousands of dollars to your loan and lengthen the time you need to pay it back. However, all federal loans typically offer better interest rates than private loans. The FAFSA also caps the amount of subsidized and unsubsidized loans you can take out each year.
Finally, we arrive at private loans. There are hundreds of lending institutions out there willing to loan you tens of thousands of dollars. “Just sign here,” they say, no doubt like the Devil bargaining for your immortal soul.
Okay, not all private lenders are the Devil, but private loans are – without a doubt – the riskiest form of financial aid that a college student can use. First off, student loans, even the FAFSA ones, never go away, even if students declare bankruptcy later in life. Also, private lenders typically loan much larger sums than federally-backed loans, meaning that young students can rack up massive amounts of debt in a short amount of time.
My advice: be wary of private loans and use them as a last resort.
Learn More About Military Service
Are you thinking about joining the military after high school? If you serve, you qualify for Post-9/11 GI Bill benefits. In a nutshell, military personnel and veterans with at least 30 days of active duty service receive some tuition benefits. These benefits max out after three years of service. Other benefits include housing allowances and tuition discounts for spouses and children. The law is complex, and many stipulations apply.
Joining the military is not a light decision. Weigh your options carefully and discuss them with adults you trust.
You are incredibly fortunate: you have thousands of financial aid opportunities at your fingertips! By starting work now, you can attend your dream college without incurring debt, setting you up for financial, professional, and personal success later in life.