November 6, 2007
Loans don’t incite pleasant feelings in students, in anyone on the borrowing side. It doesn’t help that the media has made it a point to discuss, extensively, what appears to be the newest trend… mortgage loan defaulting. Student loans aren't as large as mortgages, but for a growing number, they are catching up.
Regardless of cost, there are a lot of dedicated students out there, and until the college-financing system undergoes a major overhaul (cross your fingers but don't hold your breath), loans may be inevitable. Before taking out loans, students should complete a FAFSA and conduct a free scholarship search. Those who still need money should apply for federal loans. Only after exhausting government loans should one consider private student loans
As a result of the recently passed College Cost Reduction and Access Act, there will be a decrease in interest rates on federal college student loans. That's great news for students with large financial aid needs, but loan rates have not yet been changed. Even before government rates become less expensive, it is in a student's best interest to see what the government has to offer before looking elsewhere. Below are the federal student loan options available to those in need.
Stafford Loans- Students who are interested in taking out a Stafford Loan (or other types of federal student loans) will need to fill out a FAFSA. The amount that a student can borrow will depend on a student’s year in school as well as on whether the Stafford Loan is subsidized or unsubsidized (only a portion of the amount may be subsidized). Stafford Loans disbursed after July 1, 2006 are fixed at a 6.8 % interest rate, but lower rates are in the works.
PLUS Loans- The Parent Loan for Undergraduate Students or PLUS Loan is offered to, as the name suggests, parents of undergraduate students. Recently, the loan has also been made available to graduate school students. PLUS Loan amounts may not exceed the total cost of attendance minus any other financial aid received. If the student’s estimated cost of attendance (amount determined by each school) is $6,000 and the student receives $4,000 in aid, only $2,000 may be borrowed. To take advantage of this loan, students must max out their Stafford Loans, and doing so is in a student’s best interest anyway. PLUS Loans have higher interest rates than Stafford Loans; those disbursed on or after July 1, 2006 are fixed at 7.9% for Direct PLUS Loans and at 8.5% for FFEL PLUS Loans.
Perkins Loans- Although Perkins Loans are made with government money, they are normally classified as campus-based aid because they are administered by schools. Perkins Loans are offered to students with exceptional need, and only a limited amount is available. Once a school runs low on Perkins Loan funds, students will not receive as much (the same holds true for federal-work study opportunities). This is why students are generally advised to submit their FAFSA early. The earlier they apply, the greater their chance of receiving some forms of aid. The loan amount received through the Perkins Loan program depends on the amount a school has, on already-received aid and on the financial needs of the student. Students who qualify can borrow up to $4,000 each year and pay it off at a 5% student loan rate.
May 21, 2009
Each year at about this time, I see students, desperate for financial aid of any kind, begin to despair juuuust a bit. “This scholarship is due in two days… I can’t put together a application/winning essay that quickly!” or something along those lines. Others complain that the deadlines have passed for many of the scholarships for which they might have applied. There is only really one solution for this and that is for you to begin searching for scholarships earlier in the year."
November 13, 2007
The key to applying for financial aid is to fill out the Free Application for Federal Student Aid (FAFSA). This form is used to determine your eligibility for all federal student financial aid programs, and is a powerful tool for anyone who wants to find money for college.
Information from the FAFSA is also used to determine eligibility for many need-based scholarship programs and for some state grant programs. When you ask a representative of your college’s financial aid office how to apply for financial aid, he or she will tell you that you must complete the FAFSA.
Until you submit a FAFSA, there is no way for you to get an accurate estimate of the types of federal financial aid that you might be able to receive. FAFSA data are used to determine eligibility for Federal Pell Grants, various Federal student loan programs, and college work-study positions. If you are planning to enter college in the fall following graduation from high school, you need to submit your FAFSA as early as possible in your graduation year.
As soon as you have W-2s and/or tax forms for you and your parents for the previous year, you need to fill out the FAFSA financial aid forms. The financial aid office at the school you plan to attend may be able to answer questions you have about how to apply for financial aid with the FAFSA. The Federal Student Aid Information Center can also assist you if you have any questions about how to fill out your financial aid forms.
You may reach a representative by calling 800-4-FED-AID. The sooner you take care of this important aspect of applying for financial aid, the earlier you will understand your financial aid options. Once you submit your FAFSA, it will be processed and you will find out what types of Federal Financial Aid you can receive.
August 28, 2007
In the world of financial aid there are many different forms of assistance available
to students and each serves a slightly different purpose than the other. Many students
assume that words like scholarship, grant, fellowship, internship, and student loan
are interchangeable. They are not, however, and the consequences of misunderstanding
which form of financial aid you are looking for or receiving can be far reaching.
For each variety of assistance there are different tax stipulations, service requirements,
and repayment expectations attached. Any student on the hunt for financial aid should
know what he’s looking for, what he’s found, what the award requires and how it
will help him achieve his college goals.
are financial awards given to eligible students with no strings attached. Typically,
if you win a standard scholarship, unless it is renewable, your interaction with
the donor ends the day you receive your check. According to the IRS, if you are
not pursuing a degree, the entire scholarship is taxable. For those students using
the scholarship for college, any portion used for tuition, fees, books, and supplies
is not taxable. Any funds remaining after your expenses are paid for, however, are
subject to tax. There is not typically a service requirement or other stipulation
attached to the scholarship upon receipt of the award, however, you should check
to be certain. Scholarships are offered in many varieties—sweepstakes, essays, competitions—for
traditional and non-traditional students alike. Occasionally scholarships require
that you do a specified amount of community service after receiving the award.
Like scholarships grants are a cash award that does not need to be repaid. There are federal
grants, state grants, and grants issued by private businesses and organizations.
Many undergraduate students greatly depend on government grants to get them through
college. Why shouldn’t they? As long as students qualify financially, all they need
to do is fill out a FAFSA. Aside from the
government sponsored grant program, most grants are awarded to graduate students
who need help funding research or who intent to enter a specific field. Grant amounts
range greatly. They may be $100, $100,000, etc. Graduate school grants are not typically
used toward tuition, but rather, they are usually used for any expenses necessary
to complete your research.
Fellowships are typically awarded to pursuers of graduate or doctoral degrees. Although
providers don’t seek repayment, they will frequently ask that students perform research
work as a part of the deal. The work may be tedious, but it is usually worth the
effort; it is not uncommon for stipends, in addition to tuition coverage, to be
a part of the fellowship package. Fellowships tend to be lucrative, and they can
get pretty competitive. Students who demonstrate exceptional merit are usually the
Most students know the difference between a scholarship and an internship, however,
for those that need clarification an internship is an opportunity to work within
a business or organization that you would otherwise need a degree to hold a position
in. While some internships offer monthly stipends for students participating in
their programs, others are unpaid. There are many professions that require students
to have participated in an internship program before they can be hired as an employee.
It’s a good idea to find out how most professionals in your field of interest secured
a position in their field because you will likely discover that without the help
of an internship most would not be where they are today. When you are considering
an internship there are several things to think about before you accept a position.
Ask yourself: How will it help me? What is the time commitment? Is there a stipend?
And of course, is there a possibility for employment after the internship?
Believe it or not, student loans qualify as financial assistance; however, loans are a form of low-interest debt that must eventually be repaid. There is a limit to how much financial assistance
a student can receive from student loans which is usually determined by how great
the financial need of the student is. For the students who do not qualify for a
need-based grant but do not have enough cash to pay for tuition, student loans are
a good option. An added benefit is that most loans do not begin accumulating interest
until 6 to 12 months after you graduate and monthly payments are also delayed until
May 29, 2008
The Federal Supplemental Educational Opportunity Grant (FSEOG) is a form of federal student aid that does not need to be repaid. It is awarded to students by colleges and universities, and a mixture of federal and school funds is used to pay for the program. As FSEOG awards are based on financial need, students interested in obtaining this form of financial aid will have to complete a FAFSA and have their Expected Family Contribution (EFC) calculated. A standard federal formula will be used to determine a student’s financial need, but schools will have a large degree of leverage over how much each student will receive.
To obtain the FSEOG, a student must attend one of the approximately 4,000 colleges and universities that participate in the federal program. Schools that take part in the FSEOG program receive grant money from the government but must still contribute 25 percent of the funds.
Individual colleges and universities determine how much grant money each student will receives based on fund availability, the time a student submits their FAFSA (earlier is better) and the student’s level of need. The yearly awards may vary from $100 to $4,000 per year, and those who were eligible for Pell Grants will be considered first.
If a student is awarded an FSEOG, the school may pay them directly, credit their school account or both. Depending on the school’s term system, students may be paid each semester, trimester or quarter. Regardless of the institutions set course timeline, the money must be paid in at least two installments.
September 14, 2009
As unemployment rates remain high and budgets stay tight, more people are looking to wait out the struggling economy by going back to college. Competition then has become more fierce not only on the admissions level, but for funding to pay for those educations. While many schools are doing whatever they can to continue offering scholarships and grants, the economy has affected some schools' available funding. Good news is, scholarships do exist, and there are things you can do to have a better chance of landing one.
For more information on upcoming scholarships and other helpful financial aid tips, visit our College Resources. Tomorrow, we'll explore your options on keeping college costs low and looking at a school's program versus its reputation.
September 23, 2009
A new study out today shows that it literally pays off to ask for help if you're feeling lost while filling out your FAFSA. The National Bureau of Economic Research has found that low- and moderate-income financial aid applicants who received help from professional tax preparers when filling out their FAFSAs not only received more generous aid packages, but were more likely to apply for aid compared to those navigating the process independently.
The FAFSA can be daunting, and it isn't surprising to hear many students are intimidated by the process or skeptical that they will receive any need-based aid at all. Still, it's rare to see data on such anecdotal topics. The study was based on results from three groups. One group received help from several H&R Block tax professionals; the second received some financial aid advice, but did not receive personalized assistance; the third received no help in completing their FAFSAs. The results showed that it isn't enough to tell students to fill out the FAFSA and give them the form. The group with the most personalized assistance fared best in terms of how much funding they were approved for, and more generally, whether they would be going to college at all.
The federal government and higher education advocates have been working for years to come up with ways to simplify the financial aid application process. The Student Aid and Fiscal Responsibility Act of 2009 that recently passed in the House of Representatives includes a clause that would streamline the application and make it easier to understand for students. The study suggests that students who have trouble filling out applications or who avoid the financial aid process altogether for one reason or another are significantly less likely to go to college. Often the financial aid students receive is a determining factor in the campus they'll find themselves come fall, and if you don't apply for the need-based aid, no one is going to hand you any or often even urge you to fill out that FAFSA application.
Researchers from the study hope the results will lead to programming and services where students are not only told to fill out the applications as part of the college admissions process, but receive automatic assistance in completing their FAFSAs. If you're nervous about doing it on your own come Jan. 1 when the applications first become available for processing, ask for help. Browse through our site to find tips on landing the most free money and filling out the application correctly, as the smallest mistake can lead to delays in not only the processing of your FAFSA, but in the awarding of scholarships, grants and student loans that you're relying on to pay for that college degree.
October 1, 2009
Soon enough, financial aid application season will be upon us, and you'll need to know how to navigate the process so that you don't make any mistakes that could delay that application, and your funding for college. The first and important step will be getting ready to fill out your FAFSA, which the U.S. Department of Education starts accepting starting Jan. 1 of each year. If you take away anything from this blog though, remember this: FAFSA stands for the Free Application for Federal Student Aid. It should never cost you anything to fill it out.
The easiest way to fill out your FAFSA will be online, directly through the Department of Education's website at www.FAFSA.ed.gov. In your research you may find sites that charge to prepare your FAFSA for you, like www.FAFSA.com. That site, run by Student Financial Aid Services, Inc., charges a fee of $79.99 to prepare and advise you about your FAFSA, and while studies have shown that professional help through the financial aid process does lead to some positive results and more generous aid packages, with some time and effort you can become a FAFSA expert, too, without the added cost. Your intended college's financial aid office will also be happy to help you - for free - if you come across any roadblocks or feel like you've make a mistake when filing your FAFSA.
The Department of Education's site will walk you through the FAFSA application process, even allowing you to come back to your application if you find that you don't have all the necessary paperwork handy. While some students have reported feeling intimidated by the process, you won't be awarded financial aid from your college if you don't fill it out. And if you're uncomfortable filing the FAFSA online, you can also submit the paper form through the mail. (This could delay your application somewhat, though.)
Remember that you should never feel forced to pay to apply for and receive financial aid. Also avoid scholarship search engines that charge you to come up with a list of awards you may be eligible for, and awards that come with large processing fees attached. Scholarship scams are unfortunately a common occurrence, but if you know what to look for, you should have a positive financial aid experience. Browse through our site for more information on filing your FAFSA, and conduct a free scholarship search to see scholarships you may qualify for to supplement your financial aid package - all without paying a dime.
December 31, 2009
One of the most important steps you'll need to take in the financial aid application process is applying for the Free Application for Federal Student Aid, or FAFSA. The Department of Education starts accepting the FAFSA Jan. 1 of each year, which just so happens to be tomorrow. So start your new year off right by filing that financial aid document, or filing a renewal FAFSA if this isn't your first time. State financial aid deadlines fall as early as February, so it's best to get a head start and know how much funding you can expect come next fall.
Both the FAFSA and renewal FAFSA are available online through Federal Student Aid, an office of the U.S. Department of Education. Completing the FAFSA online will speed up processing and leave less time for you to worry about how much financial aid you'll be receiving. Remember that it doesn't cost anything to fill out your FAFSA - the FAFSA is free - and some agencies will charge you for filling the application out for you. Once you complete the online form, you’ll be able to check its status, make any corrections as needed, and print your Student Aid Report once that is ready. (Your Student Aid Report summarizes what you've filled out on your FAFSA, and provides you with an Expected Family Contribution, or the total you and your family would be expected to come up with to fund your education.) If you aren’t comfortable filling out your FAFSA online, you can submit a paper form, but it does take longer to process than the online form.
In order to complete your FAFSA, you'll need the following:
We have a number of resources available to those filling out their FAFSAs and preparing to apply for federal aid. Browse through our site so that you know exactly where to begin, what to expect, and how to file the application successfully, because if you do make mistakes you may delay the processing of your FAFSA. Happy New Year!
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