It’s an exciting time: We’re facing a brand new year! The holidays are winding down, spring’s still a long way off, and all you current and prospective college students have an important task ahead of you—applying for financial aid that will help make your education dreams a reality.
January 1 is the starting line in the financial aid application process. As of the new year, you can begin filling out the Free Application for Federal Student Aid, or the FAFSA, as it’s more commonly known. The FAFSA is the key to federal student aid such as grants, loans, and Work-Study, as well as other forms of aid that your college may administer.
So, in case you’re not sure whether financial aid is for you, or how to get started, let’s break it down into the why and how of applying for financial aid.
WHY should you apply for financial aid?
It’s never too soon to start thinking about how you’ll pay for college. Federal financial aid includes grants that don’t need to be repaid, loans that have low interest rates and advantageous terms, and on-campus Work-Study jobs. Your school may offer additional forms of aid, such as assistantships and grants. And you can search for scholarships, some of which will ask you to fill out the FAFSA form. Keep in mind:
– If you’re not certain where you’ll be going to school, or even if you’ll be going to school next year, you still need to apply for federal financial aid so that you have all your options open to you.
– You may think you don’t qualify for federal aid—but you don’t know until you apply! Even if your circumstances right now make you think that you don’t need aid, things change, especially in a rough economy. It’s always best to keep your options open now to avoid potential trouble later.
– Even if you have received financial aid last year or in past academic years, you still need to complete a FAFSA for each new academic year.
HOW should you apply for financial aid?
The FAFSA form is the starting point for most need-based financial aid, whether federal or school-based. After you download the form, you can get help in several ways:
– On the FAFSA site, where you can learn all about what information you need to fill out the FAFSA
– At the amsa.com borrower site, where you can learn about the overall federal aid application process
– In person at a College Goal Sunday event in your area, where counselors will sit down with you, one-on-one, and help you fill out the FAFSA or answer your questions—for free
Your college may also require you to provide additional information beyond the FAFSA to determine your eligibility for institutional aid. Check with your school to determine if the CSS Profile or another supplemental form is required.
Lastly, when should you apply for financial aid and begin forming a plan to pay for college? The time is right now—so let’s get started!
Posted by Mike Ryan on January 13, 2009 at 04:05 PM EST
Studentloan, that’s a common and important question facing families today. Options to consider include PLUS loans, Private/Alternative loans, and scholarships. I’ve provided the details for each below.
PLUS Loans
The federal Parent Loan for Undergraduate Students (PLUS) lets parents of dependent students borrow money to pay for any costs not already covered by the student’s financial aid package, up to the full cost of attendance.
•Amount: There is no cumulative limit (that is, if you borrow PLUS loans for several years of your student’s schooling, you will not hit a limit before he or she finishes the degree).
•Interest: For the 2009–2010 school year, a new PLUS loan will have a fixed interest rate of 8.5 percent in the FFEL program and 7.9 in the Direct Loan program (your child’s school will be affiliated with one program or the other). Interest begins accruing on a PLUS Loan from the date of the first disbursement until the loan is paid in full.
•Fees: Parent PLUS loans carry a fee of up to 4 percent of the loan amount, which is deducted at the time of disbursement. This fee goes toward the costs of administering the loan. You also may be charged late fees and collection costs if you fail to make on-time payments.
Private Education Loans/Alternative Education Loans
As a general rule, you should consider this option only if you have exhausted your Stafford and PLUS loan amounts. These loans are offered by private lenders. Eligibility depends on your credit score.
•Amount: The amount is not limited to the cost of attendance, making it easy to get funds, but also easy to borrow more than you need.
•Fees and interest: Fees and interest rates vary, but loan consumers should read the fine print and shop around. Lenders who eliminate fees often roll the difference into the interest rate: A good rule of thumb is that 3% to 4% in fees is about the same as a 1% higher interest rate. By contrast, a loan with low interest but high fees may end up being quite costly. The best private student loans will have interest rates of LIBOR + 2.0% or PRIME -0.50% with no fees but will be available only to borrowers with great credit who also have a creditworthy cosigner.
Scholarships
Scholarships are another excellent option. Unlike student loans, scholarships do not need to be repaid. Your daughter’s school or other local, civic, or religious organizations may have scholarships available. Scholarships typically go to students with special academic, athletic, or artistic qualifications; to those in a particular demographic group or area; to those interested in a special field of study; or to students with financial need. Some sites to aid in your scholarship search are:
Posted by Mike Ryan on March 24, 2009 at 10:19 AM EST
received financial package from my daughters school of choice after scholarships we need $10,000 more- we received perkins 1700 sub stafford 3500 unsub. stafford 2000
we would like to know what is the lowest interest rate loan to be paid after graduation-(non adjustable) to consider to add to this scenerio?
Posted by studentloan on March 19, 2009 at 12:32 PM EST
Posted by Mike Ryan on February 10, 2009 at 12:42 PM EST
I would like to see the finacial aid process flow from FAFSA to Student Loan applications once the FAFSA is completed so that they can all be done at the same time.
Posted by tlewis on February 09, 2009 at 02:04 PM EST
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Michael T. Ryan is Vice President of Borrower Services for American Student Assistance, a position he has held since joining ASA in February, 2003. Mr. Ryan heads ASA’s Borrower Services Division, which is responsible for all aspects of the management and delivery of service to borrowers in ASA’s education loan portfolio, including all default prevention and recovery efforts.
In his 20-plus year career in higher education financing, Mr. Ryan has held key management positions at the Massachusetts Educational Financing Authority (MEFA), and Key Education Resources (formerly Knight Tuition Payment Plans). As MEFA’s Associate Director for Programs and Operations, Mr. Ryan facilitated MEFA’s entry as a Federal Family Education Loan Program (FFELP) provider. He also played an instrumental role in the introduction of the U. Fund, (MEFA’s Section 529 College Investing Plan), managed MEFA’s U. Plan (Prepaid Tuition Program), and was responsible for the operation of MEFA’s loan programs.
While at Knight and Key, Mr. Ryan held progressively responsible management positions, from Account Manager to Senior Vice President.
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