Category Archives: financial aid

FAFSA, financial aid, financial planning

FAFSA Week: A Step-By-Step Guide to the 2021-22 FAFSA

2021-22 FAFSA

If you break it down, the 2021-22 FAFSA isn’t that complicated. Because it’s a federal form (like income taxes), many parents and students are hesitant to tackle it. If you take it step-by-step, it’s much easier. Here’s a synopsis of the requirements and the sections of the 2021-22 FAFSA.

Information you will need to complete the FAFSA

Use this list to gather all the information necessary before you begin:

  • Your FSA ID, which you can create on fsaid.ed.gov. Note that students and parents will need to create their own FSA ID and keep it private.
  • Your social security number and driver’s license, and/or alien registration number if you are not a U.S. citizen.
  • Your federal income tax returns, W-2s, and other records of money earned.
  • Your parents income tax returns, W-2 forms and 1040 forms if you’re a dependent.
  • Bank statements and records of investments (if applicable).
  • Records of untaxed income (if applicable).
  • Title IV Institution Codes for each school you’re applying to, which you can find from the FAFSA federal school code search.

Sections of the FAFSA

At each online step, a “help and hints” box pops up at the side, in case you need guidance. Here’s a short synopsis of each section from CollegeXpress.

Student eligibility

This is pretty basic: the name of your high school, what year in college you’ll be entering, and your parents’ level of education. This is also your chance to opt into federal work-study. Consider saying yes if you aren’t sure; you can always decline later if you change your mind.  

You will also be asked if you have registered with Selective Service (the military draft). Nearly all men age 18–26, including undocumented immigrants and people with disabilities, are required by law to register—and if you aren’t registered, you will be denied federal financial aid. You can register via the FAFSA form by checking a box.

School selection

Here’s where you enter the names of the colleges you plan to apply to. You can add as many as 10, but don’t worry if you haven’t finalized your list. If you want to add another or make changes, you can do it later.

For each school you include, you will be asked if you plan to live on campus, off campus, or with your parents (because you won’t need funds for room and board if you will live at home). For state aid, some states require that colleges are listed in a specific order; check the federal aid website to see if your own state is fussy about this.

Dependency determination

Colleges want to know if your parents support you or if you are an independent adult. The vast majority of high school students are considered dependent for college financial aid/FAFSA purposes. However, you’re generally considered an independent student if you are:

  • 24 years old by December 31 of the award year
  • A graduate or professional student during the award year
  • Married (or separated)
  • A parent or have other dependents who currently receive more than half their support from you
  • An orphan or a ward of the court
  • A veteran of the US Armed Forces

Otherwise, you are most likely a dependent student.

If your family situation is complex (for example, you are a minor but don’t live with your parents or don’t have access to their financial information), you can find some guidance on the federal student aid website.

Parent demographics

You fill this FAFSA section out if you are a dependent. Aid decisions will consider your parents’ age (because older parents may need to conserve more for retirement), how many children they support, and, most important, if they will have additional children in college that year. Each of these elements affects the calculation for your Expected Family Contribution (EFC), so answer the questions carefully. For example:

  • Older parents are expected to contribute less since they are closer to retirement.
  • Parental contribution is divided by the number of students in college.
  • If the parents are divorced or separated, include only the financial data of the parent with whom the student lives for the greater part of the 12 months preceding the date of the application. If that parent has remarried, the student must include that stepparent’s income and asset data as well. Note: some colleges request information on the “other” natural parent and may expect a contribution from that parent as well.

Financial information

You will need to fill in your parents’ adjusted gross income from the 1040 form, or whichever form they file. (Or your income, if you are independent.)

The IRS Data Retrieval Tool really shines with this part of the FAFSA, because it transfers your tax information directly to the form, saving time and eliminating the chance of a mistake.

You’ll also be asked about assets—both your parents’ and yours. That’s right: the money you’ve saved from summer jobs, birthdays, or bat mitzvah gifts—all of it is fair game. And your colleges will expect you to contribute a percentage of your savings to your college tuition.

Of course, your parents will need to report their savings and investments too, including money market accounts, mutual funds, 529 college savings accounts (yours and any siblings’), and investment real estate (not your family’s primary home).

Qualified retirement accounts—IRAs, 401(k), 403(b), or pension plans—aren’t counted as assets. As always, you can find guidance in the pop-up help boxes at the right side of the page.

Sign and submit

After you’ve finished the FAFSA’s financial section, you add your electronic signature with your FSA ID and hit submit. That’s it.

For a visual step-by-step guide to completing the FAFSA, follow this link:

https://www.nitrocollege.com/fafsa-application

Don’t forget to read the other articles related to FAFSA Week:

FAFSA Week: Debunking 5 FAFSA Myths

FAFSA Week: Financial Aid Q&A

FAFSA Week: 10 Reasons to File

FAFSA, financial aid, financial planning

FAFSA Week: Debunking 5 FAFSA Myths

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fafsa myths

This week is FAFSA week. An entire week devoted to the FAFSA. Today, I am debunking some FAFSA myths.

As the week progresses, I’m going to scour the my blog, the web, and social media to find you the best information, tips and advice related to the FAFSA. If you’re not sure it’s worth your time, this advice should answer that question. If you want to be informed before you complete the form, this information will most definitely help.

Myth 1: If you can’t qualify for federal aid, there’s no point in filing out the FAFSA.

Reality: There’s more to the FAFSA than federal aid. Colleges use this form to disburse merit aid and grants. Also, if your student is considering a student loan or you are considering a Parent PLUS loan, you must complete the FAFSA. In addition, many states use your FAFSA data to determine your eligibility for their aid and many scholarships ask if you have completed the FAFSA.

Myth 2: I make too much money to qualify for financial aid.

Reality: There is no income cut-off to qualify for federal student aid. Many factors—such as the size of your family and your year in school—are taken into account. Your eligibility for financial aid is based on a number of factors and not just your income.

Myth 3: I have too many assets to qualify for aid.

Reality: Most colleges won’t care if you own a house and won’t count home equity against you if you do. The majority of schools rely on the federal aid application, FAFSA, which doesn’t ask parents if they own a home. If the college requires the CSS Profile, home equity is required, but because of the equity cap, has little impact on the award decision. In addition, money in qualified retirement plans, such as a 401(k), 403(b), IRA, pension, SEP, SIMPLE, Keogh and certain annuities, is not reported as an asset on the FAFSA.

Myth 4: I didn’t qualify for financial aid last year, so filling out the FAFSA form again is just a waste of time.

Reality: It’s super important to fill out a FAFSA form every year you’re in college. Why? Because things can change. For instance, your school or state might create a new grant or scholarship, or the factors used to calculate your aid could change from one year to the next. Either way, if you don’t submit a new FAFSA form, you’re out of luck.

Myth 5: The form is too complicated and since I’m sure I won’t qualify, it’s a waste of my time.

Reality: The FAFSA is actually pretty straightforward and can be completed in one sitting; and filing out the FAFSA is never a waste of your time. Colleges and states use this information when awarding grants and scholarships. (See Myth 1)

The bottom line: there is no excuse to not complete the FAFSA. It’s free and is well worth your time. Even if you can afford to pay for the entire cost of college, you should complete the FAFSA. Colleges use this data when dispersing merit aid as well.

Don’t forget to read these posts too:

FAFSA Week: Financial Aid Q&A

FAFSA Week: 10 Reasons to File

FAFSA, financial aid, financial planning

FAFSA Week: Financial Aid Q &A

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financial aid

Financial aid can be a confusing part of the college application process. Even if you can afford to pay for college, it’s a good idea to learn what aid is available and apply for it. You aren’t obligated to accept it, but most students qualify for some form of aid and, if it’s available, why not use it?

What is financial aid?

Financial aid is intended to make up the difference between what your family can afford to pay and what college actually costs. With college tuition rising rapidly, more than half of the students currently enrolled in college receive some sort of financial aid to help pay for college. The system is based on the premise that anyone should be able to attend college, regardless of financial circumstances. However, students and their families are expected to contribute to the extent that they are able.

There are two types of aid: need-based, and non need-based. Need-based aid includes grants and scholarships that are issued based on the family’s ability to contribute to education costs. Non-need-based aid is allocated solely based on availability, not need.

There are three main types of financial aid: grants and scholarships, loans and work study.

What is “free” money?

Not all aid is equal and the best aid is the aid you don’t have to pay back. It’s like getting a huge coupon of savings to use for your college education.

What types of education loans are available?

Not all college loans are equal.

There are two types of government-based loans: subsidized and unsubsidized. Subsidized loans have lower interest rates and are awarded based on the student’s financial need with interest deferred until after graduation. Unsubsidized loans are awarded without regard to financial need with interest payments beginning immediately and regular payments due after graduation.

What is work study?

The Federal Work-Study Program provides a method for college students to earn funds to be used toward their education. The program is based on financial need and students must be accepted into the program to qualify which is determined by completing the Free Application for Federal Student Aid or FAFSA.

What is the FAFSA and do I need to file it?

The FAFSA is the Free Application for Federal Student Aid and you should apply if you want any chance to receive federal and state student grants, work study, loans or merit-based aid. If you don’t complete the FAFSA, you can’t apply for student loans. Colleges also use these figures when determining financial aid eligibility for grants and scholarships. Plus, many states use your FAFSA data to determine your eligibility for their aid.

The FAFSA is available on Oct. 1 of every year and you should complete it as close to that date as possible in the fall of your senior year. Aid is dispersed on a first-come, first-served basis. The sooner you apply, the more likely you will receive a portion of the financial aid pie.

What is the EFC?

The Expected Family Contribution (EFC) is how much money your family is expected to contribute to your college education for one year. Typically, the lower your EFC, the more financial aid you will receive. Factors such as family size, number of family members in college, family savings, and current earnings (information you provide on the FAFSA) are used to calculate this figure. Once your FAFSA is processed, you will receive a Student Aid Report (SAR) with your official EFC figure.

You can calculate your EFC by visiting FinAid.org.

What is an award letter and how do you use it?

As the offers of admission arrive from colleges, the financial aid award letters will follow. They can be confusing and vague. Added to the confusion is that every award letter is different, making it hard to easily compare them side by side.

Thankfully, there are tools available and information to help you look at these letters for what they are: the college’s pitch for you to accept their offer of admission. You are in control of this process and you hold the cards. It’s your decision to accept or reject their offer based on the amount of aid they are willing to give you. Money, in this situation, is everything.

If a college wants you to attend, they will back it up with money. No money means their offer is probably based on filling a quota and expecting you will decline to attend. And you should. Who wants to attend a college that doesn’t value you as a student?

FAFSA, financial aid, financial planning

FAFSA WEEK: 10 REASONS TO FILE

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fafsa

The FAFSA for the 2021 school year will be available on October 1. The earlier you file, the better your chances of getting some of the money colleges allocate for financial aid. In order to help parents understand the FAFSA and answer some of your questions, this week is FAFSA week.

Surprisingly, many families don’t even take the time to complete the FAFSA. The most common reason is they believe they won’t qualify for financial aid; but nothing could be further from the truth. Most students receive some form of financial aid. If you don’t file, you could be missing out on some of that aid.

Here are 10 reasons to file the FAFSA:

1. College is expensive

Even if you can afford to pay for your child’s education, it’s expensive. Why would you pass up an opportunity to help with some of the cost?

2. It’s FREE

That’s right. It’s completely free to complete the FAFSA. You’ll spend some of your time completing the FAFSA and you could get thousands of dollars of financial aid in return. So one could say, it’s BEYOND free–they pay you!

3. Getting help is easy

If you get stumped, help is available. You can use the online help tool, submit a question on social media, or call the help number. You can even access the Help Center where you will find answers to their most-asked questions. Many schools even host a FAFSA day where they offer help to parents and students on how to complete the free form.

4. FREE money could be waiting for you

According to a recent Reuters article, about 1.8 million lower income undergraduates who might have qualified for aid neglected to file the FAFSA and missed out on financial aid. No matter what your income level, you should file the FAFSA because there is more money out there to be awarded than just need-based aid.

5. Federal aid

The federal government provides over $80 billion dollars in grants, loans and work-study programs every year. The only way to get Pell grants, , Stafford loans, Parent PLUS loans and other federal aid is by submitting the FAFSA. Federal loans offer the best interest rates and repayment terms for student borrowers and are superior to private student loans.

6. State aid

FAFSA is the gatekeeper for state financial aid programs. Each state’s programs are different but they all require the FAFSA to distribute the funds. Check with your state’s higher education agency for deadlines and requirements. In some states the financial eligibility ceilings are much higher.

7. Institutional aid

Colleges and private scholarship sponsors offer billions of dollars in financial aid. Even if you don’t have financial need, you may be eligible for these awards. Some school and private scholarship programs are specifically designed for students who were rejected by federal financial aid. Some schools will not award merit aid unless you complete the FAFSA.

8. Scholarship applications ask if you’ve applied

In addition to the aid that a student may receive from federal and state agencies, many scholarship applications include a box to check asking whether the student has submitted a FAFSA. According to Monica Matthews of How to Win College Scholarships, “Scholarship providers want to know that the student is doing everything possible to get financial help in paying for college and submitting the FAFSA is a very important step in the process.”

9. You have two or more children in college

With two in college, your expected family contribution (what the parents can afford to pay) drops by 50%. Even if you didn’t get financial aid with the first, file the FAFSA because having a second child in college can net you some financial aid.

10. You want to claim a “piece of the pie”

Look at it this way: FAFSA is the ONLY way to be considered for federal, state and college financial aid. Even if you don’t NEED the aid you still want to get it. Who doesn’t want FREE money?

financial aid, Guest Posts, scholarships

Use This Merit aid Strategy to Avoid the Student Loan Trap

merit aid

Over a lifetime there’s a huge financial payoff for going to college, but how can students avoid taking out outsized student loans for their education in the short term? The key is to make your ‘out-of-pocket’ expenses as low as possible. You can do this by putting strong merit aid colleges on your list. Applying to colleges that are likely to give you merit aid is one of the best ways to make ‘financial fit’ choices and save thousands of dollars a year. 

The largest pool of non-loan money available directly from colleges is merit aid scholarships. Colleges award over $8 billion dollars in merit scholarships annually. Understanding how colleges award these scholarships requires a thoughtful strategy that can result in significant savings. Merit aid awards are mostly given to applicants who show academic excellence and are in the top 25% of a college’s most recently admitted freshman class. Since many colleges offer merit scholarships, you don’t need to have straight A’s or a 1600 SAT score to be awarded merit aid. Each school has its own top quartile stats. 

Merit aid grants are unlike other forms of aid in several ways. Federal government grants like Pell are primarily targeted at low-income families and are limited in size. Private scholarships are generally not renewable and require a separate application. And loans, of course, have to be repaid with interest. Merit aid, on the other hand, is not income dependent, doesn’t require a separate application, doesn’t have to be paid back and it’s renewable.

Finding  merit aid can be tricky and time-consuming. Using a college’s Common Data information will provide some information. You can find lists of colleges that give merit aid awards online, but those lists won’t show you if a particular college is likely to give you aid based on your profile. A new tool called MeritMore uses your stats to match you with  colleges most likely to give you aid and shows you how generous those colleges have been to students with similar profiles. You can check to see if your top schools are likely to offer you merit aid and then compare aid offers against each other. MeritMore also finds colleges generous with merit aid that match your criteria, but may not have been on your radar. This is a great strategy for finding financial fit gems.

The best way for families who don’t qualify for need-based aid to avoid paying sticker price is through merit aid. Awards can be in the thousands and tens of thousands of dollars per year. These scholarships help make college more financially accessible and help families avoid getting caught in the student loan trap. 

FAFSA, financial aid, financial planning, student loans

A Parent’s Guide to Financial aid

financial aid

Financial aid can be a confusing part of the college application process. Even if you can afford to pay for college, it’s a good idea to learn what aid is available and apply for it. You aren’t obligated to accept it, but most students qualify for some form of aid and, if it’s available, why not use it?

What is financial aid?

Financial aid is intended to make up the difference between what your family can afford to pay and what college actually costs. With college tuition rising rapidly, more than half of the students currently enrolled in college receive some sort of financial aid to help pay for college. The system is based on the premise that anyone should be able to attend college, regardless of financial circumstances. However, students and their families are expected to contribute to the extent that they are able.

There are two types of aid: need-based, and non need-based. Need-based aid includes grants and scholarships that are issued based on the family’s ability to contribute to education costs. Non-need-based aid is allocated solely based on availability, not need.

There are three main types of financial aid: grants and scholarships, loans and work study.

What is “free” money?

Not all aid is equal and the best aid is the aid you don’t have to pay back. It’s like getting a huge coupon of savings to use for your college education. Here are the types of aid you can receive that you won’t have to pay back after graduation:

  • Federal Grants – These are grants given by the federal government.
  • Pell Grant – This grant is given to students with exceptional financial need.
  • College Grants – These grants are awarded by the individual colleges based on financial need.
  • State Grants – These grants are given to students who plan to attend college in their own state (and states are strict about residency).
  • Private Scholarships – There are a multitude of private scholarships available awarded by private organizations and businesses for every type of student.
  • Institutional Scholarships – These scholarships are given by individual colleges based on the student’s qualifications or financial need.
  • Federal Scholarships – Scholarships funded by government agencies.
  • Tuition Waiver – This waiver is offered by colleges to students who meet specific criteria (e.g. child of a POW/MIA)

What types of education loans are available?

Not all college loans are equal.

There are two types of government-based loans: subsidized and unsubsidized. Subsidized loans have lower interest rates and are awarded based on the student’s financial need with interest deferred until after graduation. Unsubsidized loans are awarded without regard to financial need with interest payments beginning immediately and regular payments due after graduation. Following is a brief description of each:

  • Stafford Loan – Government based loans that can be either subsidized or unsubsidized.
  • PLUS (Federal Parent Loans for Undergraduate Students) – This loan is for creditworthy parents and has payments due beginning 60 days after it is disbursed with relatively low interest rates.
  • Private Loan – Loan offered by private lenders usually with higher interest rates than government loans.
  • Institutional Loan – A loan in which the school is the lender.

Once you have chosen the loan that best fits your needs, do the research and educate yourself about repayment, interest rates and grace periods.

To learn more about work study, the FAFSA, the EFC and award letters, read the entire article I wrote for TeenLife Online Magazine here.

financial aid, parenting, scholarships, social networks

8 Facebook Pages and Groups to Help With College Prep

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facebook

Have you ever had a question about college prep and there was no one to ask? Do you wonder what other parents have done in your situation? Is there a question about paying for college that you simply can’t find the answer to?

Odds are, you can find most answers to your unanswered questions on Facebook (or at least a suggestion on who to ask). From parenting a teen through the college process, paying for college, financial aid, scholarships and connecting with college parents, you can find groups or pages to help.

Here’s a list of my favorite Facebook groups and pages:

Grown and Flown

This is a widely popular group for parents of both college-bound and college students. You can connect with experts in college prep here or get advice from other parents who have been through the process and/or have current college students. It’s a friendly, conversational group and if you have a question, it’s easy to post it and usually get an instant response from another parent or expert in the group.

Paying for College 101

If you have a question about paying for college, this group is available to help. Helpful articles are posted daily and questions are answered quickly by experts and mentors on the page. They cover topics related to college prep and often offer training sessions and webinars to help you with the college admissions process.

College Talk

Financial aid can certainly be confusing for parents and students. College talk provides parents with tips and strategies related to college financial aid.

How to Find Merit Scholarships

Looking for merit scholarships? This group is devoted to sharing merit scholarship opportunities and discussing ways to find schools generous with financial aid and merit scholarships.

How to Win College Scholarships

Need help searching for scholarships? Need help with scholarship applications? Have a question about the scholarship process? You capayn find the answer on this page, along with endless lists of scholarships available. Check this page daily for the best in scholarship information.

Parenting for College

This is my page and you can find the answer to any college-related question here. I post informative articles daily and am happy to answer any question you might have about college prep. I also frequently post scholarship opportunities and free training opportunities as well. Check back often to see new news about college admissions.

Parents of High School Students

This is the portal for you to ask any question, raise out any concern or get feedback from the group. This type of forum rarely exists in the college admissions space, but it’s space for parents to expand their network, build connections, establish relationships and form a support system in this competitive field. This is also the place for parents and students to grow and even enjoy their college admissions journey.

College Essay Guy

Everything you need to know about the college essay, personal statements and supplemental essays can be found on this page. From podcast episodes to essay samples to expert advice, the College Essay Guy is available to help. Your student can also join his private group page for personalized essay help: College Admission and Application Forum.

…and one more

College Connections Educational Consulting Services

A page with over 14,000 members offering great college advice, current articles in the news, and a forum for students and parents to comment on them and ask questions. College Connections’ main objective is to have our students gain admission to the college which is their best match, and where they find happiness, success and a solid academic program.

financial aid, financial planning, Student debt

How To Avoid College Debt

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college debt

Parents want what’s best for their children. I’m sure you do. You want your student to succeed in life and if that path is college, you don’t want them to be saddled with college debt after they graduate. Entering the work force with debt puts strain on your student and their ability to live independently after college.  

But with college costs rising it almost seems impossible to attend without borrowing money to pay for it. At least that’s what you might think; but with some smart planning and wise financial choices, I t can be done and here’s how:

Know how much you are willing to pay

Before even starting the college search, you should know how much you are willing to pay. Set a budget before your student starts looking at colleges. If you know how much you are willing to pay, you can avoid going over-budget on a college, even though it’s a college your student wants to attend.

Have the money talk

After you know what you’re willing to pay, have the “money talk” with your student. Discuss with them how much you are willing to pay for college and how much you expect them to contribute. Do not (I repeat do not) allow them to apply to any colleges beyond your financial reach unless your student has been working toward and receiving scholarship awards. Do not count on financial aid or merit aid to fill the gap when planning for college. If your student applies and is offered admission to a college you cannot afford it makes for a difficult conversation and a very disappointed student if you cannot pay for the tuition.

Research individual college statistics

Before applying, research the financial aid footprint of every single college on the list. How much aid do they typically give? How much debt does the average student graduate with? Use their net price calculator and determine what it will cost to attend there before applying. If your student is offered admission, there will be no surprises and disappointment if you do your due diligence before the application process begins. Colleges offering small percentages of financial aid in the form of scholarships and grant

Think outside the box

There are thousands of colleges in this country. Many families make the mistake of not researching affordable colleges before applying. Smaller private universities offer more generous financial aid packages. Recognizable names and Ivy League colleges are not the only schools offering a quality education. Don’t assume that a state university is cheaper than a private college out of state. Look at the numbers, research colleges, and think outside the box.

Consider community college

Two years at a community college will save you and your student a substantial amount of money. After completing the basics at a much lower cost, they can transfer to a four-year college and graduate. Your student may also choose an associate’s degree in a technical field and graduate from community college with a skill and a career. In the past, community college has gotten a bad reputation from parents and students for being “less than” a “real” college. But smart parents and students know the education is the same at a much lower cost.

Apply for scholarships

Until your student graduates from college they should be applying for scholarships. The sooner they begin, the better. There are scholarships for all ages and if your student accumulates awards all throughout high school and into college those awards will go a long way to help them graduate without debt. There are resources to help you and your student find and apply for scholarships—take advantage of them.

Get good grades

Scholarships and grants are disbursed by colleges based on merit. Grades are a key factor colleges use to determine merit aid. They use this aid to entice student applicants to accept their offers of admission. Putting your student at the top of the applicant pool with good grades stack the odds of merit aid in your favor. Believe it or not, a great GPA results in more scholarship money than athletics. Use this to your advantage.

Graduate in four years or less

You might be surprised to learn that most students take more than 4 years to graduate from college. On average, a college degree takes six years. That’s two years more of college costs, not to mention two years of lost income. Plan to pay for four years and make a plan for your student to stay on track.

Become a National Merit finalist

Your student doesn’t have to win a National Merit scholarship to score some generous financial aid. All they have to do is become a semi-finalist—and with a little study for the PSAT, it’s entirely possible. Colleges who have money set aside for the finalists will use merit aid to entice your student to attend: full tuition, room and board, books and fees, laptops, study abroad and even spending money. They might also offer automatic entrance into the honors college, the best housing and priority registration until graduation.

Take AP exams or CLEP tests before college

It’s possible for your student to take AP or CLEP exams and test out of freshman subjects. Your student could enter college as a sophomore, cutting a whole year off the degree. For a small test fee, your student can save thousands of dollars and time by taking advantage of these tests.

With all these options available, your student does not have to take on college debt to receive a quality education. With knowledge and hard work, your student should be able to graduate college debt-free.

financial aid

Why Complete the FAFSA?

FAFSA

October 1 is on the horizon and that means the FAFSA will be available for students to complete and file. Believe it or not, many students don’t bother completing it and that’s a decision you and your student might regret.

According to the National Center for Education Statistics, Only 65% of high school seniors complete the FAFSA, Why don’t more fill it out? Most either can afford college without financial aid or think they won’t qualify for financial aid. Other reasons include a lack of information — and just planning on skipping college entirely.

FAFSA

Completing the FAFSA is an essential step of the college application.

Why bother completing the FAFSA if you don’t need financial aid?

Even if you and your student can afford to pay for college, why would you pass up free money? Colleges use the FAFSA when distributing merit aid and even some private scholarships require a completed FAFSA.

If you need financial aid, how can completing the FAFSA help?

If you need some form of financial aid to pay for a college education, you MUST complete the FAFSA. In order for students to qualify for federal student loans, state loans, and work-study, they must submit the form. The FAFSA is also required if you plan to take out a Parent PLUS loan to help your student pay for college.

In addition, many students are eligible for federal Pell Grants. High school graduates who didn’t complete a federal financial aid application missed their opportunity for part of $2.6 billion in free money for college, according to NerdWallet’s annual analysis of federal financial aid data.

The money went unclaimed by 661,000 members of the Class of 2018 who were eligible for a federal Pell Grant but didn’t complete the Free Application for Federal Student Aid, or FAFSA.

How much time does it take to complete the FAFSA?

The FAFSA has over 100 questions, which can take anywhere from a half hour to an hour to complete. According to data compiled by Finder.com, new applications less than an hour, averaging 35 minutes. Renewing your application takes even less time — 23 minutes on average. Filling out the FAFSA for the first time takes the longest since you need to fill in answers for each required question.

The bottom line: complete the FAFSA. It doesn’t take that long and most students qualify for some form of financial aid. That doesn’t mean you have to accept it, but why not have that option? And you certainly don’t want to miss out on some of that FREE money!

 

financial aid, financial planning, student loans, Uncategorized

Paying for College: Borrow Wisely

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borrow wisely

I received an email from a concerned parent whose student was going to be attending orientation next week. In the email, he confessed that he might need some help with information regarding financing his son’s college education. I was surprised that he waited so long. Unfortunately, I had to advise him that at this point his only options were private loans and advise his student to apply for scholarships over the summer.

Parents should consider college funding even before their student applies to college. The inevitable result of lack of planning is parents and students borrowing to pay and usually borrowing more than they can repay after graduation.

What do the statistics say?

With school starting shortly, student loan borrowing often appears in the news. It’s especially prevalent now with presidential candidates promising to erase student loan debt. Wherever you stand in the political landscape, it’s clear from the statistics that students have borrowed more than they can repay.

According to a 2018 report by the Federal Reserve Bank of New York, as many as 44.7 million Americans have student loan debt, that’s one in five adult Americans. The total amount of student loan debt is $1.47 trillion as of the end of 2018 — more than credit cards or auto loans.

How do you make wise financial choices?

Before applying to college, you and your student should investigate the cost. You can gather the information either on the college website or by using College Navigator. When viewing these figures, you should also research the college’s financial aid statistics—what percentage of students are awarded aid, how much aid is awarded and how much do students typically borrow. Since every family’s financial situation is different, these figures should help determine if the college is affordable to attend.

How does financial aid play into the equation?

If you complete the FAFSA, your student will receive some form of financial aid. The most common is student loans, but colleges also award grants and merit aid as well. Always complete the FAFSA, even if you don’t think you will qualify for aid. Colleges use the information on the FAFSA when awarding scholarships and grants. No FAFSA, no aid.

What’s the key to avoid borrowing too much?

Use repayment calculators before you sign on the dotted line. The rule of thumb is that students should only borrow as much to pay for college as their first year’s salary. By keeping your debt under one year’s salary, you won’t have to put more than about 10% of your income towards student loan payments. Borrowing more than your student can afford to repay sets them up for overwhelming debt after graduation. Your student can look at salary comparisons for their anticipated career at PayScale.com.

How can you avoid borrowing to pay for college?

The key to not borrowing to pay for college is to receive merit aid, grants, and outside scholarships. Your student should apply to a college at the top of his or her applicant pool. This means the college will be more likely to award aid to attract your student. Grades and standardized test scores are also a key factor in awarding aid. Your student should focus throughout college to pursue excellence in these areas. And, don’t forget outside scholarships. Your student should focus time and effort in applying to every scholarship he or she qualifies for. This means starting early and planning to submit the best application. Click here for scholarship application tips and see how your student can win enough money to pay for college.

Finally, borrow wisely. Only borrow what you need. Your student can borrow the maximum amount, but only borrow what is necessary. Just because you can, doesn’t mean you should. Choose the loans with the lowest interest rates first.