HOW DO I APPLY FOR FINANCIAL AID?
All accredited colleges and universities in the U.S. require financial aid applicants to complete the Free Application for Federal Student Aid as soon as possible after January 1st of the senior year. The federal government and colleges use the information on the FAFSA to determine how much financial need a family has with regard to college expenses. Students applying to colleges and universities in the state of New York should also apply for the Tuition Assistance Program.
Many private colleges will also ask financial aid applicants to file an online aid form called the CSS Profile, which can be completed as early as October of the senior year. Colleges and universities may also ask applicants to complete their own institutional financial aid forms. Students must remember that these forms cannot be substituted for one another; if a college wants financial aid applicants to complete the FAFSA, TAP, CSS Profile and institutional financial aid forms, then that's what must be done.
FINANCIAL AID & SCHOLARSHIPS
WHAT IS "FINANCIAL AID
The term "financial aid" can mean a lot of things. It is very important to understand differences in the general types of aid a student can receive. Grants and Scholarships are the best type of aid. Grants and scholarships are essentially free money; these never have to be repaid. They can be awarded to a student from the college they will attend (often through what is known as tuition discounting), from an outside organization, or from the government.
We are all familiar with Student Loans, which will eventually have to be repaid. Different types of student loans carry different terms for the borrower. In short, some kinds of loans (federal) are much safer than others (private).
Work Study is a third and much smaller source of financial aid. Work Study programs typically entail a student working a federally funded part time job on campus. Paychecks go directly to the student to help meet college expenses.
Click here for detailed descriptions of the Federal Student Aid programs.
SHOULD I TAKE OUT A STUDENT LOAN?
You may have heard about some of the incredible financial aid policies that have been announced recently by some of the nation's most prestigious institutions. The Ivies, along with several other highly selective institutions including Amherst College, Davidson College, Bowdoin College, and several others, have eliminated loans from their financial aid packages for all students. Other schools have eliminated loans from their aid packages for all financially disadvantaged students. This means that a low income family can send their child to one of these institutions essentially for free. This presents an amazing opportunity for some families.
Unfortunately, most colleges and universities don't have the resources to eliminate loans from their financial aid packages. The institutions that are able to do so are also incredibly selective. The truth is that students are increasingly reliant on loans to help pay for their college educations, particularly when they are going to be living on campus. Federal and state grant programs aren't nearly enough to cover the costs of attendance for needy students at most institutions.
WHAT ABOUT SCHOLARSHIPS?
Many colleges and universities will use financial aid incentives to enroll students through a process known as tuition discounting; often this will take the form of a scholarship from the institution. Sometimes a student will need to complete a separate application to apply for these institutional scholarships, but very often students will automatically be considered for available need or merit based scholarships. A host of private institutions offer scholarships as well. These typically require some work on the part of the student; an application and often an essay, teacher and or counselor recommendations, etc. There will often be academic or financial guidelines that a student must meet in order to apply. Students can identify private scholarships through a number of sources although some will require nomination from the high school or another educator. Two great sources through which students can safely search for scholarships are listed below.
Students who appear to qualify for need based financial aid will be asked to go through a process called verification. In other words, they will check to see if you accurately completed your FAFSA and other financial aid forms before they award you any aid. This process now involves students electronically linking their parents' most recent federal tax returns to their FAFSA through the IRS Data Retrieval Process. Families who cannot complete this step must make sure to request an official IRS tax transcript be sent directly to the colleges to which they applied. Yes, this process can be a bit complicated...which is why it is important to start working on these forms as early as possible in January and not procrastinate. Parents should file their tax returns as early as possible in the senior year (don't wait until April anymore!) to be prepared for the verification process.
Students can get an early estimate regarding how much need based aid they may be eligible for by completing either the fafsa4caster or Finaid's EFC Calculator. All juniors should complete either or both calculators before entering their senior year. Students may also get a sense of what it may cost to attend a specific college by using that institution's net-price calculator. NPCs are available on each college's website
So, should you take out a student loan?
That depends; taking out a low interest federal loan may allow you to attend an institution that may change your life. Don't be afraid to take out some reasonable loans if you have researched your colleges and loan options carefully. After all, your education is an investment in your future. However, if you end up borrowing high interest private loans that leave you financially crippled for decades, you have almost certainly made the wrong choice. The problem with borrowing is that too many students and families borrow carelessly. Think about the amount you will be borrowing in terms of four years...not just your freshman year. You can find great advice about student loans at the Poject on Student Debt.