financial aid

FAFSA – How Does Financial Aid Work?

Financial Aid Definition

According to Wikipedia, student financial aid in the United States is funding that is available exclusively to students attending a post-secondary educational institution in the United States.

The Office of Federal Student Aid provides more than $120 BILLION in aid each year to help pay for college or trade school. This aid can come from a variety of sources, however, there is only one way to access these funds – by using the Free Application for Federal Student Aid (FAFSA). 

When to Apply for FAFSA

The FAFSA filing timeframe always begins October 1st the year BEFORE you plan to attend school. So if you plan to attend college in fall of 2021, you can file as early as October 1st, 2020. Typically applications continue to be accepted through June 30th the year you plan to attend. 

PRO TIP: You’ll want to make sure to file as early as possible, because many states and some colleges award financial aid on a first come first served basis. 

To make things easy, here’s some upcoming filing deadlines. Go ahead and put these in your calendar:

  • June 30, 2021 | FAFSA Deadline for the 2021-22 Academic Year
  • June 30, 2020 | FAFSA Deadline for the 2020-21 Academic Year

What are the Types of Federal Student Aid?

Student aid is not always “free money” – in fact usually it’s not! It’s important to understand the differences between aid types and, more importantly, how they impact your pre and post education finances.

Grants

These are the only types of federal student aid that don’t need to be repaid – so pay attention to these. Within this category, there are 4 different types of grants. Maybe you’ve heard of a few of these:

  1. Pell Grant – The average amount is $4,271 (these figures are usually given on a ‘per year’ basis) and is primarily for undergraduates who have the greatest “financial need”.

PRO TIP: You’re going to see the words “financial need” appear a lot in the student aid requirements. If you’re wondering what that means, the department of education defines this as:

Financial need is simply defined as the difference between the student’s cost of attendance (COA) and the family’s ability to pay these costs. Note that the student’s financial need will be reduced by aid that is awarded to the student.

  1. Supplemental Education Opportunity Grant (FSEOG) – This is often awarded in addition to the Pell Grant, so if you qualify for one, you’re a priority for the other. For this reason, the amount is smaller – around $599 per year.
  2. Teacher Education Assistance (TEACH) Grant – It makes sense that educators would lobby to award aid to future educators. This is the purpose of the TEACH grant – focused exclusively to high need students in teaching programs, especially elementary or secondary school levels.
  3. Iraq and Afghanistan Service Grant – Awarded to students whose parent or guardian was a member of the armed forces and died as a result of performing military service in Iraq, Afghanistan, or on 9/11.

Loans

If you are just graduating high school, are looking at college, and you don’t have extraordinary “financial need” but also don’t have $35,000, then chances are you probably don’t have much of a credit history either. At least not enough to secure a traditional loan for $35,000 (that’s the average cost of a 4-year degree by the way). Banks would normally never loan this much to a person with little to no financial history.

This is the main reason for the government-created William D. Ford Federal Direct Loan program. Using this program, you can borrow money directly from the U.S. Department of Education rather than a bank. Like federal grants, there are also 4 different types of federal loans – but unlike grants, these will need to be repaid with interest:

  1. Direct Subsidized – These loans are made available to undergraduate students that can demonstrate “financial need”.

PRO TIP: “Subsidized” means having part of the cost paid to keep your cost low.

  1. Direct Unsubsidized – These loans are made available to students who don’t need to demonstrate “financial need” to be eligible.
  2. Direct PLUS Loans – If you don’t qualify for other types of federal student aid, you probably still qualify for this type of loan program. This is primarily for students and parents of students, who may have some credit history.
  3. Direct Consolidation Loans –  Most students require multiple sources of financing to afford college. This program allows you to roll all of your loans together under one servicer, and sometimes at a reduced interest rate.

PRO TIP:  On a standard 10-year repayment plan, a borrower  will pay $6,405 in interest or about $641 per year. Pay attention to interest rates! Source

Work-Study

Just like the name implies, a federal work-study job is there to help you earn your way through school. These are primarily community service related and possibly even something related to your field of study (it depends on your school). These jobs are always part-time and only offered while you’re enrolled.

Your FAFSA Application

Now that you know what types of college financial aid you can expect, it’s time to take the first step and visit the FAFSA Website where you will begin your application. Here’s a quick overview of the steps involved:

  1. Create a FSA ID, Username, and Password (and keep this somewhere safe).
  2. Gather Documents
    1. SSN
    2. Parent’s SSN (if you’re a dependent)
    3. Driver’s License Number
    4. Alien Registration Number (if applicable)
    5. Tax Info, such as tax returns and W-2.
    6. Income information for both you and you’re parents.
    7. Info on how much cash & savings you have.
  3. Use the documents to fill out the application
    1. Online at https://studentaid.gov/h/apply-for-aid/fafsa.
    2. On your phone using the myStudentAid mobile app.
    3. On paper by printing/mailing the FAFSA PDF.
  4. List the colleges and schools you’re interested in.
  5. Report Parents’ Info (if you’re a dependent student)

PRO TIP: You’re going to be asked a number of times if you are a dependent or independent student. If you aren’t sure, you can look this up here.

  1. Provide Your Financial Info
  2. Sign & Submit

FAFSA Customer Service

Here are all the contacts to get help with filling out your applications:

Student Aid Report (SAR)

Next, you’ll receive a report that details your eligibility for aid and is typically sent within 3-10 days, depending on how you submitted it (longer if you filled out the paper version). The SAR will NOT tell you how much money you will need to pay for college nor will it tell you how much aid you will receive. The name is misleading, but this report is mainly something you’ll want to check for accuracy, because it is used in calculations to determine those things.

Financial Aid Award Letters

Now for the fun part! 

Award letters come from the colleges that you applied to, and usually become available 1-3 months after you submitted your application. This will explain the total amount of money a school will offer you. They won’t all come at once, but you should start getting these shortly after your acceptance letters.

Here’s the order in which you should be accepting aid:

  1. Free Money (Grants)
  2. Earned Money (Work-Study)
  3. Federal Student Loans
  4. State/School-specific Loans
  5. Private Loans

The award letter will detail next steps for how to accept aid. Keep in mind that the timeline for receiving the money varies widely depending on the type of aid. Work-Study for example, will only pay after your first week on the job, which is usually AFTER you have started classes.

In Conclusion

This process is time-consuming, confusing, and often frustrating. However, it’s important to keep in mind that the benefits of both your education and the aid you receive for that education, more than compensate for your efforts. For many students, this will be one of the first steps into adulthood. You can do this – we believe in you!

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How Much Money Do I Need to Start the Semester?

cost of college
You did it. You received that highly anticipated bigger rather than smaller envelope in the mail stating you have been accepted into a college. You’re ecstatic. Then another piece of mail comes and it’s your tuition bill. That’s when it hits you. College is expensive, but just how expensive is it and what will you need to fork over for your first semester?

Tuition
Your first order of business should be calculating your tuition costs, which vary greatly from state to state and are a huge factor in determining how much student loans you may need. According to the College Board’s 2012-2013 Trends in College Pricing survey, the average cost for tuition and fees for in-state students at public four-year institutions was $4,327 a semester, while the average at private nonprofit four-year institutions was $14,528 a semester.

Room and Board
The average cost for on-campus living for undergraduate students attending public four-year institutions is $4,602 a semester, and $5, 231 a semester if you attend a private nonprofit four-year school. If you live off campus without roommates, your living expenses can double.

Books
Renting textbooks is becoming increasingly popular among college students. Your total book costs depend on your major and other factors, but on average, if you rent your books, you could spend $300 a semester, which is significantly less than if you were to buy your textbooks.

And when you rent your textbooks from eCampus.com, you may save even more money. Not only can you spend less on your books, but you can receive cash back when you sell your books to eCampus.com, so other students just like you can buy them at a lower price. It’s fast, easy and saves you money!

Transportation
Depending on whether you own a car, use public transportation, live on- or off-campus and how far you travel, your average semester cost for transportation is about $700 and parking may cost $70 a semester.

Social Life and Miscellaneous Expenses
Depending on how much you spend on eating out, you could spend  $1,000 a semester just to keep your social life intact.

Financial Aid
After you calculate all your expenses, consider how much financial aid you might receive. According to College Board, in 2012-2013, undergraduate students attending public four-year institutions received an average of $2,875 a semester in grants and federal aid, while students attending private nonprofit four-year institutions received $7,840 a semester.

Estimated Cost for Your First Semester of College (with financial aid):

  • $8,124 for public four-year institutions
  • $13,989 for private nonprofit four-year institutions

Estimated Cost for Your First Semester of College (without financial aid):

  • $10,999 for public four-year institutions
  • $21,829 for private nonprofit four-year institutions

Keep in mind, there are many factors that determine your actual cost of attendance. For a more exact cost, you may want to contact your college’s financial aid department.

Kaitlyn Fusco is a content writer for Debt.org. She combines her interests in writing and overcoming debt to inform the public about issues related to credit, debt and personal finance.

How Will You Pay For School?

Paying for school is just flat out tough. Decisions need to be made by not only you, but your parents or guardians as well. Most high school students do not have the kind of money needed to pay for college so there are a few other options.

Financial Aid

Filling out financial aid is extremely beneficial and an absolute must if you are given the opportunity. Financial aid is determined by household income and a bunch of other various categories. It is then determined how much you will receive. This will help you along with your family to pay for college.

Scholarships

Unlike financial aid in which there is a process to determine if you will receive any of it, scholarships are just flat out earned. It could either be straight out of high school in which you may have excelled in, or it may be in smaller forms maybe from an essay contest you applied to. There are various ways to receive scholarships either coming out of high school or even when you are in college. Maintain a certain GPA, earn an athletic scholarship. This will certainly help you pay for college, but you must earn it first.

Loans

Loans are a tough thing to go about. The reason I say this is because paying off student loans for the rest of your life and during your career is just an absolute challenge and it can last all of your life. But of course loans are usually needed when it comes to college, and just because you have to repay these, it is definitely the way to go for most families.

Parents/Guardians

Having your parents and or guardians help you pay for college is another option but again a tough decision. The first thing you need is the permission from your family, or just to know that they will be helping you pay off your college payments.

Work

Working a full 9-5 job during college is nearly impossible but some people do actually manage to pull it off. It is truly and honestly tough to even have a part time job during school but it is an absolute necessity. Sure you won’t be able to pay off tuition and room and board with just a part time job, but having this part time job will keep your wallet a little more filled so you can survive throughout college!

Creative College Scholarships For Just About Anyone

There are many benefits of applying for scholarships and financial aid for school. First, and probably most important is the fact that college is expensive. Costs are on the rise and it is becoming more and more difficult to be able to finance schooling on your own. Scholarships can be a great way to shed some of the fee burden off of your higher education tab.

While I was researching this topic, I came across a few scholarships that I wish I had seen back in my final high school days. Looking back on it, with a little “googling” I could have potentially saved hundreds, even thousands, of dollars with creative scholarships.

Just a few years ago, scholarships were awarded primarily for academics, test scores and athletic ability. However, times have changed. You can now save the big bucks based on more than just your GPA and transcript—you are now encouraged to showcase your activities, hobbies and personality. There are scholarships out there just waiting to be awarded to those looking outside the beaten path! If something makes you unique, or you have a longtime hobby that is a little out of the ordinary, try searching for scholarships based around it. You will be surprised with what might pop up!

Don’t believe me? Let’s look at a few examples to kick that hamster wheel into gear.

There are scholarships awarded to students who have a bit of a “green thumb”. By paying close attention to the growing gains of going “Green”, students have the potential to win scholarships based on their initiative to get students involved. DoSomething.org will enter students into a drawing for a $500 scholarship just for referring their friends to their service programs and starting a club at their school. If you have the passion to give back to your community and it’s already apparent in your extracurricular activities—this scholarship could be perfect for you!

Now being a short girl, this next one wouldn’t quite apply to me, but it’s still fascinating and worth looking into! The Tall Clubs International Student Scholarship is awarded to students who are gifted in the height department. Students can win up to $1000 in scholarship money just for being “heads above the rest”!  For the ladies who are over 5”10, and the gentlemen who surpass 6”2, this one could be calling your name!

Avid fashion lovers and prom dress shoppers unite! This next scholarship stopped me dead in my tracks. In high school, prom was the event of the season. It didn’t matter who you were or what group you fit into—everyone went to prom. I spent weeks looking for the “perfect dress”. Ironically enough, I now look back at it and cringe. How in the world did I pick that?! I should have had fun and gotten creative. Maybe if I had seen this scholarship I would have! The Duck Brand Duct Tape Stuck on Prom Contest awards over $5000 each to a couple who makes amazing Duck Tape prom outfits!

These are just a few of the hundreds and hundreds of scholarships opportunities that exist in the depths of cyber space! Spend time searching for scholarships whether you’re in high school or already in college—there are scholarships made for anyone and everyone, you just have to find them! From surveys, to sprinkler safety, to vegetarian awareness, there are countless numbers of untapped scholarship resources just waiting to be uncovered! Scholarships help you save money during school and make it more affordable in the long run!

-Ring Queen