Financing College

  • Types of Financial Aid:

    • Scholarships - these are based solely on merit; they do not need to be paid back
    • Grants - these are based solely on need; they do not need to be paid back
    • Loans - these need to be paid back plus interest
    • Work study - federally funded jobs through the college; student receives money in the form of a paycheck

     

    Source of Financial Aid:

    • The college or university - biggest source of funding for college, they offer scholarships, grants, and work study
    • Federal Government - offers grants and loans
    • Private banks - offer loans
    • Outside sources - offer scholarships

     

    Applying for Financial Aid:

    1. Complete the FAFSA (https://fafsa.ed.gov/)
    2. Fill out a CSS profile if the college or university requires it
      1. Generally, these are only required by very elite colleges
    3. Complete scholarship applications, found on the school’s website, as well as the following websites:
      1. www.fastweb.com
      2. www.finaid.org
      3. www.wiredscholar.com
      4. www.gocollege.com
      5. www.cappex.com
      6. Our Opportunities - Scholarship Central (academicworks.com)
      7. List of Top 175 College Scholarships

     

    FAFSA:

    FAFSA (Free Application for Federal Student Aid) is a form that collects household information, including tax returns, to determine how much each family can afford to pay.  This number is called the EFC, or the Expected Family Contribution. When filling out the FAFSA, students and parents include a list of colleges that they would like this information sent to.  Each college then uses this information to determine that family’s need (Cost of attendance - EFC = Need).  Colleges then use the amount of need to determine the amount of grants given to the student. However, colleges have a finite amount of money to give out; therefore, it is very important to file the FAFSA as soon as possible.  The FAFSA is released October 1, so families can begin completing it at that point.

     

    The information from the FAFSA doesn’t just affect the money that colleges are able to give the student.  The government also uses the EFC to determine to amount of the grant that they give, the Pell Grant. Generally, the lower the household income, the higher the Pell Grant amount. The Pell Grant is guaranteed money - that is, no matter when the FAFSA is filed, the Pell Grant is guaranteed to the family. 

     

    Student Loans:

    When grants, scholarships, and potential work study don’t cover the cost of tuition, student loans must be taken out.  There are several options when it comes to student loans:

    • Parent PLUS Loan - federal loans that parents take out to assist their child in paying for college
      • Pros: Less financial responsibility on the student
      • Cons: higher interest rate than loans taken out directly by the student
    • Federal Student Loans - loans that students take out from the federal government to pay for college
      • Pros: lower interest rate than private loans
      • Cons: fixed interest rate, cannot refinance at a later date; federal loans remain after bankruptcy
    • Private Student Loans - loans that students take out from private banks
      • Pros: can be refinanced at a later date, will disappear with bankruptcy
      • Cons: higher interest rate than federal loans