Now that you have selected your general pathways to pay for your education, let’s see what kind of break the financial aid office at your college or university gave you. Oh, you don’t know about finanacial aid yet, do you? Well here is the breakdown of what financial aid is, what kinds of aid are offered to people, and which options are preferable.
Financial aid is a package offered by your higher education institution of choice to students to help them pay for school. This is offered at most post-secondary institutions (including technical and trade schools, community colleges, private colleges, public colleges and universities). You will not be offered financial aid unless you complete a form called the Free Application for Federal Student Aid or FAFSA for short. The link to the official FAFSA page is in the useful links tab at the top of this page.
If you do not complete the FAFSA, no financial aid for you! There are two methods for completing the FAFSA paper and the internet. The internet is generally preferred because it is more efficient (you don’t have to go to the post office) and processes faster than the paper method, plus the internet will guide you through the steps of the application. Ultimately both paper and internet get the same results, so do whichever method you prefer.
In order to fill out your FAFSA it is generally recommended that you (or your parents , or both of you) file your tax returns first. It is possible to file the FAFSA before you do this, but there will be required updates that will make you wish you finished your taxes first. The other key is to get this done as soon in the calendar year as possible. The second you get all of your tax documentation do your taxes and complete the FAFSA. Note: you have to do complete the FAFSA every year that you attend school.
There is one catch to the FAFSA, unless you are an emancipated minor, a ward of the state, or older than age 24 you are required to include your parent’s financial information on the FAFSA. This is because you are not considered to be an independent adult by the federal government. Even if your parents will be contributing nothing towards your college education or living expenses this is still required. It isn’t fair because this will create an appearance of money you don’t have and will decrease the amount of the best kinds of financial aid offered to you, but this is the doing of the federal government and won’t change anytime soon…you will have to suck it up and get your parent’s tax information.
Now for the kinds of aid your school offers you. Let’s start with the best kind of aid…free money. This free money goes by two names grants and scholarships. Grants are awarded to people based mostly on financial need. Grants do not have to be paid back (unless you do not complete your semester). The best thing about a grant is the only work required to receive one is filling out your FAFSA application promptly and correctly.
Scholarships are awarded for multiple reasons. These reasons can range from merit (you had amazing grades in high school or college, you are a very talented musician or athlete, etc.) to financial need (you have a lower range income reported to FAFSA) to your interest in careers (you plan on becoming an engineer, or actuary, or teacher). Scholarships can also be awarded to people who belong to certain racial or ethnic groups, or minority groups within a certain field of study (i.e. women in math, science, and engineering). Some schools will automatically award you with certain scholarships, but generally speaking you have to go out, find, and apply for scholarships on your own. If you are awarded a scholarship the organization that will be giving you money will often be the ones to directly pay your school. This will be reflected in your financial aid statement.
There are a couple of well know scholarship search sites which I have listed in the useful links tab at the top of the page, but contact your guidance counselor at your high school, or your college advisor (or financial aid office) at your college or university for additional scholarship opportunities that are only found locally.
Another great resource for scholarships is if you know what your major is going to be or what you want to do for a career, search the different professional organizations in that field. Many of those professional organizations offer scholarships to people who plan to pursue a career in their field, or who are majoring in their field. In addition to paying for your college these scholarships can look very good on your resume when you graduate. Note: if you find a program that says you have to pay money to gain access to scholarships or to apply for scholarships DON’T DO IT! It is a scam and you will never see one red cent go towards your education.
The next best financial aid option that is offered in your financial aid package is work-study. This is a great option for those of you who plan on working at least part-time while attending school. Generally speaking you accept the work study money in your financial aid package and then find an eligible work-study job on or near campus. The advantage of work study is that you are taxed less than other jobs. The disadvantage is that these jobs are often low-paying compared to other jobs in the area and can only be part –time hours. If you plan on working full time you will need to get a second job, or forgo work-study altogether if you find a full-time job that pays significantly more.
The last option offered in your financial aid package is loans. There are three kinds of loans you will be offered: subsidized, unsubsidized, and PLUS loans. Now that you know what is on your financial aid statement look it over. Always accept grant and scholarship money. Accept work study, unless you know for a fact you will not be using it. Accept loans if you really need to. Tally up your financial aid package and see how much money you will be awarded for the year. Subtract that total from your true cost of college worksheet total to find what your new financial responsibility is going to be for the year.
For example if you calculated that you will need $40,000.00 per year to pay for school and living expenses and your financial add totals to $22,000.00 you now only need to pay out of your pocket $18,000.00. That is approximately $1500.00 a month in costs. I will go over multiple ways of coming up with money to close that financial gap in future posts.
The next post will be more detailed about loans and how they will affect you while in school and out of school. Make sure to consider what is said in the next post before you go accepting loan money for your education.
