Applying for Student Loans Tips
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How FASFA Works
For the majority of college students today, obtaining some sort of financial aid is a fact of life. Whether extra funding is received from working while going to school, loans from family members, applying for scholarships or applying for student grants and loans, getting outside funding resources is necessary. Before applying for financial aid, it is required that you fill out a student loan application. While the process may seem daunting, it is actually quite straightforward. To assist in getting prepared for filling out the forms, make sure that you have tax information from the previous year and current salary details.
The Free Application for Federal Student Aid or FAFSA as it is affectionately known in the college world is the required form needed to be completed to apply for student loans from the government. This form can be filled out on line or a financial aid director at any college can provide assistance when completing the details. Filling out the form doesn't guarantee receiving any type of aid. If the application is approved, an award letter is issued that will detail the amount of aid eligible. There are a variety of aid types and some loans will not accrue interest while attending college. If there is a lack of credit history a student loan cosigner may be needed to qualify.
Determining College Expenses
Chase Tip: Some lenders are very specific about what a loan can be used for. In most instances, the lender will specify that the money must be used for college expenses. College expenses are usually defined as tuition, books and housing. Sometimes a new computer will also be considered a legitimate college expense.
Entrance And Exit Counseling For Federal Financial Aid
Chase Tip: After you complete your degree or leave school, you may also be required to complete exit counseling. This provides greater detail on the expectations for repaying any school loans you received. Students learn about options and what can happen if you are unable to repay your school loans. In addition, through this process, students learn that it is very important to provide updates to their lender regarding any changes like address or name. It is important to note that failure to complete exit counseling could result in your college or university holding up transcripts or other academic records.
Information Needed To Complete The FAFSA
Chase Tip: If you are an undergraduate completing the FAFSA form, you will also need to make sure you not only have your personal information, but financial information from your parents if you are a dependent. In order to accurately complete the FAFSA, you need the information from your parents' previous year federal tax return if you are a dependent student. You will also need records of any untaxed income from the previous year (i.e. social security, welfare payments, etc.), current banking information including recent statements and up-to-date information on other assets.
Application Process
Chase Tip: Even if you will be a part time student attending college, you will need to complete the Free Application for Federal Student Aid, if you are interested in obtaining federal loans to pay for school. When you fill out any financial aid forms from the federal government, you will be asked to specify whether you will be a part time or full time student. This will help determine the amount of money you will receive in loans.
Apply Early But Not Often
Applying for student financial aid doesn't have to be done right away, but it's recommended. Each year beginning January 1, the federal government makes the newest applications available on its website so students can apply early for the next academic year. While you are required to submit financial information, it is ok to estimate and make corrections later. Some state funds, scholarships and other aid have earlier cutoff dates than may be necessary for most federal student aid. In addition, some grants monies are limited and awarded on a first come, first serve basis. Applying as early as possible will give you a better opportunity to receive all of the financial aid for which you qualify.
Completing The FAFSA Honestly
In an attempt to qualify for higher amounts of federal student aid, you may think you can make adjustments to the information you provide in your FAFSA. This is not wise. You should be aware the federal government has several steps in place to automatically verify the information you provide. First, your social security number is checked against the database of the Social Security Administration to verify your citizenship. They also check records available through the National Student Loan Data System (NSLDS) for defaulted student loans. This system allows them to check on grants and student loans you have received (along with any overpayments) and also provides information on the total amount you have borrowed to ensure you have not exceeded the maximum allowable amounts.
Don't Pay To Apply For Financial Aid
There are many scams out there just waiting for a sucker to come along. Don't be that sucker! If someone tells you that you qualify for financial aid but they need money from you upfront, don't believe them. Instead get the information about what they offer and report it to the Better Business Bureau or Federal Trade Commission. The Free Application for Federal Student Aid (FAFSA) is just that – free. While there are many scams out there, some ask the student to provide banking information say the money can be automatically transferred to them. Never give out any information like that. It could leave you with more debt and hurt your credit.
Determining College Expenses
Each individual college or university determines what the cost of an education at their institution will be for the average student. They take into account more than just tuition and fees but include other costs like books, housing costs, and food. There may also be other educational expenses associated with the overall costs that are also figured in. College expenses are typically different for those students who commute from off-campus housing or live in the residence halls. Additionally, the costs calculated for a graduate student will vary from those identified for undergraduate students. The financial aid package awarded to a student is determined based on the cost of attendance as determined by all of the information provided. Essentially, your financial aid award takes the cost of attendance minus your expected family contribution to determine your financial need.
Information Needed To Complete The FAFSA
When completing your online application for student financial aid the first time, there are a number of items that you should have available, including:
1. A PIN number assigned by the Department of Education. This acts like your signature verification and allows you to complete the entire process completely online. If this is your first time completing the FAFSA and you don't have one yet, you can apply for one at the same website and wait to complete your FAFSA until you receive the PIN.
2. Your social security number.
3. Your driver's license number.
4. Information from your previous year federal tax return.
Application Process
Applying for financial aid is free. It is also a fairly easy and painless process available through the Department of Education website. Each student who wants to be considered for financial aid needs to complete the Free Application for Federal Student Aid (FAFSA) indicating which schools should receive a copy of the results. Based on those results, your school will determine your eligibility for financial aid.
Since financial awards and options have a limited amount of funds available to distribute between many college students, your best bet is to apply early. In addition, many states have early cutoff dates for state financial aid awards. While applications can be submitted beginning January 1 of each year, this may be before you have been able to complete your taxes for the previous year. In these cases, you can submit your estimated financial information and make corrections to it later.
Entrance And Exit Counseling For Federal Financial Aid
The first time you receive federal financial aid at your college or university, you will be required to complete entrance counseling. In fact, funds will not be disbursed until this counseling is completed. Through this process, you will learn what is involved if you accept federal financial aid. Even though grants are “free money” that you are not required to repay, there are rules involved that you need know. For example, if you drop out of school midway through the term, you may be expected to repay the grant. If you are receiving student loans, expectations on repayment will be explained.
Student Aid Report (SAR)
The results of the information provided on the Free Application for Federal Financial Aid (FAFSA) will be returned to you on the Student Aid Report (SAR) within four to six weeks. The colleges or universities that you selected to receive the information will also be sent the SAR. This notifies them of your eligibility for grants such as the Pell as well as providing them your Expected Family Contribution (EFC). The school will then use this form to determine your financial aid package. When you receive your copy, review it carefully to ensure everything is accurate. Errors should be corrected quickly so that you can receive your financial aid in a timely manner. You can log back into the Department of Education FAFSA website for corrections or mail in the corrections on the paper copy you are sent.
Financial Aid Verification
You may be asked to verify information provided in your financial aid application by the college or university you attend. If you are selected to provide additional information, you may be asked to include copies of federal income tax returns, W-2's, or other information to clear up any inconsistency. Your financial aid award depends on you submitting this information in a timely manner. The final processing of your financial aid will be delayed until all information has been received and corrected. Failure to provide this information will result in your college or university canceling any potential financial aid award.
How Your Expected Family Contribution (EFC) Is Determined
After you have completed the Free Application for Federal Student Aid (FAFSA), the information you provided is analyzed. The financial information you provided regarding your savings, income and various assets are used in the equation. Other factors such as the number of members included in your family are also considered. Having more than one member of your family in college can have a positive effect on your expected family contribution (EFC). Ideally, you want to have a lower EFC in order to qualify for a higher amount of financial aid. A lower EFC also could qualify you for certain grants or scholarships.
Renewal FAFSA
The first year you apply for financial aid, you are required to complete all pertinent fields. Each year after that, the process is simplified by transferring much of that information on the application from year to year. The online FAFSA renewal process still requires current financial information, but you won't have to input your social security number, address or other basic information unless there has been a change. In order to make this process as quick and easy as possible, you need to have your PIN number from the previous year. This verifies who you are and allows the online system to find your information from the previous year. Your PIN number should remain the same throughout your college career and will be used later for information access if you have loans serviced through Direct Loan Servicing.
Requesting A Change To The SAR Based On Special Circumstances
The Federal Government and the financial aid office at your school recognize that sometimes things change between the time you fill out your financial aid application and the time you are awarded financial aid. Situations like losing your job, marriage or the birth of a child may impact how much you can actually contribute towards the cost of your education. If you feel that a change in your financial circumstances should qualify you for additional financial aid, contact your financial aid office to request a change. They will review the information you provide to make a determination of your special circumstances.
Student Status: Independent Versus Dependent
While many college students would like to claim they are independent when applying for financial aid, it is the federal government that makes that determination. Unfortunately, it doesn't matter if your parents claim you on their taxes as a dependent. The characteristics that are used include:
1. age;
2. marital status;
3. degree pursuing (undergraduate or graduate);
4. having children;
5. being a ward of the court;
6. guardian for other dependents;
7. having deceased parents; and,
8. veteran status (honorably discharged).
If, based on these factors, you are considered dependent but you have other special circumstances, you can appeal the status with your university financial aid office. To make the final determination, you may be asked to provide additional information regarding the conditions of your situation.
Talk to a Friend
Do you have friends or family members in college or who recently graduated? Talk to them and find out what the college experience was like. They may be able to help you with the nitty gritty stuff. Why let yourself become overwhelmed with all the forms and deadlines? Have someone who has done it before show you how to fill the FAFSA out, how to keep things organized and get through the whole process.
There are tons of guides out there in the form of books, magazines, the Internet and more. These are great resources because they are presented to you by people who have been through what you are now experiencing. The more resources you check out before starting the financial aid process, the more prepared you will be when the time comes. Another person's personal experience can teach you a lot. Once you are ready to fill out those forms and attend the school of your choice you will be happy you took the time to use all these guides.
Save Money Now
Start saving early to lessen the burden later. More in savings will probably increase your Expected Family Contribution (EFC), but that increase is usually outweighed by the amount you can save and put toward college. Putting those savings in the parents' name is usually a better idea than in the student's.
The average amount of parental savings expected to be put toward college each year is 5-6 percent. For a student, that number jumps to between 20 and 30 percent. So it is better to put away savings, which are already earmarked for school expenses anyway, in the parents' name.
You will find it much more efficient to start saving early and put that toward tuition costs rather than taking out more in loans or borrowing against credit. Save what you can and then fill out your federal student loan applications. This results in a better financial situation with less debt. Then paying back the loans you do take out will be easier when you graduate.
Secure Your Information
Apply online for a Personal Identification Number (PIN) to streamline the entire loan application process. Your PIN allows you to do a number of things, including updating your personal information and accessing your loan records at any time. Your PIN will also serve as your electronic signature so that you may file your FAFSA each year online if you wish.
Even if you do not plan on filing your student loan applications electronically, having a PIN will at least give you that option. When you are given a PIN you agree that you will not share it with anyone. When you use it online it is considered an electronic version of your signature. You do not want anyone else to have access to or use your PIN. Loan applications and your personal records have very sensitive information in them that no one else should be able to access without your knowledge or permission. Your PIN is a way of securing your information.
Don't Settle for Less Than You Really Want
Explore all your options before eliminating choices from your list of potential colleges. When reviewing you federal loan application, your Expected Family Contribution (EFC) is calculated. This figure is what you are expected to pay on your own without loans, and is based on your current financial situation.
Your EFC does not change based on which school you attend, so a more expensive school does not always mean you will have to pay more out of your own pocket. The student financial aid package you receive will be based on the cost of attendance minus your EFC. In fact, you may actually get a more substantial aid package for a more expensive school. So do not let your first choice go because you are not sure you can afford it. Take it step by step and see if it can be worked out. You may be surprised at the result. Even if your EFC seems a bit high, there are many ways to assist in covering that cost. Private loans, scholarships and grants are just a few of the possible sources of assistance after federal student loans.
Sometimes an Extra Step Helps
Before filing your financial aid application, complete the FAFSA worksheet online. This is an optional step, but one that can be very helpful. The worksheet will prepare you for filing your application by listing all of the documents and other information you will need to reference in order to complete the process. It also shows you the questions that will be on the actual application. This way, if you are not sure about something you can get clarification rather than inputting incorrect or incomplete information on the final form.
Some applicants do not want to add more steps to an already difficult process, but this is one step that will reduce your stress and increase efficiency. Just like the Boy Scouts say, it is a good idea to always be prepared. The FAFSA worksheet will do just that for you.
If you choose to complete this worksheet it will be very beneficial, but make sure you keep it for your own records and do not mail it in for processing. This is not the actual application for an education loan and mailing it in can only cause delays. The worksheet is meant as a guide to familiarize yourself with the aid process and complete the real application.
Knowledge is Money
Before filing applications for financial aid, make sure you familiarize yourself with all the different types that are available to you. There are Perkins and Stafford loans, continuing education student loans, subsidized and unsubsidized, federal and private student loans. There are also limits placed on many types of loans.
Spend some time researching online, find out what all of your options are and use all of the resources available to you. High school guidance counselors help students each year with their college plans and will have valuable knowledge and experience in this area. Set up a meeting and explain what schools you are looking at, the tuition costs and what you think you can contribute financially.
Getting in touch with the financial aid departments of the schools you would like to attend is also a good idea. Talk to them and see if there are any further accommodations they are willing to make if your federal aid and private student loan are not enough. There are always alternatives they can suggest. This is what they do, so use them as a resource.
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| Jennifer Mathes, Ph.D. |
