At today's prices, without considering inflation, four years of college at a public university would cost around $76,000. Most families, even those with some savings, could use some additional help paying their tuition bill. Fortunately, there are many sources of financial aid available. The federal government alone provides over $150 billion to students looking for assistance, and states, colleges and private organizations also offer awards. Applying for financial aid can be a daunting process, which is why many schools and organizations celebrate Financial Awareness Month each February. With application deadlines approaching, the beginning of the calendar year is the perfect time to learn how to maximize your chances of receiving aid. Here are five tips to focus on before spring:
Estimate your financial aid eligibility here
1. Get started on your financial aid applications
Financial aid applications must be completed for each year you plan to attend school. Filling out the Free Application for Federal Student Aid (FAFSA) should be your top priority. The U.S. Department of Education takes the information from your FAFSA, along with your federal tax return, and calculates your Expected Family Contribution (EFC) toward college costs. FAFSA deadlines are typically June 30, but students can apply as early as January 1st. It is strongly encouraged to apply as soon as possible since many awards are available on a first-come, first-served basis. Waiting to submit your FAFSA can cost you, especially if you are depending on grants.
In addition to the FAFSA, many schools also require students to fill out the CSS/ Financial Aid PROFILE to determine eligibility for other nonfederal forms of financial aid. Unlike the FAFSA, there is a fee to submit a CSS/ Financial Aid PROFILE application for each school or program you apply to. However, by filling out just one form on the College Board website you can apply for almost 400 different schools and scholarship programs. Keep in mind that each college or program may have different application deadlines.
2. Take advantage of free workshops
In the financial aid process, mistakes can delay your application process causing you to miss out on potential awards. Many schools host financial aid workshops and seminars to help families with things like deciphering the FAFSA and CSS/Financial Aid Profile, calculating college costs, how to find scholarships and how to avoid scams. Expert speakers can include financial aid officers from local universities, college counselors, representatives from the National Association of Student Financial Aid Administrators (NASFAA) or current college students. Some sessions are held in computer labs to give families hands on assistance while they fill out the required applications.
3. Meet with the experts
When planning a college visit, students often focus on learning about the campus lifestyle, checking out the dorms, lecture halls and dining options. All of these things are certainly important, but so is learning how to pay for them. During your campus visit, be sure to make an appointment to visit the school's financial aid director. This is the best way to learn what the realistic costs of attending the school will be, including living expenses, books and any anticipated tuition increases. It's also the perfect chance to learn all the ins and outs of how the school's financial aid system works. For example, will they reduce your financial aid package if you get a scholarship?
4. Know how your savings will affect your EFC
When calculating your EFC, colleges will look at all of your family's assets, but not in the same way. For example, the equity in your home, the value of a small family business, the cash value of your life insurance policy and the value of your retirement accounts will not be counted when computing your EFC. However, if you withdraw money from Roth IRA, even if it's to pay for college, it will be counted as income on the following year's FAFSA. In fact, parents are sometimes encouraged to hold off on retiring because all liquid assets, even those intended for retirement, will count against you on the FAFSA.
When it comes to financial aid, 529 plans and Coverdell Education Savings accounts are typically your best college savings options. Assets in these accounts are considered parent-owned and receive more favorable treatment on the FASFA than student-owned assets such as UGMA/UTMA accounts. What's more, they are not counted at all on the FASFA when you withdraw money to pay for college.
5. Understand your award package
Once you've applied for aid and have been accepted to a college, you should receive a financial aid letter that includes details about the award you are being offered. Most letters outline the school's cost of attendance (COA), your EFC and the amount of need that is being met. Before you accept an award, be sure you understand exactly what is being offered. Federal student aid can include grants that do not need to be paid back, loans that need to be paid back with interest, and work-study, which is money you earn by working. Around 38 percent of aid awarded is in the form of loans. If you need to borrow money for college, federal student loans are usually a better option than private loans. There are several types available, with varying interest rates and repayment requirements.
At today's prices, without considering inflation, four years of college at a public university would cost around $76,000. Most families, even those with some savings, could use some additional help paying their tuition bill. Fortunately, there are many sources of financial aid available. The federal government alone provides over $150 billion to students looking for assistance, and states, colleges and private organizations also offer awards. Applying for financial aid can be a daunting process, which is why many schools and organizations celebrate Financial Awareness Month each February. With application deadlines approaching, the beginning of the calendar year is the perfect time to learn how to maximize your chances of receiving aid. Here are five tips to focus on before spring:
Estimate your financial aid eligibility here
1. Get started on your financial aid applications
Financial aid applications must be completed for each year you plan to attend school. Filling out the Free Application for Federal Student Aid (FAFSA) should be your top priority. The U.S. Department of Education takes the information from your FAFSA, along with your federal tax return, and calculates your Expected Family Contribution (EFC) toward college costs. FAFSA deadlines are typically June 30, but students can apply as early as January 1st. It is strongly encouraged to apply as soon as possible since many awards are available on a first-come, first-served basis. Waiting to submit your FAFSA can cost you, especially if you are depending on grants.
In addition to the FAFSA, many schools also require students to fill out the CSS/ Financial Aid PROFILE to determine eligibility for other nonfederal forms of financial aid. Unlike the FAFSA, there is a fee to submit a CSS/ Financial Aid PROFILE application for each school or program you apply to. However, by filling out just one form on the College Board website you can apply for almost 400 different schools and scholarship programs. Keep in mind that each college or program may have different application deadlines.
2. Take advantage of free workshops
In the financial aid process, mistakes can delay your application process causing you to miss out on potential awards. Many schools host financial aid workshops and seminars to help families with things like deciphering the FAFSA and CSS/Financial Aid Profile, calculating college costs, how to find scholarships and how to avoid scams. Expert speakers can include financial aid officers from local universities, college counselors, representatives from the National Association of Student Financial Aid Administrators (NASFAA) or current college students. Some sessions are held in computer labs to give families hands on assistance while they fill out the required applications.
3. Meet with the experts
When planning a college visit, students often focus on learning about the campus lifestyle, checking out the dorms, lecture halls and dining options. All of these things are certainly important, but so is learning how to pay for them. During your campus visit, be sure to make an appointment to visit the school's financial aid director. This is the best way to learn what the realistic costs of attending the school will be, including living expenses, books and any anticipated tuition increases. It's also the perfect chance to learn all the ins and outs of how the school's financial aid system works. For example, will they reduce your financial aid package if you get a scholarship?
4. Know how your savings will affect your EFC
When calculating your EFC, colleges will look at all of your family's assets, but not in the same way. For example, the equity in your home, the value of a small family business, the cash value of your life insurance policy and the value of your retirement accounts will not be counted when computing your EFC. However, if you withdraw money from Roth IRA, even if it's to pay for college, it will be counted as income on the following year's FAFSA. In fact, parents are sometimes encouraged to hold off on retiring because all liquid assets, even those intended for retirement, will count against you on the FAFSA.
When it comes to financial aid, 529 plans and Coverdell Education Savings accounts are typically your best college savings options. Assets in these accounts are considered parent-owned and receive more favorable treatment on the FASFA than student-owned assets such as UGMA/UTMA accounts. What's more, they are not counted at all on the FASFA when you withdraw money to pay for college.
5. Understand your award package
Once you've applied for aid and have been accepted to a college, you should receive a financial aid letter that includes details about the award you are being offered. Most letters outline the school's cost of attendance (COA), your EFC and the amount of need that is being met. Before you accept an award, be sure you understand exactly what is being offered. Federal student aid can include grants that do not need to be paid back, loans that need to be paid back with interest, and work-study, which is money you earn by working. Around 38 percent of aid awarded is in the form of loans. If you need to borrow money for college, federal student loans are usually a better option than private loans. There are several types available, with varying interest rates and repayment requirements.
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