Paying For College: A Guide to Financial Aid

By Hannah Overton

When I was in college, I had no concept of student loan debt. I filed my FAFSA each semester, usually right at deadline, and electronically signed for whatever loan money came my way. I knew college was “expensive,” but I had no idea how expensive. I figured it out pretty quickly after I graduated and the bills started rolling in.

According to Debt.org, (a website that helps students manage and understand their debt,) students who graduate from college in 2017 will owe an average of $37,172. In order to avoid being part of the statistic, have a grasp on total expenses before you start school. Most college websites offer a “Tuition Calculator” on the Financial Aid page that gives students a better idea of total out-of-pocket spending. When you start searching for schools, talk to your parents about how you will pay tuition.

Scholarship Search

Scholarships come from national and local sources and you don’t have to wait until you have been accepted into college to begin applying. Criteria for each award varies, so make sure you fit all of the requirements and read all of the guidelines. Some awards won’t transfer to other schools and some need to be reapplied for each semester.

There are hundreds of thousands of scholarships available; money can be awarded based on academic achievements, race, religion, athletic involvement and more. Some are as simple as filling out your basic information, while others ask for essays and resumes. Most colleges offer scholarships in several categories. If you meet the requirements, apply! As a senior in high school, try to spend two hours every week searching and applying for scholarships. Use the following websites to find some additional educational funding:

 
“Parents can help their children by being honest and forthcoming about what they can and can’t afford. Let them know ahead of time that they need to work hard and apply for scholarships.”
--- Katherine Foster – Reach Higher Montana
 

FAFSA

Once you have been admitted into a school (or several schools,) file a Free Application for Federal Student Aid, or FAFSA. You can list up to 10 schools on a FAFSA, which is helpful in comparing financial aid packages. Every state has different deadlines for filing a FAFSA, but you can begin as early as January 1st, or once you have your tax information from the previous year.

Filling out a FAFSA will determine the amount and type of Federal Student Aid you will receive for the upcoming school year. Each year, Federal Student Aid provides over $120 billion to more than 13 million students. All students are eligible for some kind of federal aid, and it is important that every student apply, regardless of how much their parents earn.

The FAFSA can be filled out at home or in the Financial Aid Office of your school. The easiest way to file is to fill out the online FAFSA at fafsa.ed.gov. The form consists of about 100 questions. If you have all of the required information on hand, you can fill out the form in about half an hour.

Make sure to bring:

  • Your Social Security Number
  • Driver’s License or State ID
  • Untaxed income records (if applicable)
  • Business and Investment records (if applicable)
  • Alien registration Number (if not a U.S. citizen.)
  • Most recent federal income tax returns, W-2s, and any other record of earnings. (This information is accessible online, and the online form will prompt you to transfer your federal tax return into the FAFSA using the IRS Data Retrieval Tool.)

As a dependent, you will be prompted to enter your parents’ earnings information. It is helpful to have one or both parents present while filing a FAFSA. Make sure you answer each question correctly; incorrect answers will negatively affect your total aid package.

It will take 3 days to 3 weeks to get a Student Aid Report, (SAR,) which is a summary of the information you submitted. Look it over and make sure you filled everything out correctly. Next, the schools you included on your FAFSA will send you electronic aid offers or award letters, letting you know the financial aid you will receive from each individual school.

Types of Financial Aid

Before you accept or decline anything, know what you’re agreeing to.

  • Grants & Scholarships: These are the best awards you can get because you will not have to repay them. Thesy are based on financial need or academic achievement. Know the requirements of these scholarships, reapply for them every year and keep your grades up.
  • Federal Work Study: Get a part-time job on campus that will help you pay for your tuition. This program encourages students to work in a field related to their course of study. In addition to getting help with tuition, you still earn a paycheck.
  • Loans: There are several different types of loans. While it’s easy to accept the loan now and worry about it later, understand interest rates, total amounts, and pay-back options. Be as conservative as possible with loans.
  • Federal Perkins Loan: Awarded based on need, this money is borrowed directly from the school. The interest rate is 5%, and you can borrow up to $5,500 per year depending on need.
  • Stafford Loans: Interest levels on Federal Loans are almost always lower than the interest levels of private loans. You don’t have to pay them back until after you graduate, and certain jobs offer federal student loan relief.
  • Direct Subsidized Loans: The school determines the amount you can borrow, and the U.S. Department of Education pays the interest on the loan half the time you are in school, six months after you leave school, and during a period of deferment. You can borrow $5,500 - $12,500 per year, depending on factors and year in college.
  • Direct Unsubsidized Loans: They require no financial need, the school determines the amount you can borrow, and you are responsible for paying interest on the loan. Interest can accrue while you are in school, during grace periods or periods of forbearance. You can borrow $5,500 - $12,500 per year, depending on factors and year in college.
  • Direct PLUS Loans: This is a parent loan, funded by The U.S. Department of Education. Payments for these loans are made while the student is still in school. Credit counseling must be completed in order to receive this loan.
  • Private/Alternative Education Loans: If you’re out of options and you still have a balance due, consider a private or alternative loan as a last resort. Eligibility and interest rates are determined by your credit history. These loans usually come with hidden fees and high interest rates, so borrower beware.

 
“If a student can avoid student loans and utilize financial aid and scholarships that is ideal.”
--- Brian Hanchett - Counselor Skagit Valley College
 

Always keep track of how much you’re borrowing. Each loan will come with a set of terms and conditions. As easy as it is to click through to the agreements page, take the time to read and process what you are signing up for. When you sign the promissory note, you are agreeing to pay back the loan, regardless of whether or not you get a job after college. There are benefits to borrowing. Student loans are flexible and offer several different repayment plans and low interest rates.