EBONY HAZELEGER: Applying for college financial aid

Many parents these days want their children to go to college irrespective of not saving early enough to pay for college expenses. With the rising cost of tuition, it becomes harder and harder each year to pay for your children’s education and get them into the school of their dreams. But by being diligent and submitting your application early and by doing your financial research, students and families have a better chance of securing cheap or even free money for college.

Sources of Financial Aid

The federal government provides the majority of financial aid, offering as much as $100 billion a year. The remainder of the aid comes from state agencies, private loans, scholarships or employers. The four most common types of loans are direct subsidized and unsubsidized loans, PLUS loans for parents; Perkins loans for high financial need students, and the Federal Pell Grant loan, which doesn’t have to be repaid and is usually awarded only to undergraduate students based on financial need, cost of attendance and other factors.

State and federal agencies are also commonly used. Federal agencies such as the Department of Health & Human Services and the Department of Veterans Affairs provide many scholarships, loans and education benefits. For a list of aid programs, check your state’s education department.

Private student loans are also provided, but with limitations. Before 2008, there was an abundance of private education loans that could be used as an option for additional loans for school. Since then, though, dozens of lenders left the market. And the lenders that do offer the loans have made it harder and more expensive to apply.

Where do I start?

Complete the FAFSA application. There are a limited amount of funds, so do not delay.

FAFSA also determines your EFC (expected family contribution) and financial need.

FAFSA does not guarantee you will receive all the financial aid you are offered. Keep in mind that most financial aid offers will not meet a student’s calculated financial need because the federal program has annual and lifetime limits. This “unmet need” is the difference between the financial need and your financial aid offer. From here, you will have to start finding the funds on your own. This can be done through other loans, independent scholarships, work study programs, etc. If you have an unmet need, be sure to call your financial aid office and see if they can help.

They often have additional scholarships they can give upon request. Additionally, you can find many scholarships outside of the schools and FAFSA.

We hear every day about people who are financially crippled because of student loans.

It is no surprise when you realize that the average college degree costs about $120,000 and is rising by about 5% each year. During your child’s freshman year of high school, have a talk with them about the reality of paying for college. Go over with them what is affordable without loans and all of the different financial aid options and scholarships that are available to them. It is important to set realistic expectations early on so that your child doesn’t start out in a hole. Just remind them that they are not alone and that there are many resources, including yourself, to help them succeed.

There are number of factors that go into saving for higher education. For help with lowering your estimated family contribution, maximizing financial aid tax-free, and to start saving for the future, give my office a call today.