| Student
Financial Aid is the single most daunting
and misunderstood part of the college planning
process.
The financial planning part of college planning
is complicated by the mystery of what it takes
to qualify for college student financial aid.
With college costs going through the roof,
student financial aid is becoming an increasingly
more important potential source of funding.
Financial aid is not to be
confused with scholarships. College scholarships
are awarded to less than 2% of all college
students. Meanwhile, over 30% of college students
receive some form of financial aid support
from the pool of roughly $70 billion in grants
and loans available every year. But remember,
most financial aid comes in the form of government
loans, so it is not "free money."
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Key
Facts and Information about Financial Aid
What is financial
aid and what are its benefits?
Financial aid is defined as monetary assistance
provided to students for the purpose of paying
costs associated with obtaining an educational
degree. Providers of financial aid include
federal and state governments, colleges themselves,
banks, and other financial services companies.
There are three main types of financial aid:
grant aid, which is free money for the student;
loan aid, which requires repayment, usually
after graduation; and work study financial
aid, which is basically an on-campus job that
enables students to earn money that they use
for college tuition and expenses. The benefits
of financial aid are obvious, to allow more
students to attain higher education degrees,
which will help them open their minds, develop
careers and obtain secure employment in the
workforce.
Who
can get financial aid? Anyone,
regardless of income level, can and should
apply for financial aid. There are many forms
of student financial aid, including unsubsidized
Stafford Loans and PLUS Loans, which have
very favorable interest rates. It costs nothing
to apply for financial aid and there are also
some good financial strategies that families
can employ to get more financial aid.
How
do I get financial aid? Students
should apply for financial aid in each year
that they attend college and graduate school.
The FAFSA (Free Application for Federal Student
Aid) application is free. Private colleges
often require additional financial aid forms
in order for students to qualify for college
grants and loans. Applications should be submitted
after January 1st for the upcoming school
year (which includes Fall and Spring Semesters).
What
is the minimum and maximum amount of financial
aid that one can get? Students
may receive financial aid ranging from several
hundred dollars to the full cost of tuition
and expenses at a university. It depends on
what their financial aid eligibility is according
to the results of their financial aid application(s).
What
are my choices for financial aid?
There are hundreds of providers for loan-based
financial aid, the most popular of which is
Sallie Mae. Otherwise, your choices depend
on which schools you are applying to, whether
they are public or private, and what states
they are in, since states also offer financial
aid to some students (usually residents of
that particular state and sometimes neighboring
states).
What
are the costs associated with financial aid?
Remember that financial aid is not just free
money. There are no costs associated with
grants or the free money part of financial
aid. Student loans, whether subsidized or
unsubsidized cost students thousands of dollars
in interest charges, but since the loans do
not have to be paid until the student graduates,
it gives them an opportunity to get a paying
job that provides them with the necessary
income to repay school loans.
For more financial aid FAQs, visit the
401kid Help Center.
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