Financial aid is one of the best ways to help pay for your college education. Going through the process of financial aid can be quite daunting however, so read on to be prepared.
Federal aid: Start with the FAFSA
If you are applying for financial aid from the federal government, you can pick up an application at your high school or college or you can complete the application at www.fafsa.ed.gov . Completing the FAFSA, or Free Application for Federal Student Aid, online limits the amount of paperwork to keep track of since everything is submitted over the Internet. You will have to apply for a PIN, or personal identification number. This number will function as your signature online and you will be able to use it every year that you apply for financial aid. It is perfectly acceptable to submit your FAFSA through the mail, but completing the FAFSA online can expedite the process.
Eligibility
Before you complete your FAFSA, you should first determine if your child is eligible to receive financial aid. Students need to be U.S. citizens or eligible non-citizens. Students must also have reached certain educational requirements in order be eligible for financial aid. You must receive your high school diploma, General Education Development (GED) or another ability-to-benefit (ATB) test before you can receive financial aid. A federal law suspends eligibility for federal aid if your child has been convicted of possession of or sale of illegal drugs, if the offense occurred during a period of enrollment for which the student was receiving federal student aid. However, you should still apply for financial aid, as you and your child may be eligible for aid from other resources.
Have your information ready
You should know what information you will have to submit when applying for financial aid, and have it next to you when filling out the form. Some of the things you’ll need include:
- Social Security number
- Driver’s license number
- Student’s tax information
- Parents’ tax information and untaxed income records
- Information about your mortgage, investments or a business
Unless you are applying for an unsubsidized Stafford loan, you will need to demonstrate financial need. The information on the application determines how much federal aid you can receive. If you have defaulted on federal grants or another federal student loan, you probably will not be eligible to receive additional money.
Getting help
If you have any questions about financial aid, you can ask a guidance counselor at your high school or college. You can also call the Federal Student Aid Information Center at 1-800-4-FED-AID. Be wary of any web sites or organizations that require you to pay for help.
Private student loans
If you don’t qualify for federally-funded loans, or if you simply require more money to pay for college, there are other options.
Private loans, which come from private institutions such as banks and credit unions, are not guaranteed by the government. Their rate of interest, along with their terms and conditions, are set by the lender. In some cases lenders will not require any payments while the student is in school and may even offer flexible repayment options after graduation. But private loans’ specifics vary widely, so students should shop around.
Other options
Students and parents can also investigate other borrowing sources to cover the cost of education. One option is a home equity loan. The interest on these loans is also usually tax deductible (consult a tax advisor about your particular situation).
TuitionTree, a new service from LendingTree, can help families understand their loan options and compare private student loan offers from lenders. Learn more about TuitionTree.
Next step: Working in college.
Step 3: Finding scholarships.
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