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The bad news is that college expenses continue to climb. One year of tuition at public colleges is currently averaging $9,650 for in-state students and $24,930 for out-of-state residents. The good news is that there are plenty of financial aid opportunities out there to help students reduce these costs.
To maximize your piece of the financial aid pie, follow these 5 tips for getting financial aid for college.
1. Understand the different types of aid you can receive.
There are three main types of financial aid for college: grants, scholarships, and loans. While grants and scholarships don’t require repayment, loans must be repaid with interest.
Many grants are offered by the federal government, but you can also receive grants from your state, professional associations, and corporations.
You can also apply for scholarships, which may be based on academic or athletic merit, in addition to other student characteristics. There’s no limit to the amount of scholarships for which you can apply, so it’s a good idea to apply as many as possible.
For both grants and scholarships, do research online. You may be surprised just how many different options are available. See if you can find scholarships linked to your race, religious affiliation, career or major of interest, etc. There are even scholarships available for left-handed students!
If grants and scholarships don’t earn you enough money for tuition, you can also apply for loans. There are both federal and private loans. Since private loans charge higher interest rates than federal loans, they should be a last option.
Federal loans may be subsidized or unsubsidized. Subsidized loans are available for students with financial need. For these loans, the government covers interest while you are in school, and for a small window after you graduate. With unsubsidized loans, you are responsible for all interest payments.
There’s also a federal Parent PLUS loan that your parent can take out to help you pay for college. These loans carry a 7% interest rate, which is higher than the interest rate for most student loans. For this reason, it may be a better idea to get help from your parent with your loan instead of having them take out their own loan.
2. Fill out a FAFSA.
Even if you think your family earns too much money to qualify, you should fill out a FAFSA (Free Application for Federal Student Aid) annually.
Some families are surprised when they unexpectedly qualify for aid, and everyone who fills out a FAFSA will at least receive federal loan offers (which can be accepted or rejected).
Additionally, says Beth V. Walker, founder of College Funding Coaches, “It’s a surprise to many people to know that the merit-based aid is handed out many times through the need-based door.”
To fill out a FAFSA, you’ll need:
- Bank statements and account balances
- Your driver’s license number
- Your Social Security number
- Federal tax, including W-2s
- Records of untaxed income
The FAFSA is used to calculate your family’s expected financial contribution (EFC), which is the amount the government believes your family is capable of contributing to college tuition that year. Students may qualify for federal grants, loans, and/or work study programs as a result.
Colleges also use FAFSAs to determine how much they will contribute to a student’s financial aid package.
Remember to fill out the FAFSA each year. Even if your family’s situation hasn’t changed, FAFSA requirements and parameters do change annually. Plus, financial aid awards don’t carry over from year to year.
3. Be strategic.
There are several strategies you can use to maximize the amount of financial aid you receives.
For example, file your FAFSA as early as possible. Aid is often awarded in the order in which forms are submitted, and the amount of financial aid available is not unlimited.
Another strategy is to transfer or spend assets that are held in your name. While parental assets are assessed at up to 5.6%, student assets are assessed at 20%. This means every dollar linked to an account in your name will result in a 20-cent deduction from your aid package.
You’ll save your family money if you transfer these funds to an account in your parents’ name. Another option is to pay for items you need for college using the money from any accounts in your name — like a computer or dorm furniture — before filling out the FAFSA.
Be strategic when applying for scholarships and grants as well. Research thoroughly, and come up with a list of scholarships or grants for which you may qualify. Purchase a calendar and write down the deadlines for each grant or scholarship.
You can often reuse essays or personal statements for multiple scholarship applications, so keep a strong essay on file to save time and hopefully maximize reward money.
4. Let the financial aid office know if your circumstances change.
Sometimes, a family’s circumstances change after submitting the FAFSA. If this happens to you, be sure to inform the financial aid office so they can adjust your aid amount. For example, if one parent loses a job after filling out the FAFSA, don’t forget to share this vital information with your school.
Sanday Baum, a senior fellow at the Urban Institute, says that students should also inform their school about circumstances not covered on the FAFSA. Providing documentation relating to factors like medical expenses, divorce, or death in the family can make a difference in the amount of aid you receive.
5. Be aware of ongoing requirements.
Most grants and scholarships, as well as federal student loans, have ongoing eligibility requirements. It’s important for you to be aware of these requirements in order to avoid the sudden loss of financial aid.
These requirements are typically linked to your performance in school and status as a student. For some federal loans, the requirement is that you be at least a half-time student. A half-time student takes six credit hours per semester.
Other scholarships and grants may require you to be a full-time student, which means you take 12 credit hours per semester. This generally translates to about four classes.
If your financial aid is need-based, be aware that positive changes in your financial situation may result in reduced or lost aid.
You must be aware of these requirements so that you can prevent or plan for the loss of much-needed financial aid.
College financial aid is complex, but we hope this article has given you the most important basics.
Plan, research, and fill out a FAFSA every year. Be strategic by submitting your FAFSA early and transferring assets held in your name. Be mindful of ongoing eligibility requirements, and update the financial aid office if your circumstances change.
College has a steep price tag, but these tips on getting financial aid for college can help you cut costs.
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