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Financial Aid Application Guide

The Department of Education distributes $150 billion per year in grants, work-study, and low-interest student loans. Federal student aid covers common expenses such as tuition and fees, room and board, textbooks, and school supplies. Each student's financial need is re-assessed yearly, and the financial aid award is readjusted as necessary. Surprisingly, elite colleges and universities offer the greatest savings for students, due to their enormous endowments.

To begin the search for financial aid, you'll need to fill out the FAFSA, the federal student aid application. Please note that financial aid deadlines are strict, so submit your scholarship application early for the best chance of obtaining all the financial aid that you're qualified for. It's a fact that literally millions of students that would have qualified for some financial aid didn't even apply for it, or were late in submitting required forms. The official FAFSA website is fafsa.ed.gov. Other websites imitate the FAFSA site, but are deliberately misleading, and may charge fees, as well as sell your personal data online. Further, each college and university has its own formula for determining levels of financial need. Parents should keep financial records for at least three years, including tax forms and any business records. The earliest that the FAFSA form can be filled out is January of the senior year in high school. In contrast, the CSS Profile can be filled out much earlier during the fall.

Many parents make errors when filling out the FAFSA, including forgetting to click the 'submit' button, leaving out some fields instead of entering a zero, or incorrectly entering their social security number. Since FAFSA formulas dictate that 20% of student assets can be used for college, as opposed to only 6% of parents assets, you may choose to move funds from student to parent bank accounts in prior years to maximize aid eligibility. Estimated tax data can be used to fill out the FAFSA, provided the information is updated later. Various financial aid calculators are listed below, to help you determine your financial aid eligibility, and loan repayment schedules.

Financial Aid Loan Calculators

The following calculators will assist you in computing various financial aid metrics.
Family Contribution
Loan Calculator
Savings Growth Projector
Compound Interest
Payment Chart Generator
Loan Balance vs. Rates
Loan Consolidation Calculator
Stafford Loan vs. PLUS Loans
Source: www.FinAid.org

Be aware of the differences in tuition for in-state versus out-of-state residents, and the documentation required that may enable reclassification as an in-state student after your first year.

Federal Grants

A Federal Pell Grant, unlike student loans, does not have to be repaid. Pell Grants usually are awarded only to undergraduate students who have never earned a bachelors or professional degree. Award amounts change yearly, but the maximum Federal Pell Grant award is $5,730 for the 2014–15 school year. The grant distribution will depend on demonstrated financial need, according to the FAFSA application, the cost of attendance, your status as a full-time or part-time student, and your plans to attend school for a full academic year or less. You may not receive Federal Pell Grant funds from any more than one educational institution at a time.

Students who receive Federal Pell Grants and have extreme financial need will receive FSEOG grants first. The FSEOG grant does not need to be repaid, and the FSEOG program is administered directly by the financial aid office at each participating school. Check with your school's financial aid office to find out if your school offers the FSEOG. You can receive anywhere between $100 and $4,000 a year, depending on when you apply, the amount of other financial aid you get, and the availability of funds. Each participating school receives a certain amount of FSEOG funds each year from the US Department of Education, office of Federal Student Aid. Once the full amount of the school’s FSEOG funds has been awarded to students, no more FSEOG awards can be made for that particular year. This system works differently from the Federal Pell Grant Program, which provides grant funding to each eligible student.

Guaranteed Student Loans

Need-based, fixed interest loans originate from a variety of sources, including US Federal Government Loans, as well as debt management tools. Loan calculators, repayment options, loan forgiveness, and default ramifications need to be considered carefully before you saddle yourself with a large amount of student debt. Short-term loans may bridge the gap between starting school and financial aid disbursement dates. Be aware that there are variable interest rates, and stiff penalties to pay if you fall behind on your loan repayment schedule.

Federal Direct Student Loans, also known as Direct Loans or FDLP loans, are funded from the U.S. Treasury, while private student loans are additional student debt that is not guaranteed, and is offered directly by banks, credit unions, or a finance companies. When Federal student loans enter the repayment period, a borrower usually has up to 10 years to repay the total amount of student debt. While federal student loans can be dismissed for permanent disability, private student loans cannot be discharged outside of bankruptcy proceedings. The best financial aid plan is to aggressively pursue scholarships, and grant funding where available, combined with parental savings.

Private loan programs issue loans based on the credit history of the applicant and any available cosigners. This contrasts with federal loan programs which focus on need-based criteria that is specified in the FAFSA. Moreover, private student loans have variable interest rates while federal loans generally have fixed rates. Loan applicants must be aware that private loans may require large up-front origination fees. Origination fees are a one-time charge based on the amount of the loan. Private loans are therefore higher-cost than federal student loans, and are to be used when students have exhausted the borrowing limits under federal student loan programs. Many private loans are pegged to one or more monetary indexes, such as the Wall Street Journal Prime rate, or the BBA LIBOR rate, plus an overhead charge.

Low-interest Perkins Loans

The Federal Perkins Loan Program is composed of low-interest, federal student loans for undergraduate and graduate students which have demonstrated exceptional financial need. The interest rate for Perkins Loans is set at 5%, and disbursement figures depend on your financial need as well as the availability of funds at your college. You may apply for a Perkins Loan if you are enrolled full-time or part-time, and attending a school that participates in the Federal Perkins Loan Program.

You should submit your FAFSA early to be considered for a Perkins Loan, but due to limited funding, not everyone who qualifies will succeed in getting this low-interest loan. If you are attending school at least half-time, you have nine months after you graduate, or fall below half-time enrollment status before you must begin loan repayment.

College Scholarships

To increase your chances of landing a college scholarship, begin searching for programs even before your senior year in high school, or at least a year in advance of your college application if you've already graduated form high school. There are several free scholarship sites available online. With more than 1.5 million scholarships worth more than $3.5 billion, the FastWeb.com is the largest and most frequently updated scholarship search database. Students often ask if there are any scholarships available for them because they don't have a 4.0 GPA. In fact, there are many scholarships that focus on other qualities besides grade point averages alone. More stats can be found in the National Postsecondary Student Aid Study, a survey conducted by the National Center for Education Statistics.

In general, parents may count on paying at least half to two-thirds of their children's college costs, through a combination of savings plans, current and future income contributions, and student loans. Government aid, scholarships, and grants, account for only about a third of the cost of a college education. Thus, it is important that parents think about starting a savings plan many years before their kids reach high school age.

Another option may be the ROTC program. The Reserve Officers' Training Corps pays for college tuition as well as a stipend while you're still in school. There is no fixed military commitment for the first year, allowing you to enroll in ROTC on a trial basis. If you then choose to commit to a military career, ROTC scholarships pay for almost all tuition and fees, and textbook costs, for up to four full years of college.

ROTC: 1-800-USA-ROTC
US Navy: 1-800-USA-NAVY
Air Force: 1-866-423-7682
Marines: 1-800-MARINES

US Service Academies:

US Military Academy, West Point: 1-800-822-8762
US Naval Academy, Annapolis, MD: 1-800-638-9156
Air Force Academy, Colorado Springs, CO: 1-800-443-9266

Sources: Business Week, USA Today
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