Each year, many students undergo the process of applying for and receiving financial aid for their education. Since February is Financial Aid Awareness Month, and if you’re a student in this boat, we’re here to provide you with the information you need to get a jump start on the process.
The process can be difficult for many, due to the dizzying array of terminology, the wide availability of options, and the various steps involved.
As a student, you may be eligible for multiple types of financial aid. Often, financial aid packages include a combination of scholarships, grants, and loans. Knowing exactly what to pursue and what you might be qualified to receive can certainly be overwhelming and you may not know where to start.
At Lafayette Federal, we want to give you the knowledge and confidence you need to tackle this process with ease. In this financial aid guide, we will cover the most important concepts you need to know to be successful.
Common Financial Aid Terms
In general, there are two categories of financial aid. The first category includes money that is given to you with no expectation of repayment, commonly referred to as “gift aid.” The second category of financial aid is “self-help.” This is aid that has a caveat of some kind – either you pay it back or you work it off.
Scholarships usually provide money to students based on some sort of criteria. They can be awarded for a variety of reasons, including, but not limited to: academic achievement, college entry test scores, competitions, or extracurricular performance.
Scholarships can originate from a variety of institutions. It may be a state government incentivizing academic performance. Alternatively, it may be a corporation seeking to give back to the community, providing benefits to current employees, or building a path for future employees. Furthermore, there are many nonprofit organizations that provide scholarships.
Similar to scholarships, grants are free money for students. Except in notable circumstances (such as withdrawing from a program, receiving other funding that changes your financial status, or changing enrollment), you won’t be expected to repay the grant money you receive. Many people have heard of the Pell Grant, which is a common federal grant often given to those with great financial needs.
Grants also come from a myriad of sources, such as federal or state governments, private and nonprofit institutions, and even universities themselves.
Work study is a less well-known financial aid option. This type of program is offered by universities and is supplemented by the federal government. There is limited funding for these programs, so getting applications in early is vital.
Essentially, these programs trade the teaching of the institution for the work of the student. You can expect to work part-time, either on or off campus. Typically the hours are flexible and you (the student) will receive payment directly. This is an important point, as students must be sure to personally apply their wages toward their student loan bills.
Loans that are part of the financial aid package which must be repaid. This money is lent to you and there will be given a schedule for paying it back.
Perhaps the most important thing to be aware of when beginning to pursue financial aid is that student loans can often make up the majority of your financial aid package. Although there are those students whose grants and scholarships will cover the majority (if not all) of your financing, this is often not the case for many. Still, student loans can be a good way to finance your education, as long as you are aware of the required repayment.
EFC and COA
EFC, or Expected Family Contribution is the money that a postsecondary institution can expect you to pay based on your current financial circumstances. The level of financial aid you will receive is based on the gap between your EFC and the cost of attendance (COA), which includes the total cost (tuition, fees, etc.) associated with attending a particular university.
FAFSA stands for Free Application for Federal Financial Aid. To apply for this type of aid, you will submit a comprehensive application that is then used by colleges to determine your level of eligibility for monetary assistance.
The Process for Filing and Receiving Financial Aid
To begin, you will need to visit FAFSA.gov. Once there, you will create your FSA ID (Federal Student Aid Identification). This is what you’ll use to sign your FAFSA form online. Be aware that there may be a waiting period (up to three days) for your information to be verified. If you are considered a dependent, you should complete this with a parent/guardian, as they will need their own FSA ID as well.
After getting your FSA ID, you can begin filling out your FAFSA form. You will answer demographic, dependency, and financial questions, as well as indicate to which schools you want your FAFSA information sent. (Note: colleges won’t see other schools you’ve listed and if you end up not applying to a specific school, they’ll disregard your FAFSA).
Once you have supplied all the necessary information, you must sign and submit your FAFSA form before it is complete.
After you’ve submitted your FAFSA, you can expect the U.S. Department of Education to process it within 3-5 business days. After your application has been processed, you will receive a Student Aid Report (SAR). This report summarizes what was submitted on your FAFSA and outlines your financial need.
Once you receive your SAR, you can expect that the Department of Education has begun sending this same information to the universities listed on your application. Each college uses the information from your SAR to determine whether you are eligible for federal and nonfederal student aid. They are responsible for creating what will be your financial aid package or “offer.” If you have questions at this point in the process, you’ll want to contact the bursar’s office at the institutions to which you’ve applied.
6 General Financial Aid, Student Loan Planning, and FAFSA Tips
As you begin planning for how you will finance your education, you need to be intentional about your efforts. Ultimately, you may want to apply for as much grant and scholarship money as possible. After that, you may need to incorporate student loans as well. We’ve listed a few important tips, to help make this process a bit easier:
- Get educated
- Plan ahead and file early
- File together
- Collect all your personal information before starting
- Apply for as many scholarships as possible
- Work hard and save
1. Get Educated
Since you’re reading this article, you’ve already started on the right path. Making yourself aware of the many grant, scholarship, and loan options out there is the first step in the process. As you research, be sure to pay attention to any relevant application requirements and deadlines.
2. Plan Ahead and File Early
The FAFSA application period typically opens on October 1st of each year. This is when you are able to first file for the following school year (fall of the next calendar year).
The trick is to be ready ahead of time so you’re able to file on day one. Universities often determine financial aid based on a finite amount of available money. This means once it’s gone, it’s gone. Don’t miss out on grant or scholarship money because of procrastination or lack of awareness.
There are usually deadlines associated with scholarships as well. Once you’ve determined which scholarships you’re eligible for and what you’re able to apply for, make note of the deadlines and plan accordingly.
3. File Together
If you are a dependent, it’s important to make sure you’re filing alongside your parent(s)/guardian(s). FAFSA will require demographic and financial data from them as well. Be sure you are clearly communicating and that each of you is aware of the requirements for filing and the data you’ll need to provide in your application.
4. Collect All Your Personal Information before Starting
There are quite a few things you’ll need to know when you are filling out your FAFSA. Collecting these items ahead of time will help you streamline the application process and save you a lot of stress.
These items include:
- FSA ID
- Social security number
- Driver’s license
- Federal income tax return
- Records of untaxed income
- Records of current assets
- List of schools you are considering attending
Remember, if you’re a dependent, your parent(s)/guardian(s) will need to walk through this process with you. Therefore, they will need to have much of the same information available. As previously stated, it will be very important for you and them to stay connected as you go through the financial aid process.
5. Apply for as Many Scholarships as Possible
When it comes to gift aid, scholarships are a significantly overlooked opportunity for many students. Too often, people think you can only get scholarships from the university you’re planning to attend, or if you get one scholarship you can’t qualify for any more. Neither of these statements is true, and it’s important to know the facts.
You can get scholarships from many different places, such as:
- The colleges to which you’re applying
- A current employer
- A parent’s employer
- Your state’s higher education agency
- Community organizations religious organizations
- Organizations that share your interests
- Local businesses
Scour the web for as many scholarships as you can find and start there. This website from the U.S. Department of Labor provides a free scholarship search tool.
Work hard to meet the requirements of the scholarships to which you apply. Some require a few sentences, others require essays. You may not love the idea of having to write, but you will thank yourself for this later in life if you’re able to keep your student loan debt to a minimum, or none at all.
6. Work Hard and Save
Importantly, you shouldn’t forget about this crucial financial step: work hard and save. When you’re planning for college, you shouldn’t rely entirely on financial aid. Ideally, you and your parents will have been working toward your higher education for a while. Be sure to work hard, save what you can, and use it to help pay down as much of your tuition bill as possible.
Let Lafayette Federal Credit Union Help with Student Loans
At Lafayette Federal Credit Union, we’re here to help our members succeed. Our Youth & Student Finances page has a dedicated collection of resources to help our young members succeed.
A college savings calculator can help you think through the total costs you will experience as a result of your education and plan for how to save effectively. The many articles you’ll find on our website will give guidance on topics such as 529 plans, college budgeting, the student loan moratorium, and more.