Financial Aid

A College Money Plan Now Helps Avoid Problems in the Fall

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Students have a lot to deal with as they prepare for college and figure out how to pay for their education. But what about once they get to school? Financial aid can help pay for the cost of school, but covering that distance between direct costs (tuition and school fees) and indirect costs (food, books… and just about everything else) is often the first chance for students to explore what it’s like to live with the same financial pressures as an adult.

Having a good game plan is important either planning for college or dealing with creating a budget and financial goals during (and after) college. Here are some tips to help students develop positive habits with money both now and throughout their life:

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  1. Make a budget. Commit to creating a monthly budget AND live within your budget each month.
  2. Utilize a calendar. A calendar is not just for plotting your class schedule, campus organizational meetings, and social events. A calendar can be an effective tool for managing the due dates for your monthly bills—rent, cell phone bill, car payment, utility bill, etc. Making note of due dates helps to ensure that you will not miss a payment and potentially harm your credit history.
  3. Shop around for text books. Many bookstores, as well as online retailers, offer used textbooks for much cheaper than buying a “new” textbook. If you won’t want to keep your textbook for future reference after a class has concluded, consider renting a textbook for the semester.
  4. File the FAFSA on-time, every year. If you plan on attending college in the upcoming school year, be sure to file your Free Application for Federal Student Aid (FAFSA) prior to your college’s priority deadline. Doing so will ensure you are considered for all financial aid opportunities the school has to offer.
  5. Get a part-time job. A part-time job can allow you to meet your basic needs, as well as reducing the amount of student loans you need to borrow. Working 15 hours per week at a part-time job can dramatically reduce your need for student loans to cover living expenses. Additionally, most colleges have numerous on-campus employment opportunities for students.
  6. Plan early for a summer internship. During the first week of the spring semester, visit your college’s career placement office and discuss your desire for an internship during the upcoming summer with a career advisor. Career advisors can provide information about companies looking for interns, as well as information regarding career fairs on campus. Many internships  pay a stipend or salary which can help pay for expenses while you’re in college and can lead to a job after graduation.
  7. Know your financial aid options. Visit the Financial Aid office on your campus during the first three weeks of the spring semester to discuss your current year’s financial aid and to check into scholarships and grants available for next year.
  8. Be a savvy shopper. At the grocery store, opt for the store-brand product. It is often significantly cheaper than its name-brand counterpart, and the money you save can be used to pay interest on your student loans or keep you from having to borrow more loans next year.
  9. Protect your Personal Information. If you aren’t already, start safeguarding your Social Security Number, credit card and bank account numbers, along with any other non-public personal information. Shredding sensitive information will ensure it doesn’t fall into the wrong hands and can help protect you from identity theft.
  10. Separate Needs from Wants. Although it may seem like you need that morning latte from the local coffee house to start your day; at $3.50 per day, that adds up to $1,277.50 per year! Make your financial choices based on what is necessary to meet your basic needs, and avoid wasting money and borrowing more to satisfy your wants.

Keeping these 10 tips in mind can be difficult. But by doing even a few of these, students set themselves up for a financially fit future.

Avoid Getting Stressed Out Over College Decision With These Tips

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After years of hard work and months of waiting, students are starting to receive acceptance letters from colleges. Those students accepted into more than one college might face some difficult decisions to make when weighing the pros and cons of one school against another.

Three students studying and learning in a coffee shop

“College  fit” means finding the school that best meets at student’s needs for the future, but there is no such thing as a “perfect school.” Students shouldn’t stress themselves out thinking that if they pick the wrong school, their life will be ruined. After all, college is what you make of it. But with a little research and effort, students and families can feel more secure about the school they pick. Here are some tips :

Compare financial aid awards

While cost shouldn’t be the only thing considered when deciding between schools, the financial aid offered can go a long way to giving one school an edge over another. The financial aid award letter often comes after the acceptance letter, and has many things to consider when reviewing. Check out our videos on comparing financial aid award letters for more tips (here and here).

Dig deeper with schools

Students already researched schools before applying, but now is a chance to get more detailed information to get a more complete picture of what a school offers, not only in education, but day-to-day life. Such questions can include:

  • What is the graduation rate? How many students return after their freshman year?
  • Are there work or volunteer opportunities that reflect a student’s major or interests?
  • What do students do for fun?
  • What student support services does the school offer?

Students can talk to college admissions counselors, current students, recent grads or even the college’s official website to research these and other subjects. It’s important to use only trustworthy sources of information and to recognize the difference between fact and opinion. A college’s official website and its admission officers are often the best sources of factual information about that college.

Visit — or revisit — the campuses

Now that a student has been accepted to a school, a college visit becomes even more important. Even if a family has taken a campus visit previously, going back with a more focused approach will help students see if they truly see themselves as a student at that school. Can’t visit a campus? Call or email the admission office with questions, reach out to professors in your areas of interest or ask to connect current students and recent graduates. High school counselors and teachers may also be a good source to recent grads or current students.

Think about it

Research and asking questions can provide the information that students need to make a decision, but asking and answering the important questions can only be done by a student with their family. How did the student feel during their campus visit? Did the school offer both the academic and social aspects that will lead to success? Will they be happy there? These basic questions might lead to some further reflection about each school.

Make your decision

The good news is that schools don’t need to hear back immediately. Many colleges don’t expect a final decision until May 1, so students and families have some time to make up their mind. Lay out the pros and cons and find the school that fits best with financial, academic and career goals. Remember, though, that colleges are serious about reply deadlines. Not sending a deposit by the deadline can lose a student’s place in the incoming class.

Video: Identify, Separate Loans From Grants on Award Letters to Better Understand Out-Of-Pocket Costs

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Getting accepted into college is an exciting moment for students and families who are ready to embark on the next part of their educational journey, but can often be offset by concerns about just how much school will cost both now and after graduation.

Financial aid award letters help students and families get a better understanding of what to expect both in terms of money being provided by the school and state, through scholarships and grants, and costs of attendance (COA) at the school.

Award Letters Part 2

In part two of our “Understanding Your Financial Aid Award Letter” video series, we discuss how to best identify repayable financial aid options and separate them from scholarships and grants to get a better picture of the actual financial responsibility that will be required to attend a school.

More often than not, there is a gap between the “free” money being offered to a student and the COA, leaving families to determine the best way to meet the financial requirements.

On many letters, both federal and private loans are included as possible options to bridge that gap. However, as there is currently no standard format for schools to consistently show financial aid options, loan amounts are often included in the same area as scholarships or grants. At a quick glance, families might not realize that loans, which must be repaid after graduation, are being included with the “free” money of grants and scholarships.

For more tips, advice and information for preparing for college, check out Iowa College Aid’s “Your Course to College,” a free downloadable guide for students, families and schools available at https://www.iowacollegeaid.gov/YourCourse

Better Understand Your Financial Aid Award Letter With This Video

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Getting accepted to the college or university of their dreams is the culmination of a years-long effort. But receiving an acceptance letter isn’t the end of the journey, just the start of the next one.

For many families, the excitement of being accepted into a school is often soon replaced by concerns of how to pay for that education. Even those families who have put together a strong financial plan for college may not have a clear picture of what school will cost when their student leaves home.

 

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Our new two-part video series helps families better understand their Financial Aid Award Letter. Watch Here

 

The financial aid award letter is a document sent to families by the school shortly after the acceptance letter, if not included as part of the acceptance package. The award letter includes cost of attendance and other estimated costs, as well as any scholarships, grants and other funds to help pay for a student’s education.

As there is no standard format for presenting information on the financial aid award letter, families might have a difficult time comparing the actual costs of one school versus another, let alone clearly understand their financial responsibility to their student’s education.

In our new two-part video, we look at the elements of a financial aid award letter and offer tips to families for understanding the true cost of a college education. By following these tips, families can better compare schools and ask the questions of financial aid officers to make the best financial decision for their student’s education.

Have You Been Selected for FAFSA Verification? Here’s What to Do!

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Verification is the process by which colleges review student financial aid applications for accuracy where the U.S. Department of Education identifies some FAFSA applications for colleges to review.  In addition, colleges may review additional applications based on answers provided to certain FAFSA questions.

Roughly one-third of all FAFSAs filed are selected for verification and the process must be completed before financial aid can be awarded. If you are selected for verification, you can expect the following:

  1. When you receive your Student Aid Report (SAR) after completing the FAFSA, you will see a comment stating “Your FAFSA has been selected for a review process called verification. Your school has the authority to collect certain financial documents from you”.
  2. Your college’s financial aid office will contact you and inform you of documents you need to submit and any additional forms you need to complete.
  3. Your college may be required to verify the following data elements:
    • Adjusted gross income
    • Taxes  paid
    • Income earned from work (for non-tax-filers)
    • Untaxed portions of IRA distributions or pensions
    • IRA deductions and payments
    • Tax exempt interest income
    • Education credits
    • Household size
    • Number in college
    • Receipt of food stamps/SNAP benefit
    • Child support paid
    • High school completion status
    • Any other inconsistent or conflicting information.
  4. To verify the elements above, the college may ask for documents which may include, but are not limited to:
    • Signed copies of the prior year tax transcripts for parent and student (if the student is dependent) or Federal IRS Data Retrieval.
    • W-2s showing wages, 1099s and supporting schedules.
    • Statement of child support paid, documentation that child support payments were made, and/or copy of the separation agreement or divorce decree that shows the amount of child support to be provided.
    • Verification of net worth.
    • Documentation of food stamps/SNAP benefit.
    • Copy of the applicant’s high school diploma, final official high school transcript that shows the date when the diploma was awarded, GED certificate/transcript, state certificate or transcript received after passing a state-authorized exam (HiSET, TASC or other state-authorized exam) or a copy of the “secondary school leaving certificate” (or other similar document) for students who completed high school in a foreign country.

The best action you can take to reduce the likelihood of being selected for verification is to use the IRS data retrieval tool to automatically populate your (and if you are a dependent student, your parents’) tax information directly from the IRS into your FAFSA. When you use the IRS data retrieval tool, the tax information is considered to be already verified so you will not have to submit documentation.

If you are selected for verification, ensure that you respond to all requests from your college or university. If you do not submit documentation on time your financial aid may arrive after late fees have already been accessed to your account.

A Good Plan for College Helps Keep Loan Debt Low

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While the national conversation around the importance of continuing education past high school gains much attention, so to does the issues surrounding paying for it. Regardless of politics, the fact remains that paying for college stands as one of the biggest challenges for students and their families.

Getting a head-start on putting together a financial plan is always a good idea for any prospective student. Here are some tips for families to consider now to ensure that they limit the amount of student loan debt accrued while still in school:

Borrow only the amount you need

Many borrowers make the mistake of taking out more loans than necessary. To avoid doing this, create a budget to determine how much loan money will be needed and avoid using loan money to pay for unnecessary expenses, such as trips to the movie theater or expensive dinners.

Consider a part-time job

If a student’s academic schedule allows, they should consider finding a part-time job on campus to help supplement the cost of unexpected expenses. Be sure to check with the financial aid office to see if students qualify for work study, which gives the opportunity to work on campus.

Compare award letters

Once a student receives their financial aid award letter, compare loan offers by reading the fine print. If federal loans are not enough to cover the cost of education and a student is considering private loan offers, be sure to shop around for the best interest rates and repayment options.

Take college credit while in high school

Taking AP, dual credit or college credit courses while in high school can give students a head start on achieving your intended major. Find out the general education requirements at the college a student plans to attend and take courses that will fulfill those requirements. Doing this can help students graduate from college early, which means borrowing less in student loans.

Consider paying loan interest while still in school

Students who start making interest payments on their student loans while still in college will reduce the total amount they have to repay after graduation. Interest payments are usually manageable. By paying off interest as they go, students can  keep outstanding interest from capitalizing on any balances. Allowing interest to capitalize increases loan balances essentially requiring students to pay interest on the interest that has been accrued!

Apply for scholarships

Scholarships can pay for portions or all of a student’s education during an academic year. But students can’t earn scholarships if they don’t apply! Find scholarships specific to a school or department by talking to a representative from the school’s financial aid office or department chair. In addition, the following sites are just a few places to check for scholarships:

Choose a school that fits into the family budget

Review the financial aid packages from the colleges where students applied and consider how much needs to be borrowed in order to attend each. Keep the goal in mind and select a college where loan debt can be kept at a reasonable level against future income potential.

Get more tips in Iowa College Aid’s “Path to College.”

Destroying These Myths About Student Loans Will Help Students Planning For College

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For many students going to college, private student loans will be an inevitable fact of life. Private loans should be used to fill in the gaps that college savings, grants and other scholarships don’t cover in a student’s final aid plan. As a result, many students leave college with a nagging fear of the loan repayments that await.

Rather than start on the wrong foot when it comes to loans, students can get a healthy perspective of both their responsibilities and ways to more quickly get on top of their debt with these tips that destroy the common myths about student loans:

If I need help understanding or dealing with student loans, my former college or university won’t help me. Even though a student may have graduated from a school, their financial aid office is still a great resource to help explain loan repayment options and connect students with loan servicers. Financial aid offices have a vested interest in helping students understand and stay on track with their loan repayment, as high default rates can negatively impact a school. So if a student starts to get confused by paperwork, the financial aid department is a great place to start.

Man looking at monthly statement glad to pay off bills

I’ll never pay off my loans. Those first payments after graduation may feel a bit overwhelming, and will likely be a large part of any budget as a student gets started in their career. Salary increases, paying extra when budget allows and plain old perseverance will lead to progress. Income-based plans and automatic payments are just two options to “set and forget” loan repayment as a part of monthly budgeting.

Consolidating my student loans into one loan is a good idea. Loan consolidation may offer convenience, but often students will find themselves in situations which either are not eligible for consolidation or can actually negatively impact their repayment. Loan servicers will already use a combined billing for students with Federal loans so that the students have one payment to make and federal loans can’t be combined with private loans in a federal direct consolidation loan. In some cases, consolidating Perkins Loans can lead to students losing repayment benefits that the loan provides.

Filing for bankruptcy means not having to repay student loans. While Chapter 7 or Chapter 13 bankruptcy does help protect against some loans, most borrowers will not be able to discharge their student loans unless it can be proven that the loan repayment will cause an undue financial hardship. Rather than negatively impact a credit record with a bankruptcy, students should consider finding more flexible payment plans that best meet their needs during repayment.

Get more tips and advice to help in your college planning with Iowa College Aid’s “The Path to College.”