After you exhaust other financial aid and employment opportunities, student loans can be a good option to cover educational expenses. When borrowing, remember that unlike grants or scholarships, which do not need to be repaid, student loans must be repaid with interest. You should always be 100 percent clear about what you are signing up for.
Myth #1: I don’t need to worry about my student loans while I’m in school.
Truth #1: You need to think ahead. Don’t blindly take out student loans without considering your major or future career—or without finding ways to minimize your debt while in school.
Myth #2: I should borrow as much as I can.
Truth #2: You should borrow the minimum you need. Loans are a helpful way to get an education that might seem out of reach, but be informed before you borrow. Your future self will thank you!
Myth #3: I have to pay back 100 percent of my student loans.
Truth #3: Maybe not. Depending on the type of loan and your profession, forgiveness programs can help you pay back a portion or all of your student loans.
Myth #4: I need to pay someone to help me with my student loans.
Truth #4: You should never have to pay someone to help you with your student loans. Contact the financial aid office at your college for assistance.
Find more information about student loans here.
When you are selecting a college to attend, you want to know how much it’s actually going to cost, if you’ll make enough to pay off loans, what the current students are like, etc. Gathering all this information takes a ton of time, especially if you’re not sure where you want to go. Luckily, the U.S. Department of Education offers a valuable online tool to help you compare schools and make an informed decision. For any school that offers post-secondary education in the United States, the College Scorecard, collegescorecard.ed.gov, will show you:
- Costs—Not the published costs, but the average annual costs that students actually pay, broken down by family income and compared to the national average.
- Loan debt—How many students take out federal loans, graduates’ typical debt and monthly payments, and percentage of students paying down debt compared to the national average.
- Earnings after school—Average graduate’s salary compared to national average, and percentage of graduates who earn more than students with only a high school diploma.
- Student body—A demographic breakdown of the student population by race/ethnicity and socioeconomic status.
- Success rates—Retention rate after one year and graduation rate, compared to the national average.
- Test scores—Standard range of SAT and/or ACT scores for students who are admitted and enrolled.
- Academic programs—Available areas of study, as well as the most popular programs offered.
This combination of factors gives you a more complete picture of your investment and potential payoff from attending a specific school. A school with high costs, high loan debt and low graduation rates, for instance, might not offer your best chance of success. A school with high costs might be a more reasonable choice, however, if it also offers high graduation rates and high salaries for graduates.
While these might be important factors, the most important pieces of the equation will be how a school fits with your needs. The College Scorecard lets you look up specific schools or search based on criteria such as location, size and degrees offered. It also offers predetermined searches such as “Affordable Four-Year Schools with Good Outcomes” or “Find a Community College in Your State with High Salaries.”
Happy college hunting!
By now, students and families with an eye toward college, or any kind of education beyond high school, should have a pretty good understanding of just how important the Free Application for Federal Student Aid (FAFSA) is to helping them achieve their goals. If not, here’s a good place to get started with the FAFSA.
Filing the FAFSA is crucial to getting money for school. But what happens after submitting the FAFSA? Here are some things for families to look out for, as well as some things to remember when dealing with information
Student Aid Report
After completing the FAFSA, the U.S. Department of Education will process the data and compile the Student Aid Report (SAR). The SAR will be sent to families and the colleges selected during the FAFSA. If an email address was provided during the application, instructions to access an online copy of the SAR will be emailed; otherwise it will arrive snail mail.
Typically, applicants can access their SAR within three to five days if the FAFSA was filed electronically (approximately three weeks if filed by paper). The SAR contains the Expected Family Contribution (EFC) as well as initial information about Pell Grant eligibility. Colleges and universities use the EFC to determine student eligibility for federal grants, loans, work-study and other financial aid programs.
How is the Expected Family Contribution Calculated?
Variables that determine a student’s EFC include income and net worth for the student and parents, family size, age of older parent, state and federal taxes and number of family members attending college. As a result, the EFC might change from year to year when the FAFSA is refiled.
Understanding Financial Need vs. College Costs
Each college or university listed on a student’s FAFSA application that accepts that student will determine financial need and present the applicant with an award letter describing the aid offered. “Financial Need” is determined by calculating the Cost of Attendance (COA) minus the EFC determined through the FAFSA.
The EFC will remain the same in a given year (unless an unusual family situation arises) regardless of which college or university the student attends. The amount of aid received cannot exceed the total cost of attendance at a college or university.
Each award letter will include federal, state and college-specific financial aid programs. It is likely that a student’s award letter will include one or more types of loans. These letters often don’t cleanly show which funds offered are scholarship or grant aid (free money) and which are loans (money which must be repaid). To get some tips on understanding award letters, check out our video series here and here.
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:
- 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”.
- 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.
- 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.
- 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.
For the second year, October 1 marks the availability of the Free Application for Federal Student Aid (FAFSA) for the next academic year. The FAFSA is a standardized application used to determine eligibility for federal grants, loans and work-study funds from the federal government. Additionally, many colleges and states, including Iowa, use FAFSA information when determining eligibility for institutional and state financial aid programs. It’s kind of a big deal!
When it comes to the FAFSA, remember these tips:
File the FAFSA no matter your financial situation. Even if you do not think you will qualify for need-based financial aid, you should still file the FAFSA. Many colleges require that you file the FAFSA to be considered for institutional aid. In addition, you are required to complete a FAFSA to be eligible for federal Stafford loans and completing the FAFSA does not obligate you to accept any of the aid offered.
Never pay to file the FAFSA. You can file the FAFSA for free at http://www.fafsa.gov. Reputable resources, including Iowa College Aid, are available to help for free. In addition, more than 50 College Goal Sunday events will be held throughout Iowa to provide one-on-one assistance with FAFSA filing.
Electronically access the FAFSA. The FSA ID comprises of a username and password. Users who have not already done so, will be directed to a link to register for a new FSA ID upon arriving at the http://www.fafsa.gov website. The registration process should take less than seven minutes.
Meet state and college deadlines. Many states, including Iowa, have FAFSA filing deadlines for state-funded scholarships, grants and work-study opportunities. Keep in mind most colleges and universities have their own FAFSA filing deadlines. You should check with your college of choice to determine its priority deadline for financial aid and if additional documentation is required.
Double check information to avoid delays. Review your FAFSA information before you submit it for processing. Make sure your Social Security number and your parent’s Social Security number are typed in the correct spaces. Mix-ups like these will cause processing delays.
It’s easier than ever with the data retrieval tool. The IRS Data Retrieval Tool allows students and parents to access their IRS federal tax return information from the IRS website and securely transfer the necessary data directly into their FAFSA. It is highly recommended that you use the data retrieval tool if you are eligible as it is the best way to ensure that your FAFSA has accurate tax information. An added bonus is that IRS transferred information means that you won’t need to provide a copy of your or your parent’s tax return to your college. The tax data should be available within 1-2 weeks of electronically filing taxes and then the IRS Data Retrieval Tool can be used to make a FASFA correction, streamlining the completion of the FAFSA.
Iowa Residents: Don’t forget to complete the Iowa Financial Aid Application! Upon completion of the FAFSA, all Iowa resident applicants have the option to link to the Iowa Financial Aid Application directly from their FAFSA confirmation page. If eligible, you will have the ability to pre-populate most of your demographic data to the Iowa application in the process. This not only streamlines the federal and state financial aid application process but also solidifies access to the Iowa application if you had not been informed of its availability.
The Free Application for Federal Student Aid (FAFSA) is a key part of college financial aid. While many families might think that the FAFSA is only for lower-income households, the truth is that the application helps make federal, state and school funds available for all students, regardless of their family’s income.
Here are some reasons to complete the FAFSA:
- To qualify for a variety scholarships and grants. Many federal and state scholarships (including those in Iowa) require a completed FAFSA for consideration, even when those scholarships and grants do not consider family income. FAFSA information can also impact the financial aid offered by schools in terms of grants or other awards.
- Some financial aid opportunities are available on a limited basis. Completing the FAFSA as soon as possible gives students the best chance for receiving those aid amounts.
- Completing the FAFSA earlier gives students the time to focus on other parts of college preparation, such as completing college applications, focusing on coursework and applying for scholarships.
- When students have completed their FAFSA, schools can more easily provide estimated financial aid offers sooner. This makes comparing colleges much easier, as students will have a better idea of what their education will actually cost them at each school to which they are accepted.
Attending college opens a student to a variety of new experiences and for many this includes new options of subjects to study. Many college students arrive at campus with an idea of what they want to study and consider for their career. But when facing new options, many students change their major at least once.
Changing majors can lead to retaking classes, which means more time on campus and, often, more money needed in financial aid. While people are certainly prone to change and should be willing to consider which direction their life will take them, putting in some early thought to your major will make it more likely that you’ll find a major that is the right fit if you base your decision on your career planning and your experience. Here are some topics to consider:
Think about the types of things you enjoy. Do you prefer working alone or in groups? Do you like working with data, or would you rather work with people? Start exploring by taking classes related to your interests.
What high school courses are your best subjects? What are your strengths and weaknesses? Do you see a pattern?
Your Work Values
What is important to you? Examples of work values include helping others, contributing to your community, being creative, solving problems, producing results, making a difference, leading others, having a structured day and being recognized.
Taking the time to ask some questions (and find the answers) about your possible major can also go a long way to figuring out if your plans can offer the best future. Some things to consider about a major include:
Why do I want this major?
Are you really interested and excited about the subject matter, or are you choosing something based on what your friends or family want you to do?
What do I know about it?
Look at the requirements and course descriptions. Talk to people who are currently studying this subject, or to graduates in this field.
Which colleges are strong in this field?
Not all majors are equal on a college campus. Some colleges specialize in certain majors or are known for strong programs in particular fields.
What is the career outlook?
How many students in this major find employment in their field after they graduate? Is the demand for jobs stronger in certain parts of the country? If so, are you willing to move?
Answering these questions won’t necessarily guarantee that you’ll still consider changing majors in school. But by having a good sense of your educational goals, you’ll be more likely to find a major that sticks.