Federal Student Loans
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.
Sure, college can seem daunting. The idea of four more years of school (more for a graduate degree), being away from family and dealing with the cost of your education for years after graduation. It’s enough to make you ask why you should even bother with college if you can get a job right after high school.
Iowa College Aid’s “Your Course to College” guide offers a great deal of information and tips for students preparing, applying and succeeding in college. But perhaps the best tip of all (which is why it’s right up front in the guide), is showing why college is important in the first place.
A strong career and a bright future can be possible for all Iowans. When college is added to the mix, studies have shown that things can get stronger and brighter for those with a degree. Here are four (and maybe even a few more) reasons why a college education can make a difference in your life:
College graduates simply earn more. Weekly earnings for workers with bachelor’s degrees are almost twice the earnings of workers with only high school diplomas. Over a lifetime, this can translate to a difference of more than a million dollars, and the gap is getting wider.
You’re more likely to land a job if you go to college. The unemployment rate for college graduates is about half the unemployment rate for high school graduates. The number of jobs for college graduates is growing, while the number of jobs for high school graduates is falling. More than 95% of the jobs created from 2010 to 2016 required at least some college education.
Maybe you’ll never need to solve a differential equation or quote Shakespeare, but higher education will still serve you well. College teaches critical thinking, communications and problem-solving skills. A recent survey found that employers consider these skills more important than a potential hire’s subject of study.
Quality of life
In terms of finances, health and happiness, college graduates do better. The poverty rate for people with only a high school degree is nearly three times the poverty rate for people with bachelor’s degrees. College graduates are less likely to smoke, be obese or be incarcerated. College graduates are also significantly more likely to be happy with their standard of living.
Those are the biggies. But there’s so much more that college offers students that make for a fuller and more fulfilling career and life:
- Meet people from different backgrounds and cultures
- Discover your passion
- Try new things
- Learn new skills
- Build your confidence
- Get involved in clubs and activities
- Make your own decisions
- Learn more about yourself
- Challenge yourself and prove you can succeed
- Start a tradition
- Make your family proud
Keep these things in mind when you find yourself struggling with the more frustrating parts of preparing for college and remember: the more you put into your education, the greater the reward. You can get there, you can afford it and you can succeed.
For families and high school students, having a good gameplan for getting to, paying for and succeeding in college is valuable. That’s why we’re here to help.
Iowa College Aid’s annual “Your Course to College” guide will ship to schools and families later this month, but we’re taking the opportunity to preview some highlights and some of our favorite tips found in the guide. This week, tips to finding the best sources of funding for your college education. To find more previews and sign up to receive your copy of “Your Course to College” in print or download, visit our “Your Course to College” page at IowaCollegeAid.gov.
There are many ways to pay for a college education, and the financial aid process is not as complicated as most people think. Most students attending Iowa colleges and universities receive some form of financial assistance.
After you submit your college applications, complete these four steps:
1. Submit the FAFSA
To qualify for most financial aid, you must complete and submit the Free Application for Federal Student Aid (FAFSA). The fastest and most accurate way to apply is online at fafsa.gov. The FAFSA will gather information about your finances, your family’s finances and your college plans. You can complete the FAFSA for 2018-19 beginning October 1, 2017, using 2016 tax information.
2. Submit the Iowa Financial Aid Application
The Iowa Financial Aid Application allows you to apply for multiple state-administered aid programs with one application. Click the Iowa Financial Aid Application button at IowaCollegeAid.gov.
3. Decide on a College and Accept Aid
All colleges that you list on your FAFSA will send you a financial aid award letter if you are offered admission. Award letters will describe the financial aid package each college can offer. When comparing aid packages, consider how much assistance is from scholarships and grants (which do not have to be repaid) and how much is from loans (which must be repaid).
To accept the financial aid package offered by a college or university, follow all instructions. This might involve entering aid amounts you intend to accept in an online form or signing and returning a paper award letter by a specified deadline. Talk to the financial aid office at the college or university if an unusual circumstance delays your response.
To officially accept a college admissions offer and reserve your place, submit your deposit by the college’s reply date. May 1 is the date for most colleges.
4. Apply for Scholarships
Continue seeking and applying for outside scholarships. Think of it as a part-time job. If you spend 20 hours on scholarship applications and receive one worth $1,000, you just made $50 an hour for your efforts!
Reputable education organizations will NOT charge for scholarship searches.
For most students graduating from college, financial aid debt is reality that can impact everything from buying a house to starting a family. Fortunately, there are a number of loan repayment and forgiveness programs that help those graduates in certain fields help pay down their student loan debt in return for their work.
Programs are available on both the federal level and in the state of Iowa for those in the education, public service, healthcare and legal professions. However, the qualifications for these programs are often specific or require that the employee work in a specific geographical or subject area in order to obtain the award. Here are some loan forgiveness and repayment programs open to Iowa graduates:
- The Teach Iowa Scholar (TIS) Program provides qualified Iowa teachers with awards of up to $4,000 a year, for a maximum of five years, for teaching in Iowa schools in designated shortage areas. Qualified teachers are those currently teaching in designated shortage areas who meet all eligibility criteria. Find out more here.
- The federal Teacher Loan Forgiveness Program offers forgiveness of a combined total of $17,500 from direct subsidized and unsubsidized loans in return for teaching full-time for five complete and consecutive academic years in certain elementary and secondary schools and educational service agencies that serve low-income families. Criteria and details can be found here.
- The Iowa Registered Nurse & Nurse Educator Loan Forgiveness Program offers qualified applicants an annual award of up to 20% of their total eligible federal student loan balance. Applicants must be registered nurses employed in Iowa or nurse educators teaching at eligible Iowa colleges and universities. Details here.
- The NURSE Corps Loan Repayment Program is a national program that supports registered nurses (RNs), advanced practice registered nurses (APRNs), and nurse faculty by paying up to 85% of their unpaid nursing education debt. Qualification criteria and details here
- The John R. Justice Student Loan Repayment Program is federally-funded program provides loan repayment awards to public prosecutors and defenders employed in the state of Iowa who agree to remain in their positions for 3 years. Details here.
- The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on Direct Loans after making 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying government or non-profit organization. Details and qualifying employer types can be found here.
- Lawyers working with the federal Department of Justice can have up to $6,000 of student debt forgiven per year as part of the agency’s Attorney Student Loan Repayment Program. Details and qualifying criteria can be found here.
Planning how to pay college debt can be difficult. It can be even worse when companies that might otherwise seem helpful are actually preying on those in need. Loan “rescue” or “consolidation” plans are one such instance where researching a company can make the difference between getting a helping hand or being placed in a worse situation.
While loan consolidation can lower student loan borrowers’ monthly payments, reduce interest rates or resolve other repayment issues, many of the services these companies charge a fee for can be done for free by borrowers if they contact their student loan service provider directly. To find your loan servicer for federal student loans, visit the National Student Loan Data System. Other companies offer these services in an attempt to steal consumer identities and money. The biggest red flag is if the company is making a promise that sounds too good to be true.
Some of the scams highlighted in the advisory include:
- Law offices or attorneys that charge fees ($300-$600) to file paperwork for borrowers that could be filed for free by the borrower if they contact the loan service provider directly.
- Companies that require access to the borrower’s bank account under the false pretense of using it to automatically deduct payments and steal money from the account. Also, any personal identification information, such as Social Security Numbers are used to steal the borrower’s identity or sold off to other scammers.
- Long-term scams in which the company charges consumers a service fee, down payments and collects a couple of monthly payments they claim are
going towards the borrower’s loan. The money is never applied towards the student loan and the borrowers face late fees and penalties from payments they didn’t know they were missing.
Do not fall prey to these scams. Some of these student loan companies will have professional looking websites and may claim to be associated with a government agency or that they are working for the U.S. Department of Education. If you feel you may have already fallen victim to one of these scams, file a complaint with the Attorney General’s Consumer Protection Division.
For students graduating from colleges all over the country this month, the thrill of earning a diploma is often being offset by fears of dealing with student loan repayment. While loan repayment is inevitable, many new grads will start on the wrong foot because of assumptions about their student loan responsibilities and ways to pay back their debt.
Here are four common myths that can be easily avoided to prevent students starting down the wrong path. It’s good advice for not just recent grads, but current students and those considering the impact of student loan debt on their educational plans:
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..
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.
There’s no way around it: getting the degree or certificate that will connect you with your future costs money. No matter the type of education students pursue after high school, cost will often play a factor in not only determining where students go to school, but, in many cases, impact whether or not they complete their degree and find the career they’ve long sought.
Many students and families rely on private student loans which come with interest rates that can feel daunting not only during school but in the years after. However, thanks to the Free Application for Federal Student Aid (FAFSA), students are discovering many roads to free money that can help reduce their student debt and help them succeed.
Completing the FAFSA arms students with a tool, a baseline of financial information and need for aid that can be used for a variety of state and federal grants, as well as private scholarships. There are many ways for students to find free money that require nothing more than the time to research and apply in order to receive some financial help for their education. Here are few places to start:
State Grants and Scholarships
The state of Iowa provides funding for grant programs to help with higher education costs. Students who receive Iowa-funded grants and scholarships must be Iowa residents, attend an eligible Iowa college or university and meet other criteria specific to each program. Scholarships and grants do not have to be repaid and can significantly reduce college expenses. The chart below provides an overview of the application requirements for each scholarship and grant administered by Iowa College Aid. For specific criteria, go to IowaCollegeAid.gov.
Every year, MILLIONS of dollars in private scholarships go unclaimed; not because no qualified candidates applied, but because no candidates applied at all.
Scholarships are available from private sources including businesses, foundations, religious organizations, community groups and fraternal organizations. High school counselors are excellent resources for scholarship information, as are libraries and college financial aid administrators.
Web searches also allow students and families to explore scholarship possibilities. Reputable organizations will NOT charge fees for scholarship searches.
Think of finding scholarships like a part-time job. If you spend 5 hours researching and applying for scholarships that lead to a $1,000 scholarship, you’ve just made $200 per hour. That’s pretty good money for working part-time! Here are some ways to track down private scholarship opportunities:
- Work: Have your parents ask whether their employers offer college scholarships to children of employees.
- School networks: Many high schools offer scholarships for graduating students. Also check with the area alumni association of your college.
- Community organizations: Many community organizations sponsor local scholarships. Check your city’s website or call your local community center for lists of organizations in your area.
- Religious organizations: Find out if your place of worship offers scholarships. If not, it might partner with other organizations.
- Field of study: Your college might offer scholarships specific to your major. Contact your program department.
College and University Scholarships
Your college or university might provide scholarships or financial awards from its institutional funds. Often, institutional scholarships go to recipients who meet specific requirements related to particular areas of study, academic achievements, outstanding talent, leadership, athletic ability or other criteria. Contact the financial aid office and ask about institutional programs available through the college or through on-campus organizations.
Federal grants are awarded to both Iowa resident and non-resident students. Eligible students can receive these federal grants for attendance at any postsecondary education institution participating in the program. Federal grants include:
- Pell Grants
Pell Grants are funded by the federal government to assist the neediest undergraduate students. The maximum award is $5,920 for the 2017-18 award year.
- Supplemental Educational Opportunity Grants
Federal Supplemental Educational Opportunity Grants (SEOG) are based on financial need. Eligible recipients receive between $100 and $4,000 per year. Not all colleges participate.
- Teacher Education Assistance for College and Higher Education Grants (TEACH Grants)
The Teacher Education Assistance for College and Higher Education (TEACH) Grant program helps students in teaching preparation programs. In exchange for a TEACH Grant, recipients agree to serve as full-time teachers in high-need fields in public or private non-profit elementary or secondary schools that serve low-income students. These grants are available to eligible undergraduate, post-baccalaureate and graduate students for a maximum amount of $4,000 per year. Students must meet academic standards.
Taking the time to track down free money for school now may seem like hard work, but the impact it will make in saving students from debt as they start their careers will be an even greater reward as they start their careers.