Your Guide to Student Loans & the FAFSA
Though navigating the student loan and scholarship process begins in the same place for everyone—with the Free Application for Federal Student Aid or FAFSA—it’s important to understand that the ultimate financial aid award you receive can depend heavily on how successfully you communicate your unique family financial situation via that form.
Here are a few tips to keep in mind as you enter financial aid season:
What You Should Know About the FAFSA
While there’s plenty of step-by-step guidance available online to help you through the FAFSA—see, for example, this U.S. Department of Education guide—there are some basics you should know at the outset.
- Everyone should apply. Even if you believe your family earns too much income to qualify for federal aid, the smart move is to apply and see what happens. There are no income limits and some schools offer generous grant aid you’ll otherwise miss out on.
- There are a variety of deadlines. Generally, the earlier you submit the FAFSA the better. if you have a tendency to procrastinate, however, be aware that there is no uniform deadline for the FAFSA and some scholarships across schools—“on time” for one college may very well be “late” for every other school you’re applying to.
- You’ll need tax information. To complete the FAFSA, you’ll need your tax info for the previous year, so keep those records on hand and easily accessible.
- Better safe than sorry when listing schools. There may be schools you’re considering but aren’t 100% sure you’ll actually apply to. Include them on your FAFSA list anyway. The earlier you apply, the earlier schools can receive your FAFSA results and calculate your aid package, and it’s important to keep your options open until you understand the pros and cons of all your potential schools.
- You must do it every year. Your FAFSA application is only valid for one year, although in future years you can fill out a renewal FAFSA.
What You Should Know About Your Results
Here are a few things to watch for after you submit your FAFSA:
- Your Student Aid Report (SAR). It can take up to three weeks for your FAFSA to be processed, but once it is your SAR—which summarizes your financial aid eligibility as well as your expected family contribution (EFC)—is available from fafsa.ed.gov. If anything here is incorrect, now’s the time to fix it. And if your family’s financial situation has substantially changed during the most recent tax year, contact the financial aid offices of the colleges on your list to make them aware of your new circumstances.
- Your financial aid award letters. Once you have a piece of paper detailing in black and white what the school is offering in gift aid—such as scholarships and grants that don’t have to be paid back—and loans, you can compare college aid packages by subtracting any grants and scholarships from the total cost of attendance. These bottom line numbers aren’t the only factor you want to consider when choosing between colleges, but they will help you get an idea of what kind of burden you’ll be placing on your future student loan-paying working world self.
- A gap in coverage. If a school offers less in aid than you’ll need to attend, don’t panic. You’re not out of options. You can sometimes appeal your aid package with the financial aid office—check the website or give them a call to learn more about your next steps. You also may be able to bump up your total by proving special financial circumstances or by showing that you’ve received a larger aid package from another school, although success rates are typically higher at a private institution which has more assets to draw upon.
What to Think About Before You Borrow
Does your aid package include a hefty student loan amount? Here’s what to contemplate before signing on the dotted line:
- What do you plan to do for a living? Some experts recommend borrowing no more than you expect to make—in total—in your first year of your proposed profession. In general, if you keep your student loan total below that number, you should be able to pay it off within 10 years. Above that, your debt could drag on much longer. Try this calculator to see how much you’ll need to cover costs.
- Think carefully before signing on for private loans. Private loans can help bridge the gap between federal loans and the funds you think you’ll need to attend a certain school. That said, while such loans can be a great tool to expand your menu of educational opportunities, the terms are different than federal loans, so be sure to understand the terms before going this route.”
- Know that loans aren’t easy to shake. In one survey, approximately half of students with loans indicated they believed they’d be able to get federal loan forgiveness after graduation. While this is true for a small subset of borrowers—those in a public service profession for 10 years, for instance—it’s not for most. Operate on the assumption that you will be paying back every cent you accept—with interest.
- Beware borrower’s remorse. Forty-eight percent of undergrad borrowers said they could have borrowed less. Another 27% regretted going to a school that required them to take out loans to afford it. Almost a third regretted not applying for more scholarships. It’s in your best interest to borrow conservatively today to avoid becoming part of one of these statistics.
Your quest for the best possible financial aid package at your preferred school need not be all angst and stress. With a little research and planning, you can hit your deadlines and free yourself up to move on to picking out first semester classes and dorm decorations.
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