Top 5 financial aid questions students ask
Achieving a higher education degree requires significant investments of both time and money. It is easy for new students to become overwhelmed when researching their options for financial aid and other resources for success. There are numerous sources of information available to help guide students through the process. It is important to be aware of specific deadlines for filing for aid based on federal and individual university schedules. Explore the top 5 questions that students ask when beginning their road to graduation.
Important financial aid questions to understand
1. Am I eligible to receive financial aid?
Financial aid can come from a variety of sources including federal and state governments, the college you attend or a private organization. Federal student aid is the most common type of sought after funding. To be eligible to apply for this type of support students must demonstrate financial need, be a US citizen or eligible non-citizen with a valid social security number, and be enrolled as a regular student in an eligible degree or certificate program. Students must also maintain satisfactory grades and progress throughout their academic program.
In order to demonstrate financial need a few factors are taken into a consideration. The Federal Methodology of Need Analysis is used to calculate the cost of attending school and the resources that you and your family may sensibly be expected to contribute toward meeting these expenses. When considering educational costs your school may analyze both instructional costs such as books and supplies and non-instructional costs such as transportation, rent and other personal expenses. These estimates are part of the eligibility formula that is mandated by the government and may vary based on individual situations.
2. What is a FAFSA?
A FAFSA is the commonly abbreviated term for the Free Application for Federal Student Aid, which is used to establish your eligibility for all federal and state programs. There are a few important deadlines that you should be aware of. Students can start applying annually after January 1 for the upcoming academic year. The reasoning for this specific timeline is that the need analysis process is based on tax information from the most recent year. The federal deadline for filing a FAFSA is June 30, while state deadlines may vary depending on local governmental requirements. California universities, like UMass Global for example, have a preferred filing deadline of March 2 while in Connecticut schools give priority consideration to those who file by February 15. Students can explore their individual state deadlines by visiting the FAFSA website or by asking their school’s Financial Aid Office.
When completing the FAFSA students will need to include a six digit federal school code specific to the institution they are attending. The majority of applicants file the documents electronically on the FAFSA website. If you select this option you will also need a United States Department of Education Personal Identification Number (USDE PIN), which can be obtained by going to Federal Student Aid. A paper version of the application is also available for those who prefer the traditional method of filing. Students will need to file a FAFSA every year if they pursue federal aid on an annual basis.
3. What types of student aid are available?
There are various sources of financial support that students should explore when applying for aid. Federal aid programs include Pell Grants, the Supplemental Education Opportunity Grant, Work Study, Direct Loans, Grad PLUS Loans, and Direct Parent PLUS Loans. Here is a quick summary of each of the federal programs, to learn more visit studentaid.ed.gov:
- Pell Grant: The amount awarded to the student depends primarily on the length of study. Once an undergraduate program is selected, and the number of credits required for graduation is determined by an education plan, a federally mandated eligibility formula will determine the grant amount.
- Supplemental Education Opportunity Grant: The goal of this program is to support low income families. It applies to students without a bachelor’s degree who are enrolled in at least three credits. The amounts awarded range from $200 to $4000, however because funding is limited, awards seldom exceed $500 per year.
- Work Study: Federal work study assists undergraduate and graduate students with financial need by providing them part-time job opportunities. The program allows students to earn money to help pay for education expenses while encouraging community service and work related to the student’s course of study. The program is administered by the school.
- Direct Loans: Federal direct loans can be subsidized or unsubsidized. Subsidized loans are based on financial need and no interest is charged while a student is in school at least half-time. For unsubsidized loans, students are charged interest even while the student is attending school. The borrowing limit of a Federal Direct Loan is based on class level, and annual amounts may be affected by the cumulative amount a student has already borrowed.
- Grad PLUS Loans: This particular program is dedicated to graduate students enrolled in a degree or certificate program. Grad Plus Loans provide extra support to students whose eligibility is not fully met with Federal Direct Loans and other financial aid. In addition to meeting the basic eligibility requirements of financial aid, students must also have satisfactory credit. The program does not apply to teaching credential students.
- Direct Parent PLUS Loans: Federal Direct Parent Plus Loans allows parents with good credit to borrow money to help meet the educational expenses of their undergraduate dependent children. The program does not take financial need into account.
Almost every state offers their own type of grant or scholarship to its residents. For example California offers Cal Grants for local residents attending an in-state institution, which is common practice for most other states as well. Cal Grants offer support to three types of students including those studying for vocational purposes, attend four-year colleges, or simply those who come from low-income households.
4. How and when will I receive my financial aid funds?
Part of planning for the future includes determining a schedule of when and how you will move forward. Once you have filed your FAFSA, received an award letter from your school and accepted your program, it is important to take note of the timeline of receiving funds.
This process may vary based on the institution you are attending, but generally a grant or loan will cover a full academic year. In most cases, your school must pay you at least once per semester, trimester or quarter, depending on the term length. For University of Massachusetts Global, a nontraditional institution with accelerated classes, financial aid is posted to student accounts during the first two weeks of classes. Check with your Financial Aid Office or One Stop student services representative to find out your schools schedule for disbursement. For most institutions, first-time borrowers may have to wait 30 days after the first day of the enrollment period to receive initial disbursement. Many federal loans also require borrowers to complete entrance counseling before receiving funds.
The method of receiving financial aid depends on the type you are receiving. For grants, student loans, and parent plus loans typically the college first applies monies toward tuition, fees and residence expenses for those who live on campus. Any funds that are left over are paid to you or your parent for other expenses. For work study students, their earned income follows the organization’s pay schedule and the funds are paid directly to the student worker. Program participants do have the option however to request the school to simply apply the money directly to your student account for education-related charges.
5. How do I repay my student loans?
Understanding the repayment process can contribute to building a healthy financial foundation. Similar to capital loans such as mortgages or auto loans, repayment is required even if you run into tough financial times. Be prepared to pay back the borrowed amount as you go through the process. This posting can help you prepare for the future.
The US Department of Education uses several loan servicers to manage billing and other services on its behalf. Your school’s Financial Aid Office can help you learn more about your servicer. Students may also visit the National Student Loan Data System to view information on their individual loans and find contact information for a servicer or lender. You will need your Federal Student Aid Pin to access this information. The servicer or lender will provide a repayment schedule that states the schedule of when payments are due. In most cases you won’t have to begin repaying federal student loans until after you leave college or drop below half-time enrollment. PLUS loans are the exception to this guideline as repayment is expected after disbursement occurs.
A grace period is given to students to allow them ample time to select a repayment plan and get financially settled. Not all federal student loans have a grace period but those that do generally give students six-months before payments are due. The standard repayment plan has fixed payments of at least $50 per month and the lowest interest rate over time than other plans. Plans may range from extending from 10 to 25 years depending on the type of loan selected. Visit the “Repay Your Loans” section on the Federal Student Aid website to learn the differences between plans.
Financing your education
For additional information on eligibility contact your school’s Financial Aid Office. Many schools, like University of Massachusetts Global have dedicated One Stop student services or advisors who can walk through the process with you. For more information on how to finance your education read on with our article "The working professional's guide to paying for college."
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