What is financial aid?
Financial aid is any monetary resource, lending agreement, or support program that helps you pay for college — including tuition, books, and other college-related expenses. Some financial aid is ongoing, renewable throughout your time in school; other forms are only offered once. Depending on the type of aid, you may or may not need to pay back the amounts you receive.
Where does financial aid come from?
Financial aid is offered by three main groups: the federal government, your state government, and the school you plan to attend. Aid that comes from your school or college is called institutional aid. Collectively, aid that comes from the federal government is called federal student aid or Title IV aid.
Under the umbrella of federal student aid, there are various award types with unique terms and qualifiers – including Pell Grants, TEACH Grants, Perkins Loans, PLUS Loans, and several others. In order to qualify for institutional aid, state aid, or federal aid, students need to complete a Free Application for Federal Student Aid (FAFSA).
Financial aid can also come from private organizations, banks, employers, and corporations. Aid from these sources does not usually require a completed FAFSA.
Which types of financial aid can I receive?
Unless you've defaulted on a previous student loan, or have been convicted of a crime, you may be eligible for some level of federal aid. (Even if you're doubtful about qualifying, you should still complete the FAFSA, since many school and state-based awards automatically receive your information through the FAFSA funnel.) All together, award options from the three main groups are combined to form a financial aid package.
After completing a FAFSA application, you'll be notified – by the federal government and by your school's financial aid office – about the aid options available to you. Ideally, packages would include more aid that doesn't need to be repaid (scholarships, grants, work-study assistance) and less loan options. Still, students are allowed to accept or reject any component within their financial aid packages.
There are other forms of financial aid – like private loans, private scholarships, and employer tuition reimbursement – but you'll need to explore these avenues independently. Completing a FAFSA application will not help you to find or acquire these types of funds. That said, colleges' financial aid departments are often willing to help students locate applicable private scholarships, and they may post lists of preferred lending institutions, which offer private loans.
How do I know if I'm "eligible" to receive financial aid?
Many college students are eligible to receive state and federal funds – even if they are adult students, returning to college later in life. The FAFSA website outlines specific eligibility requirements, but the main criteria are:
- You must demonstrate financial need with your expected family contribution (EFC). (Even if your family income is quite high, you may still qualify for unsubsidized Stafford or PLUS Loans, which are not need-based awards.)
- You must be a U.S. citizen with a valid social security number
- You must have a high school diploma, a GED, or a passing score on an ability-to-benefit (ATB) test
- You must be attending an eligible program at an accredited school or college
- You must not be in default on a previous federal loan or owe a refund due to withdrawal from a previous college program
- You must not have any drug-related convictions
- If/when you're applying for renewal of federal aid, you must have made satisfactory academic progress towards program completion
If you're applying for private loans or private scholarships, eligibility requirements will be different from those listed above. Private lenders, for example, will mainly want to check your credit score. They may require a cosigner if your credit report is subpar.
Private scholarships entail many different eligibility requirements. State-based financial aid often requires that aid recipients be residents of the state and attending in-state schools. A financial aid advisor at your college can help you better understand both options.
How do I know how much financial aid I can collect?
You won't know for sure until you complete the FAFSA application, receive your Student Aid Report (SAR) from the government, and receive a financial aid package from your school's financial aid department. However, several websites offer tuition calculators, which can help you estimate your expected family contribution (EFC) and what you might receive in financial aid awards. Also, individual colleges are now required to offer tools called "net price calculators" on their school websites. Different schools use different formulas, but the calculators are designed to help you predict how much a degree will actually cost you, based on your personal circumstances and probable aid options.
What about private loans?
Countless banks and credit agencies offer private loans for college students. You can apply for private loans at any time of year, and the application process is often much quicker and easier than it is for government loans. (Although the FAFSA process has dramatically improved in recent years, and is ALWAYS worth the effort.)
Still, private lenders are mainly concerned with making money. The terms of their loans (higher interest rates, deferment penalties, and strict repayment rules) are often less desirable than the terms of federal or state-based loans. You should only consider private loans after exhausting all other options. Even then, be sure you understand how private student loans differ from federal student loans, and make educated borrowing decisions.
What about employer tuition reimbursement?
Many employers offer tuition assistance or tuition reimbursement programs to qualifying employees. Exact details vary from one employer to the next, with especially generous programs covering 100 percent of tuition costs. If you're planning to pay for your education with tuition assistance from your employer, speak with an HR representative to be sure you understand all the terms and conditions. Common questions to ask include:
How much of my tuition will you cover, and is there an annual or lifetime cap?
Employers often outline this benefit by opting to pay for x percent of tuition costs (usually not including books or campus fees). They may also limit the dollar amount employees can receive in a given semester, school year, or overall.
How long must I be employed (before and after I receive tuition assistance)?
Most employees are not eligible for tuition assistance after just one day on the job. Employers want to ensure that recipients are responsible and productive, before shelling out for outside opportunities. Tenure requirements can range from several weeks up to a full year.
Additionally, most tuition assistance programs involve repayment rules, in the event of employee termination or resignation. If you decide to quit your job the day after you finish school, you'll likely be required to pay back some or all of the funds you received.
Do I need to have my program or courses approved by a supervisor?
Employers aren't helping you pay for school just to be nice. Usually they plan to benefit from your education, as it will allow them to promote you or extract relevant input. For this reason, employers may limit the subjects you can study and the degree level you can obtain, when using company funds. (e.g. a law firm probably won't reimburse an employee who plans to study fashion design.
Do I need to maintain a certain grade point average?
It's very unlikely your employer will pay for D's and F's. You may need to maintain a specific GPA, in order to keep your benefits.
Will my tuition be paid in advance, or do I need to apply for reimbursement after completing each course?
Most tuition assistance programs require that you pay up front and are reimbursed after you've completed the course. This is a good thing to know before enrolling, so you're not on the hook for out-of-pocket costs if the reimbursement is delayed or denied.
What about private scholarships?
Of all the types of financial aid, private scholarships are probably the most difficult to outline. They are awarded by thousands of different groups and individuals. They can range from $50 to $50,000. They can involve very narrow application parameters (e.g. only available to left-handed Floridians who plan to study rocket science) or very broad parameters (e.g. any student from Florida can apply).
Because private scholarships are so numerous and so diverse, there's no single guide or website that can list them all. New opportunities crop up every year, while existing scholarships are often discontinued due to lack of funds. The best way to search for private scholarships is to consider your personal attributes in a number of common scholarship categories.
Your gender, your desired major/career path, your ethnicity, your employer, and your hometown are all factors that can help you find a relevant scholarship. Here's how they work:
- Gender-Based scholarships – If you're a woman preparing to study business, law, or one of the so-called STEM subjects (science, technology, engineering or mathematics), you may find scholarship opportunities through professional women's associations, which are aiming to level the number of men and women in these fields. Likewise, if you're a man preparing to study in a female-dominated department (education, nursing, certain social sciences), you may find similar options through leagues of male professionals.
- Major/Career-Path Scholarships – Many professional organizations aim to help incoming professionals by subsidizing a portion of their education costs. Professional groups in fields like accounting, psychology, law, engineering, and specific areas of business are all common benefactors. Usually, career-based scholarships are geared towards high-achieving students (meaning high school grades and accomplishments are weighed). But some organizations also offer scholarships to minority and nontraditional students – regardless of their academic history.
- Ethnicity Scholarships – Students can often find organizations that are specifically dedicated to the support and advancement of a particular race, culture, or national heritage. In some cases, even distant lineage (e.g. your great, great grandfather) is enough of a qualifier.
- Corporate Scholarships – In addition to tuition assistance, some corporate employers award annual scholarships to employees or children of employees.
Pursuing private scholarships can be a difficult and tedious process. Each application may involve an essay, a recommendation, and supplemental documents. If you're hoping to pay for your education with private scholarships, you should start investigating possible awards very early.
How do I know if I can trust private scholarship providers or services?
Unfortunately, some of the scholarship offers that you'll find online are questionable, or downright fraudulent. The best places to find reliable scholarship listings are government websites (with URLs ending in "gov"), accredited colleges' financial aid pages, and reputable private sites like FastWeb or FinAid.org. You should never pay anyone to find scholarships that match your profile.
Some scholarships and student contests require you to send an application fee or pay annual membership dues as a requirement for scholarship eligibility. And many of them are legitimate. Still, you should check with your college's financial aid office to determine whether or not such fees are worthwhile expenses. If you're only marginally committed to a specific field of study, it doesn't make sense to pay any money – even to a highly respected professional organization.
Some scholarship providers will ask you to send proof of your financial need. But you should never send your social security number, your employment data, or copies of your tax returns to anyone. Even legitimate and well-intentioned organizations cannot protect your information from criminals who may intercept it during the application process. You should only supply personal data in the completion of your Free Application for Federal Student Aid (FAFSA). The federal government has taken great pains to ensure your privacy and protection.
Once you've completed the FAFSA, the colleges you're interested in will safely and automatically receive information about your financial need. Use these financial aid offices as a resource when scouting and applying for private scholarships. Financial aid advisors may be able to help you submit verification of financial need to private scholarship sponsors without compromising sensitive information – like your social security number.
How do I apply for financial aid? Where do I start?
The first step in the financial aid process should be the completion of the Free Application for Federal Student Aid (FAFSA). As its name suggests, this application is used to determine how much financial aid you may receive from the United States government. The FAFSA website now makes it easy to apply online, and you can even reach a live representative with any questions that aren't answered in the FAQ section.
Bear in mind, you can and should complete the FAFSA application before you're accepted at a college or university. You won't receive any funds until you're accepted and start your coursework. But you don't want to wait until that point to start the application process.
Why do I start with the FAFSA?
Information from your FAFSA application is often the same information you'll need to complete any state or school aid applications. So it makes sense to prepare your FAFSA first. Also, in many cases, you will automatically be considered for school-based aid and state-based awards, just by completing the FAFSA. (FAFSA allows students to include up to ten prospective schools on their applications. And the schools listed will automatically receive FAFSA results.) In other words, sometimes there is no additional paperwork required to apply for financial aid from all three main sources.
When should I submit my FAFSA application?
There is no deadline for federal financial aid applications. For any given school year, the FAFSA may be filed from July 1st until June 30th of the following year. That includes every day on the calendar. However, individual colleges and individual states may have different parameters, including springtime filing deadlines for traditional college programs that begin in the fall.
Why do some sources say I can't complete my FAFSA before January 1st?
January 1st is the earliest you can file a FAFSA for the upcoming school year. FAFSA recognizes the "school year" as extending from July 1st to June 30th. In other words, you can't apply for the 2012-2013 school year until January 1, 2012. However, you can file a FAFSA in November or December of 2011 for the 2011-2012 school year, which extends until June 30,, 2012. If/when you continued your courses beyond that date, you would need to re-file for next year's FAFSA.
Why do some sources recommend filing the FAFSA early? When is early?
Traditional colleges may only offer two start dates: spring semester and fall semester. If you are applying to a college with this type of schedule, you may want to file your FAFSA in early January, which is the start of the financial aid calendar for most traditional schools. Some forms of aid – particularly those offered by states and traditional colleges – are distributed on a first-come, first-serve basis. If your FAFSA application arrives outside the January to June window, available money from these sources may be gone.
Today of course, many colleges and online degree programs offer flexible start dates – meaning students can enroll at virtually any time of year. If you're ready to start school in October or November, you don't have to wait until January to complete your FAFSA. Just be advised that by filing your FAFSA application in the summer or the fall, you may be outside the deadlines for certain state awards.
When should I submit my applications for state-based financial aid?
As noted above, states have different financial aid deadlines. Unlike how the FAFSA works for federal aid, there isn't one, official, state-aid application that you need to complete. Instead, states present different requirements and deadlines for the different award programs they offer.
For example, Delaware's Scholarship Incentive Program (ScIP) requires applicants to file their FAFSA by April 15th. Meanwhile, Delaware's Diamond Scholarship requires the completion of Delaware's Common Merit Application, a personal essay and the submission of high school transcripts by March 22.
Some states, like Florida for example, provide student residents with a personal financial aid account – accessible via user login and PIN. These accounts allow students to apply for multiple sources of state aid in a single application, to check the status of their awards, and to update pertinent information – like changes of address or phone number. If your state doesn't provide this feature, you should consult its department of higher education website, and make note of any awards that might match your profile.
All in all, it's important to be aware of what your state offers, and what actions you need to take.
Is state-based financial aid only redeemable at in-state colleges? How does this affect online students?
The short answer is: yes. In most cases, financial aid from a state government can only be used at colleges within that state's borders. Beyond that, some awards further stipulate that only public colleges are eligible colleges. Some state awards involve shared sponsorship between the state and a handful of participating schools. In those cases, a specific list of participating colleges will be provided. Finally, some states maintain agreements or exchange programs with neighboring states whereby students can use portable grants or pay in-state rates for out-of-state programs that aren't offered by their own state's colleges.
All that said, there are a limited number of state-based awards that can be used in other states and for online programs that are based outside your state. If you're interested in an out-of-state/online college, contact your state's department or commission of higher education, and ask about available options.
If you're a graduate student or an independent student, planning to attend an out-of-state school, you can often apply for state residency within one year of relocation. You're usually required to obtain a driver's license and provide a copy of lease agreement, in addition to other paperwork. Not only could state residency qualify you for in-state financial aid, it might also reduce your tuition to resident rates.
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