Borrowing for College: Advice about Loans for Students and ParentsSuzanne Shaffer
Financial aid helps qualified students cover the costs of higher education. It is important for students to apply on time and fill out the necessary forms carefully because an incomplete form cannot be processed until all required information has been submitted or corrected.
Make sure to fill out the Free Application for Federal Student Aid, also known as FAFSA. This is the federal government’s application that is used to award aid based on an applicant’s need.
All students should fill out this form. Some universities also require the CSS/Financial Aid PROFILE form. Your student’s school may also have their own online application. Your student should verify which forms are required by their university and call the financial aid office if they have any questions.
If your student has already completed the FAFSA and indicated their university on the form, wait for a financial aid offer from the school. Even if your family does not qualify for financial assistance from the government, filling out the FAFSA is a good idea because many schools use FAFSA to award their own grants and scholarships.
The FAFSA is available on October 1st each year. For 2017–2018, the federal application deadline is June 30, 2018 (which means your student can apply even if they have already started college). HOWEVER, the university’s own deadline is usually the spring before the academic year gets started, and there may not be institutional funds available for students who miss this deadline.
Financial aid is intended to help bridge the gap between the college’s “Total Cost of Attendance” and what your family can afford to pay (“Expected Family Contribution”). Review the financial aid package offered by the college, which may include grants, scholarships, work study and loans. Your student’s financial aid award can be used to pay for tuition, room and board, student fees, travel, books and supplies.
The main sources of need-based grants for college are federal and state governments, individual universities, and private funds. Grants (including Federal Pell Grants) do not have to be repaid — they are free money! Grants can be renewed each year if the student continues to meet the requirements and the funds are available.
Scholarships are usually based on academic achievement and economic need and this is also money that your student does not have to repay. The staff in the admissions and financial aid offices determine student eligibility. Some students meet the requirements for multiple scholarships.
Many students and their families do not realize that there are many sources for outside/private scholarships and grants available to pay for college, in addition to what universities offer. High school counselors can be very helpful in identifying scholarships, and there are also many online sources that provide lists of available scholarships.
This is a federal program which distributes money to colleges and universities to finance campus employment for eligible students. If work study is part of your student’s financial aid award, they will find out early in the school year what kinds of jobs are available and they can decide which to apply for. Work-study funds are delivered to your student in the form of paychecks from the university to help them cover any education-related expenses.
Federal student loans may be part of your student’s financial aid offer. This is money your student borrows and must pay back with interest.
Through the William D. Ford Federal Direct Loan Program, the U.S. Department of Education offers direct loans to eligible students and families:
You can find out about other kinds of federal loans, including the Federal Perkins Loan Program for students with exceptional financial need, by visiting the website studentaid.ed.gov/sa/types/loans (English) or studentaid.ed.gov/sa/es/types/loans (Spanish).
Your student does not need to accept the federal loans that are offered in a financial aid award. Before you sign for any loans, we suggest creating an inventory of other loans that your student has already acquired. Research the loan requirements and repayment terms, how and when payments are made, and how much the payments
We recommend avoiding loans from private institutions (banks and credit unions) because interest and penalties can be higher and repayment terms can be less flexible. We also recommend avoiding companies that offer information only in exchange for payment.