By Elizabeth LaScala
Amid Recession, You Still Have to Pay for CollegeUploaded: Jan 11, 2010
In those agonizing months between sending out college applications and waiting for those admission decisions in the spring, many high school seniors and their parents will be applying for financial aid. Financial aid should never be an afterthought. The cost of higher education continues to rise and the recession is taking its toll both on college endowments and family resources. Move quickly to understand the process. Find out what forms and documents are required, when they are due, and where they should be sent. Since most aid is distributed on a first come first serve basis, early is better. Here are some basics to get you started.
Financial aid is any grant, scholarship, loan, or paid employment offered to help you meet college expenses. A Financial Aid Package is a combination of different types of aid combined to meet your financial need. There are two types of Need-based Financial Aid: gift aid and self-help aid. Gift aid consists of grants and scholarships and does not have to be repaid. It also does not require a work commitment on the part of the student. On the other hand, self-help aid does require either repayment or a work commitment. Self-help assistance takes the form of student loans and student employment through work-study programs.
For a student to be awarded need-based financial aid, families must demonstrate through the financial aid application process that there is financial need. Financial need is defined as the difference between the full cost of attendance at a particular school and the amount the family is expected to pay for these costs. Cost of attendance includes direct costs, such as tuition, fees, room and board, as well as indirect expenses such as books, supplies and transportation and personal expenses. Student financial need varies because costs vary based on the particular school.
A financial aid award may also include aid that is not need-based. This award often takes the form of an unsubsidized Stafford loan and/or a PLUS loan. The unsubsidized Stafford loan and the PLUS loan are educational loans which are not need based. The Stafford loan is a student loan, and the maximum a freshman can be awarded in the unsubsidized form is $5,500. The PLUS loan is a parental loan and is offered based on credit history. The interest rate is presently fixed at 7.9% or 8.5% depending upon what school the student attends. For both loans, interest accrues from the date the loan is disbursed (paid out to cover some expense such as tuition).
All schools will request the completion of the FAFSA (Free Application for Federal Student Aid). The federal government uses it to determine eligibility for financial aid (including grants, scholarships, work-study, loans, etc.). All colleges require this form, and it is best to file the FAFSA online. Visit www.fafsa.ed.gov. Parents and students should try to complete their income taxes and file a FAFSA as close as possible to February 1. If this is impossible, use estimated income to complete the FAFSA. You will need to update these estimates with actual income once your tax returns are done.
In addition some schools will want an alternative financial form, the CSS (College Scholarship Service) PROFILE. The PROFILE asks additional questions in order to get a more detailed picture of family finances. Students register online for the PROFILE service, then a customized PROFILE form is completed and submitted to a central processor. The financial information is then sent to colleges listed in your account. Register for PROFILE at www.collegeboard.com.
Finally, some colleges require additional supplementary financial aid forms. Consult each college's instructions to verify the forms required and deadlines.
Families should review and compare all offers of admission, financial aid packages and their own resources with great care. As you become more acquainted with the process, you will be better positioned to take advantage of the aid that is available. As the economy improves, this will prove to be an asset that helps you better manage the costs of your college education.
This is the last in a six-week series of blogs about applying to college by admission advisor Elizabeth LaScala and Teen Wire high school senior Daniel Morizono - showing both sides of the coin, so to speak. Topics cover everything from pressures to apply early, to parental involvement, to dealing with acceptance, rejection and the hated wait-list option.
Elizabeth LaScala, Ph.D. is an educational consultant and certified college admissions advisor. Her goal is to help students and their families understand the admissions process, research college and career options, create a customized college list and submit a strong and cohesive application. She is familiar with local high schools and has guided three daughters through the college admissions process in addition to more than 300 clients. Dr. LaScala is an active member of NACAC, WACAC, and HECA and earned a certification in College Admissions and Career Planning from University of California at Berkeley. Contact her at (925) 891-4491 or [email protected]