About College: Understanding Financial Aid, FAFSA, and Managing Student Debt While in School
Overview of College Finances
First and foremost, college is a business. You (or the government or other people) will be paying for their services to obtain your degree. That being said, colleges want your business and will do a lot to get it. This guide is here to help you get through college cheaply and to gain the knowledge you need to navigate college finances before (or maybe after) you get there. There are tons of things that I will help you get through, be it the FAFSA, understanding what loans are right for you, how to manage your unexpected expenses, and whatever else you may run into in the world of college finances.
Before I get into the FAFSA I want to say a bit about scholarships. No matter what point you are at in your college career, you can always get scholarships. Scholarships are money given on behalf of private groups. You can and should apply for as many as possible well before you head off to college and continue looking while at college. There are a few key places I would look for scholarships.
- I would reccomend looking at the website of the college you are planning to attend. Almost every college has some sort of scholarship program and is willing to give students going there free money.
- Next look at local scholarships from organizations in your town or through your high school. Talk to your guidance counselor. They will likely have a list of all local scholarships.
- After applying for all of those scholarships, I would recommend looking at State-wide scholarships and then nationwide scholarships. It is rarer that you will get these, but not so rare you shouldn't apply. Somebody has to get them, it might as well be you.
If you are having problems finding scholarships, I would go online and look at Fastweb or Scholarships.com. These are both useful websites for finding state and national scholarships. Apply for as many as you can and are willing to. You will usually start to hear about getting scholarships in the summer.
If you are a high school Junior or Senior you have probably heard of the FAFSA. If you haven't, it stands for the Free Application for Federal Student Aid. The website can be found here. It is essentially a for that helps colleges figure out how much Student Aid a student can get. You basically need your guardian's tax information and your tax information to fill it out. Once you get started on it it will let you know where to look on your tax forms to see what number to put in. It is a pretty painless form. However, there are a few important things to know about the FAFSA.
- Deadlines are crucial. Financial Aid is on a first come first serve basis. The earlier you get it done the better. Most schools require it before the school year starts, but if you can complete it in February or March you will be better off than people who get it done in July. Especially if you are going to a school with limited funds.
- The FAFSA is trying to guage how much of your and your guardian's money can be contributed to your education. If you have some cash stuffed under your bed, you probably don't need to list it. If you have a savings account specifically for college, maybe it is time to cash it out and keep it with you and don't list it on the FAFSA. I am not advocating financial fraud or lying, but if you can find any loopholes to help get more assistance, especially if you need it, you should try to utilize them. I have never had the FAFSA request anything from my bank so I usually just report that I have 0 in my bank accounts.
- The FAFSA will, however, sometimes request your tax information. Do not ever deliberately lie about your taxes and income on the FAFSA. If you do they will figure it out and adjust your information and usually delay the submission of your FAFSA to the schools you select. This delay could hinder your financial aid received if you had just told the truth in the first place. It's not worth it. Don't do it.
So in conclusion. Fill out the FAFSA as early as possible. The steps to fill it out are pretty simple. Get your and your guardian's tax information, personal information (ssn, etc.), and an hour and sit down and get it done.
Student Financial Aid
Once your school gets your FAFSA they will begin to dole out the money to the students who deserve it. There are many forms of financial aid that the college will give out. Here is a list (I will describe each one in detail later):
- Loans (Subsidized and Unsubsidized)
- Work Study
Grants are a form of student aid that does not need to be paid back. Ever. This is essentially free money if you can keep your grades up. That being said, schools won't give as much federal aid to students who are failing out of college. There are several types of grants, but the major ones are the Pell Grant and State Grants. The Pell Grant is a federal grant that is given to low income students. State Grants can be given on academic performance or financial need.
There are two major forms of federal student loans. Subsidized and Unsubsidized. Subsidized loans means the government pays the interest on the loan while you are in school. Unsubsidized are loans that accrue interest while you are in school. All student loans have some sort of deferment so you don't have to pay until you are out of school a certain amount of time. Once offered one of these types of loans through your school, you will need to accept and sign the loan agreement. You do not need a cosigner for these loans offered through your school. However, there are also private student loans that are offered through many private banks. These are not subsidized and usually have higher rates than loans offered through the school. These should always be a last resort if you can't get enough aid through your school. You will need a cosigner for these loans and they do not take into account anything from your FAFSA.
Work Study -
Work study is what it sounds like. You work for the school, they pay you and you can use that money to either help pay for your tuition or use for personal expenses. Most schools will try to make it so your expenses are covered and the work study money is yours. However, you may be in a position where you have to pay your work study money to the school. Work study is usually optional and you don't have to do it if you don't want to. If you turn down work study, some schools will allow you to turn work study into a loan. Some do not. If you have questions about this you should ask your financial aid office at your school. If you are offered work study, you typically have to find the work study position yourself. This can be as easy as going on the school's website and looking for work study positions and applying for them. At some schools you may need to ask your adviser or other people to help you find positions.
Some schools will offer additional scholarships to students with financial need. These are usually based on your FAFSA. You usually have to apply for these with a separate form. You should look on your school's website or call the financial aid office. There are usually pretty early deadlines for these scholarships. Apply for them early and apply every year.
Some of these expenses can be unexpected when you go to college. Especially when you think everything is already covered. Always plan to have a bit put aside each semester for books and supplies as they can be quite spendy. To see a good guide on buying books for extremely cheap see my other guide How to Buy and Sell Textbooks. Transportation can be important for some students and not so important for others. If you can, carpool or take public transportation. Some schools will include bus passes into their fees. Take advantage of that if you can.
Some students will need to get a job in college. If you know you will have additional expenses in college (car payments, cell phone bill, child care, etc.) you will probably need to get a job. If you go to college with very few expenses, I would recommend waiting to get a job to make sure you can handle the classes and make it a bit easier on you your freshman year. That can be a very stressful transition and adding additional unneeded stress on top of it can kill your motivation to even go to school. If you absolutely need a job or think you can handle it, more power to you. But I know, my freshman year, I couldn't have handled it.
I say all this, however, work-study jobs are usually fairly simple or easy and limit your hours to only a certain amount each week. They work with your class schedule and make it easy for you. If you are offered a work study package, I would not turn it down.
I have one final thing to say about college finances. College is the perfect time to start building credit. You will probably get your first loans student loans or maybe auto loans which effect your credit (positively if you pay them off and never miss a payment after school, negatively if you neglect them once they start billing you). Credit cards can be very beneficial if used correctly and awful if used irresponsibly. I would recommend looking around for a credit card that suits you and will allow your short credit history. Usually look for student-specific credit cards if you are going to apply. Keep your balance low and always have the cash to back up what you spend on it. If you never miss a payment and keep your balances low you will have good credit by the time you get out of school. Credit cards usually carry a negative stigma because people have a hard time being responsible with them. But if you think you can handle the responsibility and remember to always make the payments you need to, you will build a good credit history.
College is a time of a lot of learning, especially the first few years, about money. If you are responsible and are proactive about keeping track of your money and where it is going, you will be fine. If you are irresponsible and don't watch your money, you will struggle. However, I hope this guide helps you become more knowledgeable of where your money comes from and where it is going. If you are ever confused about any college finances, always call your financial aid office right away. Ignoring a problem or an issue will never fix it. Call and find out what is going on immediately.