Student Loans: Casting Your Net for Financial Aid
Is your daughter or son college bound this year? If so, one of the most important things on the "to do" list is getting information, applications and filling them out for that student loan. Makes little difference whether you are poor, in the middle or rich. You still have to do it.
Maybe you kid has several offers from several choice schools and all offer financial aid help. Your job is to figure which one produces the biggest return. What is on the applications varies from 6000 colleges. of those, only 700 have adopted the U.S. Department of Education's wording and format to evaluate your finances. The others do as they want. Some colleges only provide aid information, not an actual loan, and the parents are expected to apply for them.
Below is a checklist of items to determine financially and ALWAYS use "net" not "gross" amounts. if you have grants or scholarships, subtract them from your annual costs. This will determine how much of a loan you might need.
- Determine the net cost: all tuition, room and board, yearly cost for books (use $1200 for a default) and transportation, lab fees, parking, health insurance.
- Estimate the cost over four years and inflation. Use a default figure of 15%.
- Ask about conditions or renewals for awards and what happens if the student gets outside scholarships.
- If the difference in cost is not more $1000 between a prestige and regular school, go prestige, otherwise, go with the cheaper school.
- As a rule, student debt that must be repaid should not be more than the starting salary, assuming they get a job. Make sure the loan can be paid off within 10 years.
- Try to get a federal loan or a Stafford loan, lastly, private loans, which are costly.
- Appeal your financial aid offer and point out why if the award is less than expected- family changed circumstances, job loss, large medical bills
- Student Costs include: tuition and fees, housing and meals, books and supplies, transportation and all other.
- Determine the grants and scholarships your student has won.
- Subtract all aid (grants\scholarships) from the total student costs. The result is the net. The amount the parent pays.
- If you need a loan consider: Federal Perkins, Federal direct subsidized or unsubsidized, Federal Parent Plus first.