Applying for college is an exciting, yet intimidating experience for millions of teenagers every year. The experience can be even more intimidating for parents, who are often responsible for shouldering the enormous cost of their child’s college education. Before applying, students and parents should take the time to learn everything they can about the world of financial aid.
Understand Loans vs. Grants
Before you attempt to utilize any hacks or strategies, you should understand the difference between grants and loans. Loans are offered by both the federal government and private financial institutions, and they must be paid back. Private loans charge interest that accrues over time if a student fails to make payments in the future. Grants are only offered by colleges and the federal government, and they do not have to be repaid. Grants are dispersed according to financial need, and they are usually given more freely to freshmen.
With this in mind, if you or your child wants to save money, try taking advantage of the six time-tested hacks below.
1. Submit the FAFSA Early
The FAFSA form, which decides how much financial aid you are entitled to each year, is made available each year at the beginning of February. To expedite the process and get the most money possible, you should complete and submit your form immediately. Experts state that more aid is available at the start of each year, and as time goes by, federal and state funds begin to dwindle. Fill out your FAFSA once it becomes available, and avoid falling victim to procrastination.
2. Consider the Net Cost of a College Education
Knowing what to expect in terms of expenses can be extremely helpful when applying for financial aid. Many experts suggest students and parents consider the net cost of a college education. This involves subtracting the amount of financial aid from the school’s cost of attendance. When forced to do this, many people realize that their financial aid package is not sufficient. You also need to factor in other costs such as living expenses, transportation, lab fees, books, etc. Once you have a realistic and accurate financial picture, you can plan your financial strategy more effectively.
3. Choose Federal Loans Instead of Private Ones
When you or your child finally receives the financial aid package, be sure that you understand which loans are private and which ones are federal. Federal loans are generally more favorable than private ones, because they tend to offer more flexible payment terms, which can be beneficial if a student drops out or is having difficulty finding employment after graduation. Unlike private loans, federal loans can be discharged during bankruptcy, and they usually do not require co-signers. Since college students usually lack an established credit history, parents usually end up becoming co-signers for private loans. If the student defaults on the private loan for any reason, the credit score of the co-signer will be damaged as well.
4. Try Negotiating the Size of Your Financial Aid Package
This hack is not really discussed, as many students and parents do not know that financial aid packages are negotiable. Colleges, especially elite, competitive ones, want to enroll the best students possible. High-achieving students make the school look good, and when they graduate, they are more likely to have the funds to donate to their school. Once you receive your financial aid package, you may be able to speak with the financial aid office at the school of your choice about getting more funds. Students with impressive academic credentials will certainly want to consider this hack.
5. If Your Parents Are Wealthy, You Should Still Apply for Financial Aid
If your family leans towards the higher end of the income scale, you will still want to apply for financial aid. The fact that lower-income families tend to get more aid is generally true, but funds are still available to students from affluent backgrounds. Many colleges will also give money to students with outstanding academic records. When the time to apply for college comes around, avoid giving in to old financial aid urban legends – students with high-earning parents can get aid for their education.
6. Research Potential Scholarships
Scholarships are the unsung heroes of financial aid, and many people think that they are only available to students with extraordinarily high grades. This is true in many cases, but there are also scholarships that take other factors into consideration. Scholarships are often offered to students because of their:
- Major of choice.
- Age, race, socioeconomic background, or nationality.
- Community involvement.
- Extracurricular achievements.
Some scholarships are also open to students who attend certain colleges. When the time to consider paying for college arrives, try researching scholarships – there are more available than you think. And if you do not qualify, begin searching for grants that you may be eligible for. As a student, any deals that do not require you to pay the money back are preferred, and there are plenty of grants available for you to consider.