The goal of this workshop is to
simplify the process of researching, evaluating and applying
for student loans. We have distilled the information from
countless resources into a one-stop student loan solution
so that you can quickly find and learn everything you need
to know about how student loans can help you pay for your
education!
With tuition bills and related expenses on the rise, paying
for education is increasingly difficult for students and their
families. Whether you are planning to attend, or are already
attending, a college, university, community college, trade
school or private high school, middle school or elementary
school, Studentloans.com is ready to help. Although financing
higher education may appear to be challenging, our goal is
to make it simple for anyone to determine the loan options
available and help you quickly apply and receive the student
loan funds you need.
| First, here are some important tips to consider
before financing your higher education: |
| • |
Nearly everyone qualifies for some form
of student financial aid, so learn as much as you can!
|
| • |
Talk to your family. Have an in-depth discussion with
your parents and/or family members about how they might
play a role in financing your education. Will they lend
you money? Will they co-sign for loans? Will they borrow
money for you? |
| • |
Complete your Free Application for Federal
Student Aid (FAFSA) early on to be considered for
federal financial aid. The FAFSA is used to determine
“need”. This “need”, Expected
Family Contribution (EFC), helps the schools determine
your financial aid eligibility, and will also determine
if the interest on your Stafford loan can be subsidized
during school and if you qualify for other student loans,
school-based loans, grants or work-study programs. |
| • |
Create a financial plan to pay for college. Do some
research about which programs you can use to help finance
your education. |
| Financial
Aid Calendar |
 |
Here is a suggested calendar to help you plan for and stay
organized as you plan for your education path.
SEPTEMBER-DECEMBER
- Apply for admission to your top choice schools.
- Attend a financial aid workshop if one is available at
your school.
- Apply for scholarships and grants. (You can do this throughout
the year -- the earlier the better!)
- Print this entire section and establish a game plan of
activities
JANUARY-MARCH
- File the Free Application for Federal
Student Aid (FAFSA) and other forms required by
your school(s). The FAFSA can be filed any time after January
1.
- Complete and submit the FAFSA over the Internet at www.fafsa.ed.gov
- Be sure to indicate your interest in applying for
state aid and the Federal Pell Grant.
- A copy of the results -- Student Aid Report (SAR)
-- will automatically be sent to the Department of Education
for the Federal Pell Grant, the State Student Assistance
Agency, and the financial aid office of each school
you are applying to.
- Contact the financial aid administrator at your school(s)
for information on application procedures for student loans,
grants and any work-study programs.
- Review the Student Aid Report (SAR) from the Department
of Education. Within 4-6 weeks of submitting your FAFSA
(sooner if you completed your FAFSA on the web) you will
receive an acknowledgement of the information you submitted
on your FAFSA. Please make any necessary changes or corrections
to ensure your applications are reviewed appropriately.
Your SAR will either be yellow, green, blue or pink (the
color rotates each year). If you filed the FAFSA using estimated
income, then you will want to update your SAR (part two)
when you and your parents complete your Federal income tax
returns.
- The SAR indicates your eligibility for a Pell Grant and
expected family contribution (EFC).
- When you receive your SAR, your college(s) of choice
will have also received the results.
- When you correct the SAR and return it to the central
processor, each college will have access to this new information.
- You can add additional colleges by including the new colleges
on the SAR or by calling either 1-800-433-3243 or (319)
337-5665.
APRIL-JUNE
- Review the financial aid packages you have been offered
by various schools.
- Choose the school you want to attend and notify the admissions
office.
- Accept and return the financial aid package, or award
letter from the school you've chosen. (see more on this
below)
- For additional funds, file student loan applications at
www.studentloans.com
- Ask your parents to complete student loan applications
(Parent PLUS student loan or a private student loan) at
www.studentloans.com
JULY - AUGUST
- Find alternative or private sources of funding to make
up the difference between the total cost of your education
and your school aid package, grants, and government loans.
Private education loans are also available at www.studentloans.com.
- Pay required school fees and bills.
- Verify with the financial aid office that all of your
documentation has been received.
- Verify with the business office that your financial aid
award has been credited to your account.
AUGUST-SEPTEMBER
- Start school!
- Be aware that changes in course load may impact the amount
of your aid. Check with your financial aid office before
you change your course schedule or credit load.
| Types
of Financial Aid |
|
After you have been accepted to a school and provided the
financial aid office with the financial information they require,
you will receive a letter detailing your financial aid award
package. Your award letter will very likely include a combination
of different types of aid--scholarships, grants, loans, work-study
opportunities, and other options.
A scholarship is generally awarded to a
student from a private funding source based on financial need
or to award a student's special talents in academics, music,
athletics, or some other area. Places to check for scholarships
include your parents' employers, religious organizations,
local foundations, and civic groups. Scholarships are quite
competitive, so start at least a year in advance. Ask your
guidance counselor to help you get started, or check out the
many Internet resources that help students find scholarships.
Scholarships do not have to be repaid.
A grant is a funding award that does not have to be repaid.
All grants are based on financial need and are basically gift
money from some funding source (usually the government, your
school, or a private entity).
The major grant program from the federal government is the
Pell Grant (for undergraduate students only).
Pell Grants are reserved for the neediest students. The maximum
Pell Grant is $4,500 for the 2006-2007 school year. Supplemental
Education Opportunity Grants are also available.
These funds are disbursed at the campus level, and are also
reserved for very needy students. The State Student
Incentive Grant program is a federal program that
matches state grants to students. Again, it is reserved for
very needy students. Generally speaking, it is difficult to
receive grants unless your family is very needy.
A student loan, on the other hand, is a
debt obligation and must be repaid. In recent years, much
more financial aid money is given as loans rather than as
grants. It is therefore very likely that you will have loans
to repay as part of your education funding. Even though you
must repay loans, student loans are often referred to as student
aid. Most loans allow for long repayment terms which make
them an attractive funding source. Make sure that you fully
understand your rights and responsibilities for borrowing
and repayment before accepting this important form of student
aid.
| What do you want
to do? |
| Pay for school? |
| Consolidate existing student loans?
|
Over $60 billion in student financial aid available in the
United States each year comes from the federal government.
"Federal" or "Government" student loans
are administered and disbursed through two different programs.
The (1) Federal Family Education Loan Program, or FFELP, uses
a network of commercial lenders to provide loans to students.
If your school participates in this program, your award letter
will contain a list of approved lenders that your school suggests
you use to provide your loan. If your school participates
in the (2) Ford Direct Lending Program (FDLP), your lender
is the federal government itself. Either way, you'll be getting
a "government backed" loan to help you pay for school.
Federal loans can either be subsidized or unsubsidized. If
you have a subsidized Stafford loan, the government will subsidize
the interest on this loan while you are in school. If your
loan is unsubsidized, you are responsible for the interest
that accrues on your loan while you remain in school. Subsidized
loans are generally given to students with greater demonstrated
need.
| Types
of Financial Aid – Federal Student Loans |
|
The three most common government-sponsored education (FFELP)
loans are Stafford loans,
Parent PLUS (Parent Loan for
Undergraduate Students) loans and GradPLUS
loans.
Stafford student loans are only available to students, and
the interest rate effective 7/1/06 for Stafford loans is 6.8
percent. Studentloans.com offers borrower benefits which can
reduce this rate. Apply now to determine the applicable rate
for you. There are limits on amounts that can be borrowed
through the Stafford student loan program. Stafford student
loan limits depend on your dependency and academic year. The
loan limits listed below are effective 7/1/07. If you are
a dependent, undergraduate student, Stafford student loans
are:
| Stafford Loan Limits for
a dependent, undergraduate student: |
|
$3,500 for freshmen, $4,000 for sophomores, and
$5,500 for juniors and seniors (and fifth year if
necessary). |
|
If you are an independent, undergraduate student, or if you
are a dependent, undergraduate student and your parents are
unable to get a Parent PLUS loan, Stafford student loan limits
are:
| Stafford
Loan Limits for an independent, undergraduate student |
| Academic
Year |
Subsidized
Limit |
Additional
Unsubsidized Limit |
| Freshman |
$3,500 |
$4,000 |
| Sophomore |
$4,000 |
$4,000 |
| Junior, Senior
& 5th Yr |
$5,500
|
$5,000
|
Graduate student borrowing levels are set at $8,500 per year,
on a subsidized basis, and $12,000 for additional unsubsidized
amounts. Repayment of Stafford student loans begins six months
after the student completes school or drops below half-time
status. Click here
to learn more about the Stafford student loan program.
Parent PLUS loans, on the other hand, are for parents of
undergraduate students. Each year, parents can borrow up to
the student’s cost of education (minus) expected financial
aid. Repayment begins within 60 days of full disbursement.
Click here to learn
more about the Parent PLUS loan program
GradPLUS loans are for graduate and professional students.
Each year, graduate students can borrow up to their total
cost of education (minus) expected financial aid. Repayment
typically begins within 60 days of full disbursment, however
in-school deferments are available. Click
here to learn more about the GradPLUS loan program
Another government student loan program is the Perkins student
loan program. Perkins student loans are similar to Stafford
student loans in that they are loans from the government that
must be repaid. However, Perkins student loans are administered
through your school directly. Perkins student loans come from
revolving federal funding at institutions. As students pay
back their loans, the funds are re-lent to others. Each institution
gets a small additional capital contribution each year from
the government to be distributed as Perkins student loans,
and the school can allot the funds to students as it sees
fit. Perkins student loans are need based, (based on the SAR
from the FAFSA) and presently carry a lower interest rate
than Stafford student loans. Additionally, the Perkins student
loan program contains some forgiveness programs not offered
to students who have loans through the FFELP or FDLP.
Work-study
Work-study programs allow students to earn money while in
school by working at their school or at another approved (possibly
community service related) job. The money comes in through
regular paychecks rather than in one lump sum. Therefore,
work-study money is usually used for personal expenses rather
than tuition payment, which must be paid at once, prior to
the start of the semester.
| Types
of Financial Aid - Private Student Loans |
|
Private student loans, sometimes referred to as “Alternative
student loans”, can be used to make up the difference
between what your school offers you and what you have to pay.
Private student loans through Studentloans.com can be used
for any education-related expense such as tuition, books,
housing, utilities, computers, food and lab fees. Since private
student loans are a credit based student loan, a student should
apply with a credit-worthy
co-borrower if possible to obtain the best financing
rate and terms.
Your eligibility for a private student loan may be affected
by your government student loans, whether your school participates
in the FFELP or the FDLP student loan program, and other factors.
| Types
of Financial Aid - Consolidation Student Loans |
|
Studentloans.com can also assist you with your consolidation
loan needs. Students and parents typically seek to consolidate
their student loan assets either while the student is enrolled
in school, or after the student has completed the course of
study. Whether you are seeking to consolidate
your federal student loans or you want to consolidate
your private student loans, Studentoans.com can help
you today.
| Starting
the Process |
|
FAFSA Forms
After you have applied for admission to the institution(s)
of your choice, apply for federal financial aid by filling
out a Free Application for Federal Student Aid (FAFSA). This
form will determine your eligibility for financial aid from
the federal government including Pell Grants, Supplemental
Educational Opportunity Grants, Stafford student loans, Perkins
student loans, and work-study programs. One can complete the
FAFSA by visiting www.fafsa.ed.gov.
You must fill out a new FAFSA for each year you plan to be
enrolled in school. The best time to apply for student aid
is between January 1 and March 1, since most schools award
student aid on a first-come, first-served basis. Once you
complete the FAFSA, you will receive a student aid report
(SAR) that will give you an opportunity to correct previously
reported 'incorrect information' before the form goes from
the Department of Education to your school.
When you fill out the FAFSA, it is helpful to have the following
forms and documents handy because you will have to refer to
them and/or use them to provide specific information:
- US Income Tax Returns (IRS Form 1040, 1040A, or 1040EZ)
for the fiscal year that just ended and W-2 and 1099 forms
- Records of untaxed income, such as Social Security benefits,
AFDC or ADC, child support, welfare, pensions, military
subsistence allowances, and veterans benefits
- Current bank statements and mortgage information
- Medical and dental expenses for the past year which weren't
covered by health insurance.
- Business and/or farm records
- Records of investments such as stocks, bonds, and mutual
funds, as well as bank Certificates of Deposit (CDs) and
recent statements from any money market accounts
- Social Security numbers
| Expected
Family Contribution (EFC) |
|
Every school uses the same formula to determine how much
Federal financial aid to award to students--the cost of education
minus the Federal expected family contribution. The expected
family contribution is the amount a family is expected to
contribute before the student is considered for federal funding.
The expected family contribution is calculated by taking into
account student and parent income and assets (not including
the value of the family home). For independent students, only
the student's (and spouse's) income and assets are considered.
To qualify as an independent student, you must meet at least
one of the following criteria: (1) be at least 24 years old;
(2) be an orphan; (3) have a dependent other than a spouse;
(4) be a graduate or professional student; (5) be a veteran
of the Armed Forces; (6) be married; or (7) be a ward of the
court.
The determination of financial need depends on two numbers:
(1) the Cost Of Attendance (COA) for your school (also called
the school's budget) and (2) the Expected Family Contribution
(EFC), the amount of money your family is expected to contribute
to your education. Your financial need is the difference between
the COA and EFC, and the amount of financial aid for which
you are eligible will be based on this number.
The school's COA will include tuition, fees, room and board,
books and supplies, travel, and personal and incidental expenses.
In many cases there is a standard fixed budget amount for
some of these categories. The budget amount for travel may
vary depending on the student's home state. Similarly, room
and board expenses may be reduced and travel expenses increased
for commuter students.
The EFC is the sum of the student contribution and the parent
contribution. The calculation of the expected student contribution
is generally 35 percent of the student's assets and 50 percent
of the student's prior year earnings. (The federal calculation
is 50 percent of the net earnings above $2200 and 35 percent
of the student's reported assets.)
The parent contribution depends on the number of parents
with earned income, their income and assets, the age of the
older parent, the family size, and the number of family members
enrolled in post-secondary education. Income is both the adjusted
gross income from the tax return and non-taxable income such
as social security benefits and child support. The Higher
Education Amendments of 1992 eliminated home equity from the
EFC, but many private colleges and universities still use
a parent's home equity as a way of rationing their school's
own grant and scholarship funds. Money set aside for retirement
in a pension plan such as a 401K, IRA, Keogh, or 403b is usually
not counted as an asset. However, the funds contributed to
a tax-deferred retirement program during the previous year
must be included on the FAFSA as other untaxed income. In
addition, an asset protection allowance shelters a portion
of the assets from the calculation of the parent contribution.
The asset protection allowance increases with the age of the
parents to allow for emergencies and retirement needs.
A few things to note about the needs assessment formula:
(1) student assets are assessed more heavily than parent assets;
(2) student income is assessed more heavily than parent income;
and (3) in most cases the EFC will go down when the number
of family members in school goes up.
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