Originally posted on C2 Education Blog
Financial aid for college can be a confusing world, especially for parents who haven’t navigated these waters since their own college days. We’ve put together an introduction to financial aid to help you and your child get started – but remember, the details of financial aid will differ from state to state and school to school so you should always thoroughly research ALL of your options!
Sources of Aid:
Federal Aid: Most students fill out the Free Application for Federal Student Aid (FAFSA). This application is required for eligibility for any federal aid. Almost all students are eligible for some form of federal student loan, regardless of financial need (for more on student loans, keep reading!). Many students are also eligible for the Pell Grant, the largest federal student financial aid program. The Pell provides a maximum of $5,550 per year based on your financial need, the cost to attend your school, and whether you enroll at full-time or part-time.
State Aid: The types and amount of aid offered by state governments differs greatly. FinAid.orghas an excellent site offering resources for student aid for each state. We’ve compiled information on selected states below:
- California: Students who meet minimum GPA requirements and demonstrate financial need are eligible for the Cal Grant which provides free money to attend a California four-year institution. To apply, students must submit their FAFSA online and submit their verified GPA forms to the California Student Aid Commission.
- Georgia: Students who graduate from high school with a 3.0 GPA and choose to attend a Georgia college or university are eligible for the HOPE scholarship which can sometimes cover the full cost of tuition. Students may apply using the FAFSA.
- Illinois: Students who graduate in the top 5% of their high school class or who score in the top 5% on the ACT or SAT are automatically considered for the Merit Recognition Scholarship. Amounts differ from year to year based on budgetary concerns. Illinois students may also apply for theIllinois General Assembly Legislative Scholarship for which each member of the General Assembly may nominate 2 students from his or her district. Interested students should contact their local representative for eligibility requirements and application information.
- Maryland: Maryland students may be eligible for the Howard P. Rawlings Program of Educational Excellence Award. Interested students may apply for one of the two available grants. The Guaranteed Access Grant is available to Maryland students with a minimum 2.5 GPA who meet maximum income requirements; this grant pays 100% of financial need up to $13,700 and can be applied for using the FAFSA and the GA Grant Application available from your school’s counselor. The Educational Assistance Grant is also available to Maryland students. Applicants are ranked by their Estimated Family Contribution (EFC) as determined by their FAFSA and the applicants with the lowest EFC are awarded first; the grant pays 40% of financial need up to $3,000 and can be applied for using the FAFSA.
- North Carolina: North Carolina students who meet residency and academic progress requirements, enroll in a UNC school or other eligible NC college, and are eligible to receive the federal Pell grant can also receive the North Carolina Education Lottery Scholarship, worth $100 to $3400; this scholarship can be applied for using the FAFSA. Students who meet residency requirements and attend an eligible private institution may apply for the North Carolina Legislative Tuition Grant Program; applications can be found at the financial aid office of your chosen college.
- New York: The largest financial aid program in New York is the Tuition Assistance Program (TAP). To receive TAP money, students must meet residency requirements, attend a New York college or university in an approved program of study, and meet income eligibility limits. The amount offered is determined by the student’s EFC and the tuition rate of the school. Students can apply using the direct link on the FAFSA. New York also offers Scholarships for Academic Excellence. This program provides 2,000 $1,500 scholarships to each valedictorian at each NY high school as well as an additional 6,000 $500 scholarships to other outstanding graduates. Students must be nominated for this scholarship; those interested should see their high school guidance counselor for application instructions and eligibility requirements.
- Texas: Any high school valedictorian is exempted from paying tuition at any public college or university in the state for one year. Students who enroll in an eligible Texas college for more than 15 credit hours per semester may also be eligible for a tuition reduction. The state of Texas also offers a number of grants for students who demonstrate financial need.
School Aid: Most schools offer financial aid packages based on a combination of demonstrated financial need and merit. School aid offerings vary greatly from one institution to another. Recent federal regulations now require schools to post “net cost calculators” on their websites; these calculators can give you an idea of how much the school would cost after deducting aid packages. You could also begin by looking at schools known for their financial aid packages orschools known for giving merit-based aid. In order to help you begin your school financial aid research, here are three little-known tips to keep in mind: 1)Pricey, prestigious schools tend to have greater resources and therefore tend to offer more aid than “bargain” schools; 2) Students who apply through binding early decision programs tend to receive less financial aid because they have less leverage; and 3) most schools have more grant money than they advertise – they won’t just hand the money to you, you have to ask for it! The best time to ask for additional funds is during the summer when many students decide at the last minute not to attend the college, leaving their financial aid packages on the table. That money then becomes available for other students – but you’ve got to ask for it.
Outside Scholarships: There is a scholarship out there for almost any student – some are based on academic merit, others are essay writing contents, and still others offer awards for traits such as ethnicity. Be forewarned, though: Federal guidelines mandate that outside scholarships be considered a resource in meeting financial aid, therefore they reduce the amount the school has to offer rather than the amount you have to pay. This means that if your child won 5 outside scholarships, the school may simply offer him a smaller financial aid package. If this happens, the best way to deal with it is to request that school reduce student loan offerings before reducing grants – this can at least save you money on interest payments and reduce your debt load.
Tuition Breaks
Most states offer student exchange programs in which eligible students can receive a tuition break by attending certain out of state schools. These programs do not kick in automatically – students must apply for them – so doing your research might pay off in dividends with these programs!
- Western Interstate Commission for Higher Education (WICHE): Students who are residents of member states may be eligible for the Western Undergraduate Exchange (WUE). WUE allows students who attend a school in another WICHE state to receive a break on tuition – WUE students pay just 150% of in-state tuition rather than the full out-of-state tuition.
- Midwestern Higher Education Compact (MHEC): The MHEC has organized an exchange program which also allows residents to attend a school in another MHEC state without paying the full out-of-state tuition. Like WUE, this program also allows these students to pay just 150% of the in-state rate.
- Southern Regional Education Board (SREB): The SREB’s Academic Common Market allows students to pay in-state tuition at a school in a SREB state if they enroll in an eligible program of study.
- New England Board of Higher Education (NEBHE): NEBHE’s Tuition Break, like the Academic Common Market, allows students to pay in-state tuition at a school in a NEBHE state if they enroll in an eligible program of study.
C2 Education Student Loan Rankings:
- Perkins Loan: Perkins loans have the most favorable lending terms, but they are reserved for students with demonstrated financial need. These federal loans are made through the school and must be repaid to the school. Eligibility is determined by the FAFSA.
- Subsidized Stafford Loan: Subsidized Stafford loans carry a low interest rate (currently 6%) and the government pays the interest that accrues for a certain period of time, but these loans are also need-based loans. Eligibility is determined by the FAFSA.
- Unsubsidized Stafford Loans: These loans also carry a low interest rate (currently 6.8%), but the student must pay any interest that accrues. These loans are available to most students and are also offered via the FAFSA.
- PLUS loans: These are federal loans which parents can apply for to help pay for their dependent children’s undergraduate education. These loans offer lower than average interest rates and can also be applied for via the FAFSA.
- Home equity loans: Depending on a family’s circumstances, a home equity loan is often better than a private student loan. These loans carry lower interest rates than private student loans, and the interest is usually tax deductible. However, families must be careful to consider their individual financial circumstances before going this route.
Private student loans: These should always be a last resort for funding college because these loans are not heavily regulated and lack many of the borrower protections offered by federal student loans. Interest rates and loan terms vary widely from lender to lender. If you choose to apply for a private loan, be sure to read all of the fine print so that you are fully aware of all borrowing terms; some lenders engage in predatory practices, so it is important for you to know all of your rights. It is also important to know that the school and the lenders will almost always allow you and your child to borrow more than you can afford – so it’s up to you to respect your own limits!
