Throughout the month of February, College Ave celebrates Financial Aid Awareness Month along with the rest of the higher education community.
Our aim is to provide you with crucial information about access to federal, state, and institutional student aid, so that you can make smart financial choices as we dive into college acceptance season. With all of the options out there for current and incoming students – from work-study and grants to federal and private loans – the process can be overwhelming. We want you to know you’re not alone in that feeling, and that we’re here to help!
Let’s start from the beginning:
What’s the difference between federal loans and private loans?
Federal student loans are funded by the federal government while private student loans are serviced by non-government entities like banks, credit unions, and private lenders. There are pros and cons to both, but most experts advise exhausting your federal loan options before moving on to private loans. This is usually because federal student loans offer a low fixed interest rate and carry some added benefits, like public service forgiveness and income driven repayment options not typically available on private loans.
That said, private loans do have their own advantages. For starters, there is generally more private loan money to go around. Private loan interest rates can be variable or fixed, so students need to shop around to determine the best combination of funding sources available to them. Once you’ve exhausted all other options, private loans can be a great way to supplement and fill in gaps.
Learn more about the difference between federal and private loans.
What are grants?
Grants are need-based aid that does not have to be repaid. Grants can be provided by the state and federal government (like the Pell Grant, for example), nonprofit organizations, and schools.
Want to learn more about the kinds of grants available? Explore our grant resources.
What is federal work-study?
The federal work-study program provides part-time jobs for undergraduate and graduate students whose financial situation qualifies them for this kind of aid. Full- and part-time students participating in these programs are paid an hourly rate for work that is administered by their educational institution (usually capped at a pre-determined amount). These jobs range from library assistants to research coordinators and are a great way to cover costs while staying close to your studies.
What is the FAFSA and why is it so important?
In order to qualify for federal aid, federal and state grants, federal work-study, and even some merit aid, you must complete the Free Application for Federal Student Loans (FAFSA). This online form determines your eligibility for federal aid and – in many cases – state and institutional aid.
One of the best features of the FAFSA form is its convenience. If you’re applying to multiple colleges and universities, you only need to fill out the FAFSA once. Just be sure to select all of the schools to which you’re applying when you get to that part of the form.
If you’re already enrolled in school, don’t forget that you have to re-apply for federal student aid before the beginning of each academic year.
To ensure a successful FAFSA completion, take a look at the FAFSA checklist on NAFSAA’s website and learn more about the importance of FAFSA.
What happens after I submit my FAFSA?
Once your FAFSA is processed, you will receive your Student Aid Report (SAR), which contains data that helps the government and schools determine what kind of loans, grants, and other aid to provide to you.
You’ll probably receive your full financial aid packages around the time you receive your college acceptance letters, though the timing can vary, depending on when you submit your completed FAFSA.
The most important elements within your SAR are:
• Expected Family Contribution (EFC) – what portion of your tuition and costs you and your family are expected to cover, out-of-pocket
• Cost of Attendance (COA) – tuition, room and board, books, dining, etc.
Your need is based on your EFC subtracted from the COA. Once that’s been determined, you will see how much you’ve been awarded in federal, state, and institutional aid to help make up that difference.
While the elements in your SAR are consistent from school to school, the financial aid packages offered will vary, so it’s important to compare each school’s letter carefully.
What other factors should I consider?
Though your financial aid package will show you what you can expect from your first year at an institution, there are still factors that fluctuate regularly. These include:
● Tuition increases
● Costs of books
● Lab fees
● Housing costs
● Dining options
Along with institutional cost variations, the terms of your loans also differ, so be sure to read through each carefully.
Who can I talk to for advice?
The financial aid office at your prospective or current institution is there to help you. A financial aid counselor can help you grasp loan jargon and navigate the unique costs of that particular school. They might even be able to assist you in identifying additional funding resources, so don’t be shy about reaching out to them!
Looking for more advice? Browse these resources on understanding student loan interest, what to know when shopping for student loans, and key factors in choosing a student loan.
