The financial aid process is one of many important steps students take when planning to attend a university campus or online college. The costs associated with attending college are rising, and while it may seem intimidating at first, there are many places to find financial aid. We'll walk you through the basics of the college funding process one step at a time.
Scholarships and grants are your first stop in the process of finding money for college. They typically never need to be repaid, and so are the preferred forms of financial aid. Scholarships generally are awarded to individual students from an organization and function as an investment in their futures (and free money for college!). There are some major national scholarships and grants for which a number of your classmates will apply. But there are also hundreds of local or online scholarships to be found. Even a seemingly small award can go a long way toward your books and other rising expenses.
The FAFSA, or the Free Application for Federal Student Aid, is the single-most important form you'll complete in the financial aid process; it is required for unlocking federal student aid such as government grants and federal student loans. The FAFSA process is dependent on a number of factors on your IRS Federal Income Tax Return, and if you are under the age of 24, most likely your parents' Tax Returns as well. You will also be asked to share your family's financial information regarding the number of dependents, the value of investments, savings accounts, and real estate.
Once you've filed your FAFSA and applied for as many scholarships and grants as you're eligible to receive, you'll need to wait for your Student Aid Report (SAR) to arrive; the SAR summarizes your financial aid eligibility and your financial aid award letters. Once you receive your federal financial aid allowance and grant package, you will be able to take the next step and apply for federal student loans and grants.
There are three federal student loans that students may qualify for after completing the FAFSA. These are the Stafford Federal student loan, the Perkins loan, and the Federal PLUS Loan. Depending on what type of academic program you're enrolling in, loan limits and terms will vary. Parents who wish to assist their undergraduate children pay tuition will also be able to borrow federally guaranteed loans called PLUS loans (Parent Loans for Undergraduate Students) to help pay for college.
Private student loans can be great supplements to federal financial aid and can help cover the total cost of your education. In most cases, there is
a substantial amount of unmet financial need. Private financial aid is based on your credit history and income and can be used for any education-related
expenses. A private student loan is traditionally used when the federal aid is not enough and a student needs to bridge the financial aid gap.
Also, you may apply for private student loans at any time -- this is extremely useful if you run into unexpected costs. There are a number of other benefits to having private loans, such as a variety of deferment options and repayment benefits.
Because they can fluctuate and vary from year to year, it's important to pay attention to student loan interest rates and how each loan program compares to other loan programs.