Financial Aid | Going Merry

The Only Financial Aid Guide You’ll Ever Need

1 July 2019

goingmerry

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Categories: Financial Aid

This article was updated on July 1, 2019.

Figuring out how to pay for college is often the most difficult part of the application process. Just as the need for a college education is rising, the cost of tuition is skyrocketing. Between 2003 and 2013 alone, the cost of tuition rose by 79% above inflation. Since 1982, the cost has increased by a total of 500%. As a result, about 40% of soon-to-be college students end up turning down their first-choice school and going for a cheaper option.

To help you navigate this process and help make an informed decision, check out our new budgeting tool – MerryBudget – to help you think through how you will pay for college.

Why has the cost gone up so much? One major reason for such drastic increases in college costs is a lack of funding from state and local governments. As more and more funding is being taken away from universities and colleges, upping tuition rates is an easy way to make up the difference. Other factors have also contributed to this, such as the ‘recreation parks arms race’ to attract students and rise up college rankings.

Is the Price Worth the Education?

Current tuition rates are enough to cause some students to wonder if it’s even worth going to college. After all, who wants to end up with piles of student debt at the beginning of their career?

However, despite the price, the numbers show us that attaining a secondary degree is generally worth it–even after taking the potential debt into account.

First of all, the pay gap between degree holders and non-degree holders is forever widening. Those who hold a Bachelor’s degree earn an average of $2.27 million throughout their lifetime compared to $1.55 million for those who completed some college and $1.3 million for high school graduates with no college education.

As of 2017, unemployment rates for the 25+ demographic also show that getting a college degree is generally the way to go. The unemployment rate among graduates with a Bachelor’s degree or higher was 2.5% while the rate rose to 5.3% for those with only a high school degree and to 7.7% for high school dropouts.

How Does the Cost of School Affect Me?

The rising cost of tuition tends to have a heavy impact on middle- and low-income families as well as on students who are tasked with figuring out how to pay for college on their own. Studies show that middle-income families often earn too much for federal need-based aid but too little to pay out-of-pocket, presenting a challenging situation.

If a student’s intended program or school are out of their budget, they’ll likely need to adjust and attend a more affordable school. This can be discouraging because it forces students to stray from their initial goals.

What Can I Do About It?

Luckily, when it comes to figuring out how to pay for college, there are various options available. Whether you decide to take advantage of federal aid and scholarships, take out student loans, enter a work-study program, or a combination of them all, help is available. The key is deciding which option is the best for you and your situation.

So, let’s start with the basics!.

What is Financial Aid?

In short, financial aid is money to help you pay for college. It can come in a variety of forms, such as grants, scholarships, work-study, and federal and private loans, as well as from a number of sources, including the federal government, the state government, nonprofits, and private organizations.

A great tool to help you figure out how much financial aid you’ll need in order to attend school is the Financial Aid Calculator. It calculates the difference between the cost of the school and your expected contribution, which comes from the FAFSA (see below).

What is the FAFSA?

Now let’s dive into the holy grail of all financial aid forms—the FAFSA (Free Application for Federal Student Aid). The FAFSA is used primarily to determine the financial aid you’re eligible to receive from the federal government, but many schools also use it when determining their own financial aid packages.

The good news is that the form is relatively simple and only takes around 30 minutes to fill out. In order to complete it, you’ll need to have a few things on hand, including:

-Your Social Security Number (SSN)

-Your Alien Registration Number (for non-U.S. Citizens)

-Your or your parents’ federal income tax returns (these can often be transferred into the form automatically)

-Records of untaxed income (if applicable)

-Investment records (if applicable)

Shortly after submitting the FAFSA, students receive an electronic or paper copy of their Student Aid Report (SAR). The SAR lists basic information about a student’s financial aid eligibility as well as their answers to the questions on the FAFSA. The key number and indicator of your financial aid eligibility is the Expected Family Contribution (EFC). It is an estimate of the amount of money your family can contribute towards your education. We’ll talk more about how it’s used below.

The FAFSA becomes available to students each year on October 1st. Once it’s available, it’s recommended that students fill it out as soon as possible to avoid missing any deadlines and to ensure they have enough time to plan for how to pay for college. Some schools also grant financial aid awards on a first-come, first-served basis. For more information, check out the video below.

University-Based Aid

Many schools also use the FAFSA to determine how much financial aid to award their students. As part of this, they take three factors into account: enrollment status (part-time or full-time), cost of attendance, and EFC. Generally, they subtract the EFC from the cost of attendance to determine your financial need and present you with scholarships, grants, and more. Awards can differ wildly from school to school since each institution has its own requirements and a different amount of funding available.

Alternatively, some private colleges and universities use the CSS Profile to determine financial aid eligibility. The CSS Profile is provided by the College Scholarship Service, which is the financial aid sector of College Board. Unlike the FAFSA, the CSS Profile asks questions related to the specific school or program that the student is applying for and takes additional factors into account, including minimum student contribution. Financial aid officers are also able to weigh in on individual student circumstances. The CSS Profile can be completed online and has an application fee of $25 USD.

It is also important to check if you qualify for completely tuition free admittance to a school. Some of the top schools in the country such as Dartmouth now guarantee you can attend for free if your family makes under $100,000 in total income. Harvard does the same if your family makes under $65,000 a year.

It’s also worth discussing the differences between Need-Aware and Need-Blind colleges and universities (some schools also use a blend of both approaches).

While each has its pros and cons, a student’s academic and financial status often determines how they are affected.

Need-Blind schools don’t consider students’ financial need during the application process. While this sounds positive, it can result in schools giving out some not-so-great financial aid packages. Need-Aware schools, on the other hand, do take financial need into account. While this often results in better financial aid packages overall, it can also lead to wealthier students being chosen over financially needy students when limited spaces are available.

Now that we’ve covered all the background info, let’s dive deeper into the different types of financial aid available!

Government Grants

When it comes to figuring out how to pay for college, grants and scholarships are arguably the best way since they both offer free money with no strings attached! But what’s the difference?

To begin, grants are generally awarded by the federal government and are based on financial need.

The main grants that the U.S. government currently offers are the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG). Both apply to participating public and private universities as well as four-year and two-year degree programs and some vocational training programs.

The Pell Grant is awarded to undergraduate students who demonstrate financial need and the maximum amount of the award varies from year to year. For the 2018-2019 school year, students can receive up to $6,095.

The Federal Supplemental Educational Opportunity Grant (FSEOG) is a campus-based aid program (i.e. it’s administered directly by each school’s financial aid office rather than the government itself) that offers additional aid to students with a high amount of financial need. Award amounts range from $100 to $4,000 and students with an Expected Family Contribution of 0 are given highest priority. Participating colleges and universities receive a set number of FSEOG funds from the federal government each year, meaning that the number of awards, award amounts, and award availability vary by school.

In order to apply for government grants, all students need to do is complete the FAFSA each year. They’ll automatically be considered for any grants and federal student aid that they qualify for and will be notified in their award letter.

Scholarships

Scholarships are also free money to help you pay for college and are generally offered by nonprofits, individuals, corporations or universities and colleges. Anyone can apply for scholarships and deadlines vary throughout the year, meaning there are always some available!

Luckily, figuring out how to find scholarships is an easy task. The first step to finding excellent scholarship opportunities is to talk to your guidance counselor or financial aid advisor. They should have the most up-to-date information on local scholarships, allowing you to start your search off on the right foot.

After discussing possibilities with your advisor or counselor, continue your search online with Going Merry! Inspired by what the Common App has done for college applications, we make the scholarship application process much simpler by allowing you to apply directly to scholarships through our site. Simply fill out your profile, then we’ll match you with the scholarships that are best for you and let you apply directly. You can even upload documents, like letters of recommendation or transcripts, and reuse them for every application.

The best part about scholarships is that they’re available to all sorts of people in all different situations and can be applied to both traditional and online colleges. Whether you’re transferring schools, majoring in marketing, or just looking for scholarships that only apply to residents of your state, there’s something for you! Most scholarship applications take some time to complete, but if you’re short on time you can also consider scholarship sweepstakes. Check out our list of essay-free scholarships for an idea of where to get started!

For more information, check out our step-by-step guide on applying for scholarships.

Work-Study

Work-Study is a type of financial aid that provides you with a part-time job while you’re enrolled in school. Part-time or full-time undergraduates, graduates, and professional students that express financial need and attend a participating school are eligible. Over 3,400 schools participate in the federal work-study program. To find out if your college or university is eligible for work-study, contact the financial aid office or visit the financial aid website.

Through this program, students earn at least minimum wage though they can only work a limited number of hours. While the amount of hours per week varies depending on the job, most student employers only require 10 to 20 hours per week. Jobs can be on- or off-campus and, if possible, are related to the student’s field of study—meaning you can get some relevant work experience under your belt at the same time!

In general, undergraduates are paid by the hour while graduate and professional students are either paid by the hour or paid a fixed salary.

Student Loans

Student loans strike fear into the hearts of college students all over and they’re often the least-desired option when deciding how to pay for college….and for good reason! Who wants to be welcomed by thousands of dollars of student debt after graduation? Not many.

But realistically, student loans don’t have to be the enemy. While you should always try to get financial aid from other sources first, student loans can make higher education a real possibility for many people in cases where it wasn’t before.

Here’s a step-by-step guide through the different types of loans and all of the important information that you should know about them. First, let’s talk about federal versus private loans.

Federal Loans

Federal loans are, unsurprisingly, issued by the federal government. When you’re considering taking out student loans, it’s a wise choice to target federal loans first since they offer more benefits than private ones.

One such benefit is that federal loans don’t require a cosigner or guarantor. That means you can apply independently. And most importantly, interest rates are generally lower than with private loans, meaning you’ll end up paying less in the long run. For the 2018-2019 school year, the interest rate is 4.45% for undergraduate loans and 6% for graduate and professional loans. These interest rates are fixed for the life of the loan, so you always know the interest rate you’ll be paying.

When you receive a federal loan, it will either be subsidized or unsubsidized. Subsidized loans don’t accumulate interest for the entire time you’re in school while unsubsidized loans do. Unfortunately, students don’t have much say in which type of loan they receive, since it’s heavily based on financial need. Only students with financial need are eligible to receive subsidized loans while financial need is not a requirement to receive unsubsidized loans. Federal interest rates are currently the same for both subsidized and unsubsidized loans.

Loan amounts vary considerably based on a student’s year in school and their level of financial need. Take a look at the table below to get an idea of your eligibility.

Year in School	Dependent Students (Except students whose parents are unable to obtain PLUS loans) Loan Limit	Independent Students (and dependent undergraduate students whose parents are unable to obtain PLUS loans) Loan Limit
First Year Undergraduate	$5,500 (Up to $3,500 of this amount may be granted in the form of subsidized loans while the rest is granted in unsubsidized loans)	$9,500 (up $3,500 of this amount may be granted in the form of subsidized loans)
Second Year Undergraduate	$6,500 (up to $4,500 of this amount may be granted in the form of subsidized loans)	$10,500 (up to $4,500 of this amount may be granted in the form of subsidized loans)
Third Year & Beyond Undergraduate	$7,500 (up to $5,500 of this amount may be granted in the form of subsidized loans)	$12,500 (up to $5,500 of this amount may be granted in the form of subsidized loans)
Graduate or Professional Students	All graduate and professional students are considered to be independent	$20,500 (unsubsidized only)

*Source: https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized#eligibility

PLUS loans are another type of loan that students should be aware of. They are a federal loan offered to independent students or parents of dependent students and are intended to make up for any gaps between the cost of attendance and financial aid. PLUS loans can be a convenient option for covering the remaining cost of tuition as they have fixed interest rates and virtually no borrowing limit. However, keep in mind that PLUS loans do require a credit check, an origination fee (i.e. a fee for processing the loan), and payments are expected to begin immediately (although deferment is an option).

Lastly, Perkins Loans are for students who demonstrate high financial need. While the Perkins loan is a federal program, loans are granted to students by individual schools (about 1,700 schools participate in the program). When paying back the loan, students make payments either directly to the school or to the school’s loan servicer. Like other federal options, an advantage of Perkins Loans is that their interest rates are fixed. The current level is 5% and the size of the loan depends on the amount of funds available at each individual school.

Many students prefer federal loans because of the flexible payment plans available. When paying back student loans, most monthly payments are based on a 10- or 15-year payment plan, but sometimes the monthly payments are just too high for new graduates. Federal loans work with you to find the best payment plan for your situation.

The best way to determine which payment plans you qualify for is to talk to your student loan servicer. They’ll be able to provide you with the most up-to-date information and guide you on the repayment plan that’s best for your situation.

One of the most common repayment plans is income-based repayment and the process of switching plans is quick and painless. Students need to submit their most recent tax information to determine their eligibility. Each year that they’d like to continue with the income-based payment plan, they simply need to recertify by sending their latest tax records.

To see if you qualify for income-based repayment, check out the Department of Education’s Repayment Estimator Tool. If the calculated cost of your payment is lower under an income-based repayment plan than it is under the standard repayment plan, you likely qualify and should discuss options with your student loan servicer.

Contrary to popular belief, it is possible to discharge student loans if you go bankrupt (although it’s much more difficult than with traditional loans). In order to have loans discharged, it’s required to file for Chapter 7 or Chapter 13 bankruptcy and prove that loan repayment would impose undue hardship on you and your dependents during an adversary proceeding in bankruptcy court. However, what makes it difficult in practice is that undue hardship has never been defined. For more information, head over to the FSA website.

For the latest information on loan forgiveness options, please visit the Federal Student Aid Loan Forgiveness page.

Private Loans

Private loans are often used as the last option after all other financial aid options have been exhausted. While they can be helpful in providing that little extra bit of money needed to fund your education, they shouldn’t be your first choice when deciding how to pay for college.

Private loans are issued by banks, credit unions, or private companies and the rules, interest, and repayment terms can vary wildly depending on the lender. Some private loans also have variable interest rates, meaning that your interest, and your loan payment as a result, can increase.

Another downside to private loans is that they’re based on credit, so a cosigner or guarantor is generally necessary.

Frequently Asked Questions

Should I apply for aid even if I don’t think I qualify?

Yes! The FAFSA is a free form and you never know what type of student aid is available to you until you apply…you might be pleasantly surprised! Thirty minutes of your time could save you thousands of dollars on your tuition bill and make paying for college much simpler. To apply for Federal Student Aid, head over to the FAFSA website.

Do I need to be accepted into a university or college to apply for financial aid?

No. You can apply for financial aid at any time you want, regardless of if you’ve been accepted into a school or not. However, you do need to be enrolled and accepted in order to receive the financial aid. Applying early can be a great option and provide you with a clearer picture of how to pay for college.

Is the FAFSA a one-time thing or do I need to reapply every year?

The FAFSA is based on the previous year’s tax records, so it’s necessary to fill it out once a year to qualify for financial aid. Luckily, it’s quick and easy and should become even easier after the first time.

When do I need to start repaying my student loans?

Most federal loans allow a six-month grace period after graduation (except the Perkins loan which allows a nine-month grace period). In other words, you’ll be required to start paying back your federal loans six months after graduation. Private loan repayment terms vary, so it’s best to check with your lender for the most accurate information.

Where can I get more info about financial aid?

The Federal Student Aid Information Center (FSAIC) is the best place to get the most up-to-date information on financial aid. Reach out to them with one of the methods below:

Federal Student Aid Website

FAFSA Website

Phone: 1-800-4-FED-AID (1-800-433-3243)

Phone (if hearing impaired): 1-800-730-8913

Mail:

Federal Student Aid Information Center

PO Box 84

Washington, DC 20044

Financial Aid Glossary

Let’s face it, financial aid terms can be confusing and unclear. We put this glossary together to turn you from clueless into a financial aid expert.

Cosigner → A second person (i.e. not the original borrower) who also signs for a loan and assumes the same amount of financial responsibility for the loan. Having a cosigner can often help make loans possible for those with bad or no credit.

Deferment → Allows you to stop making your monthly federal loan payments for a determined amount of time.

Expected Family Contribution (EFC) → A number that represents your family’s ability to help you pay for college. It’s determined by a number of factors, including taxed and untaxed income, family size, and the number of family members in college. It’s used in determining financial aid eligibility on the FAFSA.

FAFSA → The Free Application for Federal Student Aid. It’s a free form used by the federal government and many universities to determine if you qualify for financial aid and, if so, how much.

Federal Supplemental Educational Opportunity Grant (SEOG) → A need-based grant offered by the federal government for students with the greatest need of financial aid.

Financial Aid → Financial assistance to help students and their families pay for school.

Financial Aid Calculator → A free tool that allows you to estimate your Expected Family Contribution (EFC) before completing the FAFSA. This tool can simplify the process of deciding how to pay for college.

Forbearance → Like deferment, forbearance allows you to stop making your monthly loan payments for a determined amount of time. The difference is that deferment doesn’t always require you to pay interest, but forbearance does.

Grants → Money for college, generally awarded by the federal government, that doesn’t need to be paid back.

Guarantor → Similar to a cosigner, a guarantor agrees to pay for a loan if the original borrower defaults or is unable to pay. Having a guarantor can help make loans possible for those with bad or no credit.

Loan Forgiveness → Options for saying goodbye to student loans in exchange for non-profit, government, or volunteer work. For more information on current requirements, visit the FSA website.

Payment Plans → Options for repaying your student loans based on income or other factors. To find out which payment plan is best for you, check out this article or discuss options with your student loan servicer.

Pell Grant → A need-based grant offered by the federal government for undergraduate students who express financial need.

PLUS Loan → An unsubsidized loan offered by the federal government to students’ parents. It’s intended to cover remaining education costs not covered by other forms of financial aid. This loan is available only to parents of dependent undergraduate students or independent graduate/professional students and, as of 2018, the interest rate is 7.0%.

Tuition → The amount of money a university, college, or institution charges students for education.

Scholarships → Money for college, generally awarded by corporations, nonprofits, schools, or individuals, that doesn’t need to be paid back.

Student Debt → The type of debt that is accumulated from taking out federal or private loans in order to attend a college, university, or institution.

Student Loans (Federal) → Financial assistance in the form of a loan from the federal government. Student loans accrue interest and must be paid back.

Student Loans (Private) → Financial assistance in the form of a loan from a private provider. Student loans accrue interest and must be paid back.

Subsidized Loans → A type of federal student loan in which the federal government pays the interest while the student is in school or while the loan is in deferment.

Unsubsidized Loans → A type of federal student loan in which interest begins accruing as soon as the loan is taken out.

Work-Study → A type of federal student aid that provides students with part-time jobs while in school.

Useful Resources

Information about the cost of attending school

FAFSA

Information about Federal Student Aid and deciding how to pay for college

Information about private student loans

Financial Aid Calculators

Information about repaying student loans

Have questions about how to pay for college or financial aid that we didn’t answer in this article? Let us know below!

How to Find Scholarships

1 May 2019

Shalon B

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Categories: Applying to Scholarships, Financial Aid

Scholarships are easy to find! Tons of scholarship opportunities await applicants needing to cover college expenses. Of course, finding the best scholarships can seem tricky.

Even if you search “best scholarships” in a search engine, it is likely you’ll end up finding all the scholarships that:

a) are not related to your studies.

b) too specific for you to qualify for.

c) out of date.

An example of the top results for “best scholarships” (searched in spring 2019)

We don’t want that for you. Here, at Going Merry, we specialize in matching great scholarships with your profile. Thoroughly searching resources for scholarships became a great learning experience in how we improved our approach to finding unique, versatile, and inclusive scholarship opportunities. We learned many things, but we’ll give you the top tips!

Scholarships are easy to find once you understand the value of how and what you type while searching, compare searching tools, and are familiar with scholarship provider types. Now, these are all relatively simple ideas, but we’ll make sure to give the details. Illustrating each subject will give you a better idea of how to apply (unintentional pun alert) this knowledge to your scholarship search strategy.

How to search properly

During the introduction, we made it clear that searching “best scholarships” may not help you find the right scholarships for you. What if we type “best scholarships 2019” or “scholarships for undergraduate students”? Unfortunately, this kind of search still doesn’t help much. Searching scholarships with these phrases is too vague. Basically, the category is too wide.

Search engines provide results with relevant information or content. Determining “relevant” can be a bit foggy for a search engine. Let’s simplify this with an example:

When you type “best scholarships”, the search engine is inclined to list results that include your typed phrase and include common content related to your phrase. Then, the search engine lists the results based on popularity, or most visited results. Lastly, the engine will try to provide recent links, but popularity is usually favored over being recent.

Imagine how many sites have words like best, scholarships, student, contest, or application. Imagine if the most visited site is a scholarship list from two years ago with outdated links. See how a vague search can be misleading?

From our experience, basing the search on a specific situation allows the search engine to better understand what we are looking for.

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An example of top results for “Scholarships for Hispanic Women”

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An example of top results for “Architecture Scholarships”

Be careful of making the search too specific. Search engines may have a hard time matching a highly detailed search. For example, “Undergraduate Statistics Scholarship for Armenian in Boston” may bring up good links, but they might not be the results you had in mind.

In addition, never limit yourself to only scholarships related to studies. You can search scholarships related to community service, being a bookworm, being a gamer, having a fear of spoons, or anything else that makes you, YOU.

View your characteristics and traits as separate searches. Searching one or two at a time is a good medium in creating a scholarship search strategy.

Why does this approach work?

Remember what we said about a category being too wide? Not only does a wide category mean there are more options, regardless of actual relevance, but also, a wide category means more competition. A specific search lowers the competition. There will be fewer people eligible for the scholarships, and if your specific search helps you find a lesser known scholarship, there will be fewer people applying.

Next up is comparing tools used to search for scholarships.

Comparing Searching Tools

Each searching tool has benefits separating the search performance from other search tools. We’ll break down the common tools students and parents use in their scholarships search strategy.

Websites

Well-known scholarship search sites are typically the first place everyone arrives. These websites are easily accessible and host tons of scholarship information. The downside is the massive amounts of competition. Many of these websites have national scholarships, and sometimes the scholarships are based on a lottery system. Allowing more students to be eligible is wonderful, but the probability of receiving the scholarship decreases.

Scholarship websites tend to be super organized or not organized at all. Students will either spend time filling out a tedious application (which is probably prompting you to make an account) or spend time searching through numerous result tabs (most may not be what you are hoping for).

The wonderful function of scholarship websites is their ability to bring so many scholarships to you at once! Instead of the difficulty with searching for multiple scholarships individually, the sites provide a vast amount of options for you to choose from.

However, Beware of scam sites. You can check our tips for avoiding scholarships scams in our “No Essay” scholarship post.

Apps

Online apps are a convenient method for searching for scholarships. Having the ability to apply on-the-go and stay updated on scholarships is a great benefit. Most apps personalize your search options.

There are also exclusive features included in most scholarship search apps. Using Going Merry as an example, a few features include the following:

Apps are a great option for individuals wanting a more interactive scholarship searching experience. In fact, the resources and tips provided by companies running the mobile apps can give you an extra boost in your scholarships search strategy.

It is possible you may not like the format of a scholarship app. The first application may be too detailed in your opinion, or maybe you feel the app does not do a sufficient job of matching your profile to good scholarships. If you find a scholarship app is not to your liking, you are able to uninstall the app from your device.

Large Search Engines

Major search engines, such as Google, Ask, Yahoo, or Bing, are very popular for scholarship searches, since the search engines connect you to scholarship links. The links could be to a foundation’s official scholarship page, to a list of scholarships on a blog, or to one of the scholarship search websites we mentioned earlier.

Most of the links you’ll find are dependable. The search engine is built to find the best answers for your search, but may miss the mark every now and then.

One quick tip for large engine sites: Do not ignore the further pages.

For instance, Google. Google provides millions of results. Great and relevant results still exists beyond page 5. The results beyond the first pages are a happy medium in most cases. The links are relevant enough to be useful, and slightly hidden to lessen competition. From experience, the scholarship search websites reside in the first few pages of search engines, while the official company/foundation scholarship pages are listed further back in the result pages of search engines.

Newspapers & Bulletin Boards

Old fashioned search tools should not be overlooked! Information on great local scholarships could be waiting for you in the newspaper or on a community bulletin board. Check all sources you can think of. Try looking for newspapers or bulletin boards at schools, cafes, community centers, or places of worship.

These scholarships have the benefit of being less known or having a criteria you meet that others would not. For example, the scholarship may say “Must attend North Central Engineering High School” or “Applicants living in Olivier County are eligible”. Again, we are seeing that these factors can lessen the competition and improve the likelihood of receiving a scholarship.

After comparing all search tools, you can decide which tools you would like to incorporate in your scholarship search strategy. Then, you may want to think of which providers you are applying to.

Scholarships Providers

Similar to scholarship search tools, scholarship providers differ in organization, accessibility, convenience, and competition. The main scholarship providers are government, private, and school. We’ll break it down in the diagram below:

Government

Government scholarships are provided on a national, state, or local (ex. city) level. Usually national and state government scholarships are applied for through FAFSA. National scholarships have a crowded competition, since qualifications tend to be more flexible. For example, most national scholarships are not restricted by major, school year, or locality.

State and local government scholarships have the restriction of where you live. Local scholarships become very specific in which students are considered eligible. However, the qualifications are typically related to demographic restrictions rather than academic restrictions.

Private

Private scholarships are provided by for-profits, like Dr. Pepper, or non-profits, like the LEAP Foundation. Both options have very flexible qualifications, as the company or organization is free to set their own rules for the scholarship they are funding.

For-profit scholarships have slightly more competition as they tend to be big name companies. Other examples include, Google, Toyota, Dell, Tylenol, and Foot Locker. Non-profit scholarships can vary greatly. There are well-known organizations, like the LEAP Foundation, and also lesser known organizations you can apply to.

Both private scholarship options tend to have a certain theme attached to their scholarship. This can be a major, hobby, heritage, or a topic the organization may support.

School

School scholarships are generally done in partnership with the government or a private agency (for-profit, non-profit). Competition can be a bit crowded as many of your fellow schoolmates may be eligible for the same scholarship. Schools also may have scholarships related to alumni. For example, maybe an alumni funds a scholarship under the psychology department. A department scholarship’s more specific eligibility requirements decreases competition by shrinking the number eligible students.

Comparing competition and qualifications allow you to make an educated guess of the time you will dedicate in applying to scholarships you feel are a good fit. Having a better sense of time and effort allows you to make a more informed decision in creating a productive scholarship search strategy.

An Easy Scholarship Search Strategy

Overall, finding scholarships is straightforward, but these tips should help optimize your search. The most important part of finding great scholarships is tailoring your search to your profile. For more scholarship tips, you’re in the right place. Check out all the posts in this blog. We talk about scholarships A LOT.

How to Pay for College

2 April 2019

Shalon B

No comments

Categories: Financial Aid, General College

“How to pay for college?” It’s a tough question with many solutions, but no definitive answer. This question continually factors into major educational decisions. Forming a budget for college means considering attending in-state vs. out-of-state, your living situation, and the number of registered credits you will need to graduate. Students and parents can be eager to mold the most realistic, stress-free “Paying for College” plan, but the task can truly take a bit of patience.

Below, you can find a few ideas about using different routes to take care of educational expenses. In this way, you can build up to the larger goal of affording a great school. You can also check out our new budgeting tool – MerryBudget – to help think through your needs.

Starting with basics, college expenses are covered through three general funds. Any education-related expense you have is covered by money you earn, money you are awarded, or money you borrow. Ideally, you want to focus on “money you earn” and “money you are awarded”. These two options allow you handle the cost of college upfront. Borrowing typically results in longer commitments by adding additional time and money invested in repaying what you borrowed, also known as debt. Balancing these three funds are key to figuring out how you will pay for college.

Money you earn

Earning money is the most direct way to pay for college. In exchange for your labor or service, you make a wage you have the authority to manage.

Examples of traditional labor jobs

Barista

Grocery Store

Food Server

Day Care Assistant

Tutor

Retail Merchandiser

Tour Guide

Baker

Jobs related to customer service and hospitality tend to need less experience and have more flexible schedules. You can find these jobs on popular local job boards. Wages are typically earned hourly, and your schedule is discussed with your employer. You may need long work days to earn a decent amount of money, as these jobs usually start at minimum wage.

As a college student, you can apply for work-study to earn money towards college expenses. If you’re not familiar with the program, we’ll tell you everything you need to know about work-study.

Examples of specialized jobs

Graphic Designer

Video Editor

Youtuber

Social Media Influencer

Car Mechanic

Writer

App Developer

Photographer

Jobs related to a specialized field are based on a specific set of skills. These jobs can be done as employment or freelance to earn a wage. The minimum requirement is proof you can perform the tasks asked. You have a better chance of securing a job if you can prove you are familiar with the skills needed.

Gaining experience with skills in these fields can be done on your own time or in the presence of a mentor. Perhaps you have a family member who owned a car shop, and they taught you a few mechanic skills. You can use that experience to find a part-time job at a car shop. If you love art, maybe you started watching graphic design videos on YouTube. After working on your design skills, you could start freelancing. Jobs in this category are more about learning as you go while you develop your skills. Formal education can be a bonus, but not necessary to begin a career.

In most cases, you will choose your own schedule. A specialized job can give you more freedom. Choosing a specialized field can also help lessen the competition for a job.

Examples of side gig jobs

Task Runner

Ride Share Driver

Transcriptionist

House sitting

Survey Taker

Grocery Shopper

Event Staff

Product Tester

This category of jobs requires no formal education, and no experience. Many of the jobs are small or simple labor tasks that anyone can do. You typically find companies dedicated to one form of small labor. For example, getting someone’s groceries or driving someone around. The income for such jobs can be very profitable for jobs like driving people around. On the other hand, jobs like a survey taker gradually build smaller amounts of income.

Companies allow you to create your own schedule. The flexibility can benefit a student’s course schedule.

Jobs listed in each category scratch the surface of the jobs possible. When looking for a job, factors like time commitment and wage are very important, but don’t forget to think about what you are good at. A job exists for everything surrounding you. Assess your skills to determine what services you may be able to provide, or which skills can transfer to what jobs.

Money you are awarded

There are scholarships for everyone – you don’t need to have special talents or be a genius! Some will ask about your community service, for instance, or times you’ve shown compassion or leadership or overcome a personal challenge. There are even some that are just dependent on your location. Awards are given for a variety of reasons, so keep this as an option to explore.

Scholarships

This is probably the first method anyone considers once applying for college. Scholarship money is provided by a school, non-profit organization, private organization, or sometimes, a corporation.

Each scholarship has conditions. First, you must be eligible. Eligibility requirements could include location, GPA, school, or year of study. Along with being eligible, you will be required to show work. Scholarship providers may ask for an essay, project, or request you to send you most current transcript, for example.

You can find scholarships on blogs, in local newspapers, on school websites, or on apps like Going Merry. More resources equal more opportunity for awards.

When you compare the amount of money you can receive to the amount of work needed to apply for a scholarship, the exchange is a pretty good deal. Write an essay and receive $500? That’s more appealing than working a full-time job.

The hard part of scholarships is that they are not guaranteed. You can meet requirements, do the work, and not be chosen. In addition, finding the scholarships can be tricky for some students.

Luckily, scholarships are Going Merry’s favorite topic! We suggest scholarships to you based on your profile. We can help get you started right now!

Grants

This award is funding or financial assistance typically given by the government. You do not need to repay this money. Like scholarships, grants have conditions and a selection process.

Government grants are typically offered as part of a school’s financial aid package. Common government grants, also known as federal grants, include Pell Grant, the Federal Supplemental Educational Opportunity Grant (FSEOG), and TEACH Grant.

State and Institution Grants are also common at colleges. Federal grants are considered need-based aid. You can read this informative article, done by U.S. News, for more understanding of federal grants.

In hindsight, you can say grants and scholarships operate in very similar ways. Slight differences exists between the two.

While federal grants are only provided by the government, scholarships are provided by non-profits, corporations or individuals. Also, scholarships have a wider variety of eligibility compared to federal grants. You can find a scholarship matching your interests or characteristics, which can revolve around more laid-back, informal topics. For example, did you see the Create-A-Greeting-Card Scholarship on our post for No Essay Scholarships (2019 edition)?

College Aid

Your school can award you with need-based aid or merit-based aid. Need-based aid is determined by evaluating you and/or your family’s income and assets. Your school will use this information in comparison with the expenses of your education to decide the amount you are eligible to receive.

Merit-based aid relies on achievement and talent. Students can exhibit academic, athletic, music, artistic, or another exceptional skill to receive merit-based aid. Common types of merit-based aid include scholarships, awards, and tuition waivers.

Money you borrow

Borrowing should be your last resort. This money needs repayment. You can expect to pay more than the amount you borrow, but the total you repay comes down to details in your contract. Contracts for borrowing money include timeframes and percentages for paying back borrowed funds.

Federal Loans

Colleges can offer you loans in your financial aid package. The loans offered in your package are called Stafford loans or Direct Stafford loans. Once you fill out your FAFSA, your college can determine the amount of money the school can offer you. There are two main Stafford loan types: Subsidized and Unsubsidized.

Subsidized loans are available to undergraduate students with financial need. The government pays the interest accrued on a subsidized loan. This benefit can save you and your family money later. However, the government only pays the interest:

-While you’re in school at least half-time

-For the first six months after graduation (your “grace period”)

-During a period of deferment (postponement of loan payments)

For subsidized loans, the maximum eligibility period is 150% of the time it should take to graduate your major’s program. To illustrate, imagine you are enrolled in a four-year program. Your maximum eligibility period to receive unsubsidized loans is 6 years. (150% of 4 years= 6 years)

Unsubsidized loans are available to undergraduate and graduate students, and are not based on financial need. The interest is completely the responsibility of the student. You may choose not to pay interest while in school, during you grace period, or during deferment. At those times, the interest will still accrue and capitalized (be added to your loan amount). For unsubsidized loans, there is no maximum eligibility period.

You may also consider the Parent PLUS loan, or Direct PLUS loan, for dependent undergraduate students. Parents can apply for the loan if the parent(s) do not have adverse credit history, and if the student meets the general eligibility requirements for federal student aid.

Federal loans can be cancelled before disbursement to your school. Under certain circumstances, all or part of your loan can be discharged or forgiven.

Private Loans

For private loans providers, you will apply and sign an agreement about repayment if you are approved. Being approved for loans can prove difficult for a college student. Most times private loan providers recommend having your parent(s) or guardian(s) act as a co-signer. Companies providing the loans consider the applicant’s credit history, which is why having a co-signer is suggested.

Interest rates for private student loans are higher than federal student loans. Federal loans tend to have 5-8% interest rates, while private loans average around 8-13%. However, rates can soar above 15%.

In fact, private loans interest rates can be variable or fixed. Fixed remains the same rate throughout repayment. Variable will vary depending on state of the economy. This interest may be eligible as a tax deduction.

Private loans do not offer forgiveness or a chance of cancellation. You must pay the full amount, including interest.

The time of repayment depends on the loan contract and the rate you can afford to repay. There is no penalty for paying more than the monthly amount you owe to your provider. Before signing a contract, an expected time is usually given as an example while you are comparing which loan contract you would like. Loan providers may give you more than one option to choose from after determining your eligibility.

Income Share Agreement

Another method of borrowing money is an income share agreement (ISA). Students will pay a percentage of their income after graduating to the college in exchange for funding during college. Depending on the ISA with your school, you will pay 3-6% of your future monthly earnings between 3-10 years. The lower your future income, the lower the amount you are paying.

Additionally, a standard agreement sets a minimum salary for payback. If a student is not making the set minimum salary, the student does not pay any funds back. For example, a set minimum salary of $20,000 means a student making less than $20,000 after graduating will not pay back the school until earning more. The ISA does not have interest, and typically has a payment cap of up to 2.5 times the ISA amount borrowed.

As the trend of graduates not securing jobs related to their major continues, this option allows students who become underemployed to worry less about being weighed down by disproportionate debt.

Income Share Agreements are not common among US colleges at this time. Here is a list of schools with an ISA option:

Colorado Mountain College

University of Utah

Purdue University (Indiana)

Allan Hancock College (California)

Lackawanna College (Pennsylvania)

Clarkson University (New York)

Norwich University (Vermont)

Messiah College (Pennsylvania)

Companies like Vemo Education and 13th Avenue Funding manage ISAs for colleges offering this option. Other companies, like Lumni, partner with a college or work directly with students to manage ISAs.

Balancing your Funds

Sallie Mae, a student loan provider, completed a report about how students pay for college. On average, students covered 47% of the cost of attending college with family income and savings, 28% with scholarships and grants, and 24% through borrowing during the 2017-2018 school year.

Creating a plan for how you will fund your college expenses will help ease the stress of your college experience. Whether you work part-time, receive scholarships, or secure a loan, each part requires a form of effort. Weigh each method carefully, and don’t be afraid to change the way you balance your funds.

EFC for FAFSA: What it is and how to calculate it

31 January 2019

Shalon B

No comments

Categories: Financial Aid

Numerous calculations determine the cost of college for a student. Luckily, you don’t need to crunch any numbers, but you should understand where the numbers are coming from. How else will you know if what you’re seeing is what’s best for your situation?

One important number to understand is your EFC, or your Expected Family Contribution. According to the FAFSA official site, “The Expected Family Contribution (EFC) is a measure of your family’s financial strength, and is calculated according to a formula established by law” The EFC will be a number equivalent to a dollar amount. For example, 12000 is $12,000. Evaluating your family’s financial strength creates an estimate regarding the ability to cover a certain portion of college expenses.

Meaning, the EFC number is not a concrete amount your family must pay for school. The number is a starting point. From this starting point, your school calculates your financial aid using the EFC Formula.

Factors of Expected Family Contribution

All numbers calculated by the EFC formula are the result of information included in your FAFSA application. The formula is based upon current income and does not include consumer debt, such as credit card balances and auto loans. Therefore, credit card debt, mortgage debt, or the like will not increase chances of a more favorable EFC number.

Any information provided on your FAFSA could impact the final number you will see. Your family’s income, student income, assets, and benefits coupled with family size and number of persons attending college are factors affecting your EFC number. If you are unsure about FAFSA questions related to these topics, check out our tips to approach tricky questions.

Despite the vast range of information, income accounts for a large percentage when comparing factors affecting the EFC number. In fact, lower income alters what factors are included in the EFC Formula.

A person or household making less than $49,999 and filing either IRS Form 1040 or 1040EZ may qualify for the simplified needs test. If you do qualify, the system will exclude assets in a simple form of your FAFSA, so the assets will not impact the calculation of your EFC number. Assets can have a less favorable impact on some EFC numbers, which is why this alteration is beneficial.

Need-Based Financial Aid

The EFC number will be located on the top-right of the Student Aid Report (SAR) you receive, either electronically or physically, a few weeks after filing your FAFSA. This same SAR is sent to every school you listed as a recipient on your FAFSA. Each school considers your EFC to calculate how much federal student aid you are eligible for.

More specifically, schools need the EFC number to calculate an equation measuring your “financial need” for the school year. The schools perform the following equation: Cost of Attendance (COA) minus Expected Family Contribution (EFC) equals the amount of Financial Need.

Calculation Comparisons

This financial need value, representing your need for financial assistance, influences the need-based financial aid you are eligible to receive.

For example, imagine your EFC is $15,000. At a school where the COA is $30,000, your calculated financial need is $15,000. Now imagine your EFC is $22,000. At a school where the COA is $30,000, your calculated financial need is $8,000. As you can tell, a lower EFC is more beneficial.

In comparison, if you have an EFC of $22,000 at a school where the COA is $18,000, your calculated financial need is $0.

With regards to the value of financial need, this is the highest amount of need-based financial aid you are eligible for. Therefore, in a scenario of $0 as the amount of calculated financial need, you would not be offered need-based financial aid. Need-based financial aid includes:

Federal Pell Grant
Federal Supplemental Educational Opportunity Grant (FSEOG)
Direct Subsidized Loan
Federal Perkins Loan
Fed Work-Study

Your EFC is based on the recent year’s income. Therefore, your EFC could change from year to year. This is especially true in cases where the person in charge of income falls ill suddenly or becomes unemployed. The EFC must be calculated yearly to determine the current financial need of a student.

Options Beyond Need-Based Financial Aid

You may inquire about receiving non-need-based financial aid for further financial assistance. Schools use the following formula to calculate this aid: Cost of Attendance (COA) minus Financial Aid Awarded So Far equals Eligibility for Non-need-based Aid.

In other words, your eligibility is based on the amount remaining after receiving need-based aid, scholarships, and grants. Direct Unsubsidized Loans and Federal PLUS Loans are non-need-based financial aid. Your EFC is not considered, and does not impact non-need-based financial aid calculations.

Unmet Need of Expected Family Contribution

Speaking of alternative cases, there is a possibility of a student’s EFC being zero. If your EFC is zero, the number on your SAR will appear as multiple zeros in a row. Tip: A person or household making less than $25,000 and filing a 1040 or 1040EZ tax return automatically has an EFC of zero.

Having an EFC of zero does not mean the school will cover the complete amount of your financial need. Most schools can only cover 50-60% of the financial need for each student. After the amount your school is covering is subtracted, the remaining amount is called unmet need. The student or student’s family holds responsibility in managing unmet need and the EFC.

Pretend for a moment, that your EFC is $19,000 and your financial need is calculated to be $8,000. Your school offers you $4,000 of need-based financial aid. This leaves $4,000 of unmet need. Consequently, the family needs to manage funds to cover $23,000 (EFC plus unmet need).

Fortunately, a few colleges covering 100% of student financial need do exist.

Significance of Expected Family Contribution

Ultimately, Expected Family Contribution symbolizes a proposition. The EFC suggests what a reasonable amount of financial responsibility would be for you or your family. Your eligibility for financial aid depends on calculating the suggested financial responsibility, cost of attendance, and current financial assistance received (during non-need-based financial aid).

With this in mind, a good strategy to measure the significance of your EFC is estimating and comparing the unmet need between financial aid offers from different schools. The most important part is interpreting what your EFC means for your situation.

The Broader Picture

Make sure to take a look at the MerryBudget financial planning tool we’ve built at Going Merry if you want to see how you financial aid, student loans, and work-study programs can all add up to help you afford school.

The Ultimate Guide to Completing the CSS Profile

9 August 2018

bmailhot

1 Comment

Categories: Financial Aid

When it comes to applying for financial aid, most schools and the federal government use the FAFSA to figure out their award packages. But some schools, around 250 to be more exact, use the CSS Profile, which was created by the College Board and looks at student aid from a different perspective. If you’re applying to one of those schools, you’ll need to know how to approach the questions to get as much financial aid as possible.

Are the FAFSA and the CSS Profile Similar?

Before we dive into specifics, let’s go over the similarities and differences between the CSS Profile and the FAFSA. For starters, both forms ask for financial information and use it to determine student aid eligibility. Plus, both are online forms and both are sent to the schools you choose.

But there are 7 major differences between the forms that you should keep in mind:

1. The Issuer. The federal government handles all things FAFSA while the College Board (the same organization responsible for AP classes and the SAT) is in charge of the CSS Profile.

2. The Cost. The FAFSA is always free, but the CSS Profile isn’t. As of 2018, the fee for the application and one school is $25 plus $16 for each additional school. When applying, low-income students are automatically considered for fee waivers.

3. The Financial Section. The financial section of the CSS Profile is more comprehensive than the FAFSA. You’ll be asked more about things like non-custodial parent income (if your parents are divorced), home equity, medical expenses, non-qualified annuities, and the value of small family businesses. Student assets are also weighed heavier. We’ll give you more info on all of this down below.

4. The Methodology. Each form approaches financial aid in a different way. The FAFSA uses Federal Methodology, which considers parental gross income as the main factor for aid eligibility. The CSS Profile uses “Institutional Methodology”, which takes a more rounded look at a student’s financial situation, looking at factors such as home value, non-custodial parent income, and medical expenses. The CSS Profile also considers special circumstances that affect your ability to pay for school.

5. The Flexibility. With the FAFSA, financial aid is determined by a set formula without any room for human interpretation. In other words, the FAFSA is based solely on the Federal Methodology formula. The CSS Profile, on the other hand, allows more room for professional opinions and colleges have their own formulas for interpreting it. More specifically, college financial aid offices have more freedom and say in the amount of financial aid that a student receives.

6. The Use. The FAFSA is the only form used for federal aid, such as Pell grants, federal loans, and work-study, and most schools also use it to decide their institutional financial aid packages. The CSS Profile, on the other hand, is used only for institutional aid at around 250 colleges and universities.

7. The Questions. The FAFSA has the same questions for all students while the CSS Profile customizes the questions that students see depending on their answers in the registration phase.

Now, let’s dive into the specifics for how to fill out the College Board CSS Profile.

1. Take Out Your Calendar

Before you even start, get an idea of the submission deadlines for the schools you’re applying to. Hint: most deadlines are between January 1st and March 31st.

2. Gather Your Documents

To make completing the CSS Profile easier, get your documents together before you start filling it out. You’ll need the following documents for yourself and, if you’re a dependent, for your parents as well:

-Last year’s tax returns

-W-2s and income records from both this year and last year

-Records of untaxed income for this year and last year

-Bank statements

-Mortgage info

-Records of savings, stocks, bonds, and trusts

-Info on small businesses and other assets

3. Create a College Board Account/Register

Before you start the form, you’ll need to create an account. If you took the SAT, you likely already have one. Either way, head over here to sign in or sign up. Then, follow these steps:

1. First, you’ll need to provide basic information like your name, email, date of birth, and permanent address. The section also asks for your social security number, but it’s optional. Next, you’ll be asked about your year in school and which school you’re attending.

Keep in mind that even if you’ve taken AP courses for college credit or a few classes at a community college, you can still select that you’ve never attended college before. As a general rule, only students who have been enrolled at least half-time in a college program are considered to have attended college in the past.

2. After providing that information, the registration phase will take you through some questions to determine your dependency status. The “Student Expected Resources” section asks questions about the financial help that you expect to receive from family and your own income. Your answers to these questions will determine whether you see questions for dependent or independent students while filling out the form.

3. The next step of registration is the “College and Program Search” which is where you choose the schools you want the form sent to. Unlike the FAFSA, you should take some time to carefully think about which schools will receive your CSS Profile since there’s a cost involved.

Send it to each school that you’re applying to, but make sure that the school actually requires the form. If you can’t find it in the search then it probably doesn’t. You’ll also be asked housing information for each school, so be sure to check and see if there’s an on-campus housing policy for freshmen.

4. Lastly, you’ll need to provide information about your parents’ marital status, finances, home, employment, etc. Again, all of the questions in this step will determine the questions you’ll see on the form.

After you’ve completed the registration step, you’ll have access to the pre-application worksheet, which will show you the questions you’ll see on the form. If it helps, print the sheet out and feel free to make notes on it.

4. Parent Data (if dependent)

If you qualify as a dependent, you’ll need to fill out the Parent Data section, which is the first part of the official form. Keep in mind that you can save and continue at any time as well as jump between sections. If you need help, there are question buttons throughout the form with more information. If you need extra help, contact the College Board.

First, you’ll need to fill in the data for your first parent. The form will ask for basic information, including employment data and retirement plan information. After that, you’ll provide the exact same information for your second parent if applicable.

When asked about the number of people in your household, always include yourself. When asked about the number of people in your house who will be attending college, don’t include your parents even if they are.

This section also covers any public assistance plans that your family is involved with.

Note: Many people get confused about the question asking if your parent is a “dislocated worker”. The purple question mark provides more in-depth information about what exactly defines someone as a dislocated worker.

5. Parent Income & Benefits (if dependent)

Next, you’ll move on to parent income and benefits, the longest section of the CSS Profile. Having a copy of your recent federal income tax return will speed up the process. Each question gives you the exact line number where you can find the information on your return. If you don’t have it on hand, you can enter estimates rather than the exact dollar amount.

The first part of this section is about the previous year’s income and the second is about the year before that so that financial aid advisors can see if your family is going through major financial changes from year to year. The third section goes on to asks about your expected income for the following year. If there are any big changes coming up or currently happening in your life that will have a significant impact on your ability to pay for school, you can mention them later on in the “Special Circumstances” section.

6. Parent Asset Section (if dependent)

The next section is the Parent Asset section. You’ll find questions about assets in your parents’ names and also in your siblings’ names, such as college savings plans. You’ll see questions about investments, current home value, and how much money your parents owe on their home as well.

Note: home equity has been a huge topic of debate and confusion on the CSS Profile. Some schools don’t consider home equity at all, or don’t weigh it very heavily, while others consider it to be a major factor.

Most schools will cap home equity value at double the family income. So, as an example, if family income is $80,000 and the home equity value is $500,000, the school will only value the home equity at $160,000 when calculating Expected Family Contribution. Then, most schools will count 5% of the home equity value towards what the family is expected to pay for school. In this case, 5% of $160,000 is $8,000. Therefore, $8,000 is added to your EFC.

However, a select number of schools use the full value of your home equity. In this case, 5% of $500,000 is $25,000, which would greatly affect your eligibility for student aid.

Additionally, since student assets are generally valued higher than parent assets on the CSS Profile, it might be helpful to switch assets from a student’s name to a parent’s name before filling out the form.

7. Parents’ Expenses (if dependent)

This section is used to determine if parents have any unusual or extra expenses that haven’t been covered in previous sections, including child support, educational loans, out-of-pocket medical and dental expenses, and educational expenses for other children.

Other examples of extra expenses are elementary or high school tuition for the previous or upcoming year and monthly home mortgage or rental payments.

8. Student Data Section

Now that the parent section is done, it’s time to move on to the student section. This part will begin by asking you about the high school, college, or university that you’re currently attending as well as your year in school.

You’ll also be asked some financial questions, including the scholarships and grants that you’ve been awarded and how much your parents have paid for your education so far (if applicable). There are also a number of questions related to dependency status, such as whether you’re in danger of homelessness, have ever been a part of the foster care system, or have ever participated in the Upward Bound program.

The Income & Benefits area contains questions about your tax return from the previous year and the financial help you expect to receive for the following school year. Other questions range from veteran benefits to income to expected parent contribution. With the last point, feel free to use a conservative (but realistic) estimate if you’re not sure of the exact amount.

9. Student Assets

Similar to the Parent Asset section, this section asks about assets that are in the student’s name. Remember that, unlike the FAFSA, student assets are generally valued higher with the CSS Profile.

In this section, you should list the amount of cash in your bank accounts, retirement accounts, and investment funds. Don’t be alarmed if most of your answers are “0” in this section since students usually don’t have many, if any, assets in their name.

10. Family Member Listing – Parent’s Household

This section goes over the additional people living in your household besides you and your parents, such as siblings. You’ll be asked to list educational and other expenses for these people that your parents are responsible for paying.

11. Explanation & Special Circumstances

This is your chance to explain anything you’d like in further detail. You have up to 2,000 characters to describe special financial circumstances or anything that you feel will negatively affect your financial aid eligibility when it shouldn’t. Some examples of special circumstances include dramatic shifts in income and debt recovery.

12. Supplemental Questions

Schools can choose to ask additional questions specific to their institution at the end of the CSS Profile. Depending on which schools you’re applying to, you might not see this section at all. The specific questions asked depend on the school.

13. Pay the Fee or Get it for Free

Students are automatically considered for fee waivers when filling out the CSS Profile. Waivers generally include the $25 application fee plus the cost of sending the form to up to 8 schools. Students normally qualify if they’re an incoming freshman and annual family income is $40,000 or less. Some schools also provide fee waivers for students by giving them a code to enter at the end of the application.

If you don’t qualify for a waiver, you’ll need to pay the $25 fee before submitting the application. The first school is included in the fee, but each additional school is $16.

14. Double Check & Submit

Make sure to double check your form before you submit it since you won’t be able to make any changes online afterward. If you do make a mistake and need to correct it, you’ll have to print out the application summary form, make corrections, and then fax, email, or mail it to your school’s financial aid office.

After you submit it, you can get an idea of your aid package by using this EFC calculator. Keep in mind that your actual award might be different.

15. Submit It Every Year

Just like the FAFSA, the CSS Profile needs to be completed and submitted every year, so keep an eye out for deadlines!

Have additional questions about completing the CSS Profile? Let us know below!

The Trickiest FAFSA Questions & How to Approach Them

27 July 2018

bmailhot

1 Comment

Categories: Financial Aid

Every year, college students all over the country complete the Free Application for Federal Student Aid, also known as the FAFSA. The FAFSA determines these students’ eligibility for federal loans, grants, and work-study as well as financial aid at their colleges and universities of choice.

The FAFSA becomes available on October 1st each year. After you submit it, you’ll receive a Student Aid Report (SAR) that gives you basic information about your eligibility for federal student aid and also indicates your Expected Family Contribution (EFC).

EFC is the most important number on the form. It represents the estimated amount of money that your family can contribute to the cost of your college education.

In addition to the federal government, the majority of colleges and universities use your EFC to determine the financial aid package that they will offer you. Alternatively, some schools prefer to use the CSS Profile.* Though the outputs and resulting financial aid packages can be different, the CSS Profile is used in the same way as the FAFSA to determine how much financial support a student needs.

For more information on filling out the FAFSA, check out our step-by-step guide.

How to Approach the Trickiest FAFSA Questions

While a lot of the questions on the FAFSA are quick to answer, there are a few tricky ones that can leave students puzzled. There are others too that seem easy but you need to be careful when you answer as small mistakes can have a significant impact on the amount of financial aid you receive.

Here are the 7 trickiest FAFSA questions and our best advice on how to approach them:

1. Your Name & SSN

While nicknames are cool, the FAFSA doesn’t appreciate them. The name that you enter must be an exact match to the name associated with your social security number or alien registration card. Otherwise, the federal government won’t be able to locate your information in the system. You should keep this in mind for both the student section and the parent section.

2. Your Legal Status

It’s worth mentioning that even though the FAFSA asks you for your legal status, both green card holders and U.S. citizens are treated the same in terms of financial aid. Essentially all U.S. citizens are eligible for financial aid as well as green card holders, conditional permanent residents, any person with a legal status stating “asylum granted”, “refugee”, “indefinite parole”, “humanitarian parole”, or “Cuban-Haitian Entrant”. Lastly, citizens of the Republic of Palau, the Republic of the Marshall Islands, and the Federated State of Micronesia are considered eligible non-citizens.

DACA students are not eligible for federal student aid, but they are eligible to receive financial aid packages from many schools and sometimes from States too. Therefore, it’s still worth filling out the FAFSA if they have a social security number.

3. A Note About Selective Service…

All men in the U.S. are required to register for the Selective Service within 30 days of their 18th birthday (either before or after). After that period, they have up until their 26th birthday to file a late enrollment. Women are exempt.

The FAFSA asks men if they’ve enrolled for the Selective Service and, if they select no, it asks if they would like to register now. Students who don’t enroll by their 26th birthday are ineligible to receive student aid from the government. Some state laws also prevent students from receiving school-based aid if they select “no” to Selective Service on the FAFSA.

4. The Size of Your Household

Some students get confused when asked about their household size, which isn’t necessarily the number of people who live in your house. Rather, it’s the number of people that you (if you’re independent) or your family (if you’re dependent) financially support.

Why does it matter so much? This little number makes a huge difference when determining the amount of financial aid you receive. Luckily, it’s not too difficult to figure out by following a few easy steps. First, you’ll need to determine if you’re a dependent student or an independent student.

There are 10 FAFSA questions to determine dependency. If you answer “no” to all of the questions, you’re considered a dependent student and must include your parents’ information on the FAFSA (more on that below). If you answer “yes” to one or more questions, you’re considered to be an independent student and only need to provide your own information. Now, let’s see how you can figure out your household size based on your dependency status.

For dependent students:

Start with your parents and yourself.
Add all children under the age of 24 that live in your parents’ house and receive more than half of their support from them. You can also include children who will be born during the school year.
Then add any other people who live with your parents, receive more than half of their support from your parents, and will continue to receive half of their support from them during the school year (e.g. an elderly relative).

For independent students:

Start with yourself and your spouse (if married).
Add your children who receive more than half of their support from you.
Then add any other people living with you who receive over half of their support from you and will continue to receive more than half of their support from you during the school year (e.g. an elderly relative).

Note: When the FAFSA asks about the number of people in your household attending college, don’t include your parents even if they are enrolled in a program leading to a degree or a certificate.

5. Who is the Primary Parent?

Determining who to list as the primary parent, or your parents in general, can get tricky depending on your family situation. In general, only legally adoptive or biological parents can be listed as your parents on the FAFSA. Legal guardians don’t count even if they claim you on their tax forms.

If your parents are divorced and you qualify as a dependent, there are a few things you should keep in mind:

You must include at least one parent’s information on the form.
If your parents are divorced or separated but still live together, provide both of their information.
If your parents don’t live together and you need to decide whose information to provide, choose the parent that you’ve lived with the most in the last 12 months. Keep in mind that this might be different from the parent who has legal custody. If your primary parent is remarried, be sure to also include your step-parent’s information, too!
If you spend an equal amount of time with both parents and receive more or less equal support from each, then you can choose which parent to include. To maximize your student aid, list the parent with the lowest income. And remember again to include your step-parent’s information if your parent is remarried.

Side note: When the FAFSA asks about your parents’ education levels, only enter information about your biological or legally adoptive parents. Step-parents don’t count for this one.

5.5 A Note About Recent Divorces…

If your parents were divorced recently, it won’t show up on their most recent tax return–meaning you could run into some issues. To fix this, contact the financial aid offices at the colleges or universities that you’re applying to and see if they can work with you to correct it. Schools are usually willing to provide FAFSA help as long as you can give some additional information (like your parents’ W2 forms).

6. Reporting Income for Parents and Students

The most confusing part of the FAFSA is the income section, since there are various questions about taxed and untaxed income. However, it’s also the most important determinant of your EFC. There are a few things you should keep in mind when filling out these FAFSA questions to help you get as much aid as possible for school.

If students have a part-time job, any annual sum of money earned over $6,310 is expected to be used toward paying for college. In fact, students are expected to put 50% of their earnings towards saving and paying for school.

When it comes to reporting income, parents should never list their 401K plan. Parents are never expected to use retirement money for college costs and as parent age rises, EFC decreases. Additionally, most social security runs out when a student hits 18, so you’re not expected to use any of that.

7. And What About Assets?

Deciding which assets do and don’t count can be confusing…and these FAFSA questions can also heavily impact your financial aid award. There are some assets that you’re required to report and others that, surprisingly, don’t really matter.

As a general rule, you should only report assets that are liquid and cash-based. Things like trust funds and 529 savings plans (if they’re owned by you or your parent) do need to be reported, as well as more obvious things like your bank balances.

Some assets that don’t need to be reported include 401K plans, small family businesses, and your parent’s home. Retirement assets are never included when calculating EFC. Additionally, the maximum contribution possible from parental assets is 5%. In other words, if you report $100K worth of assets, your contribution to paying for school would be $5K. Student assets, on the other hand, are weighed heavier. Students are expected to contribute 20% of their assets towards paying for college. Check out this list for a more detailed breakdown of which assets count and which don’t.

Side note: Try to complete the FAFSA on the day that your checking account is the lowest, like right before payday. That way, the amount that you report as your account balance will be smaller.

Side note 2: It’s best to keep college savings plans in a grandparent’s or non-custodial parent’s name so that you don’t have to list them on the FAFSA (i.e. to maximize your award!).

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*While the CSS Profile and the FAFSA are both used to determine financial aid, they differ in a few ways.

The CSS Profile asks questions based on the specific schools you’re applying to while the FAFSA questions are the same for everyone.
The CSS Profile has a “Minimum Student Contribution” section while the FAFSA does not.
The CSS Profile gives more decision-making power to financial aid officials.
Home prices are taken into account on the CSS Profile, which can become an issue when home equity values rise.
Lastly, the FAFSA is always free and the CSS Profile has a cost. As of 2018, the cost is $25 for the first school and $16 per additional school.

Which FAFSA questions do you find most confusing? Let us know below!

Everything You Need to Know About Filling Out the FAFSA

17 July 2018

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Categories: Financial Aid

Figuring out how to apply for financial aid can be stressful and overwhelming, but it’s really not so bad once you have all the info. The FAFSA, or the Free Application for Federal Student Aid, is the form that the government, along with several colleges and universities, use to determine how much financial aid college students should receive each year.

But what is the FAFSA and how does it work? In general, federal student aid (i.e. financial aid from the government) is determined based on four factors: Expected Family Contribution (EFC), year in school, enrollment status (i.e. part-time or full-time), and the Cost of Attendance (COA) at your intended school. Colleges and universities might use a similar method or a completely different one.

The FAFSA becomes available every year on October 1st and must be completed again each year. We recommend filling it out as early as possible since some awards are given out on a first-come, first-served basis.

EFC and COA

When it comes to figuring out how to apply for financial aid, students are often overwhelmed by all the technical jargon. EFC and COA are both determining factors when it comes to deciding financial aid awards. Understanding what they are and how they affect you can help you maximize the aid you receive and make paying for college much easier.

Your Expected Family Contribution (EFC) is essentially your family’s ability to help you pay for school (i.e. how much they can contribute). It’s based on factors like your parents’ taxed and untaxed income, assets, benefits (like unemployment or social security), your family size, and the number of people in your household also attending school that year. Your EFC is determined by a set formula established by law. For more information, check out the official EFC Formula Guide.

Your Cost of Attendance (COA) is the price of attending your college or university of choice. In addition to tuition, the COA can also include the cost of books, transportation, supplies, loan fees, personal expenses, child or dependent care, disability-related costs, and study abroad program expenses.

Types of Federal Student Aid

The U.S. government offers several forms of financial aid, including grants, work-study, and loans, to help students pay for school. Grants are the best form of financial aid since they provide students with money that doesn’t have to be repaid.

Students have a variety of different grants available. The most common are Federal Pell Grants, which are worth up to $6,095 each year and are awarded to undergraduate students with significant financial need. Other programs include Federal Supplemental Educational Opportunity Grants (FSEOG), Teacher Education Assistance for College and Higher Education (TEACH) Grants, and Iraq and Iran Service Grants. For more information, check out our helpful section on federal grants.

Another option is federal work-study, which involves students being provided with part-time jobs while in school. Students can’t work more than a set number of hours per week (usually around 20) and can either work on- or off-campus. For more information about work-study, head over to our comprehensive financial aid guide.

Loans should be your last option for funding your education. The federal government, however, does offer options to help students avoid taking out private loans. The government currently offers five loan types: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, Direct Consolidation Loans, and the Federal Perkins Loan Program. Check out this article for more info on the different loans offered by the federal government and how you can avoid loans altogether.

How Schools Use the FAFSA

When schools use the FAFSA to determine student financial aid packages, they often focus most of their attention on COA and EFC. Each school uses its own formulas, standards, and methods for calculating financial aid based on these numbers. You’ll likely receive a different financial aid offer from each school since each institution has a different level of funding available to assist students.

What If I Don’t Think I Qualify for Financial Aid?

You should fill out the FAFSA whether you think you qualify or not. It’s free and takes under an hour to complete, so what is there to lose? While your family’s income might be too high to qualify for federal aid, you might still qualify for awards at private universities or colleges. Spending a small portion of your day applying for financial aid could save you thousands of dollars on college tuition.

How to Apply for Financial Aid: Step-by-Step

What You’ll Need

To complete the FAFSA, you should have the following documents ready:

-Social Security Number (SSN) for US citizens or Alien Registration Number (ARN) for non-US citizens

-Your/Your parents’ income tax return

-Records of untaxed income (if applicable)

-Investment records (if applicable)

Step 1: Create an FSA ID

Before you begin the FAFSA form, you should create an FSA ID, which serves as your username and password for entering the U.S. Department of Education’s websites. It’s used to confirm your (or your parent’s) identity while logging in and can also be used to sign and submit the form. Both students and parents can access the FAFSA, but each need their own FSA ID.

Step 2: Begin Your FAFSA at fafsa.gov

Once you have your FSA ID, head over to fafsa.gov to complete the form. When it comes to figuring out how to apply for financial aid, getting the website and dates correct is important. The form becomes available each year on October 1st and closes on June 30th. You should complete the FAFSA as early as possible, since many university-based awards are given out on a first-come, first-served basis.

Pro Tip: At the beginning of the application process, you can create a “Save Key” which temporarily allows you and your parent/student to share the FAFSA back and forth.

Step 3: Complete the Student Demographics Section

The first step to completing this section is to make sure you’re filling out the correct section. The parent demographics and student demographics section are different, so make sure to double check that you’re entering the information where it belongs.

You should enter your information exactly as it appears on your Social Security Card or Alien Registration Card. Generally, it’s only necessary to enter the information for the first time; it should autofill the following years.

Step 4: Decide Who Gets It

You’re allowed to send your FAFSA to up to 10 colleges and universities. You should list all the schools you’re applying for, even if you haven’t been accepted yet. You can always add and remove schools later if you change your mind. If you wind up not applying for a school or weren’t accepted, schools will automatically disregard your FAFSA.

Step 5: Are You Dependent or Independent?

Dependent students are required to provide parental information on the FAFSA while independent students are not. Keep in mind that the FAFSA uses a different set of requirements than the IRS when it comes to determining dependency. For more info on the FAFSA’s dependency guidelines, check out this page.

Step 6: Complete the Parent Demographics Section

If your status is determined to be “dependent”, you’ll need to complete the parent demographics section. It simply requires your parents’ basic info and can be filled out by either you or your parent.

Step 7: All About Taxes

The next step is to fill in your and/or your parents’ tax information. To make it easier, the FAFSA has an IRS Data Retrieval Tool (DRT), which automatically fills in your information (if you’re eligible to use it). Make sure to double check and fill in all areas that aren’t automatically completed.

Step 8: Sign, Submit, & Cross Your Fingers!

Surprisingly, many students make it through the FAFSA and then forget to sign and submit it at the end! Make sure to do it and remember, dependent students also need their parents to sign the form!

Finally, here are 10 common FAFSA mistakes to avoid…

1. Never leave a field blank on the FAFSA. It can make your processing time longer and could require you to go back and edit the form. Instead, fill in answers that don’t apply to you with a “0” (zero).

2. Make sure to report all sources of untaxed income to avoid legal issues. Untaxed income sources can include non-educational veteran benefits, child support, workers comp, disability, and more.

3. Enter the correct marital status. In order to file as married, you must be married before or on the date that the FAFSA is submitted. If you’re getting married in the near future, file as single for this year.

4. Make sure to include all parents. If your parents are divorced, then you also need to include your step parents’ (if applicable) financial and demographics information on the FAFSA.

5. Include yourself in your household size. Even if you haven’t been living at your house recently, you should include yourself when determining your household size.

6. The early bird gets the worm. Don’t wait until the last minute to complete your FAFSA. Lots of colleges and universities give out financial aid awards on a first-come, first-served basis. Also, filing early ensures that you won’t miss the deadline.

7. Use the correct website. The ONLY website you should use to complete the FAFSA is fafsa.gov. Any other website is untrustworthy. Also, the FAFSA is always free, so stay away from any sites requesting money.

8. Get your FSA ID before beginning the FAFSA. The first step to determining how to apply for financial aid, you might need to wait up to three days to sign the FAFSA after applying for your FSA ID – meaning that it doesn’t hurt to get a head start!

9. Add all the colleges! Well, maybe not all of them, but definitely more than one or two. Even if you’re not sure about applying for a school, you should add it. You can add up to 10 schools and change your preferences any time.

10. Just do it! The biggest mistake you can make is not filling out the FAFSA at all. It involves zero money and little time and can save you thousands of dollars on college tuition.

Once you successfully determine how to apply for financial aid and submit the FAFSA, you’ll automatically be considered for all types of federal student aid – grants, loans, and work-study. You’ll also be considered for a variety of school-based aid depending on your college or university.

What are your best tips on how to apply for financial aid? Let us know below!