You've got your big envelope! You've been accepted to your choice school - awesome!
Now comes the the next big step: figuring out your financial aid package. It's important to understand the responsibilities of accepting different types of financial aid such as grants, loans, work-study, and scholarships. However, those financial aid award letters can be downright confusing.
Need a little help figuring out what exactly your letter says? Verified Advisor and financial aid consultant, Justin Munio, gives some insight on what your financial aid award is. Read more...
Photo: Christopher S. Penn
By Purvi S. Mody
The beginning of a new year brings resolutions, hope, and change. For high school seniors, the next six months marks the end of childhood as they know it and the beginning of the rest of their lives. In just a few months, they will venture out into new territories: geographic, academic, emotional, and professional. Now, parents across America should begin the harrowing financial aid process.
This process can be more complex than the admissions process. While there are no essays to write or recommendations to manage, the forms are complicated and the process anxiety-ridden.
Here is a primer on how to tackle the financial aid process easily.
- It is important that families gather the appropriate documents early to make filling out the forms an easier process. You will need to have last year’s and current year’s tax returns, end-of-year reports from all financial institutions including mortgage accounts, and social security numbers easily available. While many people wait until mid-April to file tax returns, it is vital that they are filed as soon as possible this year – ideally by February 1st.
- The first step to applying for aid is to fill out the Free Application for Federal Student Aid (FAFSA). You can do this online at http://www.fafsa.ed.gov/. You will first need to create a pin in order to access the form.
- Many colleges also ask families to fill out the CSS Profile. This can be done online at https://profileonline.collegeboard.com/prf/index.jsp. This form asks for additional information not captured on the FAFSA. Before you fill out this form, confirm that the colleges your child applied to require it since it has an application fee.
- Some colleges require supplemental financial aid forms. Don’t rely just on the FAFSA and/or CSS Profile.
- The financial aid application captures a snapshot of your financial situation. Make sure that snapshot demonstrates an accurate picture. For example, if a grandparent just gave a child a significant amount of cash for a holiday gift, it will appear to a college that money can be used to pay for tuition. But if that money was given to a child to pay for current expenses and cannot be used for college, it will hurt your financial aid situation.
- Remember that some types of debt are not taken into account when the college allocates your aid package. Credit card and car loan debt are two examples. If you have money sitting in an account, that money will be considered available for college expenses. If your financial situation allows it, pay off credit card and car loan debt.
- Talk to your mortgage lender or bank about rates on student and parent loans. Often existing relationships can help lower interest rates.
- Even if you think that you may not qualify for need-based aid, you may qualify for federal loans if you apply for aid. You are not required to take out any aid that you are offered. It is better to leave loans as an option at least until May when your child decides where he or she will be attending next fall.
- Don’t be afraid to call the financial aid offices of different schools. They are there to answer questions that you may have. In reality, the better you fill out the forms, the easier you are making their work.
- If you think that the forms you are submitting do not fully capture your need for aid, send in additional information with supporting documentation. The offices will use this information to calculate your aid package and it is easier to do this now then in April.
- Sit with your financial advisor or accountant, if possible, about the benefits or downsides to second home mortgages, lines of credits, and distributing money across accounts. You don’t want to sacrifice your longer term financial plans for the sake of a little more financial aid.
Don’t procrastinate until the last minute. The faster a complete application is received by a college, the more quickly financial aid counselors can crunch the numbers, and the faster you will get an estimate of the hit to your bank account. There is plenty of aid out there for the families that really need it. And more and more colleges are changing their aid policies to make a college education more affordable across the board, which is beneficial to the middle class. Your kids have done the hard work, and now it is your turn. Your family will then be one step closer to beginning a new phase in your lives.
Purvi S. Mody is co-owner of Insight Education, an educational consulting firm that helps students throughout the country and internationally to achieve their educational goals. Get in touch with her via email at firstname.lastname@example.org or follow her on Twitter @InsightEduc.