How to pay for college?
If you’re like most parents, in spite of your best efforts you’ll need some help paying for your children’s college. The high cost of higher education coupled with families’ other financial obligations make it unlikely that you’ve saved every penny of what it will cost.
Regardless of what you think of your financial situation, you should complete the federal government’s Free Application for Federal Student Aid (FAFSA). You may be surprised to find that your student qualifies for grants or subsidized loans, or that you qualify for loans at a rate below that charged on the typical unsecured loan.
If you are the parent of a student hoping to attend school in the fall, now is the time to fill out the FAFSA. You’ll need information from your 2013 tax return and investments.
“Completing and submitting the FAFSA is free and quick, and it gives you access to the largest source of financial aid to pay for college or career school,” says the Department of Education web site. “In addition, many states and colleges use your FAFSA data to determine your eligibility for state and school aid, and some private financial aid providers may use your FAFSA information to determine whether you qualify for their aid. Colleges or career schools you list on your FAFSA will use several pieces of information to calculate your aid.”
Eligibility depends on the expected family contribution, the year in school, enrollment status and the cost of attendance at the school you will be attending. The financial aid office at your college or career school will determine how much financial aid you can get.
Need-based aid is financial aid you can receive if you have financial need and meet other eligibility criteria. Following are need-based federal student aid programs:
- Federal Pell Grant – does not have to be repaid. For undergraduate students.
- Federal Supplemental Educational Opportunity Grant (FSEOG) – does not have to be repaid
- Direct Subsidized Loan – Federal government pays the interest while you’re in school and for sixmonths after you leave school.
- Federal Perkins Loan – low interest (currently 5%) loans for undergraduates
- Federal Work-Study – provides part-time work.
Non-need-based aid is financial aid that is not based on your EFC. What matters are your COA and how much other assistance you’ve been awarded. For instance, if your COA is $6,000 and you’ve been awarded a total of $4,000 in need-based aid and private scholarships, you can get up to $2,000 in non-need-based aid.
Following are the non-need-based federal student aid programs:
- Direct Unsubsidized Loan –Available to graduate and undergraduate students; no requirement to show financial need. Interest may be deferred, but will accrue.
- Federal PLUS Loan – available to students and parents.
- Teacher Education Access for College and Higher Education (TEACH) Grant – For students working toward a career in teaching. Turns into a loan unless student complies with special requirements after graduating.
As you can see, numerous options exist for parents and students who haven’t saved enough.for college. So fill out the FAFSA to find out what’s available.
