10 Steps to Help You Navigate the Financial Aid Maze

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Getting into a college of your choice can be competitive, but paying for your degree can be equally difficult. As the cost of tuition and room and board rise, many family incomes are not able to keep up. This may leave a huge gap between what college costs and what today’s students and their families can afford to pay. That’s why it’s crucial for families to apply for financial aid to help bridge the gap.

The process to apply for financial aid can be long and confusing. But successfully navigating it will net you as much money for college as possible to keep up with rising costs.

Financial planning, talking to experts, applying for federal aid and searching for scholarships are all ways to help you secure the funds you need. But what else can you do? Here are 10 steps to consider as you begin navigating the maze of financial aid for college.

10 steps to help you apply for financial aid

The complexity of the process of applying for financial aid for college may keep many students and families from getting the college aid they need. Still, the potential payoff of applying for financial aid makes it worth it.

For prospective students and their families, it may take time and effort to apply for financial aid for college. But if you follow the steps below, they could help you understand how to make the most of your financial aid.

1. Start researching, planning and learning now
2. Focus on your FAFSA
3. Forecast your potential financial aid
4. File your FAFSA correctly
5. Beat financial aid deadlines
6. Apply for state student aid programs and school scholarships
7. Treat applying for scholarships like a job
8. Prioritize free financial aid first
9. Borrow strategically through student loans
10. Appeal your school for more financial aid

1. Start researching, planning and learning now

Ideally, students and their families should start planning for college costs years in advance. “Students and their parents can educate themselves on the process before diving in,” said Fastweb contributing editor Kathryn Knight Randolph. “The college admissions process takes some students months — even years — to complete; it should be the same with financial aid.”

Starting early could also give you time to plan and avoid costly mistakes. You’ll have plenty of time to apply for financial aid ahead of deadlines and employ strategies that can help you receive more aid.

“Research the process, apply and then figure out which type of financial aid package is right for you through further research and seeking counsel,” Randolph said.

Reach out to experts and utilize online resources

As you’re wrapping your head around the process involved for financial aid, it helps to know what resources are at your disposal.

One of the first places to start is with experts. High school guidance counselors and college aid officers are there to help students plan for a successful future and find financial aid. They provide individualized advice based on a student’s academic and financial situation. A counselor will also be aware of scholarships, financial aid or tuition-assistance programs specific to a student’s school, community or state.

There is also a wealth of online information available to students and parents on how to apply for financial aid. For instance, these awesome resources can help you started:

  • The non-profit educational group Khan Academy offers “Paying for College,” a free online course with in-depth information on the financial aid process.
  • The help section of the FAFSA.ed.gov site answers many tricky questions parents and students might have.
  • The College Financing Plan from the U.S. Department of Education (ED) helps students quickly understand and compare financial aid offers from different colleges.

2. Focus on your FAFSA

So where can you start learning about federal and other kinds of financial aid? With the Free Application for Federal Student Aid (FAFSA). You fill out the FAFSA at FAFSA.ed.gov to provide the information about you and your family’s financial circumstances, and the federal government uses that information to determine how much student aid you need.

Completing a FAFSA can be a time-consuming process that some students or parents might be tempted to skip. However, filling out a FAFSA is the only way college students can access all forms of federal financial aid, from Pell Grants to Direct Subsidized Loans — thus, taking the time to file your FAFSA is a must.

3. Forecast your potential financial aid

You don’t have to wait until your FAFSA is filed and processed to get an idea of what kind of financial aid and assistance you can expect. You can use the FAFSA4caster tool on the official FAFSA site to project the amount of financial aid for which you’d be eligible.

It can also be helpful to understand how the Department of Education’s office of Federal Student Aid uses the information on the FAFSA to decide how much aid each student gets.

The financial details are used to calculate your Expected Family Contribution (EFC). This is the Federal Student Aid office estimate of what your family should reasonably be able to pay toward college costs, based on these factors:

  • The family’s taxed and untaxed income and benefits
  • Financial assets, including college savings
  • Family size
  • Number of family members attending college concurrently

You can use this tool to estimate your own EFC.

Generally, the FAFSA compares your EFC to the costs you’ll face in college — your cost of attendance — and offers financial aid to help bridge that gap. Here’s the general formula to illustrate:

Cost of attendance (COA) – EFC = Financial need

The higher your EFC, the less financial aid you will receive. Unfortunately, according to Randolph, “there isn’t too much a student can do to change their financial circumstances.” However, Randolph noted it is possible to “maximize aid eligibility” and lessen your EFC if you plan well in advance.

4. File your FAFSA correctly

The information you provide on your FAFSA directly determines how much aid you can receive, so according to Randolph, “the best way to get the most out of the financial aid process is by providing the biggest, most accurate picture of your financial circumstances on the FAFSA.”

On top of simply filing a FAFSA, making sure you do it correctly will smooth the process and could even help you qualify for more aid. Randolph gave her tips for avoiding common FAFSA mistakes:

  • Go through the FAFSA “slowly, and don’t leave anything blank,” she said. “If the answer to a question is zero, or it doesn’t apply to you, write in ‘0’.”
  • Make sure you get your family size right. Don’t forget to “include the student in the household size,” Randolph said. “Step-parents’ information must be on the form, too.”
  • “The biggest mistake students make is actually forgetting to sign the form,” she added. “So sign the form!”

If this is the first time as a parent or student that you have filed a FAFSA, you might need some extra help — and it’s often out there. “Many communities will host free FAFSA workshop days, where professionals will help you through the application,” Randolph said.

Lastly, you should never lie or purposely misrepresent any information on the FAFSA. Not only can this jeopardize your chance of getting financial aid, it’s illegal.

5. Beat financial aid deadlines

FAFSA submissions open on Oct. 1 every year, and they remain open until the end of June a year and a half later — but you shouldn’t wait to file. “File [FAFSA] before the deadline, and if you can, file as soon after October 1 as possible,” Randolph advised.

But if you have a whole 21 months to submit a FAFSA, what’s the rush? Well, filing early can have a few benefits:

  • Your FAFSA will be received and processed well before the school year when you will need it.
  • Find out earlier what aid you qualify for. This can help you plan ahead, budget for college costs and even compare colleges to choose the most affordable option.
  • If there are any errors in your FAFSA, you’ll have time to correct or amend the application so you can receive the correct amount of aid.
  • You could get more non-federal aid: “Schools and states have a limited amount of aid, and a bunch of states have a FAFSA deadline of ‘as soon as possible after October 1,’ (meaning they actually could run out of financial aid) so it’s good to be at the front of the line!” according to a Department of Education blog post. If you apply early, you’ll have a better chance to qualify for these non-federal financial aid programs.

6. Apply for state student aid programs and school scholarships

Another reason to submit a FAFSA early is that many state- and school-level aid programs rely on this information to assess need and grant assistance. “States also have individual deadlines for when the FAFSA must be submitted in order to be considered for state aid,” Randolph said — and these are often earlier than FAFSA deadlines.

You should also do your own legwork to find state-sponsored grant or scholarship programs. This State Financial Aid Programs locator tool from the National Association of Student Financial Aid Administrators (NASFAA) is a great place to start.
These carry the same high costs as

Merit aid

As well as more need-based aid, according to Randolph, “schools will also offer students ‘merit aid,’ which is just a fancy term for scholarships.” This is institutional aid offered by your specific college; ask your college for a comprehensive list of the institutional aid it offers, including scholarships and grants.

If it’s unclear how to apply for each grant or scholarship, follow up and keep asking questions to understand which awards you could get. Persistence and initiative could pay off when it comes to getting financial aid from your school.

Check if your state or college needs additional paperwork or information from you. “Some colleges have a supplemental form that they require students and parents fill out for a bigger, better picture,” Randolph said. One common form that nearly 400 colleges require is the CSS Profile, for example.

7. Treat applying for scholarships like a job

“Students should make applying for scholarships a part-time job,” Randolph said. There are many college scholarships out there, and you might have a better chance at qualifying than you think.

While many are granted based on academic performance, not all are. Many simply have a minimum GPA requirement or have other eligibility considerations that can be relatively easy to meet.

Here are a few top scholarship search sites to get you started:

Because there are so many opportunities, you should “set a goal to apply to one or two scholarships a week,” Randolph said — “it’s a numbers game,” and the more scholarships students find and apply for, “the better their chance of winning,” she added.

8. Prioritize free financial aid first

Once your FAFSA is completed, processed and used to determine your financial need, you’ll get a financial aid award letter from the colleges you applied to. Each letter outlines the financial aid package you’ll receive if you accept their offer of admission.

However, they don’t often explain in detail what each type of federal financial aid is. You should do your own research to understand how each kind of financial aid works — whether it’s a gift with no financial obligation or a loan that you’ll have to repay.

Among the types of financial aid that take the form of gifts are:

  • Grants: These are gift awards that can include Pell Grants from the federal government and Federal Supplemental Educational Opportunity Grants awarded by the college. “Students should prioritize merit aid [such as scholarships] and grants in their financial aid package,” Randolph said. “Neither of these have to be paid back.”
  • Scholarships: These, too, are gifted awards to help cover college costs. Unlike grants, scholarships are usually offered by private entities and granted based on merit as well as need.
  • Work-Study: “Work-study will require that you work a campus job,” Randolph said, “and you can either use the paycheck for personal expenses or put it toward your tuition bill. If you qualify for work-study, take that over any loans in your package.”

9. Borrow strategically through student loans

For some students, financial aid is the only reason they can complete a degree rather than dropping out of college. For others, financial aid helps them leave school with some student loans — but limits the debt to a manageable amount.

If you still have a gap between financial aid and the total cost of attending college, student loans can be an option to make up the difference.

Listed below are the types of loans you might see on a financial aid award letter, in order of which is best to prioritize in choosing the loan portion of your aid (all listed interest rates are for loans disbursed after July 1, 2019 and before July 1, 2020):

  • Direct Subsidized Loans: These loans for undergraduate students are the best way to finance college costs. They carry low interest rates — 4.53%. And due to a student loan interest subsidy, interest charges on these loans are also partially paid for by the government.
  • Direct Unsubsidized Loans: Unsubsidized loans have the same low rates as the subsidized loans, but the student borrower is responsible for paying all interest on these. Thus, borrowing through unsubsidized loans will cost you more.
  • Direct Graduate Unsubsidized loans: These are unsubsidized loans available to graduate students, and they carry a higher interest rate of 6.08%.
  • Grad PLUS loans: Also available to graduate students, Grad PLUS loans are some of the most expensive, with an interest rate of 7.08% and a loan fee of 4.236%.
  • Parent PLUS loans: These carry the same high costs as Grad PLUS loans, but they can only be used by parents of dependent undergraduate students.
  • Private student loans: Financing from private lenders might also be listed in your financial award letter, or you can find it on your own. Using federal student loans first is often the best move, noted Randolph said — however, “if you still need money to bridge the gap between financial aid and the cost of attendance, you’ll have to look at private student loans.”

Be smart and strategic about how you use student loans. Borrow only what you need to cover college costs after using all other aid. Project your future student loan payments with a tool like a prepayment calculator and start learning about different student loan options to understand what it will take to repay this debt after graduation.

10. Appeal your school for more financial aid

Even after you get your financial aid award letter, there still might be hope to get more aid. If you feel you did not receive enough funding, or it was less than you expected, you might consider appealing for more financial aid. Most schools have their own appeal processes.

“You can call the school’s financial aid office and begin talks about a professional judgment case, which will enable the school to potentially offer you more financial aid based on your circumstance,” Randolph said. However, nearly all schools require you to write a formal appeal in letter or email form.

You’ll need a good reason to appeal your financial aid — for instance, if your circumstances changed between when you received your financial aid package and the time school starts. Maybe your sibling decided to enroll in college at the last minute, one of your parents lost a job or there’s been a family financial emergency. You might also be able to appeal for more financial aid if you’re in an abusive family situation.

In these cases, financial aid administrators can often adjust your financial need and find additional aid sources.

Apply for financial aid to afford college

Financial aid can clear the path to a college degree and helps you minimize student loans to lessen your debt burden after graduation. It’s about more than just covering college costs. The arduous process of applying for financial aid, from researching your economic options and applying for scholarships and loans to setting future repayment goals, is a useful experience as you build a healthy, post-college financial life.

Whatever your family’s money situation, financial aid is there to help students surmount college costs. Following the steps above will point you to the best strategies and resources to help you apply for financial aid, qualify for more assistance and receive all the help to which you’re entitled.

Maya Dollarhide contributed to this report.

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* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
 
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. This informational repayment example uses typical loan terms for a first year graduate student borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 4/22/2021. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.  If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


5 Important Disclosures for SoFi.

sofiDisclosures

UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.26% annual percentage rate (“APR”) (with autopay), variable rates from 1.22% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.37% APR (with autopay), variable rates from 1.12% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.30% to 11.52% APR (with autopay), variable rates from 1.29% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 10.76% APR (with autopay), variable rates from 1.22% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 4/1/2021. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 1.68% – 11.98% (1.68% – 11.07% APR)Fixed interest rates range from 4.24% – 12.40% (4.24% – 11.43% APR).

Graduate Rate Disclosure: Variable interest rates range from 1.91% – 11.63% (1.91% – 11.33% APR). Fixed interest rates range from 4.64% – 11.93% (4.64% – 11.61% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.91% – 10.19% (1.91% – 9.47% APR). Fixed interest rates range from 4.38% – 10.44% (4.38% – 9.72% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.91% – 8.99% (1.91% – 8.69% APR). Fixed interest rates range from 4.28% – 9.24% (4.28% – 8.94% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 2.49% – 8.33% (2.49% – 8.33% APR). Fixed interest rates range from 4.94% – 8.58% (4.94% – 8.58% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.46% – 9.60% (4.46% – 9.54% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.83% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.55% – 7.05% (3.55% – 6.78% APR). Fixed interest rates range from 6.99% – 10.49% (6.98% – 10.09% APR).

Variable Rate Disclosure: Variable Rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of May 10, 2021, the one-month LIBOR rate is 0.11%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%. 

Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.

Lowest Rate Disclosure: Lowest rates require a 5-year repayment term, immediate repayment, a graduate degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.


7 Important Disclosures for Discover.

Discover Disclosures

  1. Aggregate loan limits apply.
  2. Get a cash reward on each new Discover undergraduate and graduate student loan when you earn at least a 3.0 GPA (or equivalent) in any academic period covered by the loan. Limitations Apply. Visit DiscoverStudentLoans.com/Reward for terms and conditions.
  3. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including undergraduate, graduate, health professions, law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Your APR will be determined after you apply. Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.
  4. Lowest APRs shown for Discover Private Consolidation Loans are available for the most creditworthy applicants who are approved and choose a shorter repayment term, and include a 0.25% interest rate reduction while enrolled in automatic payments. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Your APR will be determined after you apply. Visit Discover.com/student-loans/consolidation.html for more information, including up-to-date interest rates and APRs.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.