5 Things This Financial Aid Expert Tells Every College Student

Written by Rebecca Safier

June 10, 2020August 24, 2022Paying for CollegeBig Money Decisions, Featured1174Rebecca Safier

Updated on June 10, 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Note that the government has paused all repayment on federally held student loans through the end of 2022, with no interest to be charged during that period and no loans to be held delinquent or in default.

* * *

Paying for college is a major challenge for new students and their families, what with the $32,410 average cost for one year at a private college, according to College Board — so it’s crucial to find legitimate college financial aid advice that will help you prepare for the costs of school.

To guide you through the process, we spoke with Mark Kantrowitz, financial aid expert and the publisher and VP of research at SavingforCollege.com. Here are his top five pieces of financial aid advice for students and new grads.

5 pieces of college financial aid advice

1. Understand the different types of financial aid
2. Know how to get the most financial aid
3. Have a plan if you run out of money during college
4. Avoid taking on too much student debt
5. Start developing savvy money habits today

1. Understand the different types of financial aid

Most students and their families don’t pay for college entirely out-of-pocket; instead, they get help through financial aid.

“Financial aid is provided by the federal government, state government, the college itself and private funding sources,” said Kantrowitz. To get aid, you must submit the Free Application for Federal Student Aid (FAFSA). Some colleges also require an additional form called the CSS Profile.

Although financial aid is sometimes referred to as an award, don’t assume that all financial aid is free money. Financial aid refers to both the money you don’t have to pay back (grants and scholarships) and the money you do (student loans).

2. Know how to get the most financial aid

If you want to know how to get the most financial aid, the date you submit the FAFSA could have something to do with it. Although the federal deadline is in June, you should fill out the FAFSA as soon as possible. It opens on Oct. 1 every year, and the earlier you apply, the more financial aid you could get.

“A dozen states award state grants on a first-come, first-served basis,” said Kantrowitz. “If you file later, you may miss out on state and institutional aid, and even some campus-based federal student aid.”

Since the government looks at annual income, you or your parents should also be strategic about how much you have in the bank.

“Avoid artificial increases in income during the base year, such as realizing capital gains or taking a distribution from retirement plans,” said Kantrowitz. That way, the government is less likely to overestimate your expected contribution.

Despite your efforts, though, your financial aid package still might not cover the full cost of college. The federal government, for instance, sets a federal loan limit of $31,000 for dependent undergraduate students, $57,500 for independent undergraduate students and $138,500 for graduate students.

So what is Kantrowitz’s financial aid advice for students whose aid package falls short? He recommends negotiating for more financial aid.

“If you have special circumstances that affect your ability to pay for college, appeal to the college financial aid office for a professional judgment review,” advised Kantrowitz.

And if you still have a gap, consider whether you want to take out private student loans.

Of course, first make sure you understand the terms of your agreement. If you take on too much debt, you could find yourself facing high student loan payments for 10 years or more after graduation.

3. Have a plan if you run out of money during college

Despite your best-laid plans, you might find yourself struggling to get by as a college student. If you run into financial hardship, speak with your college’s financial aid office about how to get help.

“Some colleges have emergency loan funds to help students who run into unanticipated problems,” said Kantrowitz. “The college’s financial aid administrator can also help you identify additional sources of funding.”

For instance, you can still apply for scholarships after you’ve started college. You could also consider a part-time job to make more money. Taking on additional loans is another option, but you should proceed with caution before adding to your debt.

Make sure to speak with a financial aid officer for advice. Taking out additional private student loans should usually be a last resort.

4. Avoid taking on too much student debt

It’s all too easy to take out student loans without thinking about the long-term consequences. After all, you could take out a loan for freshman year four and a half years before you have to start repaying it.

But repayment will kick in eventually, and you don’t want the burden of huge student loan payments just as you’re starting your career. To help out your future self, minimize the amount you take out in loans.

“The most common mistake students make with student loans is to borrow too much money,” said Kantrowitz. “They then treat the financial aid ‘refund’ as though it were free money, even though it usually comes from student loans, which must be repaid — usually with interest.”

One way to avoid overborrowing is to estimate your first year’s salary out of college. Research a few jobs you’re interested in to get a sense of their average annual earnings.

“Aim to have total student loan debt at graduation that is less than your annual starting salary,” advised Kantrowitz. “Ideally, a lot less.”

He also encouraged college students to live cheaply. Cutting down costs as a student is easier to do in college than afterward.

“Live like a student while you are in school,” Kantrowitz said, “so you don’t have to live like a student after you graduate.”

5. Start developing savvy money habits today

Most of us never get a class in personal finance — we’re left on our own to sink or swim. That’s why you may need to take your money management into your own hands.

Find out if your school offers a financial literacy course, and rely on resources such as personal finance books and blogs.

“Read one of the books by Suze Orman or Beth Kobliner,” suggested Kantrowitz. “They are a great way to learn how to manage your money.”

He also encouraged students to record their spending. You don’t necessarily need to set goals at first — instead, become cognizant of how you spend your money.

“I often recommend creating a descriptive budget — as opposed to a prescriptive budget — where you track all of your spending every day by recording it in a spreadsheet or a program like Quicken or Mint,” said Kantrowitz. “Increasing awareness of your spending is the first step in exercising restraint.”

With practices like these, you’ll develop strong money habits for the rest of your life — plus, you’ll be that much more prepared when it comes time to repay your student loans.

For more college financial aid advice, here’s how to avoid taking out more student loans than you need.

Need a student loan?

Here are our top student loan lenders of 2022!

Lender	Variable APR	Eligibility
	2.49% – 13.85%¹	Undergraduate Graduate	Visit College Ave
	2.55% – 11.44%²	Undergraduate Graduate	Visit Earnest
	3.25% – 13.59%³	Undergraduate Graduate	Visit SallieMae
	0.00% – 23.00%⁴	Undergraduate Graduate	Visit Edly
	3.25% – 9.69%⁶	Undergraduate Graduate	VISIT CITIZENS
	N/A⁶	Undergraduate Graduate	Visit FundingU
^* 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 Firstrust Bank, member FDIC, First Citizens Community 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. As certified by your school and less any other financial aid you might receive. Minimum $1,000. 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. Information advertised valid as of 9/15/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term. ² Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest. Earnest Disclosures Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.47% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 2.80% APR to 11.69% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred. ³ Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply. ⁴ Important Disclosures for Edly. Edly Disclosures 1. Loan Example: Loans from $5,000 – $20,000 Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan. Payments deferred for the first 12 months during final year of education. After which, $270 Monthly payment for 12 months. Then $379 Monthly payment for 44 months. Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan. About this example The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment. 2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply. ⁵ Important Disclosures for Citizens Bank. Citizens Bank Disclosures Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of September 1, 2022, the 30-day average SOFR index is 2.23%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the 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 are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical 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. Undergraduate Rate Disclosure: Variable interest rates range from 3.25%-10.35% (3.25% – 9.69% APR). Fixed interest rates range from 4.24% – 10.59% (4.24% – 9.93% APR). Graduate Rate Disclosure: Variable interest rates range from 3.75%-9.90% (3.75% – 9.68% APR). Fixed interest rates range from 5.22% – 10.14% (5.22% – 9.91% APR). Business/Law Rate Disclosure: Variable interest rates range from 3.75%-9.35% (3.75% – 9.16% APR). Fixed interest rates range from 5.20% – 9.59% (5.20% – 9.39% APR). Medical/Dental Rate Disclosure: Variable interest rates range from 3.75%-9.02% (3.75% -8.98% APR). Fixed interest rates range from 5.18% – 9.26% (5.18% – 9.22% APR). Parent Loan Rate Disclosure: Variable interest rates range from 3.25%-9.21% (3.25% – 9.21% APR). Fixed interest rates range from 3.96%-9.50% (3.96%-9.50% APR). Bar Study Rate Disclosure: Variable interest rates range from 6.58%-11.72% (6.58% – 11.62% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.82% APR). Medical Residency Rate Disclosure: Variable interest rates range from 5.67%-9.17% (5.67% – 8.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR). ⁶ Important Disclosures for Funding U. Funding U Disclosures Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.