Your child will spend their senior year of high school worrying about their final grades, test scores, and college options. It’ll be a whirlwind for them, but it doesn’t have to be for you.
You can get a head start on figuring out how to pay for college by starting the hunt for financial aid.
Here are five actionable steps you should take once your child enters 12th grade. Feel free to print out this list and check off each step after completion to stay on track.
|1. Complete the FAFSA||The Free Application for Federal Student Aid (FAFSA) should take under an hour to complete, and it’ll connect your student with aid from a variety of sources.|
|2. Guide the search for scholarships and grants||It’s not too late to apply for private scholarships or state grants that can help cut down the cost of higher-priced schools.|
|3. Estimate the cost of attendance||Once you have a better idea of your Expected Family Contribution (EFC) and gift aid awards, gauge the cost of your student’s top college choices.|
|4. Compare college award letters||Compare various schools’ financial aid packages to decide which is the best fit for your family.|
|5. Consider federal and private student loans||Learn about the differences between borrowing money from the Department of Education and private lenders, as each comes with pros and cons.|
The first and most important step to receiving financial aid for college is to complete the FAFSA. It’s a gateway to federal aid, such as grants and loans. It’s also a requirement for other sources of funding, such as state grants and even private scholarships. That’s because the FAFSA gives donors a sense of your family’s financial need.
In fact, the FAFSA will use your most recent tax returns and other financial information to pump out your EFC. Schools use this dollar figure to decide your eligibility for federal and school-based aid.
The FAFSA application opens Oct. 1 annually, and it’s wise to complete it as soon as possible. This way, your student has the best possible chance at securing limited aid, such as the Pell Grant. To complete the application, head to the Federal Student Aid website. The whole process should take under an hour.
Between three days and three weeks, you and your child should receive your Student Aid Report (SAR). The SAR summarizes your FAFSA responses and lists your EFC.
You’ll want to ensure your information is correct. You’ll be sending your FAFSA to up to 10 schools of your choice. Those schools will use this information to determine your aid allocation.
In addition to financial aid offered by the federal government and your student’s school, your family should also consider grants. Almost all states have generous grant programs.
Keep in mind that most grants are awarded based on financial need. If the results of your student’s FAFSA leaves you with a high EFC, you might want to spend more energy on scholarships that are merit-based. Your student could win scholarships for different reasons, such as for their grades, athletics, or extracurricular achievements.
You can find scholarships all over the place, including:
- Your employer
- Private organizations and companies
- Scholarship search engines such as Fastweb
As a parent, defer the actual grant and scholarship applications to your child. You can be more useful as a source of motivation and encouragement as your child submits their scholarship applicprations.
It’s important for you and your student to take some time to consider the schools you can afford.
First of all, each school’s true cost of attendance goes way beyond tuition. It will also include big-ticket items such as room and board, plus smaller expenses such as books and supplies. You can compare annual school costs using the Department of Education’s College Navigator tool.
The College Navigator tool also reveals how much aid each school awards its students. The University of Oregon, for example, charged its in-state on-campus students $26,862 for the 2017-2018 school year. But, on the plus side, the average student receives $6,947 in grants and scholarships.
Once you confirm the cost of your student’s top college choices, run the numbers to see if they’re affordable. For each school, take the cost of attendance and subtract the EFC listed on your SAR.
Cost of attendance – EFC = Financial need
The remainder represents your family’s financial need, which can be filled by any of the following:
- Scholarships and grants
- Additional family savings
- Federal grants, work-study opportunities, federal student loans, and private student loans
While your child checks the mailbox — or these days, inbox — for college acceptance letters, you should keep an eye out for award letters. If you receive one but not the other, contact the school’s financial aid office.
The award letter reveals the financial aid package your child can receive at a school. Because many schools expect you to accept or deny this offer by May 1 of your child’s senior year, you should be on the lookout for it to arrive early in the spring.
Ideally, you and your student will have a few college award letters to compare. To ensure you’ll make accurate comparisons, don’t focus on each school’s cost of attendance. Instead, figure and consider your net costs — that is, each school’s cost of attendance minus the gift aid offered. The math looks like this:
Cost of attendance – Gift aid offered = Net cost
What’s left over will need to be covered elsewhere, either via income and savings (yours or your child’s) or by taking on debt.
If your family’s finances have changed significantly since you completed the FAFSA, you could speak with your student’s preferred school to negotiate a better aid package. But be prepared to prove why you might deserve additional need-based gift aid.
When comparing schools, you’ll need to consider the amount of debt you’ll need to take on to afford the cost of attendance.
For example, you might deprioritize a school that suggests you borrow twice as much in loans as another school. The award letters you receive might also nudge you to borrow federal Direct Subsidized or Unsubsidized Loans.
Once you’ve found the school that’s an academic and financial fit for your student, hammer home the fact that borrowing money comes with consequences.
Say your son or daughter needs to borrow $5,000 in unsubsidized loans from the federal government. Explain that they’ll be repaying that amount with interest once they leave school. A federal loan of that size at the 2017-2018 interest rate of 4.45%, for example, would cost $6,204 over the standard 10-year repayment plan, according to our student loan payment calculator.
Also, take the award letter with a grain of salt when it comes to loans. What the school suggests your family borrow to afford its cost of attendance is not how much you have to borrow.
After reviewing the differences between federal and private loans, you might decide to maximize your federal loan allotments because of the greater protection offered by the Department of Education. On the other hand, you might decide that your stellar credit history could help you score a lower interest rate with top private lenders.
Whether you’re choosing between loans or looking for other aid, remember that the right choice for another family might not be the best for yours. Follow this five-step checklist to put you and your student in a position to succeed.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for College Ave.
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.
Information advertised valid as of 4/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* 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.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.24% – 13.24%1||Undergraduate and Graduate|
|4.07% – 11.32%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 11.35%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|6.08% – 7.22%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|