Tagged: Loans for college

Current Financial Information for Students: Get Help, Loan Info, Stimulus Payments, More

Raise.me, a scholarship program that helps first year college students, has posted valuable information to help students find or keep money during the Covid crisis (https://www.raise.me/blog/students/financial-wellness-during-covid-19/). Raise.me is addressing concerns of current college attendees, and is not a prediction of what the money landscape will look like for today’s high school seniors or juniors.

For those who aren’t familiar with Raise.me, the basis of their scholarships is a student’s high school record. $$ are awarded for each A or B, activities, and leadership. The program offers a one-time scholarship that can be applied to first year college expenses.

There are 2 downsides to this bounty. It is only available based on high school experiences so there is no follow up for the rest of one’s college expenses. The money dispersed is considered income when the financial aid package for year two is calculated. The money has been spent on expenses for year 1 and now can reduce the amount of aid given to pay for year 2. If you have earned a large sum for year 1, get help calculating the difference it will make in year 2 and if you will have to borrow .

Every Little Bit Helps!

Comparing Financial Aid Letters

When you lay out your financial aid letters you may find it impossible to figure out what it will cost at each of the colleges.  The organization and terms on each letter can be very different and few will give you a bottom-line cost.   Try this plan to come up with a real cost analysis.

 

For each college calculate……

Cost of Attendance          Hopefully, you saved the Cost of Attendance numbers from your pre-application research.  If you didn’t, add the tuition cost per year to the room and board cost.  You may not know the R&B cost until you deposit and choose a residence hall and room type; use the figure on the website as a ballpark number.  Add $500/year for books and supplies unless studying art, architecture and perhaps, engineering as the cost of supplies will be higher.  Next, figure out how much it will cost to travel to and from college, specially if flying is part of this expense.  Consider how much spending money the student will need.  Add it all together.

OK, now you are ready to attack the award letters.  For each award letter…..

Your EFC          From the Cost of Attendance you calculated above, subtract the Expected Family Contribution.  The resulting figure is the “Need“, the amount of money you hope the college will cover above the amount you must pay.

Merit Aid          Need can be met in various ways.  If there is one or more merit scholarship or grant offered, Pell or other grants, subtract those amounts from the Need you calculated.

Work Study          Look at the letters for Work Study.  Work study is a campus job that can be funded federally, by the state or by the college.  Subtract from the last Need figure calculated above.

Loans          Now we come to “Self Help”, ie, loans.  There will be federally subsidized and unsubsidized loans totaling $5500.  This is the maximum for first year students.  You may also see Parent Plus loans in the financial award.   These are loans parents take out in their own name and are in addition to any loans taken to fulfill the EFC.  Use this link to find more information on loans                                                                                  https://studentaid.ed.gov/sa/types/loans/subsidized-unsubsidized

The Gap          When  you have subtracted all of the funding from the Cost of Attendance, you should  have a zero (or close if you’re estimating room and board).  Unfortunately, not all colleges meet all of  a student’s financial need and leave families with a Gap.

Your total commitment          Your commitment is the sum of your EFC,  servicing on-federal loans and the gap between the aid package and the Cost of Attendance.  Compare the  amount you will have to pay out of pocket for each college to find the one that is closest to your projected budget.

Scholarships from outside sources can reduce the pressure.  There are scholarships for all kinds of students and scholarships with application deadlines in every month.

Outside grants and scholarships          Students can begin to apply for college money at age 13.  The awards are held until the student matriculates in college.  These scholarships do not appear on financial aid letters from colleges.  Upon learning of the additional funding, most colleges will reduce the loans in the financial aid package, but there are some that reduce institutional grants.  When the FAFSA is filed for the student’s second year, the outside scholarships are condsidered student income when calculating the new EFC.If you will be borrowing to be able to meet the EFC,  outside scholarships can reduce the total amount of family debt.