The financial aid process has given rise to a number of myths, misconceptions, and just plain misinformation. You might hear one or many of the following statements. Don't get taken in.
"The only way to know if you qualify for aid is to complete the applications," says Ann Hendrick, director of financial aid at Millsaps College (MS).
Whether you qualify for aid depends on two things: how much your family is able to pay and how much your chosen college(s) cost.
The amount of money that your family can afford to pay is determined by the FAFSA (Free Federal Application for Federal Student Aid). After you submit the FAFSA, you will receive a report telling you what your Estimated Family Contribution (EFC) should be. Colleges may adjust that a little, depending on their own methods. But the EFC is the amount of money the colleges figure you can pay toward the this year's tuition. College can cost anywhere from a few thousand a year at a community college to upwards of $50,000 at a private college.
The magic number in financial aid, then, is the EFC. And the only way to determine your EFC is to apply for aid.
"Only straight-A students get aid"
Sure, the academic (or athletic, or music, or leadership) stars may have a better chance of getting merit scholarships. But most financial aid—and all government aid—is need-based. It is given to students because they need it to pay for college, no matter what their grades are.
"As long as you make satisfactory academic process, you're going to be as eligible for federal student aid as somebody who's on the dean's list," says Bill Ryan, acting director, Student Aid Awareness, Student Financial Assistance (part of the U.S. Department of Education).
"Millions of dollars in scholarships go unclaimed every year"
This old saw has been around for too many years to count. It is not true—and it is used to scam money from unsuspecting students and parents.
The source of this claim is an old study that looked at the theoretical amount of funds available from private organizations—companies, associations, unions, and so forth. Now maybe the scholarship for a left-handed botany major whose father is a member of the Elks doesn't get used every year. But could most people qualify for it?
The truth is, about 70 percent of all financial aid is given by the U.S. government. The rest is a combination of state, private, and college aid.
But don't get discouraged yet. There are still many scholarships for which students can apply. And the Web is one of the best places to look for them (FastWeb or Scholarships.com are good places to start). Other good sources for scholarship leads are the reference section of the library, your high school guidance office, and college financial aid offices. All of these resources are free.
The danger comes when companies ask you for money to either (1) search for scholarships or (2) give you a scholarship.
"Students and parents should be careful about services that charge money for things that are available for free," says Ryan. (For more information on scholarship scams, visit FinAid or Six Signs that Your Scholarship is Sunk).
Students and parents can also look at the National Association of Student Financial Aid Administrators' (NASFAA) Web site for more information on financial aid and the U.S. Department of Education's financial aid site. To report scholarship scams, visit the Federal Trade Commission's Web site.
"Loans are not financial aid"
Many students expect all financial aid to be "free money." But neither the government nor colleges has enough money to give to the number of students that need it. That's why most financial aid packages are a mixture of grants (that don't need to be paid back) and loans (that do). Even if all you get is a government-subsidized loan, you have received financial aid. Unlike a regular bank loan, subsidized student loans allow the borrower (you) to wait until after college to pay it back.
Loans do bring some risk. You're agreeing to (usually) 10 years of monthly payments once you graduate college. So it's a good idea to minimize the loan amounts, if possible. Just because you're offered a loan doesn't mean that you have to take it. You may be able to earn more at a summer job or perhaps spend less at school than the financial aid office estimates.
"If you have to borrow money to pay for required educational expenses, that's borrowing with good sense," says Jim Craig, director of financial aid at Montana State University at Bozeman. "If you're borrowing money to support a lifestyle, that's not good borrowing."
"There's a lot of temptation for students to borrow" to keep up with friends or roommates, says Judith Lewis Logue, director of financial aid services at the University of San Diego. But resisting that temptation means you'll be in a better financial position later.
"I can do it at the last minute"
Deadlines are very important in the financial aid process. Of course, you can send your FAFSA in the day before a college's last deadline. But college financial aid goes fast, especially the grants. The earlier you can get in your application and all of the documentation that the college ask for, the sooner you'll receive your financial aid package. So pay attention to each college's "priority" deadlines—and stick to them.
In addition, the pressure of completing the forms at the last minute can be considerable. It can also lead to more mistakes than you would make if you took a little more time. So schedule a time within the next few weeks for you and/or your family to work on your financial aid applications. You'll be glad you did.
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