Six Financial Aid Realities that Sound Overwhelming but Aren’t

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describe the image The financial aid office has gone out to get you!  

At least that’s what the media would sometimes have us believe.   The particular FAFSA is frequently portrayed as an really frightening form, student loan debt a ticking time bomb, and the educational funding process  (at best) arbitrary plus (at worst) nefarious.   With such portrayals in the news, it’s no wonder that future college students plus their parents often feel disappointed.   I fear that households reading a recent article on the website Vox, entitled “ Six items colleges don’t want you to know about financial aid , ” may have experienced similarly dismayed.  

Rather than put families off of the college admissions and financial aid processes, we from College Coach want to encourage households to take control of their application process and use the insider information we offer to their advantage.   With that in mind, let’s take a look at those “Six things colleges don’t want you to know about educational funding, ” and see how you can best use this information.

1 . Whether you need financial aid could affect whether you get into college.

Indeed, it could.   But it probably will not.   Even at “need-aware” colleges, the family’s finances usually only enter the admissions equation for borderline students (and/or, as stated in the Vox article, transfer, wait-listed, and global students).   The vast majority of freshman applicants are accepted or denied entrance to a college based primarily on their own academic and extracurricular credentials, not upon their ability to pay out.   If you want to ensure your family’s finances will not affect your entrance decision, you can look for schools that practice a “need-blind” admission plan (most often in-state public or elite private colleges).   Otherwise, don’t worry too much about it.   You certainly shouldn’t decline to apply for the financial aid that you need in hopes that it will provide you with an admissions advantage.   Exactly what good is that fat envelope if you can’t afford to actually attend the school?   Always apply for financial aid if you want it (and maybe even if you don’t—see #3 below).

2 . A college that promises to meet a student’s monetary needs isn’t promising a debt-free education.

Some student loans (like the Backed Direct Loan and the Perkins Loan) are, in fact , considered financial aid.   That is because they do not require a credit check, income verification, or collateral, plus their terms are better than individuals offered in the private lending marketplace (for example, no interest accrual while the student is enrolled in school).   If you do not wish to borrow meant for college, look for schools with a “no loans” financial aid policy, increase college savings in preparation for approaching payments, utilize monthly tuition payment plans, and/or apply to colleges in which you are more likely to receive recruitment scholarships.

3. ‘Merit’ aid isn’t just for the smart children.

And that’s good news to all of us who else didn’t receive perfect scores on this SATs.   Colleges utilize “merit” aid to help recruit the learners who are most attractive to them for many different reasons.   Most often it really is above average academic qualifications (GPAs, SAT scores…) that will make you a desirable pupil to a particular college, but it can also be athletic or artistic ability, demographic factors, your choice to major within an unpopular program of study, etc .   Look for schools where you will stand out among the applicant pool (academically or otherwise)—this strategy will maximize scholarship possibilities.   And indeed, there are occasions where you may be provided a scholarship just for “showing up” and completing a financial aid app.   One more reason to fill out that FAFSA!

4. The goal of a financial help package might be to persuade happened to come.

Most colleges don’t have enough money in their financial aid budgets to make them affordable for every student they acknowledge.   Therefore , some students will necessarily be left with “unmet need” at some schools.   Because discussed above, colleges will usually provide more generous financial aid deals to those they wish to recruit the most, and can provide less generous packages to the students they care least about enrolling (i. e. the learners who got in, but just barely).   Therefore , it is once again in your best interest to apply in order to colleges where you will stand out one of the applicant pool.   You can also consider the relatively few schools who perform, in fact , guarantee they’ll meet 100 % of the financial need of all recognized students. Finally, be sure to include a minumum of one financial safety school on your list.

five. The federal government helps high-earning families pay money for college too.

More good news!   While federal educational grants, such as the Pell Grant, are reserved for the neediest families, families at much higher earnings can take advantage of federal tax breaks which also provide free money meant for education.   The most lucrative of the tax breaks is the American Opportunity Tax Credit of up to $2, 500 per year for families earning as much as $180, 000 and paying for the undergraduate tuition of their dependent kid.   In addition , the Unsubsidized Direct Loan is available to students through families at most of income levels.

6. Just how much you take out in loans might not be how much you pay back.

Federal education loans do come with certain protections unavailable in the private sector.   You will find income-driven repayment plans which cap monthly payments at ten or fifteen percent of the borrower’s discretionary household income and forgiveness programs that forgive remaining loan balances right after 10 years for public service workers (and 20 or 25 years meant for other eligible borrowers).   Although income-driven repayment plans are helpful for borrowers experiencing a temporary financial difficulty, and forgiveness programs will benefit the relatively few borrowers who sustain consistently low incomes over a long time-frame, many borrowers will not qualify for such programs.   Furthermore, govt programs change as political will shifts, so potential student loan debtors should prepare to pay back the specific amounts borrowed, plus interest, and really should make enrollment decisions accounting for the total anticipated debt burden at each applicable school.

While the financial aid process may be intimidating at times, and there may be aspects of their imparting policies that colleges prefer not have to get made available to the general public, resources do exist to help students from all walks of life attain a high-value education and learning at an affordable price.   College Coach experts, all former admissions and financial aid officers themselves, can easily provide families with the insider information that they need to seize control of the college app process and make it work for, not really against, them.

Shannon Vasconcelos   is a college fund expert at College Coach. Before becoming a member of College Coach, she was a Mature Financial Aid Officer at Tufts College and Boston University.

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