Financial Aid
The most important thing you (a student or parent) can do during to make the financial aid process as easy as possible is to inform yourself. The reality is that reading about financial aid on most of the official websites offered to you can still leave you feeling confused about what to do or what something is or means. Spring Branch ISD's goal is to help students and their families feel as empowered as they can in regards to their future when it comes to their options post-high school. This page is dedicated to breaking down a lot of what is misunderstood about college financial aid.
What is Financial Aid?
There are three main types of financial aid. Grants, scholarships and loans. Yes, loans are a form of financial aid. A very common misconception is that "financial aid" means only free money. The definition of financial aid is "a way to help you pay for college". While loans may not be the preferred method of help, the reality is that it can be a very healthy and useful way to help you afford your college education. The important word to highlight is "healthy". You will read more about how to assess what a "healthy" amount of loans is farther in your reading.
Grants
Grants are a source of money that does not require repayment. It is "gift" money - money that does not need to be paid back. A student can receive grant money through both the federal and state governments if the student files a Free Application for Federal Student Aid (FAFSA). Depending on a student's "demonstrated need", they can qualify for a variety of state and federal grant programs. Grant money given through either (state or federal) agency can be "stacked" (meaning you can receive multiple grants from both entities). However, if a student decides to attend a school outside of their "home" state (where they are considered legal residents), they forfeit their right to state grant money.
For example, if a Texas student qualifies for a state grant program which entitles them to a $5,000 grant and chooses to attend the University of Houston, or any college or university in the state of Texas (their home state), that amount of money can be applied to UofH's tuition or whichever other school in Texas they choose to attend. However, if that same student decides to attend any school outside of the state of Texas, that $5,000 grant money cannot be applied to their tuition. State grant money does not follow a student outside of their state residence. This is different from federal money as a federal grant will go towards a student's tuition regardless of what state they choose to attend college in.
Many parents use this information as a means to discourage their student from researching or wanting to apply or attend a college or university outside of the state of Texas. It is not meant to be a discouragement. The reality is that many and most private colleges and universities understand that students coming from out of state will be coming in with less many than possibly entitled and therefore are prepared, willing and ready to offer students a larger scholarship or more private grant money to help compensate. If a student has a strong enough GPA and test scores, many public out of state colleges and universities have an "out of state" grant that they award students who are coming to them from out of state. It is important that you do not assume an out of state college or university will not give a comparable or strong financial aid package just because it is out of state. It is important that you inquire to talk to your admissions representative at that college or university about your out of state financial aid concerns, specifically.
As mentioned, a student can also receive grant money through private organizations, including colleges and universities. The grant money received through colleges, universities or private organizations can either be need or merit based. This means that sometimes the student's family's financial background and means are taken into consideration in the awarding of grant money. Sometimes the student's academic talent or accomplishments (including performances like athletics, choir, art, theatre, etc.) are the basis for the awarding of grant money.
Scholarships
Like grants, scholarships are a form of "gift" money that does not need to be paid back. Scholarships are only awarded through colleges, universities and private organizations. Neither the state or federal government award scholarships. Most scholarships require an application of some sort. Some colleges and universities have a scholarship process that is separate from the admissions process, some colleges and universities will use all of the student's admissions information (including admissions essays) to do an automatic review for admissions scholarships. This is why it is so important for a student do give their best to their college essays since you never know when it might flag their application for scholarship. Scholarships can either be need or merit based, sometimes both.
The best way to get what is considered an "outside" college scholarship or grant (meaning it is awarded through an organization that is not a college or university like Dell or Ronald McDonald House Charities) is to start the search early — reach out to advisors, friends and family for advice, and never stop looking! Scholarships and grants can be attained throughout your college years to supplement college expenses.
Loans
Loans are a form of financial aid. Different from grants and scholarship, loans are not a form of gift aid. The amount of money that you borrow must be paid back. Loans can be awarded to both students and parents separately, and can be offered through the federal government and private banks. When a student chooses to take a loan from the federal government, there are various pay back options that the student can take advantage of. The college loan program for students is made to be a useful means for a student to pay for college, and can be, if the student understands what steps are necessary to manage their loans correctly. A cliche, but true: Where loans are concerned, knowledge is power!Most families shudder at the thought of their student taking out student loans to pay for their college education. The reality is that most families do not bat an eye at taking out a loan to buy a student a car, to buy furniture, refrigerators, motorcycles and anything else that is bought using a credit card or loan. The interest rates on almost any other loan or expense (like the examples above) are much higher than a student loan. And unlike all of the examples above, a college education does not depreciate in value. As soon as you drive the car, plug in the fridge, or sit on the couch, you will never get the amount of money you paid for it back. A college education will only add value to a student's life and future. It will only increase in value, itself. So why not make a smart consumer decision and invest in a college education?
Federal Student Loans
When, and only if, a student applies for the Free Application for Federal Student Aid (FAFSA), they can qualify to receive a federal student loan. Federal student loans can be offered to any U.S. Citizen or Permanent Resident student, regardless of their financial background or need. This is the easiest loan to get for several reasons. For starters, federal loans are not credit-based, which lets a person with bad credit or no credit history apply and get approved. These loans provide money for undergraduate and graduate studies.
The repayment options for federal student loans are better than any other type of loan a person will take out in their lifetime. Firstly, repayment of a any student loan doesn't start until nine months after graduation. Sometimes it is required that a student request a deferment, but often it automatically rolls into a four-year deferment. It is always smart to ask if a request is needed.
Secondly, if a student has multiple student loans, the federal government will consolidate the loans into one big loan with the same interest rate. In this way, the student is not required to manage however many different loans they've taken. One monthly payment to one payment entity makes the repayment process much easier for an emerging adult to manage.
Thirdly, if a student later in life begins to have problems with the monthly payments, it is often enough for them to contact the entity to whom they are making monthly payments and tell them of the difficulties they are having. More often than not, the student will be given the ability to push back payments until they are back on their feet. The important thing to know is that repayment of a student loan can be very flexible so long as the student is otherwise paying back steadily and keeping the lender informed of any circumstances that make it difficult for them to make repayment.
Lastly, depending on what a student's career is, a monthly payment in comparison to their post-college salary could be very minor. If a student knows their monthly payment amount and budgets effectively, they can live with the monthly payment easily. It is also important to note that there is no penalty for paying off your loans in large amounts quickly if you are given the ability to do so.
Direct PLUS Loans
Parents can separately apply for a Direct PLUS Loan to help pay for their child's education if certain eligibility criteria are met. PLUS loans are a little different from standard student loans. With this type of financial aid, parents are responsible for the loan payments usually within six months of the loan being first disbursed to the student's tuition account. A deferment may be available, however, the parents should inquire about it before deciding to take out the loan. In addition, an acceptable credit history is a requirement.
Private Student Loans
The federal government establishes a yearly loan limit. If a student qualifies for no "gift" aid at all (grants and scholarships), sometimes a student's tuition exceeds the loan amount, and she has to seek additional resources. Banks and other lenders offer private student loans with various repayment options and interest rates. The money can pay for tuition, books and other miscellaneous expenses. Sometimes a co-signer may be required.
Federal Work-Study Program
A college or university can also award you an opportunity to take part in the Federal Work-Study (FWS) program at your university. In 2009, the program provided aid to nearly a million university students at more than 3,400 campuses.
How do I apply for Financial Aid?
Regardless of how much money a student's family makes, it is encouraged that every U.S. citizen or permanent resident student apply for the Federal Application for Federal Student Aid (FAFSA). For families who "don't qualify" for federal or state grant programs, there are instances where a college or university may award you grant money based on their own standards. However, often they are not able to do so until a FAFSA is filed. So what do you have to lose?
What is the FAFSA?
The FAFSA is an application that helps colleges and universities see how much money your family needs to help pay for college. The FAFSA is available online every year after January 1st. Students apply for the FAFSA as early as the January before the school year for which they are requesting they be considered for funds. Students must apply for the FAFSA every school year. The forms needed to file the FAFSA are a student's parent's tax paperwork from that tax filing year. For example, if you are seeking financial aid for the 2013-2014 school year, a student would use their parent's 2012 tax forms (the forms they would use to file taxes in April of 2013). Additionally, the student and at least one of the parents will need to sign up for an electronic PIN Number in order to electronically sign their FAFSA when they submit.
Many families choose to "not claim" their student on taxes so that the student qualifies for more financial aid since they would be considered a dependent. Unless a student is over the age of 24, has had a child that is in their care prior to the college academic year for which they are seeking financial aid, is married, or is a ward of the state or homeless (there are specific legal definitions and qualifications to qualify as this), they must use their parent's or guardian's tax forms and a judgement will be made on the numbers submitted from those forms. A family cannot just choose to not use their information even if the family has no intention of helping the student pay for college. These are the only four ways that a student can be considered independent. If a student does not qualify for any of these four and is refused access to their parent's or guardian's tax information, that student will not be considered for any financial aid as they will be unable to submit their FAFSA.
Contact each college or university's Office of Financial Aid to find out when their priority and final financial aid deadlines are. Note that there is a difference between a priority deadline and a final financial aid deadline. Make sure to ask the financial aid officer what the difference means at that specific college or university.
It is important for parents to understand that while it is best, it is not necessary to submit their taxes when their student is filing the FAFSA, it is important for them to prepare their taxes as soon as possible. The information needed to input on a FAFSA needs to be 100% accurate as if the parents were submitting taxes that day. One reason many adults wait to submit their taxes is because they owe money and need to save it before submitting their taxes. Parents can wait until it is best for them to submit (mail) their taxes and money, but it is best for the student if they prepare their tax forms with all of the final numbers as soon as possible. Before filing the FAFSA, students should ask their parents if for sure the numbers on their tax forms will not change. If the numbers on their prepared tax forms are final and won't change regardless of when they submit, then fill out your FAFSA immediately after January 1st of their senior year, or every year after that they file.
Parents may need to contact their Human Resources department at work now in order to ensure that they receive their W2's or other documents as soon as possible come the new year.
Many families choose to "not claim" their student on taxes so that the student qualifies for more financial aid since they would be considered a dependent. Unless a student is over the age of 24, has had a child that is in their care prior to the college academic year for which they are seeking financial aid, is married, or is a ward of the state or homeless (there are specific legal definitions and qualifications to qualify as this), they must use their parent's or guardian's tax forms and a judgement will be made on the numbers submitted from those forms. A family cannot just choose to not use their information even if the family has no intention of helping the student pay for college. These are the only four ways that a student can be considered independent. If a student does not qualify for any of these four and is refused access to their parent's or guardian's tax information, that student will not be considered for any financial aid as they will be unable to submit their FAFSA.
How do I apply for the FAFSA? What do I need?
Although you cannot fill out the FAFSA until January of senior year, families can begin mentally preparing at the beginning of senior year. Parents will need to file their taxes in January so students don't miss any of the financial aid application windows. Most colleges or universities have priority financial aid deadlines and final financial aid deadlines. Some of these deadlines are as early as February 15th. If parents understand that the earlier a FAFSA is filed, the more likely the students are to receive a better financial aid package, they understand that it is important to move fast in filing taxes when January of their student's senior year arrives.Contact each college or university's Office of Financial Aid to find out when their priority and final financial aid deadlines are. Note that there is a difference between a priority deadline and a final financial aid deadline. Make sure to ask the financial aid officer what the difference means at that specific college or university.
It is important for parents to understand that while it is best, it is not necessary to submit their taxes when their student is filing the FAFSA, it is important for them to prepare their taxes as soon as possible. The information needed to input on a FAFSA needs to be 100% accurate as if the parents were submitting taxes that day. One reason many adults wait to submit their taxes is because they owe money and need to save it before submitting their taxes. Parents can wait until it is best for them to submit (mail) their taxes and money, but it is best for the student if they prepare their tax forms with all of the final numbers as soon as possible. Before filing the FAFSA, students should ask their parents if for sure the numbers on their tax forms will not change. If the numbers on their prepared tax forms are final and won't change regardless of when they submit, then fill out your FAFSA immediately after January 1st of their senior year, or every year after that they file.
Parents may need to contact their Human Resources department at work now in order to ensure that they receive their W2's or other documents as soon as possible come the new year.
How does the FAFSA work?
Once a student submits their FAFSA, it is submitted to the federal government who then assess the information and determines that student's Expected Family Contribution (EFC). The EFC states how much money that family should be able to contribute that year to their student's college education, regardless of what college or university that is, public or private, out of or in state.
The government then sends their assessment and the student's EFC to all of the colleges and universities the student listed on their FAFSA to be sent their information. Colleges and universities then begin building financial aid packages based on the student's EFC, which grants and scholarships they qualify for, which scholarships, and finally which loans.
It is important to note that in the FAFSA and when determining a family's EFC, debt is not taken into consideration. If your family has extenuating circumstances that is otherwise not noted on their FAFSA, they will be given the opportunity to make a note of this in a "special circumstance" section on the FAFSA. Often, colleges and universities have their own special circumstance form that they want students to fill out so it is important to contact them directly as well.
How does a university determine how much money I need?
There is a simple equation that is used to determine "demonstrated need". Colleges and universities take the Cost of Attendance and subtract a student's EFC. The amount that is left is what is considered a student's "Need". A student's "need" puts them in different "need brackets" from high need to low need. The need bracket a student qualifies for determines which grant programs they qualify for and how much of those grant monies they should receive. Grant programs include: PELL, SEOG, TEG and TEXAS grants. Universities stacks all of the grant money a student qualifies for in their financial aid package, then stacks on any grant or scholarship money they receive directly from the college or university itself, then outside scholarships and grants, and then finally line up the loans for whatever is left. Though this, most colleges or universities to offer a student a financial aid package made up of various ratios of scholarships, grants and loans, that equals the total cost of attendance. Some colleges and universities by policy or through financial inability, will only give a financial aid package that covers only a portion (small or large) or the cost of attendance.
As you can see, this equation is what allows for private college or universities to be just as viable options as a public institution, as well as out of state colleges and universities.
What if I am a non-Citizen?
Citizens who hold a current Permanent Resident card are allowed to and qualify for the benefits of filing the FAFSA.
For students who do not hold any current immigration documents, in the state of Texas you will be required to file the Texas Application For Student Aid (TASFA). Most public and some private colleges and universities accept the TASFA to help design a financial aid package for students who are in this category. However, many private and some public do not accept the TASFA and either have their own form they want a student to fill out that has been built by the university, or they have a student fill out a paper form of the FAFSA that the would then submit directly to the Office of Financial Aid at that university (not the federal government) for them to asses. It is, again, important for students to contact each individual college or university's Office of Financial Aid to find out which form they should fill out and by what deadline. Students who fall into this "undocumented" category are often given an early financial aid deadline than other students and so it is very important students know when this deadline is and turn in their paperwork well before the deadline just in case something needs to be resent, confirmed or added. If a student's parents or guardians are documented or are able and do file taxes, they will be required to use their parent's or guardian's tax information. If a student's parents or guardians are unable to file taxes, there are other avenues that the TASFA and other documents will require for proof of income. Again, it is important the students are in constant contact with the Offices of Financial Aid at each of their colleges and universities throughout their entire financial aid process. Visit www.collegefortexans.com for more information.
If you need fafsa instructions then please visit money4college123 site. For college planning, the guidance staff's time is best-used counseling parents and students on identifying the best college alternatives to meet student's needs.
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