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FINANCIAL AID
TYPES OF FINANCIAL AID
MERIT-BASED AID: Money awarded on the basis of your grades, achievements, athletic abilities, or other special talents.
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NEED-BASED AID: Money awarded on the basis of your family's financial situation.
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SCHOLARSHIP: Free money that doesn't need to be paid back. Scholarships may be merit or need-based and may be given from the college/university or outside organizations.
GRANT: Free money that doesn't need to be paid back. Grants may be merit or need-based and may be given from the college/university or the federal or state government.
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LOAN: Borrowed money that needs to be paid back, so invest wisely! See the Understanding Your Loans section below for more information about loans.
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WORK STUDY: You may be offered a job on campus as a source of financial aid. While there is the option to have a certain percentage of this income earmarked for tuition, it may be better to view this source of income as your own spending money that can be used to help cover your personal costs throughout the year such as food, travel, textbooks, and other personal necessities.
THE FAFSA
Free Application for Federal Student Aid
WHAT IS THE FAFSA AND WHY SHOULD I SUBMIT IT?
Completing the FAFSA makes you eligible to receive federal financial aid, and you will need to complete it each year that you will be in college. It also helps determine how much aid you will receive from a college in your financial aid package.
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QUICK FAFSA FACTS:
To start the FAFSA, you must first create an FSA ID (a parent also must create one if filing as a dependent student)
The FAFSA uses tax information from the prior-prior year (two years ago)
The IRS Data Retrieval Tool allows you to securely transfer all your tax-based information directly from the IRS.
Submit the FAFSA at fafsa.gov
THE FAFSA AND STATE AID:
Once you have completed the FAFSA, you will want to complete the application for PHEAA. PHEAA is the Pennsylvania Higher Education Assistance Agency, and filling out this application will allow you to be eligible for PA state aid. Immediately after submitting the FAFSA, choose to submit your State Application on the confirmation page.
NET PRICE VS STICKER PRICE
STICKER PRICE: What you see when you look up the cost of a school
Sticker Price = Tuition + Room & Board + Fees
NET PRICE: What you are expected to pay at a college or university
Net Price = Sticker Price - Gift Aid (money you don’t need to pay back)
Every college is required, by law, to provide a Net Price Calculator, giving interested students an accurate estimate of the amount they would be expected to pay at that school. Every college calculates cost and aid differently, so do the calculator for each individual college you are interested in.
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A sticker price vs net price example is below:
The chart pictured is from College Score Card, a great resource from the Department of Education that allows you to access Net Price Calculators and view average costs (net price) for each college across income levels.
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UNDERSTANDING YOUR LOANS
**RULE OF THUMB: Do not take out more loans over the course of your undergraduate studies than you expect to make in salary one year into your first job after college (this is usually about $40,000).
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FEDERAL LOANS: Generally lower interest rates than private loans, but there is a maximum amount that you can take out per year.
Direct Subsidized - While you are in college, the interest is paid for you by the government. However, once you graduate or are no longer enrolled full time, you will be responsible for paying interest and the principal amount of the loan.
Direct Unsubsidized - Interest will start to grow on your loan as soon as the funds have been disbursed. You can choose to make interest payments during college on this loan, or let the interest accrue.
Parent PLUS - This is a loan in the parent's name that can cover your total out of pocket cost for college. There is a credit check for this loan, however; if the parent is not eligible to receive a PLUS loan, then the student can receive more funds in their unsubsidized loan. Payments can be deferred until the student is no longer in school, although interest will accrue from the time the loan is disbursed.
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PRIVATE LOANS: Usually higher interest rates than federal loans, and students usually need a cosigner, but usually there is no maximum amount you can take out.
You and your family should compare different loan options, interest rates, and other terms from various lenders. Check with your family's bank or credit union that you have an existing history with to see if there are any reduced rate available through that lender.
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RESOURCES:
LendEDU allows you to compare private lending options and rates.
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ELMSelect shows you the most common private lenders at specific colleges and allows you to compare rates with a calculator tool.
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