01.
Understanding College Costs
02.
Mistakes made when saving money for college
03.
Federal Financial Aid
04.
Guidelines for Federal Financial Aid
05.
Tips for avoiding scholarship scams
Financial aid are funds that are supplied to help families and students achieve their educational goals. There are four main types of financial aid available to us. The first form is scholarships. Scholarships are awarded for talent and excellent academic history. A scholarship fund can be offered through state, county, federal or private programs. They usually do not need to be repaid back as long as you complete the specified requirements. The next form of financial aid is grants. Grants also do not need to be repaid. Grants are given depending on your financial state. Grants generally come from state and federal programs. The third form is a loan. A loan, which you probably guessed, does need to be repaid. Loans can come from state, federal and private programs. Finally, the last form of financial aid comes from work study or college funded employment or federal funded programs. These are given on a limited basis and some require repayment while others do not.
Financial aid is divided into two categories. They are non-need, which is also referred to as merit based and need based aid. Non-need based aid is generally scholarships. To receive a merit based aid you must demonstrate a specific talent like academic excellence, exceptional leadership skills, outstanding sports talent, or a special talent in music or instruments, or some other talent. Aside from a special talent you may also receive a scholarship from a certain company that has its guidelines.
The second category is need based aid. In order to qualify for this you must prove that you are in financial need. You will be required to complete the FAFSA. FAFSA stands for Free Application for Federal Student Aid. The information that you provide is then analyzed to determine your expected family contribution. Once your EFC is figured out it is then subtracted from the cost of your school. This figure also includes your food, housing, books, personal finances and tuition. The amount of money you will receive will depend on your financial state. Some students will receive all or part of their schooling expenses. One of your best resources is a high school or college counselor.
Understanding College Costs
There are more expenses to college than meets the eye. You should be sure to look into all expenses before applying for financial aid or picking a school. Below is a list of direct and indirect costs of completing your education.
Direct Costs
1. Tuition: This is the price that you will pay for your classes and attending the school of your choice. Keep in mind that out of state fees is often twice as much as in state fees. Out of state fees occur when you choose a school that is not in your primary residence. Other times schools will charge out of state fees if you are not a full time student. Look into the specific school and be sure to find out the tuition costs for the time period you will attend.
2. Fees: Most schools charge fees for things available on campus. You will usually pay these fees regardless
if you take advantage of them or not.
3. Room and board: The majority of schools offer facilities you can live in on campus. They usually have meal plans available also.
Indirect Costs
1. Books and Supplies: Books are required for most classes and they are usually not covered in your tuition payments. There are ways to cut these costs by buying used books, buying books online or sharing with someone who had the class previously.
2. Computer: It seems more and more schools are requiring students to have their own computers for class. Check with the admissions office and do not forget to add in the cost of software, printer and have course Internet connection.
3. Off campus room and board: You will most likely want lights, water and food. You must calculate rent but not utilities, food and furniture. If you intend on living at home plan to calculate transportation costs.
3. Off campus room and board: You will most likely want lights, water and food. You must calculate rent but not utilities, food and furniture. If you intend on living at home plan to calculate transportation costs.
4. Personal expenses: This category is one of the biggest problems especially when you send your teenager off to college with a credit card. My sister for instance is away at college and my dad got a $400 bill from Macy's! Needless to say he was not happy, however learned really quickly to put her on a budget. There are necessities like haircuts, laundry, clothing, and other things that need to be accounted for.
5. Other costs: Aside from all of these costs there are other things that will come into play. Always add a little extra money to your budget. Some of these expenses may include lab fees, fraternity or sorority costs and other programs offered throughout the school.
Mistakes made when saving money for college
1. Not saving money at all. This is the top mistake made when children are little in regards to saving money. Parents assume they do not have enough money to save for college therefore do not save anything. Reality is every dollar helps. Look into programs that help you save money for college. Many states offer prepaid programs that start when children are very young so that by the time the child is ready to go to school the money or at least the majority of it is there.
2. Not taking advantage of tax advantaged savings accounts and other government sponsored offers. College plans allow families to receive tax benefits while saving for college. By enrolling in one of these offers allow you to save thousands of dollars with no extra cost.
3. Assuming that the student will want what you want. Too many times families assume that the future student will attend a local college and do not plan for out of state and often expensive colleges. Think about all the possibilities and plan for the unexpected. They always say expect nothing but be prepared for everything.
4. Not realizing the unexpected costs. As we talked about previously there are direct and indirect costs that must be accounted for in college. Tuition often times is raised over years and living expenses need to be added into a budget for college.
5. Not taking advantages of financial resources to help pay for college. There are loans, grants and other options to help you pay for college. The sooner you look into everything available to you the more prepared you will be.
6. Not checking with your state and local government to see what they offer. Many times within your community there are resources that can give helpful advice for saving money.
Federal Financial Aid
Pell Grant and Supplemental Educational Opportunity Grant:
These grants are available to undergraduate students only. They are based on the family's need and do not require repayment.
Academic Competitiveness Grant:
This grant is available to students who are full time with up to 47 hours. Students have to have completed a high school program that the state requires. This grant ranges from $750 to $1300 depending on the criteria completed.
Smart Grant:
This grant is given to students who have completed 48 to 95 hours of a four year academic program. This grant is only awarded to students who are pursuing a major in mathematics, science, technology, engineering, or a critical foreign language. The GPA must be at least a 3.0. This grant is worth up to $4,000.
Federal Work Study Program:
This program is available to undergraduate and graduate students. The work study on your financial aid is not a guarantee of a job it only indicates eligibility. You are responsible for contacting potential jobs.
Perkins Loan:
This loan is a need based aid. It is a 5% fixed interest loan and must be paid back. Repayment begins nine months after the student moves to part time.
Stafford Loan:
There are two types of Stafford loans, which are subsidized and unsubsidized loans.
A subsidized loan is based on need. The government pays the interest on the loan while you are enrolled half time. On the other hand an unsubsidized loan in not based on need but on the cost of attendance. With this loan it is not based the government does not pay the interest. You can choose to pay the interest quarterly or defer it by adding it to the loan principal while you are enrolled in school.
Parent loan for undergraduate students:
This is a loan available to parents of a dependent student. Regardless of the family's income a parent may borrow to cover the cost of the child's education. The parent has up to 10 years to repay but payments must be made every month starting 60 days after loan is given.
Guidelines for Federal Financial Aid
Must be a US citizen or an eligible non citizen
Males must be registered with the Selective Service
Attend a participating college
Must be working toward a certificate or degree
Making good academic progress
Must not be in default of an educational federal loan or owe refund on a federal grant.
Must need financial help
Tips for avoiding scholarship scams
Potential students lose $100 million dollars each year due to scholarship fraud. Below
are some things to look out for when you are looking into scholarship frauds? Always
remember if it sounds to good to be true it usually is.
- Beware of scholarships that claim to be guaranteed or promise you a refund.
- Any offer that wants your bank/credit card information just to hold the scholarship.
- Any one who claims that you have won a scholarship, yet you never entered to win one.
- A site claiming that the information is exclusive.
- Asking for a one time payment and claiming you will never pay again.
- Application fees are not needed for most scholarships so be careful when asked for one, especially upfront.
- Avoid scholarships that say everyone is eligible. Scholarships are awarded for a specific talent.
- Be wary of sites that say they will apply for the scholarship for you. Only you can enter that information.
- Make sure you are given contact information to get in touch with the organization offering the scholarship.
- Check with the Better Business Bureau to be sure they are not scams.
- Disregard offers over the phone, most should come through the mail.
Got a question? Then contact our Education Team on 561-883-2398 Ex.310
United conducts regular seminars on financial education, including "How to Budget", come along and join us - to reserve your seat contact our Education Team on 561-883-2398 Ex.310
Newsletter 02
Rev.1
February, 2007
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February, 2007 Topic
Loans & Grants
available for education
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