Searching for a college, getting accepted, and making this dream a reality generally comes down to funding for many students.

Not many of us simply have a savings account set up to fund our college. We need a bit of help.

Let’s be honest, most of us wouldn’t go to college if we had the money to just pay for the entire degree. Costs of college are changing so often that it’s becoming more and more challenging to afford college if you’re not up on all the latest information especially about Financial Aid, and or FAFSA.

Financial Aid: This is the total funding that you are looking at to go to college; this would include the information on your FAFSA, and any scholarships you’ve received from the college itself.

FAFSA: This is a Free Application for Federal Student Aid. So by completing the application for Federal Financial Aid, your award letter will list federal grants as well as the loans you qualify for.

FACT: On average about 90% of students use FAFSA in some form or another.

Common Myths:

 

                 1.   FAFSA is Required

This had to be one of the number one questions I received as I worked with my students.

Truth: No-FAFSA is not a requirement; some schools have you complete this as a part of the admissions process to see what you qualify for, but if you decide not to use the funds available to you, this is up to you.

For example, say you qualify for grants and loans and you decide which of these you want to accept. You are not obligated to take the loans, or the grants for that matter. But all that to say that you can choose after your award letter, however, if you never complete the application process you’ll never know what you might qualify for.

 

                   2.   FAFSA is all loans/ FAFSA is a scholarship

Part A Truth: No- this application has a goal of qualifying you for both loans and grants, unless you are applying for a graduate degree, the grants are reserved for undergraduate students.

Loans are an investment in your future that has to be paid back after you’ve left college.

Grants are money that doesn’t have to be paid back, it’s used to offset the cost of college, and typically if you are attending a four year college or university, this will not be sufficient to pay for your education.

Side Note: In my experience you work with the lender to come up with a payment plan that fits your budget. They take into consideration your current level of income, your current bills and they work to create something that’s comfortable for you to pay the loans off.

After I left colleges a few years later I found myself laid off, so I gave my lender a call and let them know my circumstances to my pleasant surprise they were more than happy to work with me until I was back on my feet. I was surprised when they offered to give me more time than I even thought I needed.

Part B Truth: No-FAFSA is a combination of loans and grants, scholarships are generally provided by means outside of FAFSA, like the college, your work, or a private organization. An excellent website to complete scholarships for college is http://www.fastweb.com. This site looks through hundreds of other sites for you after you fill the application out. It is not a short application, no actually this takes time to complete, but they want to be as thorough as possible about looking for scholarships for you.

Scholarships are an excellent way to cover the cost of college, but they take work, you have to stay on top of the requirements of the various scholarships so that you get the funding you need.

                

                   3.   The FAFSA is like a credit card

No- the FAFSA application is simply that an application to see what you are eligible for. The loans have interest rates that are set federally so that the Banks lending the money cannot just determine the rates as they might for a credit card. They are not allowed to go above a certain percentage, in my experience this is generally under 10%.

So when your Financial Aid Advisor asks you to complete the FAFSA application as a part of the admissions process now you have a clearer picture what they are asking for.

 

                 4.   You won’t qualify for Financial Aid

 Truth: Qualifying for Financial Aid is based on a number of variables, but don’t assume right away that you don’t qualify; the questions on the application are there to see what you qualify for. Just because someone you know whom you feel is in a similar situation didn’t qualify for grants this doesn’t mean that you won’t qualify for Financial Aid.

                 5.   You have to pay for the Financial Aid application

If someone tells you this, or you see it on a web site application run far away, this is NOT legitimate. Remember FAFSA stands for FREE Application for Federal student aid. Here is the official website for FAFSA: http://www.fafsa.ed.gov

Do not pay for this!

               

                6.   You need to do this ever semester

Truth: No you only need to do this every tax year, unless there were drastic changes in your financial status during the tax year. FAFSA application process works with the Federal Tax year, so it begins with the summer tax quarter as the start to the New Year. So July 1^st is the beginning of the new award year, and it runs until June 30^th of the following year.

Last but certainly not least, in fact it’s probably the biggest mis-conception.

              

                7.   FAFSA application includes your Credit Score

Truth: No- this is one of the very few financial applications, and the only one I’ve had experience with, that doesn’t have an interest in your FICO score. The only time your credit score come into play is if you apply for an outside, or private loan to fill in the gap, if there is one. This is probably the most common myth I’ve heard; so a resounding no to this myth. Once you qualify for FAFSA, grants and loans the only time you’ll need to be concerned with your credit score is if you need a private loan to complete your Financial Aid package, this is not apart of the FAFSA application process itself. And even if you do find that you’ll need a private loan to complete your package, talk to your Financial Aid Advisor, there are typically other options, say for example, if you would consider taking a lighter load your FAFSA award may cover your costs.

Find out all of your options, is there a gap grant that the school offers? Are there other ways you could adjust your schooling to meet your budget. Your Advisor would be the best person to talk to for additional options.

 

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p.s. I’m not a financial advisor; this is just from my experience, both as a student and as a professional in the industry.

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