Student Loans: Everything You Need to Know About Federal Financial Aid

Lindsey, one of our Budget Counselors, was a Financial Aid Advisor for one of our local Pittsburgh colleges before coming to work at FSWP. She has put together a list of facts and tips about Financial Aid and what you need to know.

Fact: You can fill out the FAFSA at any point in time.

Contrary to popular belief, you can complete the FAFSA at any point during your academic career – there is no ‘deadline’ for completion. What happens if you fill out a FAFSA into a Fall or Spring semester, your ‘award year’ for financial aid is going to run slightly opposite your academic year. For example, you filled out the 2012/2013 FAFSA during the winter of 2012. You will still be in your 2012/2013 academic year credit wise when you have to fill out your 2013/2014 FAFSA. This is not going to hurt your academic progression and your financial aid officer should alert you to when you need to make the switch.

The FAFSA is also 100% free. If you are filling it out online and are asked to pay something than you are not on the correct site! (See some helpful links below!) You are also going to need your previous year’s tax return to fill out the FAFSA. There is now a helpful link between FAFSA and the IRS you can activate that will bring up your tax information if you don’t have it handy. 

Tip: Fill it out as soon as possible!

While you can fill out and/or receive any federal financial aid or Pell grant if you qualify, there are many other government or state grants that you may be able to receive providing you apply early. Many grants are on a first come first serve basis and applying early can give you a better chance at receiving them!

Fact: You have an ‘aggregate limit’ for federal financial aid

Sadly, when I previously worked in a financial aid department, I saw many students who had no idea what an aggregate limit was. An aggregate limit is a limit set forth from the government to how much federal financial aid they will loan you in your lifetime. Loans through your FAFSA are called Stafford loans and there are two types. Subsidized loans do not collect interest while you are enrolled in school and unsubsidized loans do collect interest while you are in school. Aggregate limits are based upon your grade level, dependency status and whether it is a subsidized or unsubsidized loan. These can change on yearly bases, so you will want to always check what they are when you are filling out your FAFSA. Right now the total (subsidized and unsubsidized) undergraduate limit is: $57,500.

Tip: Don’t borrow the maximum amount and try to make some sort of payment

When you apply for federal financial aid, some students may be eligible to receive more than what it actually costs to attend classes. When this happens a student can receive a ‘stipend’. This is an actual check from your unsubsidized portion of your loan (so it collects interest while in school) for you to use for ‘educational’ purchase. This amount can go up every year, making it so you get more and more back in a stipend. While $57,500 seems like a lot of money, between the rising cost of tuition and the large stipend that are able to be received you can reach that very quickly! When you hit your aggregate limit you are unable to receive any more federal financial aid and must resort to more expensive and sometimes harder to receive, private loans. To avoid this, only take out what you need to attend classes and try to make some sort of payment on your loans while you are in school to avoid costly interest charges. If you are unsure where you stand with your aggregate limit you can go to the website link below and check! 

Fact: If you are dependent student and your parent qualifies for the parent plus loan, your options may be limited. 

When you are a dependent student you need your parent’s information to fill out portions of the FAFSA. If you parent is found to be eligible for a Parent Plus loan then you cannot receive independent level funds. If you parent is unwilling to take out any sort of loan for you to attend school, you are likely to not have enough funding in dependent level loans. 

Tip: Discuss options prior to filling out financial aid with your parents and look into private loans

Some parents may not be familiar with how federal financial aid or a Parent Plus loan works. If you are a dependent student (a student who is under the age of 24, has no children and/or does not support themselves) have a conversation with your parents prior to filling out the FAFSA to see what they are willing to contribute, if anything. It is a good idea to see if you parent qualifies for the Parent Plus loan.If they do not, you will be granted independent level loans. If you fill there is a reason you should be considered an independent (you live on your own, have a child, etc.), then you can petition for a professional judgment through your school to see if you can get the additional level loans!

Fact: Student loans are not included in bankruptcy 

Sadly, many Americans are finding themselves in financial crises. Between mortgages, student loans and various other expensive it can b e hard to stay afloat. Bankruptcy is becoming more common. While the right choice for some people, for others, much of their debt may in fact be from student loans. With a shaky job market, it can be hard to find a good paying job, or even a job in your field and you can feel overwhelmed. If student loans are making up a huge portion of your debt, consider this before filling for bankruptcy. That student loan will still be there when all is said and done. 

Tip: Wait to continue your education 

Many people feel that if they continue their education, it will help them with their current student loans in the long run. You can put your undergrad loans on deferment (you will not have to make any payments while you are in school) and hope with a higher degree you can get a better job with a bigger salary. While this does work for some, others find that they not only cannot find a higher paying job. Instead, they've added on another couple grand to their already large student loan. If you are considering continuing your education, make sure you are financially ready and it is a step that will indeed help your career. 

Fact:  A four-year institution may not be the best thing for you

It’s no secret. A traditional college or university is much more expensive than a community college or trade school – even higher if it is a ‘private’ institution. It also is no secret that at 18 years old, many do not really know what they would like to do in regards to a career path and each major change can send you farther from graduation and further into debt. 

Tip: Take your time to figure out what you want to do

Just because everyone is ‘going to college’ after high school doesn’t mean you should follow the crowd. Do you really and truly know what you want to do ‘when you grow up’? If the answer is no, then try taking some of your general education courses at a community college while figuring it out. It will be cheaper and they should transfer to a four year school. Many community colleges have arrangements made with other institutions for people to transfer in after two years. If you feel that college isn’t for you, look into a trade school. There is no shortage of skill and trade specific jobs with good pay; you just need to spend those nine or twelve months in school to get them! Bottom line, there is no rush when figuring out how you are going to spend your educational money. 

Fact: You can’t go to school for free 

When I previously worked in a financial aid department at a university one of the number one things I heard was, “I don’t want to take out loans. I want to get grants and scholarships to pay for school”. The sad truth is that it is pretty much impossible to go to school for free. Yes, some Division 1 athletes, science genius or other rare individuals can come across a ‘full ride’ for school, but since most of us are not in that category, loans are a reality of school. Education is an investment in yourself and your future, if you are okay with investing in you, than a few loans will be okay. 

Tip: Research and apply to as many grants and scholarships as you can

There are hundreds upon thousands of different scholarships and grants out there. There is even a scholarship just for having red hair! The key is doing some research and applying for as many as you can. It can be tedious and time consuming, but if it’s a couple hundred dollars you get that saves you from taking that out in loans, why wouldn’t you want too? If you are working, look into whether or not your employer offers any sort of educational assistance.  You can also do some of the previously mentioned items like filling out your FAFSA early to see if you can receive any additional state or government grants!  

Helpful Websites!

www.fafsa.ed.gov [Fill out your FAFSA here!]

www.pin.ed.gov  [Create your personal identification number for your financial aid here. You can look up your pin if you forgot it here or change it.]

www.studentloans.gov [Fill out your Master Promissory Note and complete Entrance Counseling here. You can also find out lots of information and documents for the Parent Plus Loan]

www.nslds.ed.gov [Look up your current and past student loans, repayment status, how close you are to the aggregate limit and any other additional loan information. Any student loans you have will be here!]

www.finaid.org [A good scholarship resource!]

www.fastweb.com [A good scholarship resource!]