Paying For College (Review)

What do you receive after you submit the FAFSA?

-Student Aid Report (SAR) -a summary of the information you have entered

SAR verification

If your SAR has been selected for verification, it means that you may have to show additional financial documentation (tax returns, W-2, etc.) to your college in order to qualify for federal aid.

financial need

The difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC).

What is the federal filing period for the FAFSA?

Academic Year FAFSA forms must be submitted by 11:59 p.m. CT on June 30. Any corrections or updates must be submitted by 11:59 p.m. CT on Sept. 11.

How are the FAFSA, SAR, and financial aid package connected?

After you submit the FAFSA, you receive the SAR. Schools use your SAR to create a financial aid package for you.

Who uses the FAFSA once you have submitted it?

The government will use FAFSA information to evaluate your financial need and determine how much federal aid you are eligible to receive. Many states and college also use this information to provide their own financial aid.

Why is a school's retention rate important?

The retention rate measures how many students will return for their second year of school, and indicate if a school is living up to the expectations they set when recruiting students.

When you make a loan payment, what does your money go towards first: the loan principal or accrued interest?

Usually, when a borrower makes a payment on their loan, they will first pay any interest that has accrued. Then, the remaining amount will be used to pay down the principal balance of the loan.

When calculating net price, why aren't loans deducted from the sticker price (even though they are typically offered to you in a financial aid package)?

Various type of loans are not included in the calculated net price because they have to be paid back eventually.

refinancing vs consolidation

-Consolidation simplifies your monthly payment by combining multiple federal loans into one. Your new interest rate will be the average of the rates of your prior loans. -Refinancing replaces your seperate loans with a new loan and interest rate.

aspects of basic repayment plans

-Default (Standard) = fixed amount of at least $50/month; you'll pay off your loan faster, but your monthly payment might be high -Graduated = monthly payments are initially low and increase every two years; you'll pay less to start, but your loan payments will increase...even if your income doesn't -Extended = fixed or graduated monthly payments that are lower and made over a longer period of time; you'll pay less per month, but you will also pay more in interest and it will take longer to pay off your loan

Describe the relationship between student loan balances and the likelihood of defaulting on a student loan.

As student loan balances upon leaving school INCREASE, the likelihood of defaulting on the student loan DECREASES.

How often do you need to fill out the FAFSA?

Every year you will be in school, no matter what.

How long is a typical grace period?

Most federal student loans come with at least a six-month grace period, a time during which you don't have to make monthly payments.

You have to file the FAFSA each year over the course of your college career. In what month is the FAFSA available and when is the best time to submit it?

The Free Application For Federal Student Aid is available for the next school year every October. It is best to fill out and your application as early as possible because some aid is given on a first come-first served basis.

What is the difference between loan consolidation and loan refinancing?

When you consolidate student loans , you group multiple loans into one. When you refinance, you get a new loan to pay off your other student loans.

In what order should you accept forms of financial aid?

Free money, earned money, borrowed money

federal vs private student loans

-Federal student loans are made by the government, with terms and conditions that are set by law, and include many benefits (such as fixed interest rates and income-driven repayment plans) not typically offered with private loans. -In contrast, private loans are made by private organizations such banks, credit unions, and state-based or state-affiliated organizations, and have terms and conditions that are set by the lender. Private student loans are generally more expensive than federal student loans.

Contrast private and federal student loans.

-Many private student loans require payments while you are still in school. Federal student loan payments aren't due until after you graduate, leave school, or change your enrollment status to less than half-time. -Private student loans can have variable or fixed interest rates. With federal student loans, the interest rate is fixed and is often lower than private loans -Private student loans are often not subsidized, but if they are, you will be responsible for all the interest on your loan. But, if you have financial need, you may qualify for a subsidized loan for which the government pays the interest while you're in school on at least a half-time basis and during certain other periods. -Private student loans cannot be consolidated into a Direct Consolidation Loan, but may be refinanced. Federal student loans can be consolidated into a Direct Consolidation Loan.

personal/social benefits of attending college

-college graduates are overall happier and have greater stability in all aspects of their lives -access to better career opportunities -provides the benefit of networking and allows you to build connections with important people -students learn/develop time management, organization, and other important skills that they will use throughout their lives

What information is listed in a financial aid offer?

-cost of attendance -sticker/net price -scholarships/grants awarded -work-study programs being offered to you -state/institutional aid -federal loans available -specialized payment plans

grants vs loans vs scholarships

-grants = financial assistance opportunities that do not need to be repaid (often referred to as "free money") -loans = financial assistance that must be paid back (almost always with interest) -scholarships = financial assistance that does not need to be repaid and can be awarded for an infinite number of reasons besides financial need

financial benefits of attending college

-most graduates receive offers for better paying, more highly-skilled jobs -job security -employment soon after graduation (highly qualified = highly demanded) -access to health care, retirement investment, travel and other perks for you and your family -an investment in your future

information you will need to fill out the FAFSA

-social security number -driver's license number -federal student aid PIN -bank statements -record of investments (if applicable) -records of untaxed income -federal tax information

Expected Family Contribution (EFC)

-the amount the federal government believes that your family is able to contribute toward your college costs, based on the financial information provided on your FAFSA (not necessarily how much you have to/will end up paying) -used to calculate the maximum amount of need-based aid you're eligible for -found in the upper right corner of your Student Aid Report

major expenses in college

-tuition -room and board -books and supplies -personal expenses -transportation

Why might a student consider attending a school with a high sticker price?

A college with a high sticker price might have more money to offer you, meaning you might have to borrow and pay back less money.

Why does the amount that goes toward your interest decrease and the amount that goes toward your principal increase over time?

As the loan matures, the principal portion of the payment will increase and the interest portion will decrease. This is because the interest charged is based on the current outstanding balance of the loan, which decreases as more principal is repaid.

Why is it a good idea to make interest payments for student loans that accrue interest during a grace period?

For some types of federal loans, interest accrues and is added to your balance at the end of the grace period. So it may be smart to make payments on those loans during the grace period, if you can, to help keep the balance from growing.

Do you have to accept ALL of the aid available to you in a financial aid offer?

No. If you want, you can choose to accept some of the aid listed in the financial aid offer and decline other aid.

Can your parent/guardian can use your FSA ID to submit any information to your FAFSA application?

No. They need to use their own FSA ID.

Does the financial aid money you accept from your offer go directly to you?

Not at first. Grants and loans are applied to your tuition and other charges on your student account first, then any leftover money is paid to you.

How do grants differ from scholarships?

Scholarships are often merit-based and can require an extensive application process; grants are often need-based and may not require anything more than filling out the FAFSA (if that!)

a college's sticker price vs its net price

The total cost of a college's annual cost of attendence is known as its sticker price. The net price is the sticker price with a student's financial need, scholarships, grants, and other forms of aid subtracted. The net price is often how much students actually end up paying.

What are the two most important figures to focus on when comparing repayment plans?

The two most important numbers to focus on are your monthly payments and the total amount paid. You need a monthly payment you can afford, but you also want to pay as little as possible in the long run.

College FAFSA deadlines vary depending on the school, but almost all of them are priority deadlines. What does this mean?

You need to get your FAFSA form in by that date to be considered for the most money.

Data Release Number (DNR)

You'll need to reference this number if you want to make your SAR available to schools you did not include originally on your FAFSA.

How much money can you borrow from the government for your student loans?

Your school determines the loan type(s), if any, and the actual loan amount you are eligible to receive each academic year. However, there are limits on the amount in subsidized and unsubsidized loans that you may be eligible to receive each academic year (annual loan limits) and the total amounts that you may borrow for undergraduate and graduate study (aggregate loan limits).

promissory note

a written and signed promise to pay a sum of money at a specified time

financial aid offer

an award letter from a college that describes and explains the combination of federal grants, loans, and work-study opportunities it is offering to you. It may also include aid from the state or institution.

college net price equation

cost of attendance - financial aid being offered = remaining amount to fund

financial aid

methods of paying for education/training, such as grants, scholarships, etc.

loan servicer

the organization that collects payments on a federal student loan, responds to customer service inquiries, and performs other administrative tasks associated with maintaining a loan on behalf of a loan holder.