Everything to know about Federal Financial Aid

Everything to know about Federal Financial Aid

Did you realize that every year, over 143 billion dollars is given out in financial aid? This giant amount means that there are funds available, and it is possible to get the amount you deserve. 

Many students sadly don't even apply as they assume they simply won't qualify. And believe it or not, there are adults out there who think they have missed the boat altogether and that financial aid is only an option for high school students! 

Regardless of your age, you can apply for financial aid if you are working toward your undergraduate degree or graduate degree. Knowledge is power. This write-up can help you navigate your options.

Assuming your family income is too great to qualify for financial aid is a common issue. The truth is, you will never totally know what you are eligible for unless you apply. You may find that you are not able to secure a grant; however, you qualify for an excellent campus job, low-interest student loans, or a specific college scholarship. 

Even accessing only one of these resources can help make paying for college a reality. It all starts with prioritizing the time to apply for financial aid. 

Initiating the Financial Aid Process

You will need to provide in-depth information regarding your personal financial situation through the FAFSA or Free Application for Federal Student Aid. You will need to have your previous year's taxes completed and showcase any funds you have in investments, savings, or offshore bank accounts. 

Private colleges may ask for additional information via the college's financial aid form, Financial Aid PROFILE form, or the College Board's CSS form. Similar to FAFSA, it will ask you questions about your current finances. Check out www.fafsa.ed.gov to download a copy of these forms in advance so that you are prepared for the FAFSA. Also, go to www.collegeboard.com to download the PROFILE forms. 

Note the January 1st Deadlines 

Being organized will help ensure your financial aid arrives on time. Hand in your PROFILE and FAFSA information ASAP as close to January 1st of the year you are planning to attend your post-secondary institution. If you are hoping to start in September of next year, hand in the FAFSA as soon as you can after January 1st. 

You are unable to hand in forms earlier because they rely on your previous year's assets and income. Turn your application in as early as you can since every school has its own deadlines to consider. Typically, most of these deadlines occur in mid-February. 

Most colleges deliver financial aid until they deplete their funding. This method generates a "first come, first serve," process. Therefore, the closer to the deadline that you apply, the better chances you will have of being awarded financial help.

The First Step

Fill out the FAFSA and submit it to the government to be processed. The government will calculate your finances and pass on their results in a Student Aid Report (SAR) to you and to each college you are applying to. The SAR states your Expected Family Contribution (EFC), detailing the amount that you are personally expected to contribute to your education. 

It is essential to understand that the government follows formulas based on the numbers you deliver on your FAFSA and then passes on their results to the colleges. You will be required to indicate on the FAFSA which colleges will receive these reports. 

Remember, you are filling out these financial aid forms up to 9 months in advance of starting school and relying on tax returns that are from the previous year. This is a vital point to keep in mind. 

Anything that occurs with your finances now will not impact the result of your financial aid. Your financial aid package for the upcoming school year is based on last year's tax information. Any financial information that occurs after the new year will not be seen by the colleges when it comes to your financial aid forms, until the next year if you will be reapplying. 

Financial Aid Officers

Once they have received a detailed outline of your financial picture, financial aid officers at each college will analyze the funds you have available. Next, they will calculate your degree of financial need based on the cost to attend college. 

After they figure out how much you need, they will put a financial aid package together. This will outline how much money is available to you and in what manner you will receive these funds. Financial aid officers utilize these results as a guideline when they create financial aid packages. 

There are many reasons a financial aid officer can increase or decrease how much financial aid you are eligible for. It is imperative that you are honest about your family's financial aid positions when you are filling out paperwork and working with your financial aid officer. 

Feel free to send a letter to the college financial aid office if you seek additional information. You can use this opportunity to explain any extenuating circumstances that may reflect some of your family's financial situation. Some colleges offer a space within their financial aid forms to allow you to describe any pertinent information. Consider the following three ideas when you are planning to write this letter. 

What Happens Once the Numbers Are Determined?

It can feel like your future's fate relies on a computer that calculates number crunching and delivers an answer when you are going through the application process. Don't panic! There is a real human person standing behind all the financial aid decisions. After your forms have been processed, they will be delivered to each college you are applying to. This is where the computer calculations end and real people get involved. 

Be Honest and Be Prepared

Lying about your financial situation or trying to trick the college is illegal and a bad idea. The financial aid officers have protocols in place to keep the institution safe from being taken advantage of. They know which red flags to look for. If you decide to remove all your savings to show on paper that you have no funds, yet you reside in a nice home and make a decent living, they will question how you can be so cash poor. 

You may be asked to provide additional information if there are any red flags. If you frivolously spend your savings to prove that you have none, once the school denies your application, you really won't have any money to fall back on. Be smart and be honest throughout the process. 

Did you know that financial aid officers are experts in their field? Simply by looking at your interest statements from your 1099, they can estimate the number of your assets. If you decline to report on certain assets or income, this trickery will only backfire. 

Financial aid officers have literally experienced every trick in the book. Avoid the headaches that lying always brings on multiple levels and opt for honesty and full disclosure instead. 

Delving Into Your Financial Nitty-Gritty 

Don't be ashamed to share. It is common for people to want to omit embarrassing situations when they are filling out their financial forms. These are personal documents, and it can be difficult to air one's dirty laundry. You are sending a list of your financial weaknesses and strengths to a complete stranger, and this can be unnerving. 

If you have issues including unemployment, difficult medical bills, an ongoing or recent divorce, supporting family dependents, or extra expenses that are not reflected in PROFILE or FAFSA, it is important to share them with the financial aid officer. 

Keeping any secrets could end up costing you financially. Remember, you are not alone in any of your issues. The financial aid offers have most likely read thousands of similar circumstances. Sharing your reality is an important piece of your financial aid puzzle. 

Don't forget, financial aid officers are real people who specialize in numbers. Sharing your situation can give the college more reasons to award you more funds. 

You must back up everything you say with proof. Simply stating that you don't have enough cash to obtain your financial dreams isn't worth it. If your tax forms do not accurately reflect your true expenses or income, you will need to provide additional documents. 

Your Financial Aid Expectations

There will be a variety of things to consider in regard to how your financial aid package will differ. It takes into account that the cost of every college is different, and each school has various amounts of financial aid resources available. 

Here is a detailed description of what your financial aid package may look like. The majority of packages combine these sources. 

Federal Pell Grants

These grants are offered to undergraduate students for undergraduate study who have the most financial need. They are generally awarded to those who have an EFC or Expected Family Contribution of $4617 or less. 

Currently, the maximum amount is $5350. Students who complete the FAFSA and apply for financial aid who are determined by their college to demonstrate financial need are considered for Federal Pell Grants. 

Federal Supplemental Educational Opportunity Grants

Federal Supplemental Educational Opportunity Grants are given to undergraduates who have the most financial need. The government offers limited funds for individual schools to deliver this program. There is no guarantee that every eligible student will obtain an FSEOG Grant. Grant amounts vary between $100 and $4000 per year. The actual amount is based on a case-by-case analysis and will be determined by the school. 

College Grants

Colleges may offer a variety of merit-based and need-based grants. When you apply for financial aid, you will automatically be considered for these grants. Note that there are numerous schools that have grant money reserved just for adult students.

Federal Perkins Loans

Federal Perkins Loans are awarded to graduate and undergraduate students who demonstrate extreme financial need. You are allowed to borrow up to $5500 per year for an undergraduate student and $8000 a year as a graduate student. Your institution provides the loan from its own funds and governmental funds. There are no extra fees, and the interest rate is fixed.

Federal Work-Study

Work-study offers jobs for graduate students and undergraduate students who demonstrate financial need. This is an opportunity for you to earn money while attending school.

Typically, students will work for a public agency or a non-profit organization on campus. There will be a predetermined limit on the hours one can work in these programs. 

Generally, wages are based on federal minimum wage; however, they are often higher. Your schedule is often set, allowing you to estimate how much you will earn.

Unsubsidized and Subsidized Federal Stafford Loans

The FFES Stafford Loans and the Direct Stafford Loans comprise the two kinds of Stafford Loans. The government is the lender for the Direct Stafford Loans. The lender for the FFEL Stafford Loans may be a participating credit union, bank, or additional lender. Contact your school to obtain specific information. 

As a freshman, you are eligible to borrow up to $5500 and as a sophomore, up to $6500. If you are a junior or a senior undergraduate student, you may borrow up to $7500. Graduate students can access funding via the PLUS Loans for Graduate and Professional Degree Students. 

Keep in mind, you have control to pick and choose from your financial aid offer. You are not required to reject or accept the entire package when you receive a financial aid offer. Of course, you will want to accept any grants that you are offered; however, you may not choose to accept the loan portion. It is essential to understand how the student aid arena works so that you can maximize your opportunities and make the best choices. 

State Work-Study Options

Certain states offer a work-study program in addition to the federal program. This is similar to how the federal program operates. 

State Grants 

There may be merit-based and need-based grants available through your state. Some grants are distributed to the colleges to administer, and others are delivered by the state.