Don't Break the Bank: A Student's Guide to Managing Money (22 page)

A Grant is a type of financial aid that generally is given to a student who demonstrates financial need. Grants do not need to be paid back.

Pell Grant

The Pell Grant is the main federal grant program available to students with financial need. If you are eligible, several factors determine the amount of the grant you will actually get, including your EFC and whether you are in school full-time or part-time.

FSEOG

The FSEOG (Federal Supplemental Educational Opportunity Grant) is an extra grant that is reserved for the very neediest students, as determined by the school.

Scholarships

Scholarships can be awarded based either on financial need or merit (meaning, your academic or athletic qualifications). They don’t need to be paid back—however, there may be some conditions you need to follow in order to keep your scholarship (for example, you may be required to keep your GPA at or above a certain level).

Use the following tips to help make your scholarship hunt successful.

• Start early. Your freshman year is not too early to plan for scholarships by choosing extracurricular activities that will highlight your strengths and getting involved in your church and community—all things that are important to those who make scholarship decisions.

• Search for scholarships. The best source of scholarships can be found on the Internet. Many great, free Web sites are available, and you should also check www.finaid.org and http://studentaid.ed.gov. Scholarship information is also available at your local library.

• Apply, apply, apply. One student applied for nearly sixty scholarships and was fortunate enough to win seven. “Imagine if I’d applied for five and only gotten one,” she says.

• Plan ahead. It takes time to get transcripts and letters of recommendation. Letters from people who know you well are more effective than letters from prestigious names who you know.

• Be organized. In the homes of scholarship winners, you can often find a file box where all relevant information is stored. This method allows you to review deadlines and requirements every so often. Computerizing the information, if possible, allows you to change and update information quickly.

• Follow directions. Make sure that you don’t disqualify yourself by filling out forms incorrectly, missing a deadline, or failing to supply important information. Type your applications, if possible, and have someone proofread them.

Finding and Getting Athletic Scholarships

Are you an athlete? The following four steps can help you attain an athletic scholarship:

1. Contact the school formally.
Once you make a list of schools in which you are interested, get the names of the head coaches and write letters to the top twenty schools on your list. Then compile a factual resume of your athletic and academic accomplishments. Put together 10 to 15 minutes of video highlights of your athletic performance (with your jersey number noted), get letters of recommendation from your high school coach and your off-season coach, and include a season schedule.

2. Ace the interview.
When you meet a recruiter or coach, be certain to exhibit self-confidence with a firm handshake and by maintaining eye contact. In addition, make sure that you are well groomed. According to recruiters, the most effective attitude is quiet confidence, respect, sincerity, and enthusiasm.

3. Ask good questions.
Don’t be afraid to probe the recruiter by getting answers to the following questions: Do I qualify athletically and academically? If I am recruited, what would the parameters of the scholarship be? For what position am I being considered? It’s okay to ask the recruiter to declare what level of interest he or she has in you.

4. Follow up.
Persistence pays off when it comes to seeking an athletic scholarship, and timing can be everything. The following are four good times when a follow-up letter from your coach or a personal letter from you is extremely effective: prior to your senior season, during or just after the senior season, just prior to or after announced conference-affiliated signing dates or national association signing dates, and mid to late summer, in case other scholarship offers have been withdrawn or declined.

Myths about Scholarships and Financial Aid

The scholarship and financial aid game is highly misunderstood by many high school students. In addition, high school guidance counselors often lack the time to fully investigate scholarship opportunities and inform students about them. The myths and misconceptions persist while the truth about scholarships remains hidden, the glittering prizes and benefits unknown to many teenagers.

Myth 1: Scholarships are rare, elusive awards won only by valedictorians, geniuses, and brainiacs.

The truth is that with proper advice and strategies, private scholarships are very much within the grasp of high school students who possess talent and ability in almost any given field. Thousands of high school students like you compete and win.

Myth 2: My chances of being admitted to a college are reduced if I apply for financial aid.

The truth is that most colleges have a policy of “need-blind” admission, which means that a student’s financial need is not taken into account in the admission decision. A few colleges, however, do consider ability to pay before deciding whether to admit a student. A few more look at ability to pay of those whom they placed on a waiting list to get in or those students who applied late. Some colleges will mention this in their literature, but others may not. In making decisions about the college application and financing process, however, families should apply for financial aid if the student needs the aid to attend college.

Myth 3: All merit scholarships are based on a student’s academic record.

The truth is that many of the best opportunities are in areas such as writing, public speaking, leadership, science, community service, music and the arts, foreign languages, and vocational-technical skills. So that means you don’t always have to have a 3.99 GPA to win if you excel in a certain area.

Myth 4: You have to be a member of a minority group to get a scholarship.

The truth is that some scholarships are targeted toward women and minority students. Other scholarships require membership in a specific national club or student organization (such as 4-H or the National Honor Society), which makes these scholarships just as exclusive. Most scholarship opportunities, however, are not exclusive to any one segment of the population.

Myth 5: If you have need for and receive financial aid, it’s useless to win a scholarship from some outside organization because the college will just take away the aid that the organization offered.

It’s true that if you receive need-based aid, you can’t receive more than the total cost of attendance (including room and board, books, and other expenses, not just tuition). If the financial aid that you’ve been awarded meets the total cost and you win an outside scholarship, colleges have to reduce something. But usually they reduce the loan or work-study portion of your financial aid award before touching the grant portion that they’ve awarded you. This means that you won’t have to borrow or earn as much at a job. Also, most colleges don’t meet your full financial need when you qualify for need-based financial aid. So, if you do win an outside scholarship, chances are that your other aid will not be taken away or reduced.

Loans

For most students, the majority of their financial aid comes in the form of student loans. These loans are backed by the federal government, have decent interest rates, and don’t require a credit check. However, they can add up quickly, and you will usually have to start paying them back soon after you finish school.

Since July 1, 2010, all federal education loans are now made through the Direct Loan program. The loans are made through the college’s financial aid office, with funds provided by the U.S. Department of Education. This includes the Federal Parent PLUS loan in addition to student loans.

Direct Stafford Loan

Stafford loans come in two types: subsidized and unsubsidized. The type you qualify for will depend on your level of financial need. With unsubsidized loans, the interest accrues while you are in school, which can add quite a bit to the balance you owe. The repayment term is ten years, although that can be extended if the student uses the income-based repayment option.

Federal Perkins Loan

The Federal Perkins Loan is given by the colleges to students who have the most financial need. This loan is subsidized, meaning interest does not accrue while you’re in school.

A Warning about Borrowing Too Much for School

Education debt can have a big impact on your lifestyle after graduation. Students who graduate with no debt are almost twice as likely to go on to graduate and professional school as students who graduate with some debt. Students who graduate with excessive debt or who default on their loans are more likely to be depressed. They often delay getting married, having children, buying a car, and buying a home. Borrowing excessively can be like having a mortgage without owning a home. The debt may make it more difficult to save for retirement or your own children’s college educations.

– Courtesy of
www.fastweb.com

PLUS Loans

PLUS loans are available to parents or graduate students. Unlike other government student loans, PLUS loans do take the applicant’s credit rating into account. (However, if your parent is denied a PLUS loan due to bad credit, you are then allowed to borrow an additional amount in student loans. The PLUS loan has an interest rate of 7.9%, along with 4% fees.

Private Student Loans

Private loans (sometimes called alternative loans) are given by banks and other financial institutions. They often require a credit check. The terms of these loans can vary from lender to lender.

According to FinAid.org, two thirds (65.6%) of four-year undergraduate students graduated with a bachelor’s degree and some debt in 2007–08, and the average student loan debt among graduating seniors was $23,186 (excluding PLUS Loans but including Stafford, Perkins, state, college, and private loans). Among graduating four-year undergraduate students who applied for federal student aid, 86.3% borrowed to pay for their education, and the average cumulative debt was $24,651.

Applying for Financial Aid

You want to make sure you look into the financial aid process way ahead of time because there are deadlines you must meet, and if you are too late, you’ll be out of luck.

Here are the main things you need to do (although your situation may vary, so be sure to check with your school’s financial aid office, just to make sure you don’t overlook anything).

• Complete the FAFSA. This is the Free Application for Federal Student Aid and is required for any federal aid. You can complete the FAFSA online at www.fafsa.ed.gov. You can submit the FAFSA on or after January 1, so many people do it right after New Year’s so as not to forget.

• Complete your state financial aid application (if needed). Some states don’t have their own financial aid form—they just go by the information you submitted on the FAFSA. Check with your state’s department of education to find out for sure.

• Some schools (mainly private schools) also require another form called the CSS/Financial Aid PROFILE. This is a pretty detailed form and can take a while to complete, so be sure to ask as soon as possible if your school uses it, so you leave enough time to finish it.

Online Financial Aid Resources

      
Need a little extra help?
Staff members at your school’s financial aid office are always available to help you find ways to manage your money. Don’t hesitate to ask for their help; simply make an appointment to get yourself on a clear path to financial success.

You can get a ton of information about financial aid—and can even complete and submit most financial aid applications—online. If you have specific colleges in mind, be sure to check out the financial aid section on their Web site. You especially want to pay attention to any of these deadlines since these may be different than the deadlines for state or federal financial aid—and you want to make sure you aren’t late.

Here are some sites you should check out:

FAFSA Online

The Free Application for Federal Student Aid (FAFSA) is the form you must complete in order to receive any federal financial aid, including student loans. Even if you don’t think you will qualify for aid (say, because your parents make too much money) you should still complete the FAFSA. It’s free, and you might be surprised to find that you do qualify for aid. And besides, many schools require you to complete the FAFSA if you want to apply for any scholarships from the school. You can complete the FAFSA online at www.fafsa.ed.gov