There’s so much information available about financial aid for college that it can be hard to tell the facts from fiction. We’ve got you covered! Here are some common myths about financial aid and the Free Application for Federal Student Aid (FAFSA®)—and we’ll give you the real scoop.
MYTH 1: My parents make too much money, so I won’t qualify for any aid.
FACT: The reality is there’s no income cut-off to qualify for federal student aid. It doesn’t matter if you have a low or high income, you will still qualify for some type of financial aid, including low-interest student loans. Many factors besides income—such as your family size and your year in school—are taken into account. Your eligibility is determined by a mathematical formula, not by your parents’ income alone.
TIP: When you fill out the FAFSA, you’re also automatically applying for funds from your state, and possibly from your school as well. In fact, some schools won’t even consider you for any of their scholarships (including academic scholarships) until you’ve submitted a FAFSA. Don’t make assumptions about what you’ll get—fill out the application and find out!
Today, more than ever before, a college diploma or job-training credential is one of the best investments you can make in your future. By some estimates, a bachelor’s degree is worth an average of a million dollars over the course of your lifetime.
But college also has never been more expensive, and far too many Americans are struggling to pay off their student loan debt.
Maybe you haven’t quite landed that dream job in your field of study yet. Or you decided to go into public service instead of taking the highest-paying offer. Your reward for investing your time and money in the skills and knowledge needed to secure your future shouldn’t be a sky-high monthly payment.
Did you submit your 2016–17 FAFSA® before you (and your parents, if you’re a dependent student) filed your 2015 taxes? If so, it’s time to return to your application to update the information you estimated with the actual numbers from your 2015 tax return.
The easiest way to update your tax information is by using the IRS Data Retrieval Tool (IRS DRT). It allows you to transfer your tax information directly into your FAFSA! Check to see if your tax return is available and if you’re eligible to use the tool. You usually have to wait a few weeks after filing your taxes before you can use the IRS DRT, but this tool can save you lots of time.
Students: Log in to the FAFSA using your FSA ID. Parents: Your child must initiate the FAFSA correction process by logging in first, continuing to Step #3, and creating a Save Key*. If you need to make corrections to your child’s FAFSA, get the Save Key from your child. Once you do, you can log in by entering the student’s information. The FAFSA will ask you to enter the “Save Key” if you wish to continue.
*A Save Key is a temporary password meant to be shared between you and your child. It lets you and your child pass the FAFSA back and forth and allows you to save the FAFSA and return to it later. This is especially helpful if you and your child are completing the FAFSA, but are not in the same place.
Click Make FAFSA Corrections.
Navigate to the “Financial Information” section.
Change your answer from “Will file” to Already completed.
Click to enlarge.
If you’re eligible to use the IRS DRT, you’ll see a Link to IRS button. If you’re not eligible to use the IRS DRT, you can manually enter the data from your completed tax return.
Click Link to IRS and log in with the IRS to retrieve your tax information.
Enter the requested information exactly as it appears on your tax return.
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Review your information to see what tax data will be transferred into your FAFSA.
Check Transfer My Tax Information into the FAFSA, and click Transfer Now to return to the FAFSA.
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Review the data that was transferred to your FAFSA, and click Next.
Sign and submit your updated FAFSA using your FSA ID.
Once you’ve made updates at fafsa.gov, your changes will be processed in about three days. You’ll receive a revised Student Aid Report (SAR) showing the changes made to your application. Each school you listed on your FAFSA can access the revised information one day after it’s processed.
Remember, some state and school financial aid is awarded on a first-come, first-served basis. So, log in today to update your FAFSA!
April Jordan is a senior communications specialist at Federal Student Aid
A college or career school education = more money, more job options, and more freedom. Yet, with more than 7,000 colleges and universities nationwide, deciding which college is right for you can be difficult. Maybe you want to find a school with the best nursing program, or study abroad options, or the best college basketball team; every person values different things. However, it’s also important to remember that college is one of the biggest financial investments you will make in yourself. Just as important as academics and extracurricular activities are the financial factors: how much a college costs, whether students are likely to graduate on time, and, if alumni are able to find good jobs and pay off their loans. That is why the U.S. Department of Education developed the College Scorecard. It provides clear information to answer all of your questions regarding college costs, graduation, debt, and post-college earnings.
As you’re comparing colleges, use the College Scorecard to compare these four things:
1. Net Cost
For starters, you should consider how much you’ll actually be paying on an annual basis. That’s not necessarily the sticker price, but it’s the sticker price minus all of the scholarships and grants that you will receive when enrolling in an institution. This is called the net price, and it’s important because it’s the average amount students actually pay out of pocket.The College Scorecard can show you the average net price of each school compared to the national average. It can also give you a net price estimate for each school broken down by family income. Here’s an example:
If you borrowed before July of 2010, you may need to consolidate your loans in order to qualify for certain student loan repayment benefits, such as Public Service Loan Forgiveness and some income-driven repayment plans.
Why does it matter which type(s) of loans I have?
If you’re interested in the best student loan repayment benefits, you’ll want to have Direct Loans. If you borrowed any federal student loans before July 2010, there’s a good chance that some or all of your federal student loans are not Direct Loans. But that doesn’t mean you can’t qualify for the best repayment benefits—you can. All you’ll need to do is consolidate. If you consolidate, as a student borrower, here are some of the repayment benefits you could access:
Direct Loans are those that are made to you, though your school, directly by the Department of Education. Since July 2010, almost all federal student loans are made under this program—in full, called the William D. Ford Federal Direct Loan Program.
Though the Direct Loan Program existed long before 2010, there was another bigger federal student loan program that most students relied on to finance their education: the Federal Family Education Loan (FFEL) Program.
Under the FFEL Program, loans were made by banks and ultimately guaranteed by the taxpayer in case you didn’t make your payments. In 2010, this program ended.
Loans from both of these programs are FEDERAL student loans. The main way the programs differ is in who made you the loan in the first place. Most of the benefits in the Direct Loan Program are available in the FFEL Program. However, FFEL Program loans are not eligible for Public Service Loan Forgiveness or the best income-driven repayment plans. This is where loan consolidation can help. It will effectively convert your FFEL Program loans into Direct Loans.
How do I find out which type(s) of federal student loans I have?
Log in using your FSA ID (You can’t use your Federal Student Aid PIN anymore!)
Scroll to the loan summary section. Go through each of the loans that are listed. Use the list below to see if you need to consolidate any of your loans to qualify for the best repayment options.
What should I consider before consolidating?
First, evaluate whether you want any of the benefits that are available only in the Direct Loan Program. Consolidating your loans can increase the amount of interest that accrues on your loans, so if you’re not interested in these programs, you may not want to consolidate. Also, understand that, by consolidating your loans, you will start your forgiveness clock over. For example, if you were already on an income-driven repayment plan and consolidate your loans, then you will lose the any credit you had already earned toward forgiveness.
Lastly, understand that some of the loans that we called out for consolidation are those from another federal student loan program called the Federal Perkins Loan Program. Those loans have their own cancellation benefits that are based on your job. If you consolidate these types of loans, you will lose access to those cancellation benefits. Learn more about Perkins Loan cancellation here.
Now I know what type(s) of loans I have. What can I do?
I have some loans that I need to consolidate, and some that I don’t. Okay, you’re a little trickier to advise. You’ll definitely have some loans that you’ll want to consolidate, but the real question is, should you consolidate all of your loans? Only consolidate what you need to? You can do either. It will be easier to keep track of your loans if you only have one, but as you can see in the above section, sometimes you’re better off not consolidating if you don’t have to. After you’ve figured this out, you can consolidate your loans and apply for the best income-driven repayment plans. After you’re set up on the plan you want and if you want to apply for Public Service Loan Forgiveness Program, get your employment certified for Public Service Loan Forgiveness.
If you’re confused, need help, or have questions, you can contact the Loan Consolidation Information Call Center at 1-800-557-7392 to get free advice.
Ian Foss is a Program Specialist and Nicole Callahan is a Digital Engagement Strategist at the U.S. Department of Education’s office of Federal Student Aid.
It might seem difficult to choose an income-driven repayment plan when so many of the basic features of the plans look the same. After reading this post, you’ll be armed with the knowledge you need to choose the best repayment plan for your situation.
Here are the basics:
Let’s start by looking at the basics. All of these plans set your payments based on a percentage of your income, and all of these plans forgive any remaining balance on your loans after a period of time. There are some obvious differences between the plans, sure, but the chart is so general that you don’t have enough information in the chart to make a smart choice.
If you’re interested in an income-driven plan, you probably want to pay as little as possible over the shortest period of time and have accepted that more interest may accrue on your loans as a result. Additionally, you should understand that you have to keep in touch with your loan servicer about your income each year in order to stay on these plans. So, Pay As You Earn would seem to be a natural choice. But there are very specific requirements you must meet to qualify for Pay As You Earn plan. The details matter.
If your loans aren’t Direct Loans, that doesn’t mean you can’t qualify for the best income-driven repayment plans—almost everyone can. You just need to consolidate first. If you don’t consolidate, the only income-driven repayment plan you might qualify for is the income-based repayment plan, and, as you saw, it wouldn’t give you the lowest payment.
After you have figured out whether you needed to consolidate, and done so, you’re ready to choose a plan.
Let the Department of Education choose the best plan for you
Don’t do difficult work that you don’t have to do. The details matter for these plans. And there are a lot of details. Instead of sorting all of this out yourself, make us, or, more accurately, your loan servicer, do the difficult work. Just go to StudentLoans.gov and start an “Income-Driven Repayment Plan Request”. (That’s the online income-driven repayment application.)
When you get to the “Repayment Plan Selection” section of the application (toward the end), you should not choose an income-driven repayment plan by name. Instead, choose this option:
If you do, your loan servicer will evaluate whether you are eligible for all of the income-driven repayment plans and put you on the best plan for you.
If you want to choose a plan on your own, you probably want to choose the Revised Pay As You Earn Repayment Plan.
For most borrowers, the Revised Pay You Earn Plan is the best choice because:
all Direct Loan student borrowers are eligible for the plan,
there are no date restrictions,
there are no income restrictions,
it offers the lowest payment of all the income-driven repayment plans,
it offers the shortest repayment period for many, and
it offers a generous interest benefit to keep your interest balance from growing
However, there are some borrowers who can’t or shouldn’t choose the Revised Pay As You Earn Plan.
Answer the questions below to see if you’re one of those borrowers.
Are you married? How do you file your taxes?
If you are married, you can choose to file a joint or separate income tax return. How you choose to file your taxes can have a large impact on income-driven repayment. There are two factors at play here—whether your spouse’s income will be used to calculate your payment and whether your spouse’s loan debt will be used to adjust your payment downward.
There are two things you need to consider
If you file jointly, for all plans, your income + your spouse’s income = income used to calculate payment.
If you file separately, then how your spouse’s income is treated depends on the plan:
For the Income-Contingent, Income-Based, and Pay As You Earn plans, only your income = income used to calculate payment.
For the Revised Pay As You Earn Plan, however, your income + your spouse’s income = income used to calculate payment.
Second, loan debt.
If it seems like using a joint income is going to disadvantage you, this isn’t the end of the story. If your spouse also has federal student loans, then we will figure out what percentage of the total debt is yours and multiply the payment based on a joint income by that percentage. This acknowledges that there are multiple federal student loan debts being repaid with the joint income. If your spouse has no federal student loan debt, however, then 100% of the debt is yours, and so there’s no adjustment to your payment.
What does this all mean? Though the Revised Pay As You Earn Plan is better for most, if you are married, file a separate return from your spouse, and your spouse doesn’t have federal student loan debt, then you will definitely be able to get a better deal under the Pay As You Earn Plan (if you are eligible for it), and, depending on your spouse’s income, you might even get a better deal under the Income-Based or Income-Contingent Repayment Plan. But, to get this better deal, you have to file separately from your spouse, and that might cost you more in taxes.
Did you borrow a federal student loan for graduate school?
Let’s talk about borrowing for graduate school. If you did, then the Revised Pay As You Earn Plan might not be for you.
Under the Revised Pay As You Earn Plan, the forgiveness clock runs for 20 years if you only borrowed for undergraduate study, and for 25 years if you borrowed even one loan for graduate study.
By contrast, the Pay As You Earn Plan has a 20-year forgiveness clock for all borrowers, undergraduate and graduate alike. So, if you qualify for Pay As You Earn and are a graduate borrower, it’s probably a better option for you. If you don’t qualify for Pay As You Earn, however, the Revised Pay As You Earn Plan is still better for you than the Income-Based or Income-Contingent Repayment Plans.
How recently did you start borrowing?
The Pay As You Earn Plan has many, but not all of the benefits as Revised Pay As You Earn, and, for some borrowers, it’s a better option. However, it’s also the plan that is available to the fewest number of borrowers. Specifically, to qualify for Pay As You Earn, you need to be a “new borrower” on or after October 1, 2007 who received a loan on or after October 1, 2011. That excludes a lot of people who have loans today.
Are you are a parent borrower?
Parent borrowers who want to repay their Parent PLUS Loans under an income-driven repayment plan can’t use the Revised Pay As You Earn Plan or any other income-driven repayment plan except for the Income-Contingent Repayment Plan.
The Income-Contingent Repayment Plan is the only plan that a borrower with this loan type can opt for. However, eligibility is not automatic. To become eligible, parent borrowers must consolidate their outstanding Parent PLUS Loans into a Direct Consolidation Loan. If you’re a parent borrower, you can do that by visiting StudentLoans.gov.
Let’s sum up.
The Revised Pay As You Earn is the best plan for most borrowers. However, if it’s not good for you for one of the reasons I mentioned above, then you should consider Pay As You Earn. If that doesn’t work for you, consider the Income-Based Repayment Plan. Finally, consider the Income-Contingent Repayment Plan.
Ian Foss has worked at the Department of Education since 2010. He just saved 33% on his student loan payments by switching from the Income-Based Repayment Plan to the Revised Pay As You Earn Repayment Plan.
If you’re a parent of a college-bound child, the financial aid process can seem a bit overwhelming. Who’s considered the parent? Who do you include in household size? How do assets and tax filing fit into the process? Does this have to be done every year? Here are some common questions that parents have when helping their children prepare for and pay for college or career school:
Does my child need to provide my information on the FAFSA?
Your child’s dependency status determines whose information must be reported on the FAFSA. Even if your child lives on his own, files his own taxes, and supports himself, he may still be considered a dependent student for federal student aid purposes. If your child was born on or after January 1, 1993, then he or she is most likely considered a dependent student and will need to include your information on the Free Application for Federal Student Aid (FAFSA®).
Why does my child need to provide my information on the FAFSA?
Our dependency guidelines are determined by Congress and are different from those of the IRS. If your child is considered a dependent student, it doesn’t mean you, the parent(s), are required to pay anything toward your child’s education; this is just a way of looking at everyone in a consistent manner.
Which parent’s information should I include when completing the FAFSA?
When completing your child’s FAFSA, your household size should include parents, any dependent student(s), and any other child who lives at home and receives more than half of their support from you. Also include any people who are not your children but who live with you and for whom you provide more than half of their support.
Do we need to wait to apply until I file my income taxes?
You do not need to wait until you file your federal tax return. Deadlines in some states are before the tax filing deadline so you’ll want to ensure your child fills out his or her FAFSA as soon as possible to maximize financial aid. If you haven’t filed your taxes by the time your child completes the FAFSA, you can estimate amounts based on the previous year if nothing has drastically changed. After you file your taxes, you’ll need to log back in to the FAFSA and correct any estimated information. If you’ve already filed your taxes, you can use the IRS Data Retrieval Tool to automatically pull in your tax information directly from the IRS into the FAFSA. The IRS Data Retrieval Tool will be available February 7, 2016.
Do I need to do this every year?
Yes, you and your child need to complete the FAFSA each year in order for your child to be considered for federal student aid. The good news is that each subsequent year you can use the Renewal Application option so you only have to update information that has changed from the previous year!
What else do I need to know before I begin?
You and your child will each need to get an FSA ID, which is made up of a username and password. It is used to confirm your identity when accessing your financial aid information and to electronically sign the FAFSA. You can save time by getting your FSA IDs prior to starting the FAFSA.
Certain information and documents are necessary to complete the FAFSA and it’s good to have them handy before you begin. Here’s a checklist to help you get ready.
Susan Thares is the Digital Engagement Lead at the Department of Education’s Office of Federal Student Aid.
Each year, more than 18 million people submit a FAFSA, and the U.S. Department of Education provides more than $150 billion dollars in federal student aid. To protect the integrity of this important financial system and the private data of all of the students, parents and borrowers within it, it’s essential that only the FSA ID owner create and use their account.
Although the FAFSA is considered your application, one of your parents will have to provide some information on the FAFSA and sign it, if you are considered a dependent student. Any parent, who wants to electronically sign the FAFSA, will need his or her own FSA ID.
To avoid problems with your financial aid down the road, you (and your parent, if that applies) should create your own FSA ID. Don’t let anyone—not your teacher, your financial aid counselor, your mom or dad, your best friend, or your second and third cousins—create your FSA ID for you. And you should not create one for your parent or anyone else.
For starters, it’s against the rules. The FSA ID has the same legal status as a written signature, so you should treat it like such. You’re not supposed to let someone else sign your name on a tax form or a job application. Well, the same goes for your FAFSA.
Also, one of the primary reasons people have issues with their FSA ID and need to call our contact center for help is because someone else created their FSA ID. If you don’t make your own FSA ID you are less likely to know or remember your username and password. And if you get locked out or need a reminder of your username or password, you are less likely to know the answers to your challenge questions or have access to the e-mail address associated with your account.
Don’t miss an important deadline because someone else created your FSA ID, and you can’t reset your password!
In addition to signing the FAFSA, you can use your FSA ID to do things like
import your tax information into your FAFSA from the Internal Revenue Service,
view and print an online copy of your Student Aid Report (SAR), and
sign your master promissory note.
Creating an FSA ID is simple and only takes a few minutes. To save time when you and your parent are filling out the FAFSA, create your own FSA IDbefore you begin the application. For more information, visit StudentAid.gov/fsaid.
Some of you may be familiar with the Pay As You Earn (PAYE) Repayment Plan, which caps payments at 10% of a borrower’s monthly income and forgives any remaining balance on your student loans after 20 years of qualifying repayment. But this plan is only for recent borrowers.
REPAYE solves this problem. Like the name implies, REPAYE has some similarities to PAYE. First and foremost, REPAYE, like PAYE, sets payments at no more than 10% of income. However, REPAYE—unlike PAYE— is available to Direct Loan borrowers regardless of when they took out their loans.
Should I switch to REPAYE?
If you can’t afford your monthly payment under your current repayment plan, you should consider REPAYE or one of the other income-driven repayment plans. These plans can offer needed relief by ensuring that you will never pay more than a certain percentage of your income. If you can afford to pay more on your loan, you should, since this will save you more on interest costs over the life of your loan.
If you’re pursuing Public Service Loan Forgiveness, you should consider REPAYE. REPAYE is an eligible repayment plan for the Public Service Loan Forgiveness (PSLF) Program. If you’re working toward PSLF and considering consolidating your loans in order to qualify for REPAYE, you should read this first.
If you’re currently on Income-Based Repayment (IBR) because you weren’t eligible for PAYE, you should consider whether REPAYE might be a better option for you. REPAYE could lower your payments by one-third, from 15% to 10% of income.
Before making your decision, use our repayment estimator to compare what your monthly payment would be under REPAYE and all of our other plans.
Under any income-driven repayment plan, you’ll need to “recertify” your income and family size each year.
How is REPAYE different from the other income-driven repayment plans?
So, you already know that your payment under an income-driven plan is a percentage of your income. But REPAYE is different from the other plans. Here are a few differences:
There’s no income requirement to enter the plan: Unlike with the PAYE and IBR plans, borrowers don’t have to show that that their income is low compared to their federal student loan debt in order to enter REPAYE. In simple terms, that means that the amount of your debt and your income level won’t keep you from qualifying.
Borrowers with only undergraduate loans will have a different repayment period than those with graduate loans: Income-driven repayment plans forgive any remaining loan balance after a specific number of years of qualifying repayment—either 20 or 25 years, depending on the plan. REPAYE is a little different than the other income-driven repayment plans. With REPAYE, if you’re only repaying loans you received as an undergraduate student, you’ll repay your loans for up to 20 years. However, if you’re repaying even one loan that you received as a graduate or professional student, you’ll repay your loans (including any loans you received as an undergraduate) for up to 25 years. Of course, this difference doesn’t matter if you later qualify for Public Service Loan Forgiveness, since your loans would be forgiven after 10 years of qualifying payments.
Married borrowers’ payments are calculated differently: The other income-driven repayment plans use the combined income of you and your spouse to set your payment amount only if you file a joint federal income tax return. If you and your spouse file separate tax returns, your payment amount is based on only your income. REPAYE (with limited exceptions) uses the combined income of you and your spouse to set your monthly payment amount, regardless of whether you file a joint tax return or separate returns. This could increase your monthly payment amount. For more information, read our Q&A.
REPAYE payments are not capped at the 10-year standard payment amount: Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. However, this isn’t always the case with the PAYE and IBR plans. Under PAYE and IBR, your payment will never be higher than what it would have been under the 10-year Standard Repayment Plan, no matter how much your income increases. With REPAYE, there’s no cap on your monthly payment amount. Your payment will always be 10% of your discretionary income, no matter how high your income grows. This means that if your income increases significantly, your REPAYE payment could be higher than what you would have to pay under the 10-year Standard Repayment Plan.
REPAYE provides a more generous interest benefit: If your payment doesn’t cover all of your interest, REPAYE pays more of the remaining interest than PAYE or IBR. This can help prevent your loan balance from ballooning and limit the total cost of your loans.
What else should I consider before applying?
Determine whether you have Direct Loans before attempting to switch to REPAYE. If you’re not sure which type of loans you have, you can log in to StudentAid.gov to find out. Loans labeled “Direct” qualify for REPAYE, loans without the “Direct” label don’t qualify for REPAYE unless you consolidate them. You can apply for a Direct Consolidation Loan on StudentLoans.gov.
Special considerations for borrowers who are currently on IBR:
If you don’t have Direct Loans, but you’ve been repaying your other loans under IBR for a while and you’re thinking of consolidating to take advantage of REPAYE, it’s important to understand that you’ll lose any credit toward IBR loan forgiveness that you received before consolidating—you’ll have to start over with a new 20- or 25-year repayment period on the Direct Consolidation Loan. So, carefully consider whether having a lower monthly payment amount matters more than the additional time you may spend repaying your loans.
Any outstanding interest will be capitalized (added to your loan principal balance) when you leave IBR.
How do I apply for REPAYE?
You can apply for REPAYE—or any other income-driven repayment plan—on StudentLoans.gov. We’ve made some improvements to the way the electronic application works, so give it a spin.
Looking for the lowest monthly payment? With four income-driven repayment plans, it’s easy to overlook a plan or confuse a feature of one plan with another. Let us do the hard part for you. If you’re looking for the lowest monthly payment, there’s a box you can check on the application to request that your loan servicer evaluate you for all income-driven repayment plans, and put you on the plan with the lowest initial payment.
Where can I get more information?
There’s more to know about REPAYE than what you see in this blog post.
Get more information about REPAYE and income-driven repayment plans at StudentAid.gov/idr.
The U.S. Department of Treasury recently released a report entitled “Opportunities to Improve the Financial Capability and Financial Well-being of Postsecondary Students.” I read this report because I am an intern in the office of Federal Student Aid at the Department of Education, and I am working on various projects related to financial literacy for college students. I actually found this report to be a worthwhile read as a college student embarking on the daunting journey of funding my college education and managing my money while in school.
Despite the heavy financial burden, most of us understand the necessity of a college degree. Report after report make evident that education is one of the most significant factors in upward economic mobility. Still, college students face not only education loans but also consumer debt. There are so many important decisions that college students have to make in support of the ultimate goal to become financially independent. And, as tuition, books, housing and more only rise, the dream of financial independence has only become more difficult, and stressful.
Although I am no expert in financial literacy and financial aid, learning about responsible borrowing, careful budgeting, and repaying loans on time has helped lower my financial stress. The following are some simple tips I’ve learned that can alleviate financial stress and help college students manage their money.
1. Borrow responsibly.
Federal Student Aid offers resources to help students understand the borrowing process.
First, know how to read the financial aid package your school offers you. Be sure you can differentiate among grants, loans, scholarships, and work-study offers. You can do this by talking to the staff at your school’s financial aid office. Next, talk to your parents or those contributing to your education. Review the financial aid offer from your school, and look at your family’s finances, to decide which aid to accept or turn down. This is important in calculating how much you need to borrow in order to afford your education. You do not need to accept the full amount of loan money that’s offered to you; and understanding that concept will leave you with less debt in the future.
2. Budget carefully.
Budgeting is vital to lowering stress. By adopting responsible budgeting habits, you’ll learn planning skills to help manage multiple priorities and prepare for the future. Healthy budgeting practices provide dual opportunities for money-saving and time-management techniques. Budgeting is a great financial foundation and can be a stepping-stone to handling greater financial responsibility, leaving lifelong benefits.
3. Repay on time.
Repayment is the final step of the student loan process and lasts long after you graduate. If you do your research, the repayment process can go a lot more smoothly.
One way to reduce your stress is to understand the different repayment plans. You might find that you meet the criteria for making payments based on your income. Use the Repayment Estimator to help you understand the different repayment plans and decide which one is best for you. Then contact your loan servicer to see how to apply for the plan that best fits your situation.
Another thing to be aware of is that there are certain loan forgiveness options, including one for those who work full-time in public service. Knowing who qualifies and how to apply can ease the stress you feel about your debt as well.
Lastly, know that forbearance and deferment (ways to postpone or reduce your payments) are options if special circumstances arise. Understanding what’s best for your situation and applying in a timely manner is something you need to be aware of and talk to your servicer about.
As the report says, “Postsecondary education is essential to the economic health of our nation and to the economic opportunity of many Americans,” and each of our personal financial decisions contributes to that!
Megan McCusker is a sophomore at Loyola University Maryland studying History and Spanish. She served an intern for U.S. Department of Education’s Office of Federal Student Aid.
If you’re looking for another way to pay for college, Federal Work-Study may be a great option for you. Work-study is a way for students to earn money to pay for school through part-time on (and sometimes off) campus jobs. Work-study gives students an opportunity to gain valuable work experience while pursuing a college degree. However, not every school participates in the Federal Work-Study Program. Schools that do participate have a limited amount of funds they can award to students who are eligible. This is why it is so important for students to fill out the FAFSA as early as possible, as some schools award work-study funds on a first come, first served basis.
Here are 8 things you should know about the Federal Work-Study Program:
1. Being Awarded Federal Work-Study Does Not Guarantee You a Job
Accepting the federal work-study funds you’re offered is just the first step. In order to receive those funds, you need to earn them, which means you need to start by finding a work-study job. Some schools may match students to jobs, but most schools require the student to find, apply and interview for positions on their own, just like any other job. It is important that students who are interested in work-study or who have already been awarded work-study contact the financial aid office at their school to find out what positions are available, how to apply, and how the process works at their school.
2. Not All Work-Study Jobs are on Campus
The availability of work-study positions includes community service options with non-profit employers, which means some work-study jobs are available for off-campus work. An example might be reading or tutoring for elementary children at local public schools. If you are curious about securing a community service work-study position, contact the financial aid office or the student employment center at your school.
3. Work-Study Funds Are Not Applied Directly to Your Tuition
Unlike other types of financial aid, work-study earnings are not applied directly to your tuition and fees. Students who are awarded work-study receive the funds in a paycheck as they earn them, based on hours worked, just like a normal job. These earnings are meant to help with the day to day expenses that students have and are not meant to cover large costs like tuition and housing.
4. Work-Study Jobs May Be Limited
You may still be able to work on campus without work-study if your school does not have enough work-study funds to cover all on-campus student employees. Many campuses offer jobs for students with or without work-study. Check with the student employment office on your campus to find out what is available.
5. Federal Work-Study is not Guaranteed from Year to Year
There are several factors that can determine whether or not you receive work-study from year to year. These include your family income or financial need, whether you used the work-study funds that were offered to you in a prior year, or how much work-study funding your school receives that year. Contact your school for specific awarding criteria if you are interested in work-study. Typically, students who file the FAFSA early (in January/February prior to the academic year) and answer on the FAFSA that they are interested in Federal Work-Study will have a higher chance of being awarded funds from the program.
6. Pay May Vary
Work-study jobs vary in qualifications and responsibilities, so the pay will depend on the job that you are hired to do. Pay may also depend on your school’s policies and/or the minimum wage requirements in the state.
7. Work-study Earnings Are Removed From Your FAFSA Calculation for the Next Year
One of the benefits of earning income through a federal work-study position is that those earnings do not count against you when you complete the next year’s FAFSA. Be sure to answer the question regarding how much was earned through work-study on your FAFSA accurately. If you do not know the answer, you can contact the financial aid office at your school for help. Some schools will send you a notice in early spring regarding your earnings from the last calendar year to help you file your FAFSA.
8. Hours Worked May Vary
How many hours you work each week will depend on the type of job you get and your employer’s expectations. Most student employment positions, however, will work around your class schedule and only require between 10-20 hours/week, but again – that can vary!
Chandra Owen, Training Coordinator in the Office of Financial Aid at Michigan State University, Justin Chase Brown, Director of Scholarships & Financial Aid at the University of Nebraska-Lincoln, and Karla Weber, Senior Advisor in the Office of Student Financial Aid at the University of Wisconsin-Madison
The reality of college costs is that many families find themselves struggling to pay the entire college bill, despite having already filed the Free Application for Federal Student Aid (FAFSA) and receiving federal, state, and institutional financial aid resources. If you find yourself in this position, here are some ideas to consider to help fill the gap between what your financial aid covers and what you owe the institution.
TIP: The financial aid office at your college is a great resource. If you didn’t receive enough financial aid, contact your school’s financial aid office. They can help you explore your options.
For those heading to college this fall, most scholarship decisions for the academic year have already been made. However, we recommend you begin a routine of searching and applying for scholarships regularly. You should first consider scholarships local to where you graduated from high school or live; try community, religious, and fraternal organizations. You may also consider businesses in your community or those that employ your parent(s).
Then, look for scholarship resources available statewide, especially from organizations with which you may have been involved or companies in your state that are in the field for which you plan to study.
National scholarships can be very competitive, but don’t let that keep you from applying. Ask your financial aid office or academic unit about institutional or departmental scholarships (decisions may have been made for this year, but ask how to make sure you don’t miss deadlines for next year!). With scholarship opportunities, it’s always important to be careful of fraud. If you are ever concerned about the legitimacy of a scholarship, your school’s financial aid office might be able to help you make the determination.
You may have been awarded Federal Work-Study, which at most schools still requires you to find the work-study position yourself. This can help you cover some costs throughout the semester since these funds are paid as you earn them through working. If you were not awarded work-study funds, most schools have other part-time on-campus positions that can help you with some college costs. Working part-time on campus can be beneficial to your educational experience. Be cautious of working too many hours if you can avoid it. Ask your financial aid office or career services office how to apply for on-campus positions.
Your school’s billing office, sometimes referred to as the bursar’s office or cashier’s office, may have payment plans available to help you spread the remaining costs you owe the school over several payments throughout a semester. The payment plan can help you budget the payments rather than paying in one lump sum, possibly helping you avoid costly late fees.
Special Circumstances Reevaluation
Sometimes a family’s finances are not accurately reflected on the FAFSA because of changes that have occurred recently, such as job loss, divorce or separation, or other special circumstance. Schools are not required to consider special circumstances, but those that do have a process by which you can petition for a reevaluation of the information on the FAFSA. This process may require you to submit documentation, and the financial aid office will recalculate your eligibility, possibly resulting in a change of financial aid awards.
Additional Federal Student Loans
If you’ve exhausted all your free and earned money options and still need additional funds to help you pay for school, contact your school’s financial aid office to find out if you’re eligible for additional federal student loans. For example, you might have reached a level of increased student loan eligibility if you completed coursework after your college awarded your aid.
Federal Direct PLUS Loans: Also, if you are a dependent student and still need assistance, your parent can apply for a Direct PLUS Loan. Some schools use the application on StudentLoans.gov and others have their own application. The PLUS loan application process does include a credit check. If your parent is not approved, he or she may still receive a Direct PLUS Loan by obtaining an endorser (cosigner.) If a parent borrower is unable to secure a PLUS loan, the student may be eligible for additional unsubsidized student loans of up to $4,000 (and sometimes more.)
Emergency Advances or Institutional Loans
Sometimes you may have college-related costs, such as housing costs or other living expenses, before your financial aid is disbursed to you. Your school may offer an option to advance your financial aid early or offer a school-based loan program. Ask your financial aid office if this is an option and always make sure you are aware of the terms and conditions (such as interest rates or repayment terms) of your agreement.
Private or Alternative Loans
Some private institutions offer education loans that do not require the FAFSA. While we recommend federal aid first, we realize it does not always cover the cost, especially for pricier schools. These types of loans will almost always require a cosigner and usually have higher fees or interest rates depending on your credit. We encourage you to first ask your financial aid office if they have a list of lenders for you to consider, but not all schools maintain such a list. If not, you can search for lenders on your own, but compare products before making your choice: look at interest rates, fees, repayment terms, creditworthiness requirements, satisfactory academic progress requirements, etc.
Before making any final decisions on how to fill the gap between your aid and your costs, it is always recommended that you meet with a representative in your financial aid office to determine what campus resources might be available before going out on your own. It might also be possible that you still have the time to change some of your choices before the semester begins: Can you change the type of meal plan you chose? The type of housing? The number of classes in which you are enrolled? Check with campus officials to see if you still have time to select a different, more affordable option.
Justin Chase Brown is Director of Scholarships and Financial Aid at the University of Nebraska-Lincoln.