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FAFSA Completion May Help With College Tuition

In these hard economic times, parents and students are looking for financial aid to help with high college costs and tuition. Filling out the FAFSA early is essential.

High school seniors anticipate the time of year that they can start to apply for the Free Application for Federal Student Aid, or FAFSA, beginning January 1st of the student’s senior year. So emphasizes that if a student or parent is ambitious and attempts to fill this out before then, they will not be able to.

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If they really cannot wait to find out what their predicted financial aid will be, some websites predict the aid the student will receive based on their parents’ previous year’s tax information.

When to Fill Out the FAFSA

Although the FAFSA officially opens on January first every year, most parents cannot file the FAFSA until they complete their taxes, and that is often not until February.

Although FAFSA states students can apply for federal financial aid at any time, the money may not necessarily be there. Oftentimes, grant money is gone by March and April. Even if a student qualifies for grant money, the state may have run out of money.

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Types of Federal Financial Aid Available

Federal Grants are need-based on parent income. Students receive different amounts of grant money based on the type of grant. Students must also be enrolled at least part-time. This is not to be confused with a loan; grant money is money a student does not need to pay back.

Federal Academic Competitive Grant is for students that can prove they took a rigorous course load in high school. After their first year in college, students must maintain a 3.0-grade point average. In addition, students must be eligible for and receive the Pell Grant.

Federal Subsidized and Unsubsidized Stafford loans are loans that a student may take out if their tuition is not covered in other ways. The Federal Subsidized loan’s interest is deferred while the student is enrolled in college, and on unsubsidized loans, the interest is on it as soon as the loan is dispersed.

The yearly maximum for unsubsidized Stafford Loans varies depending on if the student is considered an independent or dependent student. For the purposes here, most students entering college out of high school are dependants. These students can borrow up to $5,500 a year in unsubsidized and subsidized loans combined.

In a student’s junior and senior year, they can borrow up to $7500. Both have a set capped interest rate of 6.8% but a student may get a lower rate. The grace period for these loans after graduation is six months.

Federal Perkins Loan is a need-based loan that has an interest rate of 5% offered by the government. Interest does not accrue until after graduation, and the grace period is nine months.

There is also the Parent Plus Loan available to assist parents in paying for their child’s education. Parents must pass a credit check and can borrow up to whatever is not covered by the government’s financial aid award package. The interest rate is capped at 8.5%, meaning it cannot be any higher than this

How Financial Need is Determined

A student must demonstrate financial need to be eligible. So points out that it is determined by the government how much the family can reasonably contribute to their child’s education based on the tax information provided. This is called the Expected Family Contribution or EFC.

The EFC and the school’s cost of attendance are the information colleges use to determine a student’s financial aid package. A college may also have the school scholarship they award to the student as well.

Steps to Complete the FAFSA

  • Apply for a PIN on as soon as possible. This will be the electronic signature.
  • Fill out the FAFSA as soon as completed tax information is available.
  • Make sure the SAR report is correct. This will be a confirmation of all information submitted on the FAFSA.
  • Wait for the financial aid package. The government determines eligibility, so it’s just time to wait.

Fill out the FAFSA as soon as taxes are filed. Waiting will only decrease the chances of federal grant money being available. Weigh options once award packages are received from colleges to determine which option is best. Students can take an entire award package or turn down part of it (meaning a loan is offered and the student does not want to take it).

As far as grants and loans, the government makes the final decision as to what each family qualifies for. Make sure that all information is accurate, since, according to FAFSA, approximately 30% of applications will be audited.

In the end, make sure to start this process early so money is still available. In these hard economic times, state and federal funding is lower, meaning many of the grant money funds will deplete earlier.

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