When Do I Apply for Student Loans?

It’s reported that 43.2 million borrowers have debt from taking out federal student loans. Although grants and applying for scholarships can work to offset the cost of school, it’s not always possible to attend higher education without incurring student loan debt. In fact, the average amount of loan debt — among undergraduate students — is $38,290. If you need to apply for student loans, it’s important to do so as soon as possible. Since colleges and universities usually require that you pay your tuition before the semester starts, you need to have your finances squared well before the start of class. This article explains when to apply for student loans and which are best for your educational needs. When Should You Apply for Student Loans? As a general rule of thumb, the best time to apply for student loans is as soon as you start preparing to pay for college. This might be when you complete your FAFSA. FAFSA typically opens up on October 1 for applications (for the following school year), so apply as soon as possible, as some loans may be contingent on the information in this application. For example, if you want to apply for federal student loans, you need to complete the FAFSA first. Keep in mind that any student aid you qualify for is given out to those who apply first,  so make sure to complete your information as soon as possible. This is especially true if you rely on financial aid to attend school. Private student loans are different from federal student loans in that there’s no deadline to apply for them. However, the bank, credit union, or other lender you apply through may have their own set of requirements for applying, so check with them to see how long the application process takes. Then time this with your school’s tuition guidelines and when they expect payment. However, expect that once you submit your application for a private loan, it can take two to three months to receive the money you applied for, with delays pending, so plan accordingly. Although private loans are a viable option for anyone attending college or university, always shop around to see what interest rates and repayment options are available from multiple lenders. Do You Need to Complete the FAFSA for Student Loans? That depends. Yes, you have to complete the FAFSA if you’re applying for federal student loans. If you apply for a private student loan, however, you don’t need to complete the FAFSA. Keep in mind that the FAFSA allows you to qualify for financial aid, grants, and scholarships, so it’s worth completing. When applying for private student loans, you’ll need to provide credit information, your income, and other information for you and your co-signer, should you need one to take out a loan. But it’s free to complete the FAFSA, so it’s recommended that all students do so. But is financial aid the same as student loans? No. Financial aid is either money earned through a Federal Work-Study Program or money given as a gift aid. It doesn’t have to be repaid. Student loans, however, have to be repaid within a certain time frame, with interest. What are the Student Loan Requirements? Student loan requirements vary based on the type of loan you apply for. If financial aid, grants, and scholarships don’t cover the cost of your tuition, then taking out a federal student loan is a way to help pay for college. You have to show proof of your financial need. When you complete your FAFSA, this need is calculated and the type of loan you qualify for is determined. This might be a Direct Subsidized or Unsubsidized Loan. You also need to be a U.S. citizen or an eligible noncitizen. There are instances where U.S. residents who aren’t citizens are still able to secure federal student loans. Have your Social Security number available, as you also need to provide this. Students looking to take out federal student loans need to be enrolled in a certificate program or an eligible degree program. It must be recognized and accredited. There may also be GPA requirements for federal aid programs, so be sure to have all the details. Federal Direct Loans require a minimum of half-time enrollments. Ensure you have all the requirements for your program — a high school diploma, GED, or proof of a homeschool program. What About Private Loans? For private student loans, you need to be enrolled in an eligible program, just like with federal student loans. Additionally, you may need to be a U.S. citizen (or a legal resident) aged at least 18 and have a valid Social Security number. You also need to have a high-school diploma, GED, or completed a homeschool program. Additionally, private student loans often require a good credit score and credit history, since credit checks are required. With federal student loans, credit checks aren’t required. This is why you may need a co-signer with a good credit score. You also need to verify your income, especially since lenders focus on your debt-to-income ratio when considering you for a private student loan. They need to see proof thay you can repay your loan. Different Types of Federal Student Loans There are three types of federal student loans you can apply for. There are Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans. Direct Subsidized Loans are for undergraduate students who demonstrate a financial need. While you’re in school, the government takes care of the interest on these loans. Direct Unsubsidized Loans are for undergraduate and graduate students, even if they don’t demonstrate a financial need. They are responsible for all the interest on these loans. Direct PLUS Loans have Grad PLUS Loans for graduate students and Parent PLUS Loans that are for parents looking to help pay for their child’s tuition. These loans require a credit check and usually have higher interest rates than their counterparts. When Do I Apply for Student Loans? If you’re wondering when do you

When to Apply for Scholarships for Fall 2024

Every year, students can access an estimated 1.58 million scholarships. This means that, for every eight students in college, one gets a scholarship. The vast majority of students — 97%, to be exact — get $2,500 in scholarships. Less than half a percent of students get scholarships valued at $25,000 and up. Considering these numbers, you might be wondering why you should apply for scholarships or how to get a scholarship for college. For starters, you usually don’t have to repay them. And seeing as the average cost of college tuition is over $36,000, every little bit helps. Even better, you can receive more than one scholarship at a time, so these amounts can quickly accumulate, reducing your overall tuition and assisting with your college funding. Now that you understand the importance of scholarships, you’re probably wondering when to apply for scholarships for Fall 2024. You should also familiarize yourself with the different types of scholarships available and learn how to find college scholarships. Different Types of Scholarships Available Before you apply for scholarships, it’s important to understand the different types available. This helps you understand how to get college scholarships in the first place. One type of scholarship is a merit-based scholarship. These scholarships are based on your academic performance, as well as achievements in art or other fields. This scholarship is often awarded based on talent and if you can use your craft to impact the world around you. Another type of scholarship is a need-based scholarship. These scholarships are awarded to students who have a low income and work to ensure students from a diverse background gain access to college, and at an affordable rate. More and more low-income students can attend college, and scholarships are one way of making this possible. In 2000, 26.7% of students were low-income, but in 2016, this percentage increased to 43.1%. If this pertains to you, be sure to look for qualifying scholarships and apply on time, something we’ll discuss more soon.  International students also qualify for scholarships, as more students are coming to America to pursue higher education. Since 5.6% of students are international, it’s important to have scholarships available to assist them. In addition to international students, there are also scholarships for underrepresented groups. These might be students with disabilities, first-generation students, members of the LGBTQ+ community, and more. If you have a special focus, you might also find scholarships available in your field. It’s important to discuss with your school all the scholarships you qualify for so that you can apply. Your institution most likely has its own scholarships available, so be sure to ask plenty of questions about what they offer. But when should you start applying for scholarships for fall 2024? And what about grants? Scholarships and Grants You need to understand how to apply for scholarships and grants. Each scholarship lists its specifics, but grants come from completing the FAFSA. However, some colleges and universities require you to complete the FAFSA to qualify for scholarships, so you should fill it out regardless. From there, your institution will decide what grants you qualify for, but always speak to them about specifics in case there are additional steps you need to take or other forms/applications for you to complete. So when do scholarships open for fall 2024? Let’s take a look. When to Apply for Scholarships for Fall 2024 There are tons of different scholarships available, and the ones through your specific college or university will come with their own guidelines. However, if you choose to apply for other scholarships — something all students should consider — most deadlines for Fall 2024 are in the spring of 2024. As you ask yourself, “When should I start applying for scholarships?” you should start looking into the specific scholarships that interest/pertain to you. For starters, the Sally Mae “No Essay” Scholarship offers $2,000 and has a deadline of April 30, 2024. The Be Bold Scholarship has a deadline of May 1, 2024, but offers $25,000. The winners must show how they’re earnest, determined, and moving. Another large scholarship is the Niche $25,000 Scholarship. Its deadline for application is May 31, 2024. The ScholarshipOwn No Essay Scholarship offers students $1,000 and has a deadline of April 29, 2024. The SP Scholarship is for $2,500 and has a deadline of April 30, 2024. Another $1,000 scholarship is the 10 Words of Less Scholarship. It has an April 15, 2024 application deadline. The Brower Youth Award is for $3,000 and has an April 8, 2024 application deadline. Another large scholarship is the Comcast NBCUniversal-SVA Scholarship. This scholarship awards students with $12,000 and has a deadline of April 12, 2024. The Stockholm Junior Water Prize Competition is valued at $15,000 and has a deadline of April 15, 2024. This scholarship is specific to an area of study — water research. The National Dairy Shrine Scholarships are worth $3,000 and have a deadline of April 15, 2024. The Gloria Barron Prize for Young Heros is valued at $10,000 and has an April 15, 2024 deadline. This scholarship aims to assist students from diverse backgrounds who’ve made a tremendous impact in their community. A smaller scholarship is the Life Parts Express Scholarship. It’s worth $500 and has a deadline of April 30, 2024. The Shawn Carter Scholarship is valued at $2,500 and has an April 30, 2024 application deadline. The LM Scholarship Program is worth $500 and students must apply by May 1, 2024. These are only a few of the scholarships available, so be sure to take a look at others you can apply for. Where Can I Apply for Scholarships? As you ask yourself, “When do scholarships open for fall 2024?” it’s important to learn more about other ways of applying and locating scholarships. Where to apply for scholarships, along with how to get scholarships for college, are more popular questions that students and their families have. You could also look to see if any local Women’s Clubs are awarding scholarships. Sometimes

Do I Qualify for a Pell Grant, and Does the Pell Grant Have to Be Paid Back?

Across the country, 34% of students are awarded a Pell Grant. More than half of these funds are provided to students with an annual income of less than $20,000. It’s important to understand as much about these grants as possible, as they can significantly offset the cost of college or university tuition. Seeing as the average cost of college tuition in the United States is just under $37,000, it’s important to have as much information as possible. If you’re interested in applying for financial aid, you’re probably wondering, “Will I qualify for a Pell Grant?” You might also wonder, “Do federal Pell Grants have to be paid back?” This allows you to plan for tuition repayment once you graduate. This helpful article tackles all these questions and more. What Is a Pell Grant? Pell Grants provide low-income households with federal grant funding. This amount changes every year. “Is there any free grant money?” is a common question among students and parents. Pell Grants are an example of free grant money for qualifying students. It’s also common to ask, “Does the Pell Grant have to be repaid?” No, these federal grants don’t have to be paid back, with certain stipulations. How to Receive Federal Grants To apply for a Pell Grant, begin by completing the Free Application for Federal Student Aid (FAFSA). You’ll need your driver’s license, social security number, or Alien Registration Card if you have one of the above. You’ll also need a list of institutions you want to attend, along with all applicable tax records for you and your family. Once you complete your application and submit it, your college or university will decide if you’re eligible for a Pell Grant. Qualification for Pell Grants is considered whenever you complete a FAFSA application, so don’t forget to do this as soon as possible. However, Pell Grants aren’t first come first serve, so if you qualify, there will be funds for you. When you complete your annual FAFSA application, you’ll automatically be considered for a Pell Grant. Keep in mind that it’s possible to qualify for this grant one year but not the next, especially if your — or your family’s — finances change. It’s also important to understand that Pell Grants have a threshold. Students can receive a Pell Grant for about six academic years or 12 semesters. Do you have to pay the Pell Grant back if you don’t have a certain GPA? No. Your grades don’t have anything to do with this type of federal grant, as it’s strictly based on need and income. Am I Eligible for a Federal Pell Grant? A common question among students and parents is, “Do I qualify for the Pell Grant?” A student receives a Pell Grant based on several items. For example, a student’s Expected Family Contribution (EFC), or Student Aid Index (SAI), is used to determine a student’s eligibility. Once a student completes the FAFSA, the information will be used to determine their financial aid need. For the most part, only students obtaining their first undergraduate degree can qualify for a Pell Grant. Any qualifying student taking fewer than 12 credits per semester may receive a prorated Pell Grant. If attending multiple colleges or universities, only one Pell Grant may be awarded to a student at once. Additionally, Pell Grant amounts are subject to change annually with congressional appropriations. For the 2023-2024 school year, Pell Grants could not exceed an annual amount of $7,395. And, to reiterate the answer to the question, “Do you have to repay a federal Pell Grant?” The answer is “No.” Does a Federal Pell Grant Have to Be Paid Back? Although Pell Grants don’t have to be repaid, there are certain circumstances where you would have to. For example, if a student changes their enrollment status after receiving funds from a Pell Grant, they may have to repay it. The same holds true if a student withdraws from courses after receiving these federal funds. Do you have to pay back federal student aid? That depends. Once you complete your FAFSA, you’ll learn about the type of financial aid you qualify for. If you receive scholarships, grants, or money from work-study, you won’t have to repay it. However, any Direct PLUS federal loans have to be repaid. Other Types of Financial Aid If you don’t qualify for a Pell Grant — or if the amount isn’t enough to cover tuition — you can always look into alternative types of financial aid. For example, you can apply for scholarships. Some schools require students to complete the FAFSA to be considered for scholarships, while others don’t. If you need financial aid, however, you’ll have to complete the FAFSA. You can also look into work-study opportunities to help offset the cost of tuition. The Federal Work-Study Program provides part-time jobs to students. Their pay is at least the current federal minimum wage, but there are opportunities for making additional funds. This program takes your needs, your school’s tuition, and when you apply into consideration, which can affect your earning potential for the better. Although you can apply for a job outside of the Federal Work-Study Program, they might not be as flexible as traditional work-study opportunities. You might have to work longer hours, plus you’ll be off-campus, which can conflict with your course schedule. Additionally, any money you make working a part-time job can affect how much financial aid you receive, such as future Pell Grants. Am I Eligible for a Pell Grant? Do you have to pay the federal Pell Grant back? No, with exceptions. If you withdraw from one of your classes or change your enrollment status, you may need to repay your Pell Grant. Always speak with your college or university about this, so you understand exactly what’s expected of you. You can also reach out to College Funding Professionals. We offer expert advice to parents and students as they apply to college. Join our free online Facebook Group to gain access to

Which Colleges Require CSS Profile?

CSS, FAFSA, EFC; the acronyms often seem endless. However, each one is equally important, and the CSS Profile is something all parents, guardians, and students should familiarize themselves with. The CSS Profile is one type of online application that determines financial aid. It’s used by colleges and scholarship programs alike and, as such, tudents who qualify may receive non-federal financial aid. By completing this online application, students can apply for a variety of scholarship programs. The FAFSA is what most students focus on, but Completing the FAFSA isn’t enough; you also need to complete the CSS Profile if you’re looking for alternative types of financial aid. But is this online application required and which colleges require the CSS Profile? This article answers these questions and more, beginning with the CSS Profile vs. the FAFSA. What’s the Difference Between CSS and FAFSA? Once you complete your CSS Profile, your information will be added to the Institutional Methodology formula. This formula determines how much financial need you require, along with whether you can contribute towards paying your school’s tuition. But how does this compare to filling out the FAFSA? With the FAFSA, student need is calculated using the Federal Methodology. Unlike the FAFSA, the College Board offers the CSS Profile, a private and independent form. Which CSS Profile Should You Fill out? You may be wondering, “Which CSS Profile should I fill out?” For starters, the CSS Profile is an online application for you or your parents/guardians to complete. You can do so by creating or accessing your College Board account. If you already have a College Board account, you’ll sign in to complete your CSS Profile application. If you previously created an account for the PSAT, SAT, or AP, then you’ll use this same login information. If you’ve never created a College Board account, you’ll need to sign up and create a new account. Once all your information is complete, it takes between three and five business days for all information to be processed and updated. From there, you’ll receive notification about your submitted documents. Completing Your CSS Profile Once you know which institution you’d like to apply to, take a look at their website to see if they require the CSS Profile, FAFSA, or both. If they require the CSS Profile, be sure they receive a copy. Required documents include W-3 forms, tax returns, and any other records for taxed and untaxed income, as well as assets, benefits, and bank statements. After you complete your online application, it’s best to keep an eye on your College Board account, ensuring no more actionable items are required. You’ll also see a payment receipt based on how many colleges you sent your CSS Profile to. If you have additional colleges you’d like to add, you can do so for an additional fee. When completing your CSS Profile, be careful to accurately complete the application. Although you can correct mistakes after you submit your application, you’re only allowed to make one correction every academic year. If you see additional mistakes that require correction, you’ll need to reach out to interested institutions for direct corrections. Are There Any Fees for Submitting the CSS Profile? There isn’t a limit to how many schools can receive the CSS Profile. However, there’s an associated cost for each school you send your CSS Profile to. For example, it costs $25 to send your initial online application to one institution of your choice. From there, it’s $16 for each subsequent institution that receives your CSS Profile. If you have a fee waiver, you may be able to submit your CSS Profile to different schools for free. To qualify for a fee waiver, you have to be a domestic undergraduate student. Additionally,  your family-adjusted gross income can’t be more than $100,000. There are other ways to qualify for a fee waiver, such as qualifying for the SAT fee waiver. Orphaned students under 24 also qualify for fee waivers. Do You Have to Submit a CSS Profile Every Year? Yes, if you’re looking for institutional financial aid yearly. You can complete your online CSS Profile application as early as October 1. Another popular question is whether you can complete both a CSS Profile and a FAFSA application. You should submit both a CSS Profile and FAFSA application, working to get maximum financial aid for school. Does it matter if you’re late with completing the CSS Profile? Yes. The school you’re interested in attending will have specific guidelines for completing the CSS Profile. If you don’t complete it on time, you might not qualify for scholarships and grants. Unfortunately, most schools won’t allow you to submit your CSS Profile after the due date. Which Schools Use a CSS Profile? Another question is, “Which schools require CSS?” Over 300 colleges, scholarship organizations, and universities require the CSS Profile. The difference between the CSS Profile and the FAFSA is that almost all institutions require the FAFSA, whereas fewer require the CSS Profile. If you’re unsure if your school requires the CSS Profile, you can check this list. Is the CSS Profile Required? Yes, knowing which colleges require the CSS profile is an important part of the college application process, but it’s also important to understand if you have to complete the CSS Profile. Even if your school of choice requires the CSS Profile, you may not have to complete one if you or your parents/guardians are paying for school out of pocket. However, always check with your educational institution to ensure you don’t have to complete the CSS Profile. The CSS Profile allows schools to consider you for aid based on merit, which means it’s not always a requirement. However, completing the CSS Profile may award you with scholarships, which means it’s worthwhile to complete. Complete Your CSS Profile Today Now that you know which schools require the CSS Profile and the importance of completing this online application, you may find yourself with other questions. This might be about completing the FAFSA and more,

Everything You Need to Know About Filling Out FAFSA

If you or your child is among the millions of students seeking a degree from a college or university, then it’s important to understand the basics of filling out the FAFSA. The FAFSA, or Free Application for Federal Student Aid, offers countless benefits. For example, federal student loans are known for their reduced interest rates, helping borrowers pay back their loans after graduation. Additionally, if you’re interested in applying for grants or scholarships, then you may have to apply for the FAFSA, making it a crucial part of the college application process. With the FAFSA comes a myriad of questions, however, from registration to paying back student loans. Here’s what you need to know. How to Register for FAFSA You may be wondering how to sign up for FAFSA. Do students or parents fill out the FAFSA? More importantly, do you have to fill out the FAFSA? To complete your FAFSA form, you’ll need to visit the Federal Student Aid’s website. From there, you’ll be prompted to start a new form, provided this is your first time filing. There is also an option to access an existing form if you already applied. The FAFSA is technically the student’s responsibility, but parents and guardians have a substantial part in the application process when students are considered dependents. Parents and students have to report basic information, such as name, birth date, and social security number, if applicable. Marital status, household size, and residing state are also required questions, along with personal finances. Is FAFSA Required? Another popular question among parents and students is whether the FAFSA is a necessity. Since the FAFSA is a college financial aid application, students who don’t want or need assistance aren’t required to complete the FAFSA. But, as previously mentioned, the FAFSA may be a prerequisite for grants or scholarships. It’s also important to know when to apply for FAFSA. Every year has similar dates for application: between October 1st and June 30th. However, it’s advisable to apply early and to follow dates for application, especially when funds are limited. But do you have to pay back FAFSA? FAFSA isn’t a loan, but that doesn’t mean there’s nothing to repay. Do I Have to Pay Back FAFSA? Completing the FAFSA helps eligible students obtain various types of financial aid. This includes grants, federal student loans, and student employment. A Federal Pell Grant typically does not require repayment, but FAFSA is still required to apply for these grants. Federal student loans, however, require repayment. The Federal Work-Study (FWS) Program doesn’t require repayment either. Is FAFSA Free to Apply For? Another common question is if it’s free to apply for the FAFSA. Yes, it’s free to apply for the FAFSA. Additionally, if you choose to apply for private student loans, you most likely won’t pay a fee either. To summarize, does FAFSA reimburse you? No, as it’s just an application for financial aid. Do you pay back financial aid from FAFSA? Yes, if it’s a loan and not a grant or FWS, as FAFSA helps you obtain various types of financial aid. Does FAFSA Deny Applications? There is a chance that FAFSA will deny your application. This happens when applications don’t meet the program’s basic eligibility requirements. For example, if you’re not a U.S. citizen or an eligible non-citizen, you may be denied. Additionally, if you haven’t shown that you need financial assistance, your application may also be denied. If this happens to you but you still need some type of financial aid, it’s best to talk to your school. You may be able to appeal your rejection for federal student aid. You can also ask what your school’s minimum requirements for financial aid are and how you can become eligible. When Do I Get My FAFSA? FAFSA is an application for financial aid determination. When you receive funds is up to your school. Each school has a schedule for distributing funds to students, which is why it’s important to complete your FAFSA — in its entirety — as soon as possible. When do FAFSA awards come out? This answer depends on the schools you applied to, but they traditionally send out award letters around mid-April. These letters explain what’s included in your financial aid package. When to Apply for Student Loans When you apply for student loans depends on the type of loans you’re interested in taking. If you want to apply for federal student loans, then you need to complete your FAFSA, following application guidelines. If you’re interested in private student loans, however, then you don’t need to complete the FAFSA unless you also want to apply for grants or scholarships. As a general rule of thumb, it’s best to apply for private student loans about two months before you have to pay college tuition. This means you need to pay close attention to when your school requires tuition payment. For example, if payment is due in July, then you want to apply for private student loans no later than May. Does FAFSA Affect Admission? No, FAFSA does not affect admission. Schools look for students who excel in a variety of diversified areas, and financial status doesn’t affect their chances of receiving acceptance to a college or university. Completing the FAFSA and receiving financial aid can help make your dream of earning a college degree that much more attainable. Students are also protected by various laws, ensuring they’re not discriminated against due to personal finances, amongst other things. For example, take The Civil Rights Act of 1964. This legislation prevents discrimination in multiple areas, education being one of them. More specifically is Title IV of the Act. This protects students in public schools and higher education. Additionally, Title VI protects students from being discriminated against if they receive federal funds. Considering that over 85% of students receive financial aid in one way or another, all students should feel comfortable applying for — and accessing — the FAFSA. Filling Out The FAFSA Although not every student has

College Saving Strategies

It’s reported that 85% of students receive financial aid to offset the cost of tuition. This may include loans, grants, scholarships, and more. However, parents need to focus on the best college-saving strategies, working to prepare for their child’s continued education. The type of college a student attends plays a large role in how much they’ll spend on their education. A private college, for example, could be as much as 75% more expensive than a public one. However, the school your child attends depends largely on their area of study and which school can help them achieve their career goals. This means that parents should prepare for their child’s education as early as possible. There are various ways parents can save, but which savings plan is best? Let’s take a look at different college-saving strategies.  Focus on a Dollar Amount Before figuring out the best way to save money, it’s important to consider a dollar amount. A general rule of thumb is to save at least 50% of your child’s complete college tuition. If you start saving when your child is young, it’s difficult to predict where they’ll go to school. But you can base your savings plan on the average tuition cost in your state or even in the country if you plan on moving. You can create a monthly savings plan that works for you, your family, and your budget, investing so you see a return when your child is college-bound. How Much Will Your Money Grow? Although many parents choose to invest their child’s college funds in a 529 account (more on that to follow), not everyone does. There are certain drawbacks to a 529, and some parents may opt to invest in some type of low-cost brokerage account. However, you’ll need to decide if you should conservatively or moderately invest. It all depends on when you start saving for your child’s future. If you start earlier, you may benefit from a more aggressive account that wields a higher return. A few years before you’re ready to access this money, you’ll want to reduce your account to a more conservative one. Consider that, annually, the stock market has an average rate of return equal to 10%. If you save $10,000 a year for 15 years you’ll have roughly $350,000 in your account. If you start saving as soon as your child is born, you can scale back to a more conservative account by the time your child is a sophomore in high school. What’s nice about investing in the stock market is that you can use this money for anything. This means that, should your child get a scholarship, this money is available to fund their future in other ways — their first house, first car, wedding, and so forth. Keep in mind that there is a risk associated with investing in stocks, and you have to pay long-term capital gains taxes. 529 Savings Account A 529 savings account has its benefits. However, you’ll also encounter some drawbacks. For starters, 529 accounts offer limited investment opportunities. You may find that the type of 529 plan you choose — and your state — restricts where you can invest. On the other hand, there are tax benefits with this kind of account. No, you can’t use your 529 plan for any income tax deductions, but you can grow these accounts federal tax-free. Additionally, when you withdraw funds from this type of account, you’re not taxed. If your child receives a scholarship or decides against going to college, then your 529 plan will cost you. Should you cash it out for anything besides your child’s tuition or other college-related expenses, you’ll have to pay federal income tax on the money plus an additional 10% penalty on any money you have earned. This can make a 529 plan offputting for parents. It’s also possible that a 529 plan will count against your child’s ability to receive student aid, so always speak with a qualified professional if you’re unsure about the best way to save. Save Monthly According to T. Rowe Price, if possible,  save $250 a month starting when your child is born. However, this isn’t always feasible for everyone. Even if you don’t have $250 to save every month, make saving habitual. No matter how much or how little, put money aside regularly. For birthdays, holidays, and other milestones, consider asking family and friends for contributions to your child’s college fund. It’s also important to consider your finances when creating a savings plan. When your child is young, daycare can be expensive. The average cost of childcare is anywhere from $5,000 to $17,000 yearly.  As your child becomes school-age and transitions out of daycare, your monthly childcare expenses should be reduced. From there, you can add more money to your child’s college savings account. It’s a good idea to sit with a financial planner yearly, discussing your investments and what you can change. If you’re unsure about how to find a financial planner, start with your local bank. They usually have a financial planning department ready to help you with your college savings goals. Parent Income vs Student Income When saving for college, remember that a parent’s assets and a student’s assets are different. When utilizing 529 plans, understand that this type of account is considered an asset of the owner. It’s not the asset of the student beneficiary. Additionally, a student’s assets and income can affect their Expected Family Income (EFC), soon to be the Student Aid Index (SAI). Before beginning the FAFSA process, parents should transfer assets from the student’s name into the parent’s name. It’s also important to factor in student income allowance, as it’s protected income. Asset protection allowance isn’t considered when determining your child’s financial aid. This means that students and parents can have assets that aren’t used for educational expenses. Additionally, these assets may be eligible for EFC/SAI calculator exclusion. The result is more federal financial aid being awarded, along with additional grants and

Understanding College Financial Aid: What You Need to Know

During the 2021-2021 FAFSA application cycle, 17.8 million forms were completed. Whether you’re a student or parent, you’re probably wondering about the application process and what’s involved. It’s important to have a firm understanding of what financial aid is, exactly. “Financial aid” is a blanket term for any funds provided by a private lender, educational institutions (such as colleges and universities), or the government. You can apply for and receive various types of financial aid, including but not limited to loans, scholarships, grants, and Work-Study Programs. Here’s your complete guide to understanding financial aid. Who Qualifies for Financial Aid? To apply and qualify for financial aid, you need to be a U.S. citizen. Otherwise, you need to be an eligible citizen. You also need to enroll in either a certificate or degree program, so long as they’re both eligible for financial aid. Eligible programs are any type of organized study or instruction where a degree or certificate is rewarded upon completion. These degrees or certifications also have to be a certain length of time, which varies from program to program. The degree or certificate you complete can either be vocational, academic, or professional. How Do You Apply for Financial Aid? To begin, you’ll need to create an FSA ID. You need to use this electronic signature when you complete your loan applications and when you apply for financial aid. Next, you have to complete the Free Application for Federal Student Aid (FAFSA). Depending on who completes this application, be sure to have the following information available: parent/guardian tax information for the year requested and any information about current assets. If the parent, guardian, or student filed a Federal Tax Return, it’s possible to streamline the application process and import data from the IRS into your FAFSA application. You’d do so using the IRS Data Retrieval Tool. Once you submit all information, you need to select the “Apply Now” button on the FAFSA’s confirmation page. Afterwards, you’ll have you Student Aid Report (SAR). Always retain a copy of this report for your records. There’s a chance your school’s Financial Aid Office may ask for additional documents for verification. If this is the case, always send over the required documents as quickly as possible to ensure you receive financial aid without delay. How Much Financial Aid Do You Qualify For? The amount of financial aid you qualify for depends on the type of loan, grant, or program you qualify for. Understand that you may not qualify for the maximum amount of money. The amount of financial aid you qualify for depends on your financial need and how many funds a school or institution has available to its students. These numbers are for the 2022-2023 school year: The amount of money you qualify for also depends on your year in school and whether you’re an undergraduate or graduate student, amongst other things. These numbers are broad generalizations for comparison. But how is financial aid determined? For example, it factors in your enrollment status, your school’s Cost of Attendance (COA) and your Expected Family Contribution (EFC), replaced in 2024-2025 with the Student Aid Index (SAI). Using a variety of information, your financial needs are calculated and funds are awarded. What Types of Financial Aid Are Available? There are several different sources of financial aid to choose from. This includes grants, scholarships, Work-Study jobs, and loans. Some can help with bills while in school. Grants are financial aid, but you don’t have to pay them back. The exception would be if you leave school and don’t complete your designated service obligation, such as with TEACH Grants. Grants include TEACH Grants, Pell Grants, FSEOG Grants, and Iraq and Afghanistan Service Grants. You may also qualify for scholarships. These may be academic, athletic, need-based, employer, STEM, Military, and more. Scholarships are essentially free money that you don’t have to repay. Another type of financial aid comes in the form of Work-Study Programs. These jobs are available to students who want to work part-time while paying for school. You won’t earn anything less than the federal minimum wage, but you may earn more. The amount of money you’re awarded depends on when you apply for the Work-Study Program, how much financial aid you need, and your school’s funding level. Loans are another type of financial aid. You borrow these funds and pay them back with interest. When you complete your FAFSA, you may find that loans are offered to you when your school provides you with a financial aid package. You have to pay this money back — with interest — so always understand all repayment options before applying for a loan. Understanding Financial Aid As you apply for college, you may find yourself wondering about financial aid. Always begin by completing your FSA ID and the Free Application for Federal Student Aid (FAFSA). If you’re a student applying for financial aid, you’ll also need your parent’s tax information (or yours if you filed taxes). After you gather the necessary information and complete your FAFSA, you’ll learn about the different types of financial aid available to you. You’ll probably have questions along the way, as understanding financial aid often has many moving parts. College Funding Professionals can help. We’ll guide you through the entire college application process, answering all your questions. We’ll also explain everything you need to know about FAFSA. Join our free online Facebook Group to gain access to the best college planning advice anywhere.

What Is FAFSA, and How Do You Qualify?

Anyone looking for federal student aid must complete the FAFSA form. You don’t have to pay to complete it, as it’s free. Additionally, you’ll have access to different forms of financial aid as you pursue higher education. But what does FAFSA stand for? FAFSA stands for Free Application for Federal Student Aid. Most colleges and universities require that you complete this form if you’re seeking any type of aid from your school or state. If you decide to take out a private loan for financial aid, you may also need to complete this form. Here’s what you need to know about the FAFSA. What’s the Difference Between Renewed and Starting a New FAFSA? Every year that you apply for financial aid, you must complete the FAFSA. To save time, you can use the FAFSA renewal. This means you won’t need to complete the entire application year after year. A bulk of the information you previously completed is automatically filled out for you. Common FAFSA Mistakes to Avoid When completing the FAFSA, you want to avoid making several mistakes. Make sure to do the following: 1. Register for an FSA ID. You should do this before you complete the FAFSA. This applies to any students filing as dependents. It also applies to their parents. They both need to complete an FSA ID or else they can’t sign off on their FAFSA application. Just keep in mind that this entire process may take 72 hours, so don’t wait until the last minute to apply. 2. Use the IRS Data Retrieval Tool (DRT). Any students and parents who completed a U.S. tax return can use the IRS Data Retrieval Tool (DRT) to complete their FAFSA. This tool transfers information and data directly into their FAFSA forms. 3. Pay attention to deadlines. To avoid missing deadlines, apply early whenever possible. You can even apply on October 1st for the upcoming school year, nearly a whole year in advance. Remember that you can’t apply later than June 30th. 4. Know your social security number. You need to know your social security number to complete the FAFSA form. You also need your social security number to create your account username and password (your FSA ID). 5. List all schools. You can include as many as 10 schools on your FAFSA application, so be sure to include any schools you’re interested in applying to. 6. Don’t use nicknames when you apply. This means you should only use your legal name. 7. Renew your FAFSA yearly. Every single year you attend school (and require financial aid), you must renew your FAFSA. 8. Always list the marital status of your parents. If your custodial parent has a new spouse, be sure to include them. 9. Verify that all information is correct before submitting and complete all the fields required (if applicable). Don’t leave questions blank, if possible. Always answer as many questions as you can. 10. Sign your application. If you don’t sign your FAFSA, your Expected Family Contribution, or ECF, won’t be calculated. This means you won’t qualify for federal student aid until you sign your application. This means students and parents BOTH need to sign. Although there are a lot of moving parts when applying to college, you can work with trusted professionals who are well-versed in the entire application process. How to Qualify for FAFSA Now that you understand the answer to the question, “What is FAFSA?” along with some do’s and don’ts, it’s important to understand the basic criteria for being eligible. Keep all these points in mind when completing your FAFSA form: You also need to show that you’re qualified to earn a degree or certification. This means you need to have a high school diploma or other equivalent, as approved by your state. This can include a GED or homeschool transcript, as per your state’s guidelines. If you are homeschooled, select “homeschooled” instead of selecting “high school diploma.” Your homeschool setting needs to be approved by your state’s homeschool laws and requirements, ensuring you’ve satisfied all requirements. Additionally, students who enroll in a career pathway program can also apply for a FAFSA.  Your ability to apply for and receive federal student aid is no longer contingent on your Selective Service status. This means that qualified males who don’t register for Selective Service can still receive financial aid, as per the Consolidated Appropriations Act, 2021. What Is The Expected Family Contribution (EFC) for FAFSA? The Expected Family Contribution — EFC for short — is calculated and decided by the government. This number reflects how much financial aid you can receive during any award year. However, the EFC is being phased out. This means that come the 2024-2025 school year, it will be replaced by the Student Aid Index or SAI. But what is the Student Aid Index, and why is it better? Unlike the EFC, the SAI removes certain family members from the calculation. These family members are those already in college. The SAI also makes it easier for students facing hardships to receive financial aid. Additionally, it expands the Federal Pell Grant. This means that more students than ever can access it, with eligibility occurring before college enrollment in some situations. Family size, income per household, and individual poverty levels on a state level are all considered. What Is The FAFSA? What’s FAFSA, exactly? In short, the FAFSA is a free form that colleges, universities, and other institutions use to determine how much federal financial aid — if any — that you qualify for. The majority of schools use FAFSA-qualifying information to determine how much aid they’ll personally give students. If it seems like learning the FAFSA  is overwhelming, know that you’re not alone. There’s a lot of college-related information to absorb, from qualifiers to the EFC (soon to be the SAI). Luckily, you don’t have to handle the college application process alone. College Funding Professionals can help. We offer assistance to parents and students applying to college or another certification program. Our team

Here’s What You Need to Know About the FAFSA Simplification Act

During the 2020-2021 FAFSA application cycle, 17.8 million FAFSAs were submitted. If you’re planning on applying for the first time, you may have heard about the FAFSA Simplification Act. Starting during the 2024-2025 award year, the FAFSA Simplification Act will change the way federal aid is provided to students. This might make parents, guardians, and college attendees wonder where they stand with federal aid and how the requirements will change. This helpful article explains what you need to know so you can enter the 2024-2025 school year confident and prepared. Changes to the Higher Education Act If your state relies on the FAFSA to award federal aid, then it’s affected by this new law. This law amends the Higher Education Act of 1965. But what is the Higher Education Act? The Higher Education Act (HEA) was created to assist post-secondary students with attending college by offering financial aid. Post-secondary schools would essentially receive more money, making it easier for students to attend. The HEA was designed to provide scholarships and low-interest loans to qualifying students. The FAFSA Simplification Act amends the HEA. There are key elements of this law that you need to be aware of. For starters, the EFC (Expected Family Contribution) will be replaced with the SAI (Student Aid Index). This means that the current metrics used to determine a student’s eligibility will soon be replaced. The new way of calculating eligibility removes how many family members a family currently has enrolled in college. It also allows families to have a minimum SAI score of -1500 (previously zero). Additionally, there will be separate eligibility to determine if you qualify for a Federal Pell Grant. Other changes include an elimination of alternate EFCs. This would be for an enrollment period that isn’t nine months. The SNT (Simplified Needs Test) would be eliminated, along with Auto-Zero calculations. However, they have been replaced with other similar calculations. FAFSA Formulas and Forms Some additional changes include the way the FAFSA determines a student’s family size. This means that the FAFSA will more closely follow what a student or their parent/guardian reposts on their tax returns. Currently, FAFSA always includes the student, even if they’re not living with their parents. The student’s parents are counted in household size as long as the student is still considered a dependent. In the instance of separated or divorced parents, the custodial parent is the only one counted. Siblings are included and don’t have to a) live at home or b) attend school. This new law will also work to streamline the FAFSA form. This means that, if possible, Federal Pell Grants and the SAI will be calculated using information obtained directly from the IRS. The Fostering Undergraduate Talent by Unlocking Resources for Education Act (FUTURE Act) makes this exchange of information possible and will work in tandem with the FAFSA Simplification Act. These both take effect starting during the 2024-2025 award year. Unlike previous years, students won’t have to answer questions about whether they’re registered for Selective Service or if they have any drug convictions. There will be questions added regarding a student’s race, sex, and ethnicity. However, these questions won’t affect is a student qualifies for federal student aid. Federal Pell Grants Federal Pell Grants are only available to undergraduate students. These students can’t have earned any other undergraduate degree. Additionally, these students must be considered low-income. Federal Pell Grants may be awarded to students who are currently enrolled in teacher certification programs, even if it’s postbaccalaureat. The Federal Pell Grant isn’t a loan so you don’t have to pay it back. It’s currently not awarded at more than $6,895 per school year. However, the FAFSA Simplification Act works to expand what students qualify for a Federal Pell Grant. Additionally, family size will play a role in eligibility, coupled with the federal poverty level. This will all begin during the 2024-2025 award year. Students currently incarcerated in federal and state prisons will once again qualify for Federal Pell Grants. This takes effect during the 2023-2024 award year. Income There have been some changes to allowances against income. Starting the 2024-2025 award year, FWS (Federal Work Study) Program income will qualify for allowances against income. Allowances against income also apply to institutional grants and scholarships that are part of AGI (adjusted gross income) as reported on your federal tax return. Allowances against income also apply to the American Opportunity or Lifetime Learning education tax credit amounts. This would need to be claimed on your federal tax return. Additionally, allowances against income apply to the payroll tax allowance and federal income tax paid. The new SAI formula no longer treats child support paid, cooperative education employment earnings, combat pay, and state/other tax allowances as allowances against income. Assets The SAI formula — more specifically, the asset contribution components — will change significantly with the new FAFSA Simplification Act. For example, the amount of child support you receive must be included in assets. If you’re the person receiving child support, you have to report the total amount you received as of the last complete calendar year. A business’s net worth is no longer restricted to companies that employ more than 100 employees (full-time). When calculating a farm’s net worth, the farm’s value is now taken into consideration. The only thing excluded is the value of the home where the family permanently resides. Other changes apply to dependent students. Education savings will be considered a parental asset only on accounts designated specifically for that student. Additionally, financial aid administrators can now use their professional judgment to determine if a family farm or business’s proceeds or losses will be excluded from family assets or income. Assets will also be adjusted if a student requires additional funds due to the disability of the student, their spouse or dependent, or their parent/guardian. Prepare for the FAFSA Simplification Act While the FAFSA Simplification Act changes certain FAFSA qualifiers, it doesn’t change the fact that financial aid is still available to eligible students.

Parent PLUS Loan: Everything You Need to Know

Consider the following: the average student pays $36,436 annually for college tuition, supplies, living expenses, and books. If you’re looking to help your child finance college, then a Parent PLUS loan is worth investigating. With so many loan options to choose from, both federal and private, it’s important to understand what each loan offers. This includes repayment options, interest rates, and what should happen if you can’t repay your loan on time. Consider this helpful guide as you navigate paying for your child’s undergraduate education so you can make the most informed decision possible. What’s a Parent PLUS Loan? When applying for financial aid and student loans, you may hear about Direct PLUS loans. These are part of a program for federal student loans. There are multiple types of Direct PLUS loans for parents. One type is Parent PLUS Loans. They’re made out to a student’s parent or legal guardian, as long as the student is an undergraduate and a dependent. With these loans, you can borrow up to the amount of your child’s attendance every year. The stipulation is that you need to deduct however much financial assistance your child has already received (if they’ve received anything). While loans without caps may seem like an ideal choice, it’s easy to accrue debt quickly with this type of loan. Keep in mind that, if you’re a grandparent of a student, you can’t utilize this loan unless you’re also the student’s guardian. Interest Rates and Loan Amount If you receive your first Direct PLUS Loan disbursement on July 1, 2023, or after this date (but before July 1, 2024) you’ll receive an interest rate of 8.05% on this federal PLUS Parent loan. Although these loans are unlimited, you can’t borrow more than the cost of your child’s attendance while at school. You also have to deduct any other financial assistance. The cost to attend a college or university varies from school to school. What’s Best: Parent PLUS Student Loan or a Private Loan? Each loan has pros and cons. Parent PLUS student loans offer more options than private loans. A Direct PLUS loan for parents comes with more forgiveness and better repayment options, whereas private loans have stricter rules. Unfortunately, when you opt for federal PLUS loans for parents, you’ll have higher interest rates. While private loans offer lower interest and, subsequently, lower monthly payments, if you need to defer your loans or need a more flexible repayment option, you’ll find it with a Parent loan PLUS. Another important difference is the way a lender collects fees. Parent PLUS loans are subject to the government garnishing your wages if you default. They can also garnish any social security benefits you receive. They may even withhold what you would get back as a tax refund. Conversely, private student loans don’t have the same ability to garnish wages. They can send you to collections, but they can’t withhold your tax refund or take money from your paycheck or social security benefits. Should a student or the borrower pass away, Parent PLUS loans will be forgiven. This isn’t true for private loans. These lenders can collect money owed to them even after someone passes away. Some private lenders may have forgiveness policies in place in the event of death or disability, but not all do. If you declare bankruptcy, you may be able to discharge a federal or private student loan. Understand that it may be difficult and it’s not guaranteed you’ll be successful. Private student loans offer the immense advantage of lower interest rates. You may see a 2% reduction in interest rates if you have a good or excellent credit score. Over a decade or other lengthy repayment terms, a lower interest rate can wind up saving you a significant amount of money. Federal loans, however, have fixed interest rates. These rates are determined annually and are based on the type of loan you take out. You can’t change these interest rates unless you refinance your Parent PLUS loans or enroll in automatic payment withdrawals. Even then, the reduction may be small. What Are the Requirements? There are specific parent and student requirements when applying for Parent PLUS loans. Parents must be the biological parent or have legally adopted the student or dependent. The student must be enrolled no less than half-time and must be an undergraduate student. The parent or legal guardian had to be a U.S. citizen. If not, they must be an eligible non-citizen. Parents must meet the minimum credit score requirements. The student has to meet the financial aid designated general eligibility requirement. Grandparents can only take out these loans if they adopt the undergraduate student legally. Students must be U.S. citizens. If not, they have to be eligible non-citizens. Students must not have any loans they’ve previously defaulted on or failed to resolve. They also can’t have consolidated an existing loan into a federal Direct loan. For males aged 18-25 to qualify, they must register for Selective Service. Is a Parent PLUS Loan Right for You? Deciding to take out a Parent PLUS loan depends on your credit score, how much you plan on borrowing, and what type of repayment options you’re most comfortable with. Although Parent PLUS loans have higher interest rates, you may be able to reduce these rates by refinancing or enrolling in automatic payments. It’s best to speak with your child’s bursar’s office about your student loan options. They’ll provide you with the most up-to-date information for your child’s school of choice so you know what you can expect to pay upon your child’s graduation. If you need assistance with understanding your student loan options, College Funding Professionals is here to assist you with your child’s college planning process. We’ll help you understand the entire financial aid process so you’re prepared as you apply for federal or private loans. Join our free online Facebook Group to gain access to the best college planning advice anywhere.