Student Loan News, Updates and Blog Posts

If you are a parent of a prospective college student, or a prospective college student yourself, you should be starting to think about financial aid. You have probably heard people around you talking about FAFSA, Stafford loans, Pell Grants, scholarships, and alternative student loans. It might seem like you are the only one who does not know what is going on, but trust me you are not alone in your confusion. Applying for financial aid can be very stressful for families and filing the FAFSA is a task that most people dread.

In order to be eligible for any kind of Federal student loans or grants you must file the FAFSA. Many people play down the importance of the FAFSA, but it should not be taken lightly.  Mistakes on this form can end up costing you thousands of dollars in aid. Luckily there are people out there who know a lot about financial aid and might even be able to help you with the application process.

Many high schools and communities host financial aid and FAFSA workshops. These are usually free sessions run by the high school guidance department, a local college or outside consulting group. These workshops usually go over a general look at financial aid, applying for student aid, why you should file the FAFSA, determining financial need, and tips and techniques for filling out the FAFSA.

If you are perplexed by the financial aid process make sure you find out if your town is holding a workshop. If they are not planning one it may be beneficial to suggest it to the high school principal or guidance department. The U.S. department of education even provides resources and presentation materials that make hosting a financial aid night more manageable. After attending a financial aid or FAFSA session you will probably find out that you are not the only one who feels lost, but you will also probably feel more confident and ready to tackle the application process.

When it is time to head off to college your parents will probably try to put every penny they have into your education. You may notice your parents going out to dinner less, postponing household projects, and even jeopardizing their retirement fund so you can go to the college of your choice.  However, no matter what income level you fit into it is important to take on some of the financial responsibility of your college education so that mom and dad are not searching through the couch cushions for spare change.

Your parents might have told you that they make too much qualify for any federal student loans. This is not true. What many people do not know is that not all loans are need based. In fact, anyone is eligible to take out an unsubsidized Stafford loan. These loans are federally guaranteed and not based on need. Interest starts accruing at the time that the loan is disbursed to the school, but the loan has a low fixed interest rate and payments do not have to start until six months after graduation.

An unsubsidized Stafford loan will not by any means cover the entire cost of your education, but it will make a dent and take a little bit of the pressure off of your parents. Though you will be making monthly payments on the loan after you graduate you will feel like you own a piece of your education. Your parents will also be extremely grateful that they did not have to give up their retirement dreams to send you to college.

One of the most common statements I hear from my college friends is that their parents never let them fill out a FAFSA. This is a frequent and sometimes costly mistake that students and their parents make when financially planning for college. The following are a few of the main reasons why people do not file the FAFSA and why you should not fall into the same trap.

Reason #1: I will not be eligible for financial aid.
According the Department of Education, approximately 1.5 million students who would be eligible for the Pell Grant do not complete the FAFSA. Could you be one of these people? The only way to even be considered for Pell Grants, Perkins Loans and Stafford loans is by filling out a FAFSA. Additionally, many colleges offer other kinds of financial aid that is not need based, but you still might need to submit a FAFSA to qualify. Some of these scholarships and grant programs are strictly designed for students who have been denied federal aid.

Reason #2: My parents do not want to disclose personal financial information.
This is probably the excuse I hear most often. The good news is that the information that you submit with your FAFSA is strictly confidential. Only a handful of people ever see the information. Try to be proactive in helping your parents understand the benefits.

Reason #3: The FAFSA is long and complicated. Filling it out will not be worth my time.
Although the FAFSA involves gathering a lot of information and can take a significant amount of time you should not dismiss it. College is going to be hard so the FAFSA will be good practice! In all seriousness, the FAFSA is free so why not take a couple of hours to talk to your parents, gather the necessary information, and fill out the form online. You could find out that you are eligible for a lot of financial aid. Also, changes are coming for FAFSA in 2010 so it will be shorter and more manageable than it was before.

The good news: The Department of Education has recently announced that the Free Application for Federal Student Aid (FAFSA) is getting a facelift. The new FAFSA will be shorter and more intuitive than ever before.

Who will be affected by the changes? Any present or prospective college student who plans on applying for federal financial aid for the 2010 – 2011 school year will be affected by the FAFSA overhaul.

What are the changes? The goal of changing the FAFSA is to make it easier and less time consuming. The current FAFSA contains more than 100 questions. The new FAFSA will be organized more logically and contain fewer questions. It will eliminate some questions across the board and some sections for certain applicants. The online form will automatically adjust which questions to ask based on information that the applicant provides at the beginning of the process.

When are the changes taking place? The FAFSA changes are happening now and they will be seen on the 2010 – 2011 application when it comes out in January.

Why are changes being made? If you have ever filled out the FAFSA before you know that it is not something to look forward to. Filing the FAFSA can be extremely taxing for students and their parents. Changes are being made because authorities are confident that shortening the FAFSA will help families get the aid they need without adding a lot of stress to the process. Additionally, making it easier to apply for federal aid will increase the number of eligible students who submit applications.

How are they doing this? You might wonder how the government can afford to trim down such an important process. The key to the change is eliminating redundancy. Questions about tax data will be eliminated because that information is available through the Internal Revenue Service database. Also, questions that have little affect on aid award will be eliminated. Some students are concerned that if certain questions are eliminated they will not receive as much aid as they should, but according to Caesar Storlazzi, Yale’s Director of Student Financial Services, since FAFSA is only one part of the financial aid application process the changes should not impact the amounts of student financial aid awards.

File your FAFSA online now!