Are you finishing high school, or do you have a child who is finishing high school? If so, thousands of dollars a semester now loom on the horizon. If you’re getting a sinking feeling in your stomach just thinking about how to pay for it all, you’re not alone.
Student loans are always an option, but the current student loan debt is one of the biggest since the 2008 housing debt issue.[1] The only difference, of course, is that federal law prohibits forgiveness of student loan debt. If your or your child’s future school is out of state, student loans are a gamble, especially if future goals lie not in a STEM career but art or education.
If you’re looking for financial assistance for higher education, your first step will be the Free Application for Federal Student Aid (FAFSA), which is the first step to a Pell Grant, a form of financial aid provided by the federal government. You don’t have to repay Pell Grants: they are a need-based, merit-based entitlement initiated by the federal government to increase college enrollment among low and middle-income families and to reduce dropout rates. The FAFSA is also required for some other government assistance programs and many University-specific scholarship programs, making it a must for anyone in the financial aid market. Even if you’re not sure if you qualify, you should complete this form. It looks intimidating, but millions of people complete the task each year. It’s free, and it can have a big payoff. You can do it.
The information on the FAFSA is used to calculate the Expected Family Contribution (EFC), which designates the needs of a family and tells the family how much they should pay for the student’s education. A low EFC number represents a high level of need, while a high number designates a low level of need.
Eligibility
Pell Grants are given out according to eligibility guidelines.
Here are some of the criteria:
Low or moderate (in some circumstances) income students with financial need.
An undergraduate student who has not previously earned a bachelor degree or a post-baccalaureate student in a teacher certification program.
The applicant must not be incarcerated.
The student must be attending a participating school. These funds do not function as individual scholarships to the student; they go directly to the school.
Only US citizens or eligible noncitizens can receive grants.
The applicant needs a valid social security number.
Applicant must be enrolled or accepted at a participating college and pursuing an eligible degree or certificate program.
Applicant must be enrolled at least half-time and making successful academic progress.
Applicant must not be in default on a federal student loan or owe money on a previous grant due to mishandling of funds.
Applicant must have a high school diploma, a GED, approved homeschool recognition, eligible career pathway alternative program, or six completed college hours.
Gathering Documents
You’ll need some documents to demonstrate your family financial state. These are the most common documents required:
Social Security card.
Registration card for non-US citizens.
Tax returns for the student, spouse of the student (if any), parents and spouse of a parent if the student is a dependent.
Record of any untaxed income, such as government benefits or child support.
Current statements for all bank and investment accounts, including student educational savings accounts.
Records applicable to your family, for example, farm records, records for any family-owned business, or medical or dental expense records.
Title IV Institution Codes for each school where you intend to apply. Codes are available here.
Some applicants may prefer to have a FASFA preparer complete the work, but it is not that difficult to do it yourself. Help is available at 800-4-FED-AID. School guidance counselors often assist with applications.
Income – Use the amount on this year’s 1040 federal income tax form (or last year’s if your form for this year is not yet available) to assure that you have included all sources of income. You will need to record non-taxable income such as child support or worker’s compensation. You must report a stepparent’s income along with the custodial parent’s income.
Marriage status – Your marriage status on or before the date you sign the form.
Household size – Include yourself and all others who live with you. Even if you lived away from home last year, you would count toward the household size.
Avoid leaving any blanks, remember to sign, and make the 2018 June 30 deadline.
Improving Your Chances
There are steps you can take to lower your EFC.
If you or your parents have surplus funds, put them in retirement or 401(k) accounts, which are not considered in calculating your EFC.=
If you have been saving money for a major purchase, buy the item and get the money out of your bank account.
If more than one student from a family is attending college, the EFC and eligibility will be affected.
Watch for eligibility changes and updates. Eligibility criteria change from year to year.
Pell Grants are limited, and not everyone will qualify. They also max out at less than $6000 a year, and not everyone will get even that maximum amount.[2] With the average in-state tuition fee slightly over $9,000 and out-of-state over $20,000, this is likely to be insufficient.[3] Even if you receive a Pell Grant, you’ll likely be looking for other sources of financial assistance.
Alternative Government Aid
Other programs are available from the federal government and other sources, most of which also require the FAFSA.
Discretionary grants exist on a competitive basis. While Pell Grants are need-based gifts that are given directly by the federal government, some programs either come directly or indirectly from the government that can help with education expenses.
The Federal Work-Study program helps needy students supplement their tuition with work opportunities. The Work-Study program provides colleges and institutions with federal money to provide work for students. The money comes directly from the government, allowing these institutions to hire students in areas where they may otherwise not have had the funding to do so. In many cases, these work opportunities later transform into higher paying work positions paid directly by the institutions. Although the program emphasizes work related to one’s major or civic-related jobs, students accepted into the program can find employment wherever it is available, even if it is unrelated to their field of study. Furthermore, this program is available to all kinds of students: full or part-time, undergraduate or graduate.
The Federal Supplemental Educational Opportunity Grant exists for many low-income students. The FSEOG is based on need, but it is given out by specific colleges, not directly by the federal government. Participating colleges receive a certain amount of funding from the government to provide to students. Amounts can range from $100 to $4,000 a year and can be combined with other programs if available and offered. This assistance is given only to students with the most financial need first, and most students cannot receive the FSEOG and a Pell Grant at the same time. Students who qualify for the Pell Grant will receive the FSEOG first.
Non-Federal Aid Programs
Some potential financial assistance packages come directly from less-common and often overlooked sources.
Many students fail to consider opportunities offered by individual colleges. Smaller colleges will often offer scholarship money based on need, or based on academic performance. Frostburg State University in Maryland, for example, offers scholarships to students based on a large number of academic achievements, including SAT score and GPA. Many other universities do the same or offer similar forms of scholarships. Always take the time to check with the financial aid office at the colleges you’re considering.
Crowdfunding is a new, although less certain, method. Crowdfunding one’s education is an idea that is gaining in popularity. Some students are turning to websites like GoFundMe to plead their cases to friends, family, and acquaintances to raise money. Some website, such as ScholarMatch, exist specifically to help individuals raise funds for their education through outside means.
State financial aid also exists. Many states have their financial aid programs and scholarships. Many of these are underutilized, as many students simply don’t know they exist. This category includes scholarships and funding available through individual state senators and representatives. Interested students should check with their local and state governments as well as their elected officials for scholarship opportunities.
Education costs are rising faster than incomes, and most families can’t keep up. Still, there are many opportunities available. Although loans are always an option, no student should turn to student loans to get funding for an education without exhausting all possibilities for assistance that will not leave them in debt.
Notes
1. “Why the Student Loan Crisis Is Even Worse Than People Think” . Time.com
2. “Federal Pell Grants are usually awarded only to undergraduate students” . StudentAid.Ed.gov
3. “What’s the Price Tag for a College Education?” . CollegeData.com