College is expensive. If you don’t already know it going in, you’ll soon find out as soon as the first set of bills roll in. Tuition, rent, and books are enough to set you back thousands instantly. That doesn’t account for the other daily expenses such as groceries, transportation, any other little thing that life throws at you, and if you have any time after that maybe a little bit of fun money.
US Department of Education yearly will award nearly $150 billion in financial aid to around 15 million students who qualify each year. To get the process started you will need to fill out the Free Application for Federal Student Aid, FAFSA, and you should get the ball rolling on FAFSA as soon as possible. You want to be eligible for the most amount of aid as possible so filling out your FAFSA should be the first thing you do even before making your decision on which college to attend.
There is a FAFSA Guide that can be used to guide your way through the application. The FAFSA applies for three types of federal aid: loans, work-study programs, and grants. Some states and colleges will use FAFSA to award eligible students with grants and scholarships.
You can get two types of federal loans direct and perkins. Federal Direct Loans are the government’s largest loan program consists of four loan types: subsidized, unsubsidized, PLUS and consolidation loans. Direct Subsidized Loans, or subsidized federal stafford loans, are for undergrads only. They are need-based, meaning eligibility depends on the income and assets of the borrower. Subsidized loans don’t accrue interest while the student is in school. Direct unsubsidized Loans, or unsubsidized federal stafford loans, are for undergrads and graduate students. These loans are not need-based, meaning the borrower can qualify regarless of income and assets. These loans will accrue interest while the student is in school. Direct PLUS Loans are for graduate students and parents of undergraduate students. Unlike the previously described loans, you need to have decent credit to qualify. Direct Consolidation Loans are multiple federal loans that have been combined into one loan. Here is a guide for federal student loan consolidation. Lastly, Perkins Loans, are loans where participating colleges will lend up to $5,500 a year to undergrads and up to $8,000 to graduate students that have what is described as “exceptional financial need.” These loans have a fixed interest rate of 5%.
After you fill out the FAFSA, you will get a Student Aid Report, a summary report of the information you provided. Review that report to make sure all your information is correct. You will receive award letters after that from the colleges you were accepted to listing which types of aid you’d be eligible for. You could receive these award letters as early as spring or as late as fall should you have applied for fall semester. Filling out a FAFSA early on will save you a headache, heartache, and an empty wallet. So, make sure it’s the first step you take when applying to colleges.
Make sure to always check back with us at Ameritech Financial for more up to date information on student loans.
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