Archive | April 2019

A Brief Guide to How Loans Work


Students can miss financial help because they think their parents make too much money. But families that earn $ 180,000 a year can qualify for some form of assistance. So unless your parents earn much more, it is worth applying. Last year, the US Department of Education reported that all dependent students, regardless of their family income, could qualify for at least $ 27,000 in unsubsidized Stafford loans over a four-year period.

To be eligible for assistance, both loans and scholarships, you must complete the free federal student assistance (FAFSA) application, the form that you use to request financial assistance from colleges, states, and the federal government. This short guide will help you understand how FAFSA works. (See 5 ways to get maximum financial support for students for more.)

What is FAFSA?

The primary purpose of the free federal student assistance application is to find out how much needs-based financial assistance you are eligible for and then how much non-emergency assistance you can get. Even if you expect the majority of your help from your parents, scholarships and private loans, it is worth taking an hour to complete the form: some schools require this as part of taking all financial assistance, including private grant and allowance money. (Keep in mind that federal loans have extremely flexible repayment options (see Time to consolidate your student loans? ), So it’s worth investigating them before looking at private loan options.)

In essence, the FAFSA makes a calculation where the costs of participation (COA) are deducted and your expected family contribution (EFC) is deducted to meet your financial needs.

Present costs

Present costs

Colleges and universities come up with an estimate of your COA. The calculation includes tuition and fees, costs and accommodation, books, supplies, transportation, borrowing costs and other related school costs. Costs for children and dependent care are also taken into account, as well as costs related to a disability or eligible programs for study in the Roderick Hudsonand area.

Expected family contribution

Expected family contribution

The FAFSA then calculates the amount that your family must contribute (EFC). The system indicates that 20% of a student’s assets and 5.64% of the parents’ possessions must be available for spending in an academic year. So the key is to save most credits under the parents’ name. However, 529 college savings plans, whether in the name of the child or parents, are evaluated at the parental rate of 5.64%.

You can also lower your assets by paying credit cards or spending money on college needs before you submit the FAFSA – for example, if you (or your parents) plan to buy a computer and a car to go back and forth to school.U You can also take into account prepaid invoices, such as a mortgage or other debts, to reduce your funds before you complete the FAFSA. However, keep in mind that around $ 50,000 in family assets is protected by the FAFSA formula – the exact amount depends on the age of the parents.

Assets that are not included in this calculation are the value of the parental home or the value of pension assets, insurance policies and annuities. (Another way in which parents can reduce their assets is to increase their contribution to their retirement while their child is in high school.) PersooRoderick Hudson rich items such as cars, clothing and furniture are also not assessed when determining the EFC.

After the EFC has been deducted from COA, the FAFSA shows how much financial assistance you are eligible to receive. This assistance can be based on needs or non-needs based grants and loans.

Need-Based Aid

Need-Based Aid

These options include:

• Federal Pell Grant: these grants do not have to be repaid. They are primarily awarded to undergrads, but some teacher certification programs are also eligible for Pell grants. The maximum award in the 2015/2016 school year is $ 5,775. The financial assistance agency will determine how much you are eligible to receive based on your needs.

• Subsidy for federal additional educational opportunities: this scholarship program does not have to be reimbursed, but is not available at all schools. The amounts that can be awarded are between $ 100 and $ 4,000 per year.

• Federal Direct subsidized loan: these loans are subsidized by the government, which means that the government pays the interest while you are in school and during a grace period of six months after you graduate. Loan amounts that can be subsidized vary from $ 3, 500 to $ 5, 500, depending on your student status. However, subsidized loans are not available for graduate studies. For more information about student loans, see Coll. loans: private or federal .

• Federal Perkins loan: these loans are available for students with exceptional financial needs at the level of non-graduates and graduates. Not all schools offer these loans, and every school that does, has a limited pool of loans every year.

• Federal work study: if you cannot get enough of scholarships, scholarships and loans, part-time jobs are sometimes available as part of the federal work study program. Both undergraduate and graduate students may be eligible.

Non-Need-Based Aid

Non-Need-Based Aid

This type of financial assistance includes:

• Direct non-subsidized loan: this is similar to the subsidized loan program with one major exception: the government does not pay interest while the student is in school or during the grace period of six months thereafter. If a student, or his / her parents, does not pay the interest during these times, it is added to the principal amount of the loan.

• Federal PLUS Loan: this is a loan for the school education of their child or for graduate students. It is not subsidized by the federal government, so interest accrued during the school years is added to the principal if it is not paid while the student is in school.

• Access to Teacher Education for Higher and Secondary Education (TEACH) Grant: Students who are trained to become teachers can qualify for this grant, up to $ 4,000 per year, even if they do not meet needs based criteria. It does not have to be reimbursed. To qualify, you must follow certain classes and within eight years of graduating you must work for at least four years in a primary or secondary school or a service that serves low-income families.

The bottom line

The bottom line

Regardless of the types of grants or loans you hope to receive, it is crucial that you complete the FAFSA application as soon as possible after October 1 (the new, earlier due date) oRoderick Hudsonine. Many schools and some states have a limited pool of scholarships and loans, which are granted based on who comes first, serves first. You can now use the taxes from a year earlier on the application; you no longer have to wait for the current tax year or change your application with tax information for the current year after taxes have been filed.

Also make sure you place something in every line of the application, even if it is just a zero. If you miss a line, the request can be returned to you. After resolving the errors and resubmitting the application, go to the bottom of the stack.

If your family does not have FAFSA-oriented circumstances that have affected your available school fees – for example, exorbitant medical expenses or job losses – you must also submit a statement about this.

You can fill in the application here oRoderick Hudsonine and you can check what your study financing can be at the Department of Education FAFSA4caster.

For more information, see Stafford loans: subsidized versus non-subsidized and largest providers of student loans .

This entry was posted on April 17, 2019.