Finding College Financial Aid: Tips for Tackling the Assignment

Planning for college is tough enough without the additional challenges of completing the various applications available for federal financial aid. The California Society of CPAs suggests several things to keep in mind when tackling this assignment: (1) prepare early; (2) investigate all options; and (3) don't assume that you are not qualified for aid, even if you think your family income is high.

The Financial Aid Process
Students shouldn't wait until they are accepted into college to start their aid search, or it may be too late. The deadlines for submitting financial aid forms tend to vary among colleges. For example, some forms may be due as early as December, although most are due in February or March. Even within one college, there may be different deadlines for different forms.

The first step in applying for aid is to complete the Free Application for Federal Student Aid (FAFSA) form. Students can obtain this form online at www.ed.gov or through their financial aid office. The FAFSA form should be filed after January 1 of the student's senior year in high school, but no later than June of that academic year.

Approximately two-thirds of all student financial aid comes from federal programs administered by the U.S. Department of Education, which has made more than $42.8 billion available in aid to students. The three most communityon federal financial aid loans are the Stafford Loans, the Pell Grant and the Perkins Loan. Except for one of the two Stafford Loans, these loans are awarded based on financial need.

The Stafford Loans
There are two types of Stafford Loans available. With the first, the funds are provided by private lenders, such as banks, and are administered by the Federal Family Education Loan Program (FFELP). This loan allows you to borrow money from the bank at a relatively low interest rate that is capped at 8.25 percent. The second type of Stafford Loan is federally funded and administered by the Federal Direct Student Loan Program (FDSLP), where the funds are provided to the school, which becomes a direct lender.

Stafford Loans are either subsidized, with the government temporarily paying the interest, or unsubsidized. The subsidized loan is based on financial need, whereas anyone can apply for the unsubsidized loan. With an unsubsidized loan, the student pays the interest, which begins to accrue when the loan is made and repayment can be deferred until graduation. Some students try to maximize their loan amount by combining subsidized and unsubsidized loans.

Pell Grants
Pell Grants are federally funded, available to undergraduate students and are based strictly on need. Unlike a loan, they do not need to be repaid.

Eligibility for Pell Grants is based primarily on a standardized formula that establishes an expected family contribution (EFC). When determining your need for financial aid, the administrator will first consider other aid you are expected to receive. He or she also will consider the cost of attendance, your status as a full- or part-time student, and whether or not you plan to attend school for a full academic year.

Perkins Loan
The Perkins Loan is awarded to undergraduate and graduate students and is based solely on exceptional financial need. Colleges and universities receive a limited pool of funds from the federal government, which they award to students on an annual basis. For such campus-based programs, application deadlines vary. It's a good idea to check with the schools that students intend to apply to as soon as possible for specific deadline information.

Preparation
When completing applications, you are generally required to provide specific financial information, including tax information. To help streamline the process, you may want to prepare your tax return early or have an estimate ready to provide the required information on the form.

Finally, remember to follow all the instructions carefully. Try to avoid common mistakes such as forgetting to sign the application forms or leaving certain lines blank, which can delay the processing of your application.