Financial aid can seem like the most daunting hump in the getting-your-kid-to-college process. But what is financial aid, anyway? What does it entail? Don’t worry, it’s normal to be confused.
Let’s compare financial aid to baking a cake. The ingredients — scholarships, grants, loans, work-study and out-of-pocket funds — are combined to create a finished product: Your child’s final financial aid award.
Hang in there! Let’s dive in and learn more.
How to Apply for Financial Aid for College
We’ll break down the process of how to apply for financial aid for college into a few simple steps. But first, let’s go over exactly what types of financial aid are out there.
Types of Financial Aid
There’s no one way to go about getting aid for college (which can make it even more confusing). Your son or daughter will have different scholarship opportunities depending on where you live, your financial situation and more.
You might hear about two types of financial aid: need-based financial aid and merit-based aid.
Need-based financial aid takes parent and student assets and income into account. In other words, a student’s scholastic achievement or ACT scores have no bearing on how much need-based aid your child receives.
Federal student aid is need-based aid awarded by the U.S. Department of Education. Every year, the Department awards more than $120 billion in grants, work-study and loans to over 13 million students. Federal student aid can help out with your child’s tuition, room, board, books, supplies, transportation, fees and more. The schools you apply to partner with the U.S. Department of Education to incorporate this aid onto your award.
- Grants are financial aid that doesn’t have to be repaid.
- Work-study allows you to get a job at the school you ultimately attend — you’re paid a wage for the work you do.
- Loans are borrowed, which means you have to pay them back with interest.
Check out the basic eligibility requirements to get need-based aid.
Merit-Based Financial Aid
Scholarships! As a parent, isn’t that word absolute magic? The vast majority of merit-based scholarships are not based on need. This means that whether you’re “needy” or not, there are scholarships available. Luckily, they’re not doled out only to straight-A students or National Merit Semifinalists (though if you have a child who is one, great!) They’re based on just about any other qualification — art, athletics, music, etc.
Lots of colleges and universities offer merit-based scholarships. All colleges have different awarding structures for how they divvy up merit-based scholarships, and the amounts are different, too. What’s the best way to understand everything there is to know about scholarships at a particular school? Talk to your kiddo’s admission counselor to learn more.
You can also find merit-based scholarships online (the word “scholarships” turns up close to 1,000,000 results on Google). You can also seek scholarships in your community, too. Don’t forget to check your local hospital, nursing home, veterans group or church for free money. School counselors can provide a wealth of information about local scholarships. Make sure your child talks to his or her school counselor on a regular basis!
Fast fact: Did you know that private colleges and universities offer lots of merit-based aid? The discount rate, which is the amount colleges channel directly back to students, surpassed 50 percent in 2017-18, according to an annual study by the National Association of College and University Business Officers (NACUBO). A $50,000 per-year college truly isn’t going to cost you a full $50,000 — because, financial aid!
Take These Steps to Get Financial Aid
There are several steps you can take to get need-based or merit-based aid.
1. File the FAFSA.
The swiftest way to get financial aid for college is to file the FAFSA. The FAFSA is a free application that gives you access to federal grants, work-study and loans to pay for college. Which types of aid are these? Yep, they’re need-based!
Get your FSA ID before you file the FAFSA. Your FSA ID is your unique username and ID that you can use to look at or sign official financial aid documents. Make sure you get both a student and parent FSA ID.
Colleges use your FAFSA results to determine your eligibility for different types of aid, such as loans, scholarships and grants.
Not sure you want to file the FAFSA? You don’t have to — but you’ll miss out on federal need-based aid. Here’s how to pay for college without the FAFSA. Complete the FAFSA between October 1, 2019, and midnight, June 30, 2020, to be considered for financial aid for the 2020-2021 academic year. Any corrections or updates must be submitted by midnight on September 12, 2020.
Many states and colleges have earlier deadlines for applying for state and institutional financial aid, so you’ll need to check the deadlines with each college you’ve applied to.
Pro tip: You’ll have to file the FAFSA every year, so use the data retrieval tool (DRT). It’s a lifesaver! The DRT pulls information directly from the IRS and prepopulates it on your FAFSA.
2. Apply for admission.
Your child can’t get scholarships from colleges until he or she applies. What type of admission does each college have? Rolling admission? Early decision? Early action?
It’s important to know each admission type, make sure your child follows all directions and applies well ahead of the deadline. Applying incorrectly (or late) could also directly affect your child’s financial aid opportunities.
3. Ask colleges about scholarships.
All colleges post information about scholarships on their websites. To get a full understanding of what a school offers, it’s a good idea to make contact with the admission office at each school. Colleges and universities can’t post every single scholarship they offer on their websites. Those lists are long!
For example, an alumna could have donated a scholarship for red-headed students education majors who like to knit. (Okay, that could be an exaggeration.) But there are dozens of scholarships that you might not know about unless you take the time to turn over every single stone at a particular college. Just ask!
4. Apply for outside scholarships.
You probably want your child to apply for every bit of scholarship money possible. That means doing some extensive research online, in your community and through your school counselor’s office. There’s no one way to piece together the scholarship opportunities available to your kiddo. You can search in the following places, according to the U.S. Department of Education:
- The financial aid office at the colleges you plan to attend
- Your school counselor
- Your TRIO counselor
- Scholarship search tools — but make sure they’re valid
- State grant agencies
- Library reference section
- Foundations, religious or community organizations, local businesses, civic groups
- Organizations related to your field of interest
- Ethnicity-based organizations
- Your employer or your kids’ employers
Pro tip: Ask the colleges you’ve applied to whether they offer scholarship competitions. Many do, and it’s a great way to earn more scholarship money.
5. Compare financial aid awards.
You’ve applied to several schools, filed the FAFSA, auditioned or interviewed for scholarships and attended scholarship events. Next, you’ll receive financial aid awards from schools. Sit down and compare them.
Be sure you do an apples-to-apples comparison. What does that mean? Let’s say you’re getting a $19,000 merit-based scholarship from College X and a $17,000 merit-based scholarship from College Y. That doesn’t mean that it’s necessarily cheaper to go to College Y.
What’s the full price for each? Figure that out, then subtract the amount of financial aid you’re awarded from each college to see which is cheaper.
6. Make a decision by May 1.
National Candidate Reply Date is always May 1. It’s a great idea to decide by May 1 or before that date to ensure your spot in the class. As soon as you’ve decided what college you’d like to attend, accept your financial aid award. You should be able to indicate exactly which loans, grants and scholarships you’d like to take advantage of online or via a paper version of the financial aid award. You’ll need to send an enrollment deposit to secure your spot in the class and secure housing.
Ask Great Questions!
Once you get your financial aid award from each school, read everything. Ask your admission counselor or the financial aid office at each school for clearer explanations about loans, scholarships, grants and other types of aid.
You might ponder these questions:
- How much will you need to pay out of pocket?
- Who’s contributing to college costs? Are you paying for it all, or is your child responsible for some of it?
- How much will the college’s scholarships and grants (free money) offset the cost?
- How much will outside scholarships help?
- Will your child work and attend school at the same time?
- How quickly does your student want to get through school? Would he or she rather attend school part-time instead?
- How much does your child feel comfortable borrowing?
What are some other factors that you need to consider as a family?
There are lots of ways you can take care of the costs of college. You can pay for it all out of pocket, you might earn a scholarship because of your violin-playing talents or your high ACT score. Or you might get need-based financial aid.
What is need-based financial aid, exactly? It’s exactly like it sounds — it’s based on your family’s financial situation. Or, in very rare cases, it’s based on your financial situation if you’re an independent student. Your grades, test scores or extracurricular achievements don’t factor in.
How Do You Get Need-Based Financial Aid?
You’ll need to file the Free Application for Federal Student Aid (FAFSA) if you want financial aid. Every single school you apply to will use your FAFSA results to determine your eligibility for federal financial aid. Certain schools you apply to may ask you to fill out the CSS Profile. Check out the list of schools. You can use the CSS Profile to apply for aid and scholarship programs from each school, not the federal government.
How is Need-Based Financial Aid Calculated?
Let’s break it up into two parts — here’s how to calculate your federal student aid and CSS Profile.
Federal Student Aid
Once you file the FAFSA form, colleges will use your Expected Family Contribution (EFC) to determine how much federal aid you’ll receive. A formula established by the government calculates your individual EFC. The EFC takes into consideration your family’s:
- Taxed and untaxed income
- Benefits (including unemployment and Social Security)
- Family size
- Number of family members attending college
The formula looks like this:
Cost of Attendance (COA) – Expected Family Contribution (EFC) = Financial Need
You won’t be able to get more need-based aid than the amount you actually need. In other words, let’s say your COA is $20,000 and your EFC is $15,000. Your financial need is $5,000 and you aren’t going to be eligible for more than $5,000 in need-based aid.
Here are the federal student aid programs:
Federal Pell Grant
You could get a Federal Pell Grant if you’re an undergraduate student who has extreme financial need. Amounts can change yearly. The maximum Federal Pell Grant award is $6,195 from July 1, 2019 to June 30, 2020.
Federal Supplemental Educational Opportunity Grant (FSEOG)
An FSEOG also requires you to have a considerable amount of financial need. You can receive between $100 and $4,000 a year. This amount depends on a few factors: your financial need, the date you apply, how much other aid you get and the availability of funds at your school.
Direct Subsidized Loan
Direct Subsidized Loans are for undergraduate and graduate students. Postsecondary schools decide how much money they can offer you, but there are caps on the amounts available. These limits depend on your year in school.
Federal work-study offers part-time employment for undergraduate, graduate and professional students. Each school determines the amount of work-study you get. Learn more from each school’s financial aid office.
Some colleges require you to file the CSS Profile. Invest the money and send it to each school to see what kind of institutional aid you qualify for.
First, register with the College Board. You’ll also want to have the following financial documents handy (both yours and your parents’):
- Most recent tax return
- W-2 forms and any other records of income from the current year
- Current bank statements
- Records of assets
Is Need-Based Financial Aid Different than Merit-Based Aid?
Soooo, what’s the difference between need-based financial aid and merit-based aid? Financial need isn’t a consideration for merit-based scholarships.
They’re also need-blind. This means that a your financial profile is not a factor. Schools use another combo of merit-based factors. They might factor in your:
- Grade-point average
- SAT or ACT scores
- Class rank
- Academic performance
- Teacher recommendations
- Community service
- Academic major
- Gender, race or ethnic background
- Extracurricular activities
The government issues need-based financial aid. Colleges or private sponsors award merit-based aid.
Do you Have to Pay Need-Based Aid Back?
You’ll pay back financial aid if it’s a loan, but you don’t have to pay back grants, scholarships or work-study money.
You don’t have to begin repaying most federal student loans until after you leave college or drop below half-time enrollment.
A repayment schedule will explain when your first payment is due, how many payments you’ll make, the frequency of payments and your payment amounts.
You might get a grace period, which is a set period of time after you graduate, leave school or go below half-time enrollment. You don’t have to start repaying your loan until after the grace period is over. The grace period gives you time to select your repayment plan. Not all federal student loans have a grace period. Interest will build during the grace period in all cases.
How to Get the Most Need-Based Financial Aid Possible
Filing the FAFSA is the best way to get the most need-based aid possible. Be sure you know how much need-based financial aid you’re taking out and make a plan to pay it back when you’re through school.
Think of it this way: An average of 66 percent of graduates from the class of 2017 took out loans to pay for college, according to U.S. News data. Students borrowed about $30,000 on average.
You’ll use your income from 2018 for the 2020-2021 FAFSA. Parents and guardians, here are a few ways you can decrease your finances:
- Be intentional: Make less during the preceding years you know you’ll be filing the FAFSA
- Don’t realize capital gains or take retirement distributions
- Defer work bonuses
- Decrease reportable assets
- The more kids you have in college, the better
Get Need-Based Financial Aid
We’ve saved the best tip for last: Make sure you file your FAFSA as soon as possible, because many schools award aid on a first-come, first-served basis. There’s a finite amount of campus-based money. (You could file the FAFSA as of October 1.)
The perfect college visit scenario: You crunch through the leaves on a beautiful college campus and listen to a tour guide’s perfect spiel on a 70-degree October day.
The reality: You might’ve had the gorgeous campus tour. But then — you find yourself in the financial aid director’s office. He’s saying words like “FAFSA” and “FSA ID” — and then, he turns you loose. You feel a little… blurry.
A college decision is a thrilling adventure — so let’s keep it that way. We’ll completely demystify the FAFSA for you.
What is the Free Application For Student Aid (FASFA)?
The Free Application For Student Aid (FAFSA) is a free application that gives you access to federal and institutional aid to pay for college. You’ll get access to federal grants, work study and loans. Colleges use your FAFSA results to determine your eligibility for different types of aid. Private financial aid providers may also use your FAFSA application to determine whether you qualify for the type of aid they provide as well.
Still sound a little murky? Never fear — we’ll cover how to file the FAFSA next.
How to fill out the FAFSA
Here are the steps you’ll need to take to fill out the FAFSA — whether you’re a student, parent, guardian, grandparent or if you’re filling it out for yourself.
First, grab a few documents before you even sit down at the computer:
- Social Security numbers for parents and students
- Your driver’s license number
- Your alien registration number if you aren’t a U.S. citizen
- Tax returns and W-2s
- Information for income such as child support, interest income and more
- Statements for cash, savings and checking accounts, investment accounts and more
Step 1: Get your FSA ID.
An FSA ID is a username and password that’s unique and confirms your identity when you’re looking at or signing official financial aid documents. Let’s say you’re filling out the FAFSA for your dependent student. You’ll need two separate FSA IDs — one for you and one for your child. Remember that you’ll need to remember your FSA ID every year that you file the FAFSA — lock it in your memory bank.
Just kidding. You might never remember it ever again. Write it down and save it somewhere safe.
Step 2: Go to the FAFSA login page.
Find “Start here” on FAFSA.gov and enter your student’s name, Social Security number and date of birth. Be absolutely sure your name and Social Security numbers match what’s on your Social Security card — lots of financial aid personnel at colleges encounter a problem when these don’t match.
Step 3: List colleges and universities.
You can list up to 10 colleges and universities where you want the FAFSA sent — but you must choose at least one. Use the Federal School Code search to identify each of the schools on your list.
Step 4: Know your dependency status.
Some students might consider themselves an independent student — but the reality is that it’s really tough to declare yourself an independent student, even if you don’t live with your parents. Here’s the checklist that can lead you through the process so you know for sure.
Step 5: Add parent information.
You’re going to have to add legal parent(s) on the FAFSA if you’re a dependent student or add your own name if you’re filing for a dependent.
- You must almost always list a stepparent who is married to your legal parent.
- Let’s say that your parents are divorced — you’ll include information for the parent you live with most of the time.
- You’ll need to list both parents if they live together, regardless of whether they’re the same or opposite sex.
Step 6: Offer up financial information.
You’ll need to gather up tax information from 2018 for the 2020-2021 FAFSA.
The data retrieval tool (IRS DRT) takes most of the work out of filing the FAFSA. It pulls information from the IRS and prepopulates it onto your FAFSA. Here’s a quick overview of how it works:
- Go to the IRS website through the DRT and fill out your name exactly as it is on your taxes.
- You’ll be able to find a page that tells you that your tax information is ready to go and you’ll be able to use that page to import your information directly onto the FAFSA form.
- You’ll be able to see “Transferred from the IRS” in the correct fields on your FAFSA but won’t be able to see exactly what’s in these fields. In other words, you won’t be able to change this information.
- You can opt to fill in all parts of the FAFSA manually instead of using the IRS DRT.
Step 7: Sign and submit your FAFSA.
Sign with your FSA ID and that ensures that your form is processed quickly. You do have the option to print, sign and mail in a signature page to submit your FAFSA, though that won’t be processed as quickly as it would if you used the FSA ID.
How does the FAFSA work?
Next, the magic happens in each college’s financial aid office. The colleges you’re interested in attending will use your FAFSA results to determine your eligibility for financial aid. The financial aid office at every school uses a couple of pieces of information, including:
- Expected Family Contribution (EFC): Your EFC is a formulated number (the formula is established by the federal government) which helps colleges and universities determine how much you could feasibly pay for college. (Note: Don’t be alarmed if your EFC seems high. Many families feel that way.)
- Year in school
- Enrollment status: The schools will need to know whether you’re going to be a full-time or half-time student.
- Cost of attendance (COA): The COA is the amount you’ll pay to attend each school. It may include — but is not limited to — tuition, room, board and fees, books, supplies, transportation costs, loan fees and more.
The schools you’re considering might have other forms you’ll need to fill out to get financial aid specifically from each school, so check each financial aid office for more information.
Each school will also have a different timeline to release aid. Some colleges can get your financial aid award to you within two weeks — but this varies from school to school. Just ask.
What does the FAFSA get you?
Contrary to popular belief, you don’t have to file the FAFSA — but know that you could miss out on certain need-based aid if you don’t. The aid you could get comes in four major flavors: Scholarships, grants, loans and work study. Here’s the scoop.
Federal aid is given through the U.S. Department of Education primarily through grants, work study funds and low-interest loans.
- Grants don’t have to be repaid, unless you withdraw from school and owe money to the program that provides you the grant.
- Work study is a program through your school that allows you to work at your school and earn money.
- Federal student loans are borrowed money that must be repaid. Federal student loans are the best loans you can get because they typically offer the lowest interest rates on the market.
There are other federal aid opportunities, too. You might qualify for aid as the spouse or dependent of a veteran, as a foster care youth and more.
You might not qualify for federal grants — so check with the department of education, the higher education agency or adult education agency in your state to see what types of grants may be available to you. Note: The colleges and universities you’ve applied to will also be able to tell you whether you qualify for state grants or other state aid.
College or university aid
The colleges and universities you’ve applied to will evaluate your FAFSA and award you directly from their own funds, too. Scholarships can offer you a major boost. Scholarships are like grants — you don’t have to pay back the money you’re awarded.
You’ll see the need-based scholarships you’ve received after you get your financial aid award. But if you want to be proactive, ask your admission counselor at each college for more information about all scholarships available.
When is the FAFSA due?
The federal FAFSA deadline is June 30, but the schools you’re applying to might require you to submit it before then. Don’t miss schools’ deadlines — check with each individual school so you don’t miss out on getting as much financial aid as possible.
As of October 1, 2019, you could file the FAFSA for the 2020-2021 academic year.
File the FAFSA now
You’ll be able to check your FAFSA form’s status immediately after you submit the online form. A paper FAFSA form takes a bit longer. You can learn more about 7–10 days you mail it in — either log in to fafsa.gov or contact the Federal Student Aid Information Center.
Again — remember that you should never pay money to complete the FAFSA. You know you’ve encountered a scam website if a site asks you for your credit card information. Close out of the website immediately and go to fafsa.ed.gov.
Can you relate to this?
Your son’s considering a particular college. On your official campus visit, the chipper admission counselor says, “Don’t forget to file the Free Application for Federal Student Aid, or FAFSA after October 1. It’s a snap to complete.”
You think (or say out loud), “But I’m not sure I want to file the FAFSA.”
The admission counselor stares at you like you’re an alien. “But… nobody ever says that,” she replies. (If she’s a good admission counselor, she won’t do that and instead, will walk you through all your options.)
Filing the FAFSA is a great option if you want your child to qualify for need-based financial aid for college. The FAFSA can allow your child to get scholarships, grants, work-study and federal subsidized and unsubsidized loans.
But it’s not a requirement — you don’t have to file the FAFSA at all. Here’s how to pay for college without the FAFSA.
Why Choose Not to File the FAFSA?
Have any of these thoughts flicked across your mind?
- “I have zero time for the FAFSA.”
- “I have privacy concerns.”
- “I’m not really sure whether it’ll actually help us beyond what we’re already getting in merit-based aid.”
- “I’ve heard you can be scammed if you land on the wrong website.”
We’ll go through these concerns one by one.
“I have zero time for the FAFSA.”
Yes — there’s some time involved. The FAFSA does take about an hour to complete, and the prep leading up to it could take even longer. It could include gathering Social Security numbers, federal income tax returns (for the 2019-2020 FAFSA, you’ll use 2017 tax returns), W-2 forms, bank statements and any investment information such as real estate, stocks and more.
“I have privacy concerns.”
The FAFSA website ensures safety. The website and its supported browser use Secure Sockets Layer (SSL) protocol to establish secure sessions. But what happens once it’s submitted to the colleges your child’s interested in? There’s no question about it — the colleges you send your FAFSA to will get a comprehensive overview of your financial affairs.
“I’m not really sure whether it’ll actually help us beyond what we’re already getting in merit-based aid.”
This is a typical concern for high-income families. You may be reluctant to share your personal financial details when you think you won’t be awarded any extra money if you do file. However, know this: There’s a complex formula that’s used by every school to determine the amount of aid you might receive — beyond just income. It’s simply not true that you’d be out of the running for additional aid if you think your income is “too high.” Have an in-depth discussion with the financial aid office at each college to be absolutely sure you’ve made the right choice not to file the FAFSA.
“I’ve heard you can be scammed if you land on the wrong website.”
This is absolutely true. There are many huckster websites out there — you should never pay any money to file the FAFSA.
Frequently Asked Questions
Here are a few other questions I frequently heard from families when I worked in admission.
1. Should we let colleges know we’re not filing the FAFSA?
Yes, you should let every college on your list know that you’re not filing the FAFSA — if you didn’t already indicate that on your application. If you left that part of your application blank (or can’t remember what you answered) tell your child’s admission counselor or the financial aid office of the schools on your high schooler’s list.
Don’t know who your admission counselor is? Most colleges divide up the country by territory. Find your child’s admission counselors online at each school and send them a quick, professional email letting them know you’re not filing the FAFSA.
2. Do we need to fill out any other paperwork instead?
Every college is different, so you’ll need to ask the particular schools your child’s interest interested in about whether you need to fill out additional paperwork. For example, one school may not require you to submit anything, but another school might require you to fill out applications for merit-based aid or fill out other paperwork.
3. Will my child be able to get scholarships and other aid?
Yes, you’ll still be able to get merit-based aid from the colleges. Just be aware that by not filing the FAFSA, you’re likely missing out on need-based grants and scholarships and you won’t be able to get any federal aid in the form of federal loans or grants or work study.
4. Will I get my financial aid packages sooner?
It’s possible that you will get your financial aid packages (also called your financial aid award letters) from various schools fairly quickly because it cuts down on the schools’ FAFSA analysis. You’ll need to check on each individual school’s timeline.
5. What will my financial aid packages look like?
Your financial aid award from all schools will include the following information:
- The cost of attendance (COA), which is just like it sounds — the amount you can expect to pay for one year of school. Your COA will list tuition, room, board and fees and might also include books and supplies, transportation and personal expenses.
- College scholarships, which are awarded by the schools to which you’ve applied.
Your financial aid award may be missing the following information because you didn’t file the FAFSA:
- Expected Family Contribution (EFC), which is a number generated by the FAFSA that schools use to generate the financial aid your student is eligible for.
- Work-study, which is a federal program that your child can earn use to earn money through a job at the school she’s considering.
- Federal student loans, which allow your child to borrow money directly from the federal government. She’ll pay back federal student loans with interest. Federal loans are offered at a low interest rate by the federal government and your student can qualify for both subsidized and unsubsidized loans. (Subsidized means that the government pays the interest while your child is in school and unsubsidized means that your child will pay interest on the loan while she’s in school.)
Ways You Can Pay for College Without the FAFSA
There are several different ways your student can tackle paying for college without the FAFSA. Think of it like this: Financial aid is like a puzzle. Colleges put different pieces of aid together to create a financial aid award.
Your child could see dollars in her pocket if she taps into merit-based scholarships, community scholarships, online and military scholarships. Scholarships are typically based on academic achievement, special talents and/or other characteristics. For example, your child may be an excellent oboe player and one of the colleges she’s interested in may have a music scholarship available.
Don’t assume that merit-based scholarships are just for straight-A students. They’re not.
The schools your child is looking at will be able to guide you both through the merit-based scholarships that are available. Call or email the financial aid office at each school for more information about merit-based scholarships. Merit-based scholarships can be any amount — your child may be able to receive a $35,000 scholarship (or more!) at a private college.
Encourage your child to research scholarships in your community. There are so many scholarship dollars that go unclaimed in communities nationwide — so don’t let the scholarship from the local dentist’s office pass by. Pay close attention to the scholarships’ requirements. Does your child have to write an essay? Compile a resume? Complete an interview?
Community scholarships may just come in small chunks of money — but those $1,000 scholarships can add up. Bonus tip: Look for scholarships that have a renewable component each year.
Your child can find online scholarships galore with a few simple keystrokes on Google. For example, a quick search for Kiwanis scholarships offered its scholarship opportunities page. Do thorough research with your student!
Nonprofit organizations offer scholarships to veterans, future military personnel or active-duty personnel. Your child may also be able to get a military scholarship if he or she is related to veterans or active-duty personnel.
What are grants and how are they different from scholarships? Grants are usually given out by specific formal entities such as a government department, corporation, foundation or trust.
Your child won’t qualify for need-based grants because you’d have to file the FAFSA in order to receive them. Merit-based grants are often offered to reward high-achieving students and can usually be used at the college of your choice. Be sure to read all the grant details to be sure. Search for them online and look for grants specifically offered in your state.
Your child won’t qualify for federal loans if you don’t file the FAFSA but may qualify for private student loans or even personal loans.
Private Student Loans
Your child can get a private student loan — banks like Sallie Mae are a primary source. Private student loans may have the following characteristics:
- Variable interest rates (the interest rate varies over time) or fixed rates (the interest rate never changes).
- Cosigners are almost always required. A cosigner is someone who also signs the loan paperwork and pledges to pay back your loan if you default. A strong credit history teamed with a cosigner can lower your interest rate.
- Your child can tap into a variety of repayment options, from deferment programs to in-school payments.
The colleges your child is considering should be able to provide you with more information about private loans. Otherwise, directly approach a bank or online bank for assistance.
You and your student might want to look into personal loans, which are unsecured loans not backed by collateral. A personal loan could pay for miscellaneous school expenses — but check on its terms and interest rates. A personal loan will likely have a higher interest rate compared to specific student loans.
You Don’t Have to File the FAFSA — But Know What You’re Giving Up
College decisions are hard, no doubt — but they don’t need to be more complicated than you want them to be. You can ditch the FAFSA, but be sure to do your research so you know for sure it’s the best choice for you and/or your child. You could be giving up access to government loans, work-study and other options that you may need to help your child pay for college!