Finding the financial help you need for college.
A college education can increase your chances of earning a high income in a job you love. It can also be very expensive, especially if you are attending an out-of-state or private college or living away from home. Here's how to apply for the student financial aid you need to afford a college education.
How much do you need?
If you want to get started figuring out how to fund your college education, our interactive College Funding Tool will help you find the right college financial aid package for you. Start the journey here.
Federal financial aid
Depending on your need, you may qualify federal financial aid. This could be in the form of a subsidized student loan, meaning the federal government pays for your interest while you are in school. With unsubsidized loan, you pay for the interest that accumulates while you are in school, though you may be able to defer all payments until after you graduate.
In order to apply for government financial aid for education, you need to complete the Free Application for Federal Student Aid (FAFSA) each year you are in school. You can find the information about FAFSA and the form at www.fafsa.ed.gov.
Types of federal financial aid
1. Stafford loan
- Taken out by students
- Available both subsidized and unsubsidized
- Don't begin paying back until after you have left college
- Top interest rate set at 6.8% through 2013
2. Parent PLUS loan
- Taken out by parents
- Designed to make up the difference between Stafford loan and the education cost
- No grace period (interest charges and repayments begin after money is dispersed).
3. Perkins loan
College Savings Tip #1
If you or your children are still several years away from college, consider saving for education in a 529 savings plan. The principal grows tax deferred and can be used for tuition, educational costs, food and lodging.
Calculating your family contribution
Parents are expected to help pay for their dependent children's education, and student financial aid is calculated to take this into account. The estimated family contribution is based on the size of your family, and your family's income and non-retirement savings. Use this calculator to estimate your expected family contribution.
Scholarships
Scholarships are usually awarded to students with high grades or special skills, and they don't have to be repaid. Even if you cannot find a scholarship to fund your whole education, you may receive smaller amounts that can help you limit your debts. To find scholarships, check with the colleges you are applying to, or search online. Two good sites to check are Fastweb, which has a database of more than 1.5 million scholarships, and the College Board, which surveys 1,200 sponsoring organizations each year to create its scholarship search engine.
Private student loans can help make up the difference if these funding sources aren't sufficient, however the interest rate may be much higher than federal loans. If you want to limit your debt, consider working part time while in school. In addition to the income you'll earn, your job may give you valuable work experience for your future career.
Source: http://learn.bankofamerica.com/articles/money-management/how-to-apply-for-scholarships-and-financial-aid.html
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