Paying for college can seem to be an overwhelming task. You can follow these steps to find free money and secure student loans to help you achieve your dream of a college education.
Step 1: Begin to apply for scholarships and grants early. Check with your high school and college, community organizations, and foundations. Don't forget to take advantage of free scholarship search engines (fastweb.com, scholarships.com) and key word searches on the internet. A majority of small scholarships are not advertised anywhere, but on the sponsor's website. Include in your search the career you intend to pursue or a special skill or academic achievement. For example: A key word search for nurse, scholarship, and professional organization finds over 100 scholarships. Now all you have to do is apply! Look for scholarships that may not have a lot of applicants (local, not advertised) and/or will choose multiple scholarship winners. Also, search for renewable scholarships that you can receive each year that you attend college.
Step 2: Apply for grants and loans by completing the Free Application for Federal Student Aid (FAFSA) at http://www.fafsa.ed.gov. The FAFSA should be completed as soon after January 1st, of the year you intend to start school in the fall. You may be eligible for school scholarships, grants, work-study programs, and low-interest federal student loans.
Step 3: Once your FAFSA has been processed you will receive a Student Aid Report (SAR) either by mail or email, depending on if you provided an email address on your FAFSA. The information on the SAR is what you submitted on the FAFSA. If any changes or corrections need to be made, you will be required to submit those changes to the Department of Education by following the directions provided in the email or mail packet. Make sure you have all of FAFSA information updated and submitted prior to your schoo l's 'priority financial aid date'. Most financial aid is on a first-c ome, first-served basis.
Step 4: Schools you have been accepted to and who have received your FAFSA information will put together a financial aid packet for you. The school will then notify you of your eligibility via a Financial Aid Award Letter. The letter will list if you qualify for student loans, school scholarships, grants, and federal work-study. You will be required to accept and/or deny the financial aid awarded to you by the school's deadline. If you accept Stafford or PLUS student loans as a part of your financial aid packet, you will be required to complete a loan application or master promissory note (MPN) for the lender you choose.
Step 5: Federal Stafford and PLUS loans are offered through private lenders, but it is the same loan from lender to lender. Loans will only differ by the borrower benefits or incentives that a lender offers. Compare lender's incentives to determine which lender will save you the most money in interest and fees. Non-profit student loan providers usually offer the best incentives, including zero origination fees and interest rate reductions for making on-time payments or automatic payments from your checking account. In addition, non-profit lenders are required to put a portion of their profits back into the community in the form of scholarships and outreach programs versus in the pocket of share holders.
Step 6: Your lender will process your application and request that your school certify your eligibility and enrollment in school. In addition, your school will set the disbursement dates for your loan. Once your loan has been processed, your lender will send the disbursement to the school based on the schedule the school requested. Your school will apply all scholarship, grants, and the loan funds to tuition, fees, and other expenses. They will notify you when the remaining funds will be available for you to pick up or automatically place the funds in your school account or bank account.
Remember that if you have excess funds and do not need the tot al loan amount borrowed from your lender, you should return the loans funds immediately. By doing so, you will keep your student loan debt to a minimum and lessen the financial burden you must repay once you graduate from school.
If you need additional money for education related expenses you can apply for a private loan. Private loans are based on credit and carry a higher interest rate than federal student loans. Private loans should only be taken out if you have exhausted your federal student loan limits and need more money.
Dana Macke-Redford is the Manager of Marketing and Development for the Arizona Higher Education Loan Authority, the designated non-profit student loan provider for the state of Arizona. She also teaches seminars, classes, and makes presentations on a variety of management, communication, financial literacy, financial aid, and student loan topics. Visit AHELA's website (http://www.ahela.org) for more useful information on planning and paying for college.
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