Once the applications have been sent and the pending acceptance and rejection letters are on the horizon the financial aid process, the second half of the college process begins. While Peter gives out the College Manual to 11th and 12th graders, which includes information about financial aid, it never hurts to review the basics.
Peter Wilson, BSGE’s college counselor, called for a mandatory meeting with students and their families in order to inform students of the types of financial aid and the forms that need to be filled out. The burden of paying for college is heavy and students are expected to shoulder it. Mr. Wilson stressed that parents cannot be the ones expected to carry all of the weight and students must be aware of the business of higher education.
Need-based aid is based entirely on the economics of your family. It is calculated by adding the income of parents and their assets, then dividing that number by the dependents, or number of people claimed on the family tax returns. Often people find out about their family situations when they fill out the required Free Application for Federal Student Aid (FAFSA) and CSS Profile. Merit-based aid is based on academic achievements such as SAT scores and high school transcripts. Neither type of aid can be given without the completion of financial aid forms.
The meeting began by first breaking down financial aid into four different types: grants, scholarships, loans, and work study. Clarifying the types of financial aid is important because it can easily become mystifying. When looking at the costs outlined by a school everything must be multiplied by four, as there students typically attend college for four years. Students pay for tuition, room and board, books, and student fees. Student fees are comprised of lab fees, concerts, beautification, plumbing, maintenance, and other necessities.
Loans are the ugly form of financial aid, but are in many cases a necessary evil. Loans must be paid back with interest. Subsidized loans are good because the government pays for them while you’re in school and the interest on them does not start accumulating until six months after graduation. If one goes on to graduate school, payments can be deferred so he or she can wait to pay them back. Unsubsidized loans require you to pay back the money you are borrowing with interest starting the minute you sign your name. At the meeting, families learned about three types of loans: Perkins, FDSL, and PLUS. Perkins and Federal Direction Student Loans (FDSL) are both loans with fixed interest rates. This means that if you borrow money as a freshman with an interest rate of 4.7 %, the interest rate will stay at 4.7%. FDSL loans tend to have the lower rates because the government understands you are not working. PLUS loans are loans taken out in a parent or guardian’s name. Often these have high interest rates. Rates vary between 6.8% and 9% depending on the year.
When taking out a loan one has to ask themselves “Is it worth it to graduate with debt? How much debt is too much debt?” Mr. Wilson has shared the idea that if you have more than a year of debt, at some private schools this means $60,000 or more that the financial plan is not possible. It is important to keep in mind that sometimes debt is necessary but it is always bad and it is essential to keep it manageable. There is no such thing as good debt. Perkins and FDSL have no penalty for paying back early. The rate on these loans increases each year, as each year of college is increasingly more expensive. An additional cost to take into account when deciding on which loan to take out is the origination fee. This number tells you the amount of money the bank charges you for it to check out your financial records. It also is important to remember that if you have a loan for $10,000 a year, this is essentially a $40,000 loan.
Grants and scholarships are known as “hard money”, in comparison to the “soft money” of loans of which you can decide on the amount based on need and the gap between what you can afford and what the school is giving you. These come from private corporations, alumni, and can be used as tax write offs for the school. The two types of grants discussed at the meeting included Pell grants and Tuition Assistance Program (TAP). Both grants are need based. Pell grants are receivable anywhere in the country while TAP is only applicable in NY state. It is the state’s way of thanking students for spending their money in New York. The maximum award from Pell Grants and TAP grants are $5,000. Grants differ from scholarships in that in order to receive them one must fill out their FAFSA form.
Scholarships very in what is required, sometimes community service and leadership skill, often essays. They are given out by charities, schools, private organizations. Millions of scholarships go un-awarded because students don’t apply for them. Because of how valuable the money provided by scholarships is, Peter Wilson often tells BSGE students that we do not do enough of them.
The fourth type of financial aid is work study. This money will be used to supplement life at college, not the cost of housing or tuition. Instead, it can be used for eating, transportation, and going to the movies. The maximum you can work a week is 20 hours. However it is recommended students limit themselves to eight to ten hours a week, as their primary job is going to school.
The FAFSA cannot be completed until January 1st, as it requires the family’s taxes for the year a student enters college. It is suggested that it is filled out between January 15th and February 1st. Mr. Wilson described it as wanting to get the party early in order to get a “big piece of the pie.” The CSS Profile is not free. It is $26.50 to register and $12-13 after that for each school. It is important to check that a school actually requires the form before sending it. This can be started in December, as applications are finished up. The CSS Profile goes into much greater detail to really get a sense of your financial situation and it allows you to share extensive circumstances. In some cases, a detailed CSS profile can lead to an increase in the financial aid allotted for the student.
due to the amount being decided based on need , are “hard money” that is given to you, which does not need to be payed back. Grants often come from the federal and state government, but there are private grants as well. These come from private corporations, alumni, and can be used as tax write offs for the school. Millions of scholarships are not awarded because students don’t apply for them. The two types of grants discussed at the meeting included Pell grants and Tuition Assistance Program (TAP). Both grants are need based. Pell grants are receivable anywhere in the country while TAP is only applicable in NY state. It is the state’s way of thanking students for spending their money in New York. The maximum award from Pell Grants and TAP grants are $5,000.
The fourth type of financial aid is work study. This money will be used to supplement life at college, not the cost of housing or tuition. Instead, it can be used for eating, transportation, and going to the movies. The maximum you can work a week is 20 hours. However it is recommended students limit themselves to eight to ten hours a week, as their primary job is going to school.
The FAFSA cannot be completed until January 1st, as it requires the family’s taxes for the year a student enters college. It is suggested that it is filled out between January 15th and February 1st. Mr. Wilson described it as wanting to get the party early in order to get a “big piece of the pie.” The CSS Profile is not free. It is $26.50 to register and $12-13 after that for each school. It is important to check that a school actually requires the form before sending it. This can be started in December, as applications are finished up. The CSS Profile goes into much greater detail to really get a sense of your financial situation and it allows you to share extensive circumstances. In some cases, a detailed CSS profile can lead to an increase in financial aid allotted for the student.
The BACC Rag 