College Financial Aid for the Young and Old: Step by Step Instructions on How to Get Started
Many people find applying for, and dealing with, financial aid for college more of an obstacle than a blessing. If you are an average financial aid beginner then this article is for you. It is designed to address some of the challenges of financial aid and provide a clear cut path to success.
So what exactly is Federal Student Aid (FSA) and how does it differ from private loans? FSA programs are administered by both the Department of Education and the Office of Federal Student Aid. The FSA disburses money to colleges to post to student accounts and is not based on the students credit score. Private loans are funds issued by a lending institution, such as a credit union or bank, and are in fact based on the students credit score. FSA cannot be denied unless you have already received the maximum amount for the grade level you are in; private loans can be denied by the lender based on the students credit score.
Stafford loans come in two flavors; subsidized and unsubsidized. Subsidized loans are loans which the government pays the interest on while you are enrolled in school. Unsubsidized loans are loans which the borrower is responsible for the interest on from the date the funds are dispersed. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution.
The FAFSA is where to start! FAFSA is short for Free Application for Federal Student Aid; free meaning you should NEVER have to pay to complete it. I have talked to students in the past that said they paid upwards of $1000 just to complete a free form! The FAFSA is a federal form, just as the title states, and is not school specific. The FAFSA allows you to enter a school's code and that ensures the form gets submitted to the school you wish to attend. You must complete a new FAFSA for each aid year you attend school; it does not get done automatically. You can complete your FAFSA by visiting http://www.fafsa.ed.gov and you can even find your school code there!
So what exactly is Federal Student Aid (FSA) and how does it differ from private loans? FSA programs are administered by both the Department of Education and the Office of Federal Student Aid. The FSA disburses money to colleges to post to student accounts and is not based on the students credit score. Private loans are funds issued by a lending institution, such as a credit union or bank, and are in fact based on the students credit score. FSA cannot be denied unless you have already received the maximum amount for the grade level you are in; private loans can be denied by the lender based on the students credit score.
Stafford loans come in two flavors; subsidized and unsubsidized. Subsidized loans are loans which the government pays the interest on while you are enrolled in school. Unsubsidized loans are loans which the borrower is responsible for the interest on from the date the funds are dispersed. Students may avoid paying the interest while they are in school by capitalizing the interest, which increases the loan amount. Unsubsidized loans are not based on financial need and may be used to finance the family contribution.
The FAFSA is where to start! FAFSA is short for Free Application for Federal Student Aid; free meaning you should NEVER have to pay to complete it. I have talked to students in the past that said they paid upwards of $1000 just to complete a free form! The FAFSA is a federal form, just as the title states, and is not school specific. The FAFSA allows you to enter a school's code and that ensures the form gets submitted to the school you wish to attend. You must complete a new FAFSA for each aid year you attend school; it does not get done automatically. You can complete your FAFSA by visiting http://www.fafsa.ed.gov and you can even find your school code there!
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