A common misunderstanding about financial aid is that assistance is only is only available to families with low incomes. The fact is financial aid of some kind is available to virtually everyone.

There are many factors that come into play when determining financial aid including cost of college, ethnic background, religious affiliation, academic achievement, etc. In some cases it may be more affordable to attend an expensive school than a lower cost one. Remember, start the process as soon as possible and check out all your options.

· Scholarships- “free money” or “gift aid” that does not have to be repaid.

· Work-Study- federal program providing subsidized job opportunities for students who are eligible

· Perkins Loans- school-based, awarded to students with the greatest need

· Stafford Loans- (student loans) federally regulated government loans

· PLUS Loans- available to parents of undergraduate students

After a student has initiated the admissions process (i.e. applying to the institution(s) the student wishes to attend), it is normally wise to start exploring financial aid options. The following is a suggested order in which to move through the financial aid process:

1. Fill Out The FAFSA (Free Application for Federal Student Aid)

2. Search for Scholarships

3. Investigate Loans

4. Receive Your Award Letter

5. Apply for Loans

The primary form necessary to qualify for Federal aid is the Free Application for Federal Student Aid (FAFSA). Pell and Grants, Perkins Loans, Stafford Loans, PLUS Loans (at many schools), and Federal Work Study all require a FAFSA filing for eligibility. The FAFSA examines a family’s financial situation and then qualifies students for aid based on U.S. Department of Education guidelines.

The FAFSA becomes available at the end of each calendar year for completion for the coming academic year (generally from the late summer of one year to the late spring of the next). It may not be submitted until January 1 of the new academic year. For example, for the 2002-2003 school year, a FAFSA may not be submitted until January 1, 2002. It is always recommended that a family file the FAFSA as quickly as possible.

Get the FAFSA from your guidance counselor, or on-line at www.EduPrep.com.

While awaiting FAFSA results, a student can look for scholarships. Scholarships (often referred to as Fellowships for graduate study) are a great way to pay for education because it is money, like grants, that does not have to be repaid. The search can begin as early as a family likes, but awards begin to be finalized in the spring preceding the start of the academic year. You can search for scholarships at www.EduPrep.com. Most are offered privately from foundations and corporations as a way of giving back to the community.

While it is the hope of every family to be able to cover the entire cost of education with grants and scholarships (“free money”), the unfortunate reality is that most families will have to borrow or use their existing resources to fund higher education. The rule of thumb for families is grab all the “free money” available, and then borrow smart. The federal loan programs are often a great way to borrow wisely. Although there are alternatives, these programs offer the best terms and easiest qualification for most families.

The Stafford Loan is borrowed in the student’s name, but has graduated limits as the student elevates in class.

Undergraduate Stafford students can borrow along the following guidelines:

Academic Level Dependent Independent

Freshman $2,625 $6,625 (max $2,625 subsidized)

Sophomore $3,500 $7,500 (max $3,500 subsidized)

Junior & Senior $5,500 $10,500 (max $5,500 subsidized)

Graduate Stafford students can borrow more:

Academic Amount

Graduate $18,500 (max $8,500 subsidized)

Medical at HEAL school $38,000 (max $8,500 subsidized)

Federal PLUS Loans at a Glance

Are you a parent who does not qualify for need based financial aid, but can’t afford to pay for four years of college expenses out of your pocket?

• A Federal PLUS Loan allows parents to borrow the total cost of undergraduate education including tuition, room and board, supplies, lab expenses, travel less any other aid.
  
• These loans are non-need based.
  
• PLUS interest is simple and fixed- currently 6.79%.
  
• PLUS loans require no collateral (like other type of loans- including home equity)
  
• PLUS interest may be tax deductible.
  
  

In the springtime, the school(s) to which the student has been accepted will issue their Award Letter(s). The Award Letter lists all the aid the student is eligible for and what the Expected Family Contribution (EFC) is to be. Award letters typically list the federal and private grants, scholarships, work-study, and Stafford loans for which the student is eligible. The PLUS may be listed, as well. When the Award Letter arrives, families generally have a realistic portrait of their aid picture, and a better understanding of their own “out of pocket” expense.

Once the information on the Award Letter has been digested, the final step in the financial aid process is applying for the loans for which the family is eligible. Schools often send preprinted Perkins and Stafford loan application for the student may either choose one of the listed lenders or use a lender not on the list from whom they wish to borrow the funds. PLUS applications are normally not included with Award package. When this is the case, a parent must contact a lender to receive an application.

Parents can request a PLUS application from www.eduPrep.com.