Financial Aid Planning
The financial aid process is extremely complicated and hard for many students and families to understand. Although we can’t cover every financial aid detail on one page, we’ve broken down the most important steps for you.
FAFSA
You and your parents (if you are a dependent student) will need to complete the Free Application for Federal Student Aid (FAFSA) sometime after January 31 of your senior year in high school. You will need to complete the FAFSA again each year that you are in school in order to get financial aid for the next year. The FAFSA helps the school determine your eligibility for federal student aid – like college grants, federal work study and federal student loans.
Award Letter
When you apply to colleges, each school that accepts you will send out an award letter detailing all of the financial aid that you are eligible to receive. The financial package that you receive from schools may impact your college decision. Once you are enrolled, you will get a new award letter each Spring from your school detailing your financial aid for the next year. Your financial package may include any of these types of aid:
College Scholarships
Your school may award college scholarships based on various categories such as academic achievement, financial need or athletics. College scholarships are free money – you don’t have to pay them back. If you don’t get enough in college scholarships from your school, you should start your own search. Your special interests, community, and your high school are a great place to start looking for college scholarships.
College Grants
This is another type of free money. College grants can come from the federal or state government, and they are usually based on financial need. Certain fields of study, especially in graduate school, may also be eligible for college grants. College grants for special interests or research generally involve a lengthy application process.
Federal Student Loans
There are several types of federal student loans:
Perkins Loan
The Federal Perkins Loan is a low-interest college loan for both undergraduate and graduate students based on financial need. Your school’s financial aid office lets you know if you qualify after you complete the FAFSA.
Stafford Loan
The Stafford Loan is the most widely used, low-cost education college loan sponsored by the U.S. government. The amount of money you can borrow under the Stafford Loan program is based on your academic level:
- $5,500 Freshman
- $6,500 Sophomore
- $7,500 Junior, Senior and 5th year undergraduate students
- $20,500 Graduate Students ($40,500 certain medical professionals)
PLUS Loans for Parents and Graduate Students
Parent PLUS Loans are college loans made in the parent’s name. A PLUS Loan can cover your child’s full cost of attendance, minus any other financial aid. The interest on a PLUS Loan is fixed at 8.5% (7.9% through the Department of Education).
Graduate students can also take out a PLUS Loan for the total cost of attendance minus other financial aid received. Federal Stafford Loans have a better interest rate, so they should always be considered before a PLUS Loan.
PLUS Loans for parents and grad students require a credit approval. There are also additional fees of up to 4% charged by the government and the guarantor.
Private Student Loans
Once you have exhausted all of the college scholarships, college grants and federal student loans available to you, private student loans may be the next option. Private loans help fill the gap between your financial aid and your school’s total cost of attendance. Check out our Private Loan Basics page for more information.