Paying for Higher Educa on

2.3.5.F1

AdvancedLevel
Countlesssta s csdemonstratethatcon nuingyoureduca ona erhighschoolhasmajorbenefits,suchasaccesstohigher
payingjobsandalowerchanceofunemployment.However,itcanalsocomewithabigpricetag.Asama eroffact,eight
mes as many students drop out of degree and cer ficate programs due to finances and debt issues than grades.1This
makesitevenmoreimportanttoplanaheadsothatyouhavethemoneyyouneedtocovercon nuingeduca oncostsand
livingexpenses.
Why do you think college students are so
Planningaheadwillprovideyouwithflexibilitytoconsideralterna vesthat
suscep ble to debt?
reducethetotalcostofhighereduca onandtraining.Examplesinclude:
Startsavingearly!
Whileinhighschool,takeadvancedcoursesorpasscollegelevel

examstoearncollegecreditsforfreeoratagreatlyreducedrate.
Whileinhighschool,takecollegeplacementexamsearlyandifa
remedia oncourseisneeded,takeit.
Begincareerpathwayplanningearlyandworkwithanadvisor
whileearningyourpostsecondaryeduca ontominimizethe
chanceofchangingdegreeprograms.
A endalocalschoolandliveathome.
Workpart metopayforpartofyourexpenses.
A endacommunityorjuniorcollegeforafewsemestersbeforetransferringtoamoreexpensivefouryear
ins tu on.
Carefullyevaluatethecostofa endanceforschoolsyouareinterestedintofindaschoolthatisbothhighquality
andlowcost.
Formany,receivingfinancialaidisnecessarytopayforhighereduca on.Understandingthetypesofaidavailableand
applica onprocessisessen altoreducingyourtotalexpenses.

Dierent Ways to Fund Higher Educa on

Therearethreeprimarytypesofhighereduca onfinancialaid:
moneyyoudonothavetorepay,lowcostfederalloans,and
highcostconsumerloans.

1. Money you do not have to repay

Therearethreedierenttypesoffreemoneyyoucanuse
topayforhighereduca on:scholarships,grantsandwork
study.Thesefinancialaidop onsdonotrequireyoutopay
anythingbackaslongasyoumeettherequirements.
Findgreatinforma onontypesandsourcesoffinancialaid,howtoapplyforfinancialaid,collegesavingsplansand
moreatMDgo4it:h p://www.mdgo4it.org/
1
Morethanhalfofthosewhodroppedoutcitedneedingtowork,another31%saidtheycouldntaordtui on.Only10%droppedoutbecausetheyfoundtheclassestoodicult.Public
Agenda,WithTheirWholeLivesAheadofThem,2009,www.publicagenda.org/theirwholelivesaheado hem/reality1

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2.3.5.F1

Scholarships:

Ascholarshipismoneyawardedtostudentsthatdoesnothavetoberepaid
andisbasedonacademicorotherachievementstohelppayforeduca on
expenses.Scholarshipsusuallymustbeappliedforandhaverequirementsfor
thestudentbefore,duringanda erthescholarshipisawarded.Typical
requirementsincludehighschoolacademicachievement,evidenceof
excellenceinahighschoolac vity(sport,clubleadership,extracurricular
ac vity),ongoingcommunityservice,maintainingaspecificGPAwhileinhigh
schoolortakingaspecificnumberofcredits.

Watchoutforscholarshipscams.
Unscrupulouscompaniesguaranteeor
promisescholarships,grantsorfantas c
financialaidpackages.Manyusehigh
pressuresalespitchesatseminarswhere
you'rerequiredtopayimmediatelyor
risklosingoutonthe"opportunity."You
shouldneverhavetopayfora
scholarship!CheckouttheFederalTrade
Commissionswebsiteformore
informa on:h p://www. c.gov/bcp/
edu/microsites/scholarship/index.shtml

Possible Scholarship Sources:

High School Guidance Counselors:Lookhereforlocalandschoolbased
scholarships.
Financial Aid Oce: Thepostsecondaryins tu onyouwanttoa end
willhavemanyscholarshipstheearlieryoucheckandapplythebe er!
Employer:Ifyouhaveajob,paidorunpaid,youremployermayprovide
scholarshipstohelpfundhighereduca on.
Clubs and Organiza ons:SuchasNa onalHonorsSociety,GirlScouts,HabitatforHumanity,andSpanishClubcanall
leadtopoten alfundingforhighereduca on.
Alia ons: Therearemanyscholarshipsthattargetstudentswithspecificbackgrounds,suchasrace,ethnicity,
militarybackground,religionandgender.
Interests/Poten al Major or Career: Didyouknowyoucangetscholarshipsfor computerprogramming,
environmentalprotec on,colonialprin ngpresstechniquesevenyarnbombing!2
Grants:

WorkStudyEarnings:

Agrantistaxexemptfinancialaidthat maybegivenformanypurposes,not
necessarilyjustforeduca on.Grantstendtohavelessrigidrequirementsthan
scholarshipsandaregivenbynonprofitorganiza ons,corpora ons,or
founda ons.Grantsaregenerallygivenforspecificprojects,andtherecipient
willbeexpectedtoreportinforma onabouttheprojecttothedonor.

Thefederalworkstudyprogram
providespart meemployment
opportuni esforstudentswith
financialneed,allowingthemtoearn
moneytohelppayeduca onal
expenses.Moneyisawardedbythe
schoolandeligibilityisdeterminedby
theFAFSA.

Federal student grants:

Almostallfederalgrantsareawardedtostudentswithfinancialneed.The
federalgrantapplica onprocessbeginswhenyousubmityourFree Applica on
for Federal Student Aid(FAFSA).Youthenworkwithyourpostsecondary
ins tu ontofindouthowmuchyoucangetandwhenyoucangetit.Federal
grantsinclude:

What personal ac vi es, skills or

achievements do you think might
lead to free financial aid for you?

FederalPellGrant
FederalSupplementalEduca onalOpportunityGrant(FSEOG)

TeacherEduca onAssistanceforCollegeandHigherEduca on(TEACH)

Grant
IraqandAfghanistanServiceGrant
AcademicCompe venessGrant
Na onalScienceandMathema csAccesstoRetainTalent(SMART)Grant
2
Tofindthese,performanInternetsearchforscholarshipsforcomputerprogramming;environmentorgreenscholarships;scholarshipsforgraphicartsorarthistory;andkni ng
scholarships.

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2.3.5.F1

2. LowCost Financial Aid

Thefederalgovernmentoersloansthathavelowerandfixedinterestrates,
generousrepaymentplans,noprepaymentpenal esandnocreditchecks(except
forPLUSLoans).Theamountyoucanborrowisdeterminedbyinforma on
providedontheFAFSA.

Loans used to pay for higher

educa on are considered
good debt. Do you agree?

Thefollowinglistoffederalstudentloans(listedinorderfromlowestinterestrateloan
tohighestinterestrate).
Federal Perkins Loan:Aloanissuedthroughyoureduca onalins tu onfor

undergraduateandgraduatestudentswhodemonstratefinancialneed.
Direct Subsidized Staord Loan: Aneedbasedloanfromthefederal

government.TheU.S.DepartmentofEduca onpaystheinterestwhiletheborrowerisinschoolandduringgrace
period (periodof mea eraborrowergraduates,leavesschoolordropsbelowhalf meenrollmentwherethey
arenotrequiredtomakecertainfederalloanpayments)anddeferment period (postponementofpaymentona
loanallowedundercertaincondi onsandduringwhichinterestdoesnotaccrue).
DirectUnsubsidized Staord Loan:Nonneedbasedloanfromthefederalgovernment.Theborroweris
responsibleforallinterestcosts.
PLUS Loan:Alowcostloanoeredtograduatestudentsandparentsofundergraduatestudentscurrently
enrolledinpostsecondaryeduca on.Theloanisunsubsidized(youareresponsibleforpayingallinterest).

3. HighCost Consumer Loans

Noandlowcostfinancialaidop onsmaynotcoverallofyour
educa on,training,orrelatedcostssuchashousing,
transporta on,textbooksandeduca onalmaterials.Therefore,
privateloansoeredbylenderssuchasabank,creditunion,state
agency,orhighereduca onalins tu onsareavailable.Youapply
directlywiththelenderandpay100%oftheinterest,whichis
o enatahigherratethanafederalloan.Typically,theseloans
shouldonlybeconsidereda erallnoandlowcostscholarship,
grantandfederalloanop onsareconsidered.

You pay 100% of the interest o en

a higher rate than a federal loan.
Confused?Whowouldntbe?Formoreinforma onand psregardingfinancialaid,checkouttheYouCanAord
Collegevideoprogram,availableonlineath p://www.mpt.org/ycac.Throughthisonlineprogramyoumeetfinancial
aidcounselorswhoexplainhowtonavigatethelabyrinthofgovernmentaidandpaperwork,frompublicandprivate
grantsandscholarshipstotaxformsandloanapplica ons.
AnotherexcellentresourceisthesetofonlinePayingForCollegetoolscreatedbythefederalConsumerFinancial
Protec onBureauath p://www.consumerfinance.gov/payingforcollege.PayingforCollegehelpsconsumerswitheach
stageindecidinghowtopayforcollege,fromcollegechoicesandweighingstudentloanop ons,throughgradua on
andrepaymentofloans.
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2.3.5.F1

All About FAFSA!

TheFreeApplica onforFederalStudent
Aid(FAFSA)givesyouaccesstothe
largestsourceoffinancialaid.TheFAFSA
determineshowmuchyourfamilycan
aordtocontributetoyourpost
secondaryeduca on,whetheritisfora
fouryearcollege,communitycollegeor
atechnicalortradeprogram.It
determineswhattypesoffinancialaid
youqualifyforincludingloans,grants
andworkstudy.NotonlyistheFAFSA
usedfederally,butmanystatesandpost
secondaryins tu onsalsouseitto
determineaid.Everyoneinterestedin
financialaidshouldcompletetheFAFSA!

To receive federal student aid, you must

BeaU.S.ci zenordocumentedlegalresident
Beahighschoolgraduate(orhaveaGED,orpassanabilitytobenefit

test)
BeregisteredwiththeSelec veServiceifyouareamalebetweenthe
agesof18and25.(Ifyouaremalebutyourenotregistered,youcando
thiswhilecomple ngtheFAFSA)
Beenrolledoracceptedforenrollmentinaneligiblepostsecondary
program
Signcer fyingstatementsontheFAFSAconfirmingthatyouarenotin
default(failuretopayaloanaccordingtotheagreeduponterms)ona
federalstudentloanandwillusetheloanonlyforeduca onalpurposes
Havenodrugconvic onswhilereceivingstudentaid
Maintainsa sfactoryacademicprogress

Yourage,race,andfieldofstudentdonotaectyoureligibility.

When do I fill out the FAFSA?

Who decides how much aid I will receive?

Theamountawardedisdeterminedbyyourpost
secondaryins tu onanddependsonavarietyof
factorsincluding:
YourExpectedFamilyContribu on
Youryearinschool
Yourenrollmentstatus
TheCostofA endanceatyourpost
secondaryins tu on

Itisimportantthatyouareawareofallfederal,stateandpost
secondaryins tu ondeadlines.YoushouldcompletetheFAFSAas
soonasitsavailablebecausetherearesomefirstcome,firstserved
aidprograms.Thefederalstudentaidapplica onprocessoccurs
January1June30ofeachyear.Stateandpostsecondaryaidis
awardedusingtheFAFSAformbutthedeadlineswillvarybystate
andins tu on.Learnaboutstatedeadlinesfromwww.fafsa.ed.gov
andins tu ondeadlinesbycontac ngthefinancialaidoce.
TheFAFSAformmustbecompletedeveryacademicyearyouarein
schooltostayeligibleforfinancialaid.

Needbased aid isfinancialaidthatyoureceive

ifyouhavethefinancialneedandhavemet
othereligibilitycriteria.ExamplesofneedbasedaidincludeFederalPell
Grant,DirectSubsidizedLoan,FederalPerkinsLoanandFederalworkstudy.
Nonneedbasedaidisavailabletocoveryourcostofa endanceminus
otherfinancialaidawarded.Examplesofnonneedbasedaidprogramsare
DirectUnsubsidizedLoansandtheFederalPlusLoan.
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The FAFSA Applica on Process:

2.3.5.F1

Determine your dependency statusItisimportanttoknowwhoseinforma onmustbereported.Ifyouarea

dependentyouwillreportyouandyourparent(s)/guardian(s)informa on.Thisgivesaconsistentandfullpictureof
yourfamilysfinancialstrengthbutdoesnotmeanthatyourfamilyisrequiredtocontributetoyoureduca on.Ifyou
areindependent,youwillreportyourowninforma onandyourspousesifyouaremarried.TheFAFSAwebsitehasa
checklisttohelpyoudetermineifyoushouldbefilingasadependentorindependentstudent.
Create a personal iden fica on number (PIN)ThePINisafourdigitnumberthatisusedincombina onwithyour
socialsecuritynumber,name,anddateofbirthtoiden fyyouontheFAFSAwebsiteandisyourelectronicsignature.If
youaredependent,bothyouandyourparent/guardianwillhavetocreateaPIN.TocreateaPIN,gotowww.pin.ed.gov.
Gather required documents Ifyouarefilingasadependent,youwillneedthefollowingdocumentsforbothyouand
yourparents/guardians.DonotmailyourrecordstoFederalStudentAid.Keeptheserecordsinasafeplace!Youmay
needthemagaintoverifyyourFAFSAapplica on.3
Iden fica on documents SocialSecurityNumber,driverslicensenumberifyou
haveoneandAlienRegistra onNumberifyouarenotaU.S.ci zen.
UsetheIRSData
RetrievalToolto
Federal tax informa on from the previous year includingW2s,Federal1040
automa cally
Forms,andForeigntaxreturn.
transferyourtax
Records of untaxed income from the previous year childsupport,interest
informa onintothe
income,veteransbenefits,etc.
FAFSAForm.
Current asset informa on bankstatements,investments,realestate,etc.
Complete the FAFSAGoonlinetowww.fafsa.ed.govtocompleteyourFAFSA.Answerallques onsaccuratelyand
completely.IfyouhavenotcompletedyourtaxesbeforeyousubmittheFAFSA,es matetheamountsandthenupdate
theinforma onlater.Whencomple ngtheFAFSA,youmaylistbetweenoneandtenschools.Schoolsyoulistwill
automa callyreceiveyourFAFSAinforma on.
Sign and submitIffilingasadependent,bothyouandyourparent/guardianwillberequiredtosignandsubmitthe
FAFSAusingyourseparatePINs.Yourapplica onhasnotbeensuccessfullysubmi edun laconfirma onpage
appears.
Review your Student Aid Report (SAR) ThisisasummaryoftheFAFSAdatayousubmi edincludingyourEFCreceived
3daysto3weeksa ersubmi ngyourFAFSA.Itshouldbereviewedcloselyandanyerrorscorrectedimmediately.
Determine Your Eligibility for Aid OnceyousuccessfullysubmityourFAFSAitwillbedistributedtothepostsecondary
ins tu onsindicatedonyourapplica ontodetermineyouraideligibility.Ifyouareeligibleandacceptedtothatschool,
theywillsendyouanawardle eroutliningyouraidpackage.Theschoolmayalsoaskforaddi onaldocumenta on
duringtheawardprocess.Besuretorespondbytheirdeadlines.
Compare Aid Packages Carefullyevaluatethetypesofaidbeingoeredbyeachschooltodeterminewhichschoolis
themostaordableforyou.Todeterminethenet price,subtractthegrantandscholarshipamountsfromthecostof
a endance.Then,compareanystudentloanoerstounderstandwhatyouareresponsibleforpayingandbywhen.
Onlyaccepttheamountofaidyoureallyneed!
What kind of help do you need to
Support is available for every step!Avarietyofresourcesareavailableduring
complete the FAFSA?
everystepoftheprocessincluding:
a.
b.
c.
d.
e.
f.
3

FreeApplica onforFederalStudentAid(FAFSA)(www.FAFSA.ed.gov)
Postsecondaryins tu onfinancialaidoce
FederalStudentAid(h p://studentaid.ed.gov/)
CollegeGoalSunday(h p://www.collegegoalsundayusa.org/)
KnowHow2Go(h p://www.knowhow2go.org/)
MDgo4it,PayforCollege:ApplyingforFinancialAid:(h p://
www.mdgo4it.org/)

h p://www.fafsa.ed.gov/help/before003.htm
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2.3.5.F1

When its not free money

Remember,federalstudentloansarerealloans,justlikecarloansormortgages.Youmustrepayastudentloanevenifyour
financialcircumstancesbecomedicult.Yourstudentloanscantbecanceledbecauseyoudidntgettheeduca onorjob
youexpectedorbecauseyoudidntcompleteyoureduca on(unlessyoucouldntcompleteyoureduca onbecauseyour
schoolclosed).4
Dependingonthetypesoffinancialaidyoureceived,youmayhavemul pleloan servicers (acompanythatcollects
paymentsonaloan).Eachloanservicerwillhaveitsownpaymentprocess.Besurethatyoufullyunderstandtherepayment
termswhenaccep ngtheloanandyourrepaymentandconsolida onop ons.Chooseapaymentplanthatisrealis cfor
youbothshortandlongtermwhileminimizingthetotalinterestandfeespaid.
Notpayingyourstudentloansbackisseriousbusiness.Ifyou
defaultonyourstudentloan:

Adefaultedstudentloanisalsooneoftheworstentries
thatcanappearonacreditreport.Itcanmeanthat:

Youren reloanbalancewillbedueinfull,immediately.

Youmaybedeniedcreditcards,carorhome

Collec onfeescanbeaddedtoyouroutstandingbalance.

loans,orapartmentleases.
Yourinterestratemayriseonexis ngloans
andcreditcards.
Banksmayrefusetoallowyoutoopena
checkingaccount.
Youmayhavetopaymoreforcarorhome
insurance.
Youmaybeunabletoobtainorrenewa
professionallicense.
6
Youmaybedeniedajobduetopoorcredit.

Yourwagesmaybegarnished.
YourSocialSecurity,disabilityincome,andstateand

federaltaxrefundscanbeseized.
Youwillloseeligibilityforfederalaid,includingPell
grants,inthefuture.
Youwilllosedefermentorforbearance(abilitytostopor
reduceloanpaymentsforupto12monthswhileinterest
isaccruing)op ons.
Outstandingfeesandunpaidinterestcanbecapitalized
(added)ontoyourprincipalbalance.5

BesuretocheckouttheextensivechartthatcomparesFederalloanrepaymentop onsat
h p://studentaid.ed.gov/repayloans/understand/plans.

Ifyoufindyourselfintrouble,dontpanic!Yous llhaveafewop ons:

1. Defer:Manylenderswillgiveyou
agraceperioda eryougraduate
fromcollegebeforeyouhaveto
startrepayingyourloanthatyoucan
extendifyouneedto.Just
rememberthatthelongeryouputit
o,themoreyouwillpayininterest.

2. Consolidate: Aconsolida onloanisone

loanyoumakewithalenderwhothen
literallypaysoyourotherloans,theloans
youcouldntaordtopayseparately.
Ideally,aconsolida onloancomespackaged
withamarkedlylowermonthlypayment
andpossiblylowerinterestratebutalonger
repaymenttermisalmostaguarantee.

3. Renego ate repayment terms:

Some mesyoucanchoosefrom
dierentrepaymentop onssuch
asgraduated(youstartowith
lowerpaymentsthatincrease
over me)orincomebased
(paymentamountiscalculatedon
awagebasedformula).

Whenconsideringhowtopayforfinancialaid,rememberthattherearelotsofresourcesavailabletohelp.Applyforas
manyscholarshipsandgrantsaspossible!BeawareofdeadlinesandcompletetheFAFSAtobeeligibleforthemaximum
amountofaid.Rememberthatfinancialaidisnotnecessarilyfreemoney.Keepyourfinancialreputa oncleanbykeeping
yourloanamountslowandneverborrowmorethanyoucanaordtopaybackonceyouareworking.
4
5
6

RepayYourLoans,FederalStudentAid,h p://studentaid.ed.gov/repayloans
AmericanStudentAssistance,DefaultConsequences,h p://www.asa.org/indefault/consequences/default.aspx
AmericanStudentAssistance,DefaultConsequences,h p://www.asa.org/indefault/consequences/default.aspx
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