Decoding the dollars You juniors yearn for senior year so you can begin pursuing your dream college. Your parents, meanwhile, fret over the impending cost of a college career—not just the anxiety of the financial aid process, but also the reality of paying the bills each semester.
The good news is that your family can start planning now to pay for college with 1scholarships, grants, work-study and loans. Applying early through the Free Application for Federal Student Aid (FAFSA) or online at www.fafsa.ed.gov and meeting individual college financial aid deadlines allows you to be considered for federal, state and college funds. Read and understand the financial aid award letters you’ll receive from your possible colleges. These letters will indicate the institutional/merit scholarships and grants (free money), work-study (money earned through work assignments) and loans (money that must be repaid) awarded to you. Grants and institutional or merit awards are the best types of financial assistance. Schools, organizations and private institutions award hundreds of thousands of scholarships every year based on academic ability, outstanding talent and/or financial need. The best part about a scholarship or grant is that it’s “free money,” meaning it does not have to be repaid.
The Federal PELL Grant and the Supplemental Educational Opportunity Grant are a few examples of federal grant programs. In addition, there are state grants available. These are based on residency, full- or part-time enrollment and the location of the college you’ve chosen to attend.
Another option, the federal work-study program, is based on financial need and gives you the opportunity to work on campus and receive a paycheck. This is useful for student-athletes, students living on campus and students participating in on-campus clubs and activities. The total hours you work are based on how much money you’re awarded through this program. More than half of all students take out loans to help finance the cost of college. Loans will make up a large portion of your financial aid award letter. Make sure you understand all the loans you are eligible for, the terms, interest rates and repayment requirements. Loans must be repaid!
The Federal Perkins Loan is based on financial need. The interest rate is fixed at 5 percent, and the college serves as the lender. No interest accumulates on the loan until nine months after you graduate, drop below half-time enrollment or leave school. Repayment may take up to 10 years.
The Federal Subsidized Stafford Loan is based on financial need. The interest rate is variable and capped at 8.25 percent. No interest accumulates on the loan until six months after you graduate, drop below half-time enrollment or leave school. Standard repayment maximum is 10 years.
The Federal Unsubsidized Stafford Loan is available to students. The interest rate is variable and capped at 8.25 percent. Interest can be deferred. If so, the interest accumulates and will be capitalized at repayment when you graduate, drop below half-time enrollment or leave school. Standard repayment maximum is 10 years. The Federal PLUS Loans enable parents or legal guardians with good credit histories to borrow and pay the educational expenses for their dependent(s). If eligible, the parent can borrow up to the full cost of education less any financial aid for the academic year. The interest rate is variable and capped at 9 percent. Standard repayment maximum is 10 years.
As you strive to pay for college, investigate and understand your financial aid awards and hone your money management skills. Your investment in you and your college career will be a solid foundation for your future!
Rick Ross is director of client relations for M&T Bank Educational Lending. Article provided by  View more articles | Information provided by collegeanduniversity.net |