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Show me the money!
Financial aid is a tangled web of loans, scholarships, and lots, lots, lots of paperwork. It's enough to decipher loans and lenders, scholarships and payment plans, but you have to be careful of scam artists, too.
LOAN ME THE MONEY
Most students know little about college loans, think it's their parents' responsibility, or just don't want to be bothered with them until it comes time to repay. Yet few enter college without a loan to cover the expenses.
And regardless of who will be paying back the money, you should be part of the loan process.
The three types of loans available to college students and their parents are student, parent, and private loans. Student loans, such as the Perkins and Stafford loans, are taken out in your name and require no collateral or credit checks, as most students have neither.
The Perkins Loan is a federal student loan taken out directly from your college. To see if you meet the financial requirements for this one, visit your college's financial aid office. If you qualify for a Perkins Loan, you may receive anywhere from $3,000 to $15,000 for each year you're in school.
The Stafford Loan may be either subsidized, meaning the government pays the interest while you're in school, or unsubsidized, which means payment on the interest begins immediately once you borrow the money. This loan's maximum borrowing amount can increase for each year you remain a student.
While qualifying for student loans depends on your financial need, parent loans, known as PLUS loans, are available to all parents, whatever their income. Parents must begin paying the loan at the time it is taken out, though student loan payments may be deferred until you graduate.
Parental loans, however, can pay for your education in its entirety. Because the costs of going to college extend beyond tuition costs, many people are unable to begin paying a loan right away. For this reason, you may want to consider a private loan from a private lender, which may be deferred until graduation.
If you must take out more than one of the loans mentioned above, loan payments might be more than you can afford. Consider loan consolidation, which means combining your loans into one mass payment, rather than two or more. This decreases the monthly amount you will be paying towards your education loans. However, in the process, the repayment period is extended, and the interest rate may increase.
SHOW ME THE WALLET
From your current standpoint, it may be difficult to determine what your financial situation will be four years from now. How will you know what kind of loan you will be able to repay? Planning ahead will save you grief in years to come. To identify your financial future, consider your present savings, if you'll be repaying your own loans, if you'll have a job immediately after graduation, and your other post-college living expenses.
Once you have an idea of the kind of loan you're looking for, it's time to consider lenders. As with the federal Perkins Loan, finding a lender may be just a matter of applying through your school. In other cases, however, it may be necessary to contact a bank or other private lender.
Getting information on lenders can be as simple as doing a little research on the Internet. Search for the kind of loan you want, and you'll find an online list of lenders. Or contact your school's financial aid office and area banks for pamphlets on educational loans.
Accumulate information from various lenders, and begin to compare. Look for the lender with the lowest interest rates and most flexible repayment options. Ask potential lenders the following:
Does the interest rate change often?
Do you offer repayment counseling?
Do you offer loan consolidation?
What will the total repayment be, including interest?
When communicating with a lender, pay close attention to the customer service you receive. After all, you will be linked to this lender for many years to come. You should be treated with respect, and be able to easily ask someone your questions.
RECOGNIZING FINANCIAL FRAUD
Asking questions should be part of every step of your financial-aid search. Each year, college students and their parents put their trust into illegitimate financial services only to find that the loans and scholarships promised never come to pass. You'll be spending thousands of dollars on your college education; you can't afford to be conned out of a single cent.
Just how big of a problem is financial fraud on the college level? Big enough for the College Scholarship Fraud Prevention Act to pass in 1999, which included a penalty increase for those who scam students and their families out of hard-earned dollars.
While the act has raised awareness of the problem, fraud still persists. Don't let your need for money make you vulnerable to these scams. When you apply for loans, you're dealing with a lot of money that could one day come out of your pocket. Don't go into it with your eyes closed.
Graduation may seem far away, but those payment due notices will show up quicker than you think. Don't be quick to accept a loan with an unbelievably low interest rate; you'll probably be required to pay a loan fee. Just because a scholarship is advertised on the Internet or even at your school doesn't mean it's a legitimate offer. Watch out for the following telltale signs of a rip-off:
Selling lists. You may come across scholarship services that offer a list of scholarships (for a small fee, of course). Sounds like a great deal until you discover that you don't meet the criteria to apply for any of the list's scholarships. Besides, school libraries generally have free scholarship lists you can get just by asking.
You're a winner. In most cases, you will not be approached with a scholarship unless you approach someone first. So if information shows up without you having requested it, don't be quick to jump on the offers.
Up-front fees. Be suspicious of any application fees, or if you're required to pay for information. Also be wary of requests for your bank account or a credit card number, even if it's on an application.
Guarantees. Nobody can promise you a scholarship. If it were that easy, everyone would get one.
Addresses. Were you given the address of an actual business, or a post office box? If the "business" is operating out of a P.O. box, be cautious.
Keep all your correspondences with scholarship and loan companies, as well as the names and addresses of those with whom you speak. Keeping detailed notes will help investigators track financial fraud in the unlikely event that you get taken.
Trusting your own instinct can go a long way towards saving you money and hassles. If you think you've encountered someone offering fraudulent scholarship or loan services, report it to such policing organizations as the Federal Trade Commission, the National Fraud Information Center, or the Better Business Bureau. Though these groups may not look at your individual situation, they will begin investigating the questionable business.
Don't let fear of financial fraud deter you from getting much-deserved scholarships and other financial help. By learning as much as you can about the financial-aid web, you can go into the process with eyes-and wallet-wide open to the best deals.
Call the Federal Trade Commission at (877) 382-4357, the National Fraud Information Center toll-free at (800) 876-7060, and the Better Business Bureau at (703) 525-8277 to report financial-aid fraud. Visit www.salliemae.com and www.ftc.gov for more information.
HELPFUL WEB SITES
Funding Your Education 2000-2001:
www.ed.gov/prog-info/SFA/FYE/FYE00/
Services for Students and Parents: cbweb1.collegeboard.org/finaid/fastud/
html/intro.html
PLUS Loans:
www.ed.gov/prog-info/SFA/ StudentGuide/1998-9/plus.html
Financial Aid from the U.S. Department of Education:
www.ed.gov/prog_info/SFA/StudentGuide/
College Board Online:
www.collegeboard.org/
Resource Pathways:
www.collegeaid.com/
The Smart Guide to Financial Aid:
www.finaid.com/
Adventures in Education:
www.adventuresineducation.org/
Embark.Com:
www.embark.com/fa/expert.asp Article provided by 
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