10 financial aid pitfalls |
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"You have a better shot at the local awards,"
says Barnett. High school students should start at their school's
guidance office to see about award programs offered by their high
school. Next they should check out area organizations such as the
Lions or Kiwanis clubs, as well as their parents' employers for
leads on financial aid.
Brandon Rogers, author of "Ten Things You Gotta
Know about Paying for College," recommends that students already
in college tap into aid awards such as research stipends and grants
offered through their programs of study. "Faculty can access
lots of money that's usually not available to the general student
population," Rogers says. "There are a lot of students
that receive financial aid just because they have close relationships
with their professors."
5.
Forgetting the family
Students lucky enough to have relatives and family friends who want
to contribute to their higher education bills should be aware that
financial gifts from outside the family can impact their financial
aid eligibility. Monetary gifts given directly to the student and
stored in an account held in the student's name are assessed at
a rate more than three times higher than funds held in a parent's
account. "People don't understand that the parent assets will
be assessed at 5.6 percent, whereas the students' assets will be
assessed at 20 percent on the federal form," says Chany. "Not
coordinating with other family members who want to contribute for
college is a big mistake."
To make sure your loved ones aren't hurting
your shot at a free check, tell Gram and Gramps to open a college savings account
for you in their name, which won't be assessed at all on the FAFSA form, or to
simply purchase necessary college supplies instead of forking over cash. 6.
Paying for free dough
The good news is that there's tons of free
loot out there. The better news is that finding it shouldn't cost you a dime.
"It's almost universally a bad idea to pay someone else to help you get financial
assistance," says Rogers. "Companies that ask you for money are basically
running your name and information through free scholarship search engines. You
can do all of that research on your own." After exhausting
the local possibilities, try your hand at the free online scholarship searches
at Fastweb.com, Collegeboard.com and Petersons.com. If you need help filling out
the FAFSA form or finding financial aid programs, check out Makingitcount.com
or Collegegoalsundayusa.org to find out when free financial aid workshops will
be given in your area. 7.
Believing all loans are made equal
When it comes to student loans, the big name isn't always the best
name. "One of the biggest mistakes students make is not taking
time to research lenders before they pick a loan," says Barnett.
"Students tend to pick a brand-name lender that they're familiar
with, without really researching the benefits to see if it fits
their circumstance best."
Federal Stafford loans are capped at a 6.8 percent
interest rate and Perkins loans are an even better deal at 5 percent
(not to mention the fact that numerous loan forgiveness programs
are designed to eliminate Perkins loan debt). That means federal
loans are, in the vast majority of cases, a much better deal than
pricey
private loans. Since all undergraduate students, regardless
of financial need, are qualified for a lifetime limit of up to $23,000
in federal Stafford loans, students should head to Uncle Sam for
money before hitting up their local bank.
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