out financial aid awards
sure to report all outside scholarships to your school's financial
aid department. Your financial aid award may need to be adjusted.
Schools take this stuff seriously. If they find out about an outside
scholarship later in the semester, they won't hesitate to yank something
else, such as a grant, out of your aid package.
Early bird gets the money
The sooner you and your teen get a jump on all this financial aid
stuff, the better off you'll be. Most schools give applicants until
May 1 to select a school and accept a financial aid package. Some
state universities have April 1 deadlines.
"Too often the student
will grab the award letter and see a scholarship or grant and figure
it looks good," says Jack Joyce, director of college planning
services at the College Board. "The letter will then find its
way to a drawer and stay there."
Not a good move if you want
to land all the financial aid you're entitled to. And don't make
the mistake of assuming that accepting admission into a university
will somehow secure your financial aid package.
You've got to accept both
separately and meet each deadline.
Stay on top of things. Make
a list of all key deadlines. Keep a file with copies of all completed
Once you understand the details
of your college aid package, the next step is figuring out how to
pay your family's share of the bill. There are three basic options:
delve into savings, set up a monthly payment plan or borrow.
Experts advise families to
have a plan in place before they accept a college financial aid
Colleges charge a nonrefundable
deposit ranging from $200 to $600 to hold a spot for an incoming
freshman. If something happens and your family can't afford that
dream college after all, you'll be out a few hundred dollars and
in for a whole bunch of last-minute stress.
You'll have to forfeit your
deposit to the dream school and your son or daughter will have to
rush to get into another college. You can spare your family this
drama by realistically assessing your family's financial situation
before accepting a financial aid award.
Families who need to borrow
should be sure to exhaust all federal loan options before turning
to private lenders.
"The federal loans are
definitely the best way to go," says Martha Holler, spokeswoman
for Sallie Mae. "They have lower interest rates and they have
more flexible repayment policies."
Federal loan types
Students may be eligible for subsidized or unsubsidized Stafford
Loans. A subsidized Stafford loan is based on need and the federal
government pays the interest on the loan while the student is in
school. With unsubsidized loans, the borrower is responsible for
the interest from the date the loan is disbursed.
Subsidized Stafford loans
are basic components of many financial aid packages. Students may
take out unsubsidized Stafford loans to help pay for their family's
share of their college expenses.
Federal loans also are available
to parents. Parents may borrow up to the full cost of a student's
education minus any financial aid with a PLUS -- Parent Loan for
Undergraduate Students. These loans are government-sponsored and
have a variable interest rate that is capped at 9 percent. Families
must pass a credit check to qualify for a PLUS loan. Monthly payments
begin within 60 days of the loan disbursement.
When choosing a private lender, the most important things to look
for are cost and customer service. Seek out the advice of the university's
financial aid department. Most schools have a list of preferred
"Your best bet is to
work through the financial aid office because they'll have an established
relationship with a lender," Holler says.
The whole financial aid process
can get a bit overwhelming. It's natural to have concerns and questions.
Be sure to speak up. If you don't ask, your family could lose out
"If they have anything
that would seem to be remotely involving a question about something
in the award letter or financial aid process, be sure to ask,"
Joyce says. "It's very clearly a complex process.
"If this whole process
makes sense to the family, they should be worried."
-- Updated: March 10, 2004