Financial Aid for College

9/6/2001

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Quick Check List

  • Early on—Study, Work Hard, and do your best to Earn Good Grades;
  • Know the ins and outs of standardized tests. High test scores open doors to more colleges and high dollar scholarships and grants.
  • Save now for college;
  • Be sure to complete all high school courses you’ll need for college admission. Most four-year colleges require the following:
  • four years of English;
  • three years of math;
  • three years of lab science;
  • three years of social studies;
  • two years of electives;
  • Seek out scholarships and grants before looking at student loans;
  • Consider Federal loan programs which offer lower interest rates;
  • Manage student loan debt by knowing how much you can afford to borrow and repay. Working while in college can help to reduce your debt after graduation.

INTRODUCTION

Over the past 20 years, the cost of a college education has risen twice as fast as inflation. Tuition at public universities alone jumped 234 percent between 1980 and 1995. But despite the huge rise in tuition, it can be easier for people to afford higher education. Today, close to half of students at public colleges and universities and over 70 percent of students at private institutions receive some sort of financial aid. This is good news since a higher education can mean more money and wider job choices in the present and future job market. To get the most from your educational potential, you should begin mapping out your future as soon as possible.

Define Your Goals
The best way to make the most of your opportunities is to work hard and know generally what you want to do in life so you can plan wisely for the future. Asking yourself questions like the ones below can help you define and achieve your goals.

  • What are your strongest skills and talents?
  • What are your values and dreams for the future?
  • How do you define success?
    Is it family, wealth, charity, etc.?
  • What activities or achievements do you find most rewarding?
  • What careers excite you most?

Establish a Career Plan
Once you’ve thought generally about what you might want to do in life, you should consider developing a career plan. A career plan will help you work towards a specific job—such as a heart surgeon—or help you find opportunities in a general field, such as medicine. Following the steps below is a good beginning:

  • List Your Skills: Write down your natural talents such as music, art, writing, etc. Include training you have gained from your parents, school, or jobs. Rank your skills in terms of what you do best and like most;
  • Research Careers: Take time to research any career fields or specific careers that you feel qualified for or that are of strong interest to you. The U.S. Department of Labor’s Bureau of Labor Statistics is a great place to get in-depth, up-to-date information on hundreds of specific careers. Look for their Occupational Outlook Handbook at your local library or visit their searchable career database on the World Wide Web at www.bls.gov/OCO/;

  • Gather Good Intelligence: Learn as much as you can about the careers you like. Be sure to read articles, biographies, etc. about people in the jobs you’re considering. Whenever possible, talk to someone in those career fields. Also, take every opportunity—after school, during summer break, etc.—to intern at a job that’s in your favored career field. Internships are excellent ways to gain good work experience and network with people who can help you get future jobs. An internship lets you discover if a career is what you thought it would be and whether it offers the salary and job satisfaction you desire.

Choose a Type of School
After identifying some of your goals and narrowing your career field choices, you can begin deciding what educational avenues can prepare you best for success. Depending on your intentions and interests, your education options are many, and include:

  • Vocational Training Schools: These are privately owned and operated schools that offer wide-ranging career training in specialized occupations such as computers, graphics design, paralegal services, etc. Course study is specific and intensive. Time to graduation is short—usually three years or less.

  • Community and Junior Colleges: These schools can benefit students who ultimately want to go to a four-year college or university or those who simply want specialized job training. Generally, these colleges require two-years of study to graduate with an associate’s degree.

  • Four-year Colleges/Universities: These schools offer bachelor’s and/or master’s, doctorate, or professional degrees and a wide variety of studies and curriculum to choose from. Bachelor’s degrees usually take four years to obtain and graduate degrees two or more years additionally.

  • Public Colleges/Universities: These schools are subsidized by the states in which they reside. Often, they are much less expensive than private colleges, with the cheapest rates going to in-state residents. Out-of-state students usually pay higher fees.

  • Private Colleges/Universities: Funded through endowments, tuition, and donations, these schools cost more than public schools. Financial aid can offset the higher costs.

Where You Want to Be
Think about the traits of a college or university that appeal to you. If you plan to attend a four-year college or university, you will almost certainly want to find qualities that can enrich your personal and social life as well as your academic performance. Consider the following in your college search:

  • Academic programs and degrees;
  • Overall academic reputation;
  • Academic reputation in your field of study;
  • Job placement rate;
  • Cost of attendance/financial aid;
  • Geographic location and size of student body;
  • Student diversity;
  • Political or religious affiliation;
  • Student Life (housing, meals, sports, health clubs, student government, fraternities/sororities, clubs, etc.)

To get answers about the subjects above, contact a college’s or university’s admissions office for an admissions catalog. Better yet, you can go to the following sites on the World Wide Web which can give you direct access to the home pages of nearly every college and university in the United States:

www.usnews.com/usnews/edu/college/corank.htm
This site lists colleges by region of the country.

Financing Your Education
You can finance your or your children’s education in any number of ways—saving, pay as you go, borrowing, grants and scholarships, or a combination of these. Types of financial aid can be divided into three general categories:

Grants and Scholarships: Money from grants and scholarships is not repaid and is often awarded on the basis of academic, athletic, or artistic abilities or talents.

Loans: Money from loans must be repaid with extra costs from interest over a prearranged period of time. Sources for such loans are plentiful, but specific loans for higher education are available at interest rates lower than those of the marketplace. Ordinarily, repayment of such student loans begins within six months to a year after graduation with a preset interest rate that lasts the life of the loan.

Work-Study: Money from work-study is earned by students working at full-time or part-time jobs for their schools during the summer and/or the academic year. Work-study jobs can be either on-campus or off-campus.

Federal Aid
The federal government is the largest source for financial aid; ahead of state and local governments, banks, and savings and loan companies. Some of the most commonly used federal aid are described below:

Pell Grants: This program provides grants which do not need to be repaid. It is designed to specifically help low income undergraduate students who have not earned a bachelor’s or professional degree. However, students coming from families with higher incomes may qualify.

Perkins Loans: This low interest federal loan is available for both undergraduate and graduate students with exceptional financial need. A student’s school is the lender. The loan is made from government funds with a share contributed by the school that the student attends. This loan is repaid directly to the school.

Stafford Loans: Similar to Perkins loans, under Stafford loan, students may borrow greater sums of money as they continue their education. This loan is open to both undergraduate and graduate students.

All student loans must be repaid whether or not a student finishes school or gets a job after graduation. Failure to pay a student loan can ruin your credit rating–—another reason to learn a school’s job placement rates beforehand.

For more information about student loans, contact the U.S. Department of Education’s Federal Student Aid Information Center at 800.433.3243 or web site at www.ed.gov and its Free Application for Federal Student Aid office at 800.801.0576 or web site www.fafsa.ed.gov. Also contact the following: FINAID at www.finaid.org, NELLIEMAE at www.nelliemae.org, and SALLIEMAE at www.salliemae.com.

Grants and Scholarships
Most high school guidance counselors and libraries have current announcements about scholarships, grants, and fellowships offered by civic and fraternal organizations, foundations, corporations, professional clubs, or charitable organizations.

The Internet, accessible through schools, local libraries, homes, and offices, is one of the best ways to find scholarships. Many web sites have searchable databases which take your personal information and give you a list of awards that fit your profile. Some of the most helpful sites are listed below:

ROTC: The Reserve Officer’s Training Corps is a special type of scholarship that pays for almost all college expenses in exchange for one to four years of military service.

Beware of Scholarship Scams
Every year, thousands of students and parents fall victim to scholarship search service scams. Looking for the warning signs below can help you avoid getting ripped off.

It’s probably a scam if a company:

  • GUARANTEES A SCHOLARSHIP OR “YOUR MONEY BACK”: Grants or scholarships are awarded on basis of performance or qualifications. No one can “guarantee” that you’ll get one;

  • CLAIMS YOU CAN’T GET THIS SCHOLARSHIP INFORMATION ANYWHERE ELSE: Free scholarship information abounds—in school libraries, with federal, state, and local governments, on the Internet, and with private companies;

  • WANTS A CREDIT CARD OR BANK ACCOUNT NUMBER FOR AN APPLICATION FEE OR TO HOLD SCHOLARSHIPS: Never give your credit card or bank account number over the phone. Free money shouldn’t cost anything. Most legitimate companies don’t charge application fees;

  • SAYS THEY’LL DO ALL THE WORK: There’s no way around it. You must apply for scholarships or grants yourself;

  • CLAIMS THAT “YOU’VE BEEN SELECTED” OR THAT “YOU’RE A FINALIST” FOR A SCHOLARSHIP OR GRANT YOU NEVER APPLIED FOR: You’ve got to go after grant or scholarship money. It won’t come looking for you.

For more information on scholarship scams, visit the Federal Trade Commission’s web site at www.ftc.gov; the Council of Better Business Bureaus web site at www.bbb.org; and FinAid web site at www.finaid.org/scams.

Precautions Against Scholarship Scams

  • INVESTIGATE: Carefully investigate the background of any company, especially if their offer exhibits any of the scholarship scam warning signs;
  • GET TRUSTED, INDEPENDENT OPINIONS: Don’t rely solely on a company’s claims. Check them out with a high school guidance counselor, college financial aid administrator, the Better Business Bureau, or other knowledgeable group or person;
  • CALL DIRECTORY ASSISTANCE: Check Directory Assistance to see if a company is listed or has an 800 number. Absence of a number should raise your suspicions;
  • GET ANY OFFER IN WRITING: Never rely on verbal promises. Ask a company for printed information about cancellation and refund policies and “guarantees.” If they won’t provide it, watch out!;
  • COMPLAINTS: If you feel you’ve been victimized by a scholarship scam, contact your local Better Business Bureau at www.bbb.org, the Federal Trade Commission at 202.FTC.HELP (202.382.4357), or your state’s Attorney General’s Office.

Outside Links
To learn more about Financial Aid for Higher Education, contact the following:

  • COLLEGE BOARD at 800.626.9795
  • U.S. DEPARTMENT OF EDUCATION at 800.872.5326, Web site: www.ed.gov
  • FASTWEB
  • FINAID
  • FREE APPLICATION FOR FEDERAL STUDENT AID at 800.801.0576
  • NELLIEMAE at 1.800.367.8848
  • SALLIEMAE at 1.888.272.5543
  • U.S. NEWS & WORLD REPORT
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