Financial Aid for College: For college purposes, students look everywhere for financial aid. That includes scholarships, so the fear of not being able to go to school because of your parent’s income. Unfortunately, many students think that because their parents have a certain income; they won’t earn scholarships or even be eligible for many other forms of financial aid.
However, that myth costs them significant gift paid and money. With the cost of college so high, even families who don’t qualify as low-income can need assistance paying for tuition. In this article, all your questions about financial aid will find solutions.
Understanding Financial Aid
Financial aid is simply money you get to help you pay for your college, career, or university education. Some different types of aid available include loans, scholarships, grants, and work-study programs. FAFSA (Free Application for Federal student aid) is the most important part of applying for student aid.
First things first, there is no income limit when it comes to the FAFSA. Everyone should apply for financial aid, no matter your or your parents’ income.
Fill out the FAFSA even if you think your parents make too much. Several factors determine your eligibility for student aid, and your parents’ income is only one of them.
When filling out the FAFSA, you are asked to provide detailed information about your parents’ financial circumstances, including tax returns so that income can be evaluated. These details are used to help calculate your financial need.
Factors that Affect Your Ability to Obtain Student Aid
Your ability to receive aid is based on several factors beyond your parents’ income, including:
School Cost of Attendance
First, the cost of attendance at the college or university you plan to attend plays a part in determining federal financial aid eligibility.
The higher the cost of attendance, the more financial aid you could qualify for. For example, if you select a public school in the state where you reside, the total cost of attendance will be lower than a private out-of-state school.
On the FAFSA, you will be asked to provide information about your family’s assets, including bank accounts, investment accounts, and accounts for educational savings plans, such as the 529 savings plan.
It also asks for information about your parents’ home, but these details are limited to the purchase year, the monthly mortgage payment, and the balance owed.
Family cash assets—including bank accounts, investments, and education savings accounts—are included in calculating your eligibility for aid; home equity may or may not matter, depending on the school you plan to attend.
However, retirement accounts, cash value life insurance, and annuities do not typically count toward what your family is able to contribute toward college expenses.
Your income and assets are also considered in the FAFSA, but that’s where the required information ends.
Other Significant expenses
A specific college may evaluate your ability to qualify for financial aid based on other factors, including other significant expenses the household incurs each month, such as significant medical debt. It may also consider whether a sibling is attending school at the same time as you.
Understanding Your Expected Family Contribution (EFC)
Your EFC is a number your school uses to calculate how much aid you’re eligible for. Despite its name, this number is not the amount your family has to pay for your education.
Depending on your EFC and the cost to attend your school, you could be eligible for certain types of need-based aid.
If your household income is high, as are the assets you could use to pay for college expenses, your EFC is going to be higher than well. This means you might be limited in the aid you are eligible to receive.
If you’re curious about how this figure will look, you can see the exact formula the federal government uses to calculate your EFC.
You can also speak with your school’s financial aid office to learn about other financial aid you could apply for, such as grants or scholarships.
How to Get Financial Aid Without Your Parents’ Help
Wondering whether you should even fill out the FAFSA if your parents are rich? The answer is a resounding yes. You might be surprised by the aid you didn’t think you’d be eligible for, and some private lenders also use FAFSA information to determine your eligibility for their aid.
Look for Scholarships and Grants
Another solution is to apply for scholarships and grant funding. Many scholarships and grants exist for different types of students.
Some of these awards are based on demographic details of the student, such as race, ethnicity, gender, or geography.
Other scholarships and grants provide funds to those who are following a particular degree path, or those who submit essays on a specific topic.
A misconception about scholarships and grants is that these funds are only available to those who are low-income. That simply isn’t the case. Scholarships and grants are given for a variety of reasons.
Use Non–Need-Based Aid
If you are concerned about how to pay for college if you don’t qualify for need-based aid; the FAFSA is your first step to collecting non–need-based aid.
When you complete the FAFSA, you will be eligible for a loan at a minimum. Non-need-based aid includes the following types of federal Direct student loans:
Direct Unsubsidized Loans: Federal loan limits are based on the year of school the student is completing and the total cost of attendance. Although payment is not due on these loans until you school, interest accrues while loan payments are deferred.
Graduate PLUS and Parent PLUS Loans: Federal Direct PLUS loans are available to parents of undergraduate students and to graduate students. They work similarly to Direct Unsubsidized Loans in terms of deferment and interest accrual, but they may offer higher loan limits.
Consider Declaring Your Independence
Another option for paying for college if you do not qualify for financial aid due to your parent’s income is to declare your independence. Being an independent student typically requires one of the following to be true:
Are you over the age of 24?
You are married.
Are your dependents other than a spouse?
You are an orphan.
You are a veteran or active duty member of the U.S. Armed Forces.
Consider Private Student Loans
Finally, if you do not qualify for federal financial aid because either you or your parents have a high income or substantial assets, private student loans might help.
Private student loans are available from private lenders, and they require a strong credit history or a co-signer with one. Lenders offering private student loans may provide higher total loan limits and lower interest rates than comparable federal student loans.
However, you will need to make some comparisons among lenders to ensure you are getting the best possible terms for your situation.
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