College MAP

Collegian Webinar #2: Financial Aid

12 September 2017
Types of financial aid

There are four main types of financial aid:

► Grants* do not have to be repaid. They are usually need-based and funded by federal
and state governments or colleges.
► Scholarships do not have to be repaid. Scholarships may be funded by governments,
colleges and private organizations. They may be awarded for academic or athletic
ability, interest in a certain subject or volunteer work, for example.
► Loans are funds that students and parents borrow from banks, the government or other
lending companies. A loan must be paid back with an extra charge called interest. The
federal government offers low-interest loans to students with financial need.
► Federal work-study programs offer paid part-time jobs to help students pay for part of
their college cost.
*You might have to pay back part or all of a grant if, for example, you withdraw from school before
finishing an enrollment period such as a semester.

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What is FAFSA? What is the CSS/Financial
Aid PROFILE?
► Your financial aid package is largely determined by completing the Free
FAFSA and possibly the CSS/Financial Aid PROFILE.
► FAFSA is used to apply for federal financial aid (certain types of grants and
scholarships, loans and federal work study).
► Most public universities will just require the FAFSA.

► CSS/Financial Aid PROFILE is used apply for non-federal financial aid from
almost 300 colleges and scholarship programs.
► You should only submit a PROFILE if your college or scholarship program instructs
you to do so.

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When to apply for financial aid

FAFSA
► You can submit the FAFSA on the web from October 1, 2017 until June 30,
2018, of the year you plan to go to college.
► Aim to file the FAFSA as soon as possible.
► It is a common misconception that earlier completion is tied to receiving more federal funds.
However, it could impact Pell Grants (which are allocated by the school itself and could run out
if filed too late).
► After you complete the FAFSA, you may be prompted to apply for state-based
aid programs.
CSS/Financial Aid PROFILE
► You can submit the CSS/Financial Aid PROFILE beginning on October 1,
2016.

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Changes to FAFSA in 2017

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Loans

Borrowing money to pay for college can be a sensible choice, as long as you do
it wisely.
► Understand all the terms of a loan — not just the interest rate repayment
terms — before you sign.
► Borrow only what you need. That way, your future self won’t be paying back a
bigger loan (plus interest) than was absolutely necessary.

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Federal loans

The federal and state governments provide different types of college loans to
both students and parents.
► Need-based loans
► Federal Perkins Loans may be awarded by colleges to students with the highest
need.
► Federal Direct Subsidized Loans are interest-free while you're in college and
have a borrowing limit that increases for each year of school you complete.

► Non-need-based loans
► Federal Direct Unsubsidized Loans charge interest, but allow you to add the
interest fees to the amount you borrow until after graduation. However, doing this
means you’ll actually end up owing more.
► Federal Direct PLUS Loans allow parents of dependent undergraduate students
to borrow the total cost of their education expenses.

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Types of loans

Interest rate –
disbursed after
7/1/15 and before
Loan Need-based? Subsidized? Sponsor Borrower 7/1/16
Direct Subsidized Yes Yes Federal government Student – 4.29% (fixed)
Loan undergraduate
Direct No No Federal government Student – 4.29% (fixed)
Unsubsidized undergraduate
Loan
Direct No No Federal government Student – 5.84% (fixed)
Unsubsidized graduate/professional
Loan
Perkins Yes Yes Federal government Student 5% (fixed)
Direct PLUS No No Federal government Parent (or 6.84% (fixed)
Loan graduate/professional
student)
State and private No No Banks, colleges, Usually student with Usually higher
loans foundations, state creditworthy cosigner than federal rates;
agencies variable

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Private loans

► In general, private loans are not subsidized, nor need-based. They also often
require a cosigner — someone who promises to repay the money if the
student fails to do so. The interest rates of private loans vary:
► Banks and other financial institutions usually have the highest interest rates.
► Some private organizations and foundations offer lower interest rates.
► Some colleges offer loans with relatively low interest rates.

► Keep in mind that it's important to understand all the terms of any loan before
you accept it. Some private loans might offer relatively low interest rates, but
the other terms might not be as favorable as those of a federal loan.
► For example, federal loans generally offer flexible terms — if you don't have a job
or become disabled, you might be able to adjust your payments — while private
loans may not be as flexible.

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Some basic student loan definitions

► Interest rate: this is the cost of borrowing money, and is usually a percentage
of the loan that is added to the amount you borrow. The higher your interest
rate, the more you'll owe over time.
► Need-based: this is awarded to students who are determined to have
financial need; that is, the amount they are able to pay for college is less than
the cost of attending the college. The federal government offers need-based
loans to students based on the FAFSA.
► Subsidized: some federal loans are subsidized, which means the
government pays the interest on the loan while you're in college.
► Unsubsidized: some federal loans are unsubsidized, which means the
government pays the interest on the loan while you're in college, but allows
you to add the interest fees to the amount you borrow until after graduation.
However, doing this means you’ll actually end up owing more.
► Defer: some federal loans let you defer — or delay — paying the loan back
until after you graduate.

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Grants

► Grants and scholarships are often called gift aid because they are free money* —
financial aid that doesn’t have to be repaid. Grants are often need-based, while
scholarships are usually merit-based.
► Grants and scholarships can come from the federal government, your state
government, your college or career school, or a private or nonprofit organization. Do
your research, apply for any grants or scholarships you might be eligible for, and be
sure to meet application deadlines!
► The U.S. Department of Education offers a variety of federal grants to students
attending four-year colleges or universities, community colleges, and career schools.
► Almost all grants are awarded to students with financial need, which is determined by
first completing the FAFSA.
*Occasionally, you might have to pay back part or all of a grant if, for example, you withdraw from school
before finishing an enrollment period such as a semester.

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