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5 Steps to Financial Aid

Step 1. Look for “free” money first.

Try to get “free” financial aid first. Free financial aid is the type of aid that you do not need to repay.

Unfortunately, free financial aid usually doesn’t cover 100% of your costs. And you may need to find other ways to pay for college, including taking out low-cost loans and using any money you may have saved. Alternative sources are also an option but use them only as a last resort. Take time to understand all the ways you can pay for college.

If you include more than one college on your FAFSA (Free Application for Federal Student Aid), you will receive one financial aid award letter (award offer) from each of those schools. These offers will likely contain a combination of free aid and low-cost loans. Evaluate each school’s financial aid offer carefully.

Ways to Pay for College
Free aid
  • You do not need to repay free aid, as long as you meet all of the obligations.
  • Free aid includes scholarships and grants.
  • Sources of free aid include the federal government, your state, your school, your employer, your community, religious organizations, and others.

Note: Be aware that in some cases, a grant may convert to a loan if certain obligations are not met.
Work-study or other employment
  • You can help pay for your education by working part- or full-time while you attend school.
  • Some employers offer tuition reimbursement programs in which they give money toward your education.
Low-cost loans
  • These loans offer reduced interest rates, various repayment options, and no prepayment penalties.
  • The primary source is the federal government, which offers loans for undergraduates, graduates, and parents.
  • Your school may offer institutional loans and flexible tuition payment plans.
Savings
  • You can always use money you already have to pay for school.
  • Sources include savings accounts, 529 plans, pre-paid tuition plans, or other savings programs.
Alternative sources
  • Private education loans can fill any gaps in funding after you have exhausted other aid types.
  • You may be able to use home equity loans and lines of credit depending on your situation.
  • Avoid cashing out insurance policies or retirement funds or using high-interest advances on credit cards. These sources are almost NEVER a good idea.

 

http://www.pheaa.org/college-planning/five-steps/index.shtml