Back to College: Financial Aid, Part 1

Money is often the deciding factor when it comes to what school we choose to attend or if we choose to attend at all, and long after the diploma is in hand, the financial burden is still felt.

While I'm not an expert of student loans and financing, I have learned a few lessons about student loans and aid, and as I am currently paying back a student loan myself (and will begin to start paying my husband's very soon as well), I can tell you that I wish I knew then what I know now about student loans.

So here are a few tips and basic info I've come up with:

• If possible, begin saving for your child's tuition as soon as you can. Find a pre-paid college tuition program. (In which you put back a certain amount of money each month.) Or invest a little money in bonds or cds early on in your child's life, or at the very least start your child a savings account. (small deposits can add up)
• Every college student is required to fill out financial aid application. (aka FAFSA)
• Shortly after filling out your application, you'll get a "reward letter." If you receive a grant, you should definitely accept it, as this means that you will not have to pay the money back. But before you accept a loan, you should review how much money you actually need for tuition, room/board, books, transportation, etc. More than likely you will be "rewarded" more money than you actually need. If you don't need all the money they want to loan you, don't accept the loan. Instead except a reduced amount. (though if you are on a fixed income, the extra money may be of great help to you, so just use your best judgement.)
• A few months before your first semester you need to talk to the people in charge of financial aid at your school to find out what the procedure is for paying tuition. Where I went to school, you had to pay tuition out of pocket, and the financial aid would later be disbursed to you. However, at the school where my husband currently goes, his tuition is subtracted from his financial aid total, which means he doesn't have to have the money ahead of time. (very valuable information to have)
• Also, when you receive you're reward letter, don't forget to turn it in to your school's financial aid department, and make certain that the person you give it to does something with it. If you're reward letter is not signed, turned in, and processed you will not get your aid money on time (if at all). I ran in to this problem myself when the person I handed my reward letter to failed to deliver it to the proper person for processing.
• If you mail in tuition money and/or reward letters, it is a good idea to call about a week later to confirm that it was received and processed into their system. If for some reason there is a glitch or an oversight, and you don't take care of it before the start of semester, then you will have a big headache on your first day.
• And this is important tip: If possible, avoid getting the loan through the government & the school at all! Instead shop around for a private loan with a competitive interest rate. And when you get your school's reward letter, just decline the loan. More on this, on the next post.
• Adding to my last point which I will expound upon in the next post, I advise you to be especially careful if your school uses companies like Sallie Mae to process loans. If you have bad credit, and can't get a loan from a bank, than these loans will obviously have to suffice, however, they carry a very high interest rate, and if you ever miss payments or want to stop/postpone payments, you have to pay penalties which can cost you a lot of money.
• While in school, you will be getting notices about paying interest early. If you are able to do this, I'd advise paying. But you don't have to. And before deciding on whether to pay or not, you need to look over your loan documents to make sure that the interest will not be compounded at the end of the year.
• After graduation, if you're on a fixed income or don't yet have a well paying job to help you make the payments, postpone your payments for as long as you can. Once you start making the payments, it's hard to stop. However, be aware that the interest on your loan will continue to accumulate, and at the very least you should try to pay this every quarter.

Next time, more on the positives and negatives of getting a loan through your school