April 24, 2018 – April is National Financial Literacy Month and it also happens to be the month when most colleges and universities send offers of enrollment and financial aid award letters. As parents and incoming freshmen of the class of 2018 assess their offers for the best fit, the National Association of Student Financial Aid Administrators (NASFAA) encourages them to make informed and carefully-weighed decisions by bearing the following tips in mind.
1. Make sure you know the terms and requirements of the money you've been offered. Any money that helps you pay for college - whether grants, loans, or work-study - is considered part of your financial aid award. While some financial aid like Pell Grants only require students to maintain certain attendance and academic standards, other programs carry additional requirements. Federal Work-Study awards must be earned through employment (usually 20 hours per week or less), and loans will need to be repaid (often with interest) after students leave college.
2. Don't think only about the amount of the loan you've been offered; think about how much you will need to pay back upon graduation. Loans generally will cost a borrower more in the long run than he or she receives up front. Some student loans accrue interest while borrowers are completing their degrees, increasing the total owed after college. After a student leaves school, interest will continue to accrue until the loan debt is paid in full or forgiven.
3. You don't need to borrow the full loan amount offered to you. Schools use average cost of attendance numbers to estimate what you will spend over the course of one year and how much financial aid you will need. Calculate on your own what you think your true cost of college will be and work with your institution’s financial aid administrators to determine what the right loan amount is for you.
4. There are other types of financial aid available beyond what your school has awarded you. You can continue to search and apply for outside scholarships—meaning scholarships from private sources, local and community organizations, through your parents' companies, etc.—after you receive your financial aid awards. In fact, you can apply for scholarships throughout your entire college career! Your family can also look to credit unions and private lenders to borrow private student loans, but make sure you know all the terms and conditions. Normally, private loans are only recommended after eligibility for federal student loans is exhausted.
5. Don't go it alone. If you're confused, call the financial aid office at a school where you've applied. Even if you're not sure whether you will ultimately enroll at that school, the financial aid administrators will be able to talk with you about your expected costs and answer any questions you may have.
NASFAA is also available to help. The online Students, Parents & Counselors center is packed with information on financial aid awards, scholarships, tuition discounts, and more.
To speak to a NASFAA spokesperson, please email [email protected] or call (202) 785-6959. Happy Financial Literacy Month!
Publication Date: 4/24/2018