Top 7 Financial Aid Mistakes Students Make
Most of the time I come here and talk about what you should do to get financial aid…Gentle reminders about filing before the FAFSA deadline, applying for as many scholarships as you can, and picking the right student loan to cover the gap.
Well, today, I’m going to be a little more ruthless. I’m going to tell you what NOT to do — under any circumstances — if you want financial aid. Don’t let one of these goofs gut your chances for the education you want and deserve.
1. Not Applying for Financial Aid
This made sound too obvious to be true, but many students and their families assume they won’t qualify for financial aid so they don’t even bother applying. They think they make too much money — but even families making more than $100,000 a year can get assistance. And according to the American Council on Education (ACE), it’s not just six figure earners that skip the financial aid application process.
In 2006, ACE estimated that 1.8 million low- to moderate-income families didn’t even complete the FAFSA (the Free Application for Federal Student Aid)… and 1.5 million of them would have qualified for the Pell Grant.
2. Missing Deadlines
Even among those who do apply for financial aid, many are lax about deadlines. If you miss the FAFSA deadline, YOU WILL NOT QUALITY FOR FINANCIAL AID. Forgive me for shouting, but there’s no excuse for not following directions — especially when we’re talking about thousands, if not tens of thousands, of dollars on the line.
Beyond the FAFSA, each school you apply to will have different deadlines and bureaucratic requirements. Make sure you understand what you need to do — and when you need to do it by. Mark it in a calendar, set multiple alarms for yourself. Whatever you do, don’t miss the deadlines.
3. Not Applying Early Enough
Okay, so the FAFSA (and other financial aid paperwork) deadline for your school is April 1. That doesn’t mean you should wait until March 30 to send in your stuff. Get it done as soon as humanly possible after January 1st (the first day you can file your FAFSA). That means that your previous year tax returns need to be filed early. Not on time. Early. If you’re dependent on your parents, make sure they realize the gravity of the situation and get their returns done early, too.
4. Skipping Over Scholarships
There is free money out there for the taking — literally thousands of private scholarship and grant programs. And you probably fit the bill for dozens of them. Yes, it is extra work and you might even have to write an essay or get some recommendations. But trust me when I say that it pales in comparison to stocking shelves all summer long.
For more information about scholarships, talk to your guidance counselor (if you’re in high school still), meet with your adviser (if you’re already in college), and sign up with one of the many free scholarship search engines (here is a post we did a while ago about some of the better ones.)
5. Paying for Something That’s Free
It’s called the FREE Application for Federal Student Aid (FAFSA) for a reason: It’s free. And so should any website be that you’re searching for scholarships on. If someone is offering to manage your college financial aid process, he (or she) is more than likely offering to rip you off. There is no such thing as a secret scholarship; if a “scholarship professional” can find it, so can you — and with relatively little searching. If you do get stuck on your FAFSA, there is online support available. Or you could call your local college’s financial aid office: They are usually more than happy to answer your questions on the phone or in person.
6. Taking Our Private Loans Before Exhausting Federal Ones
In an ideal world, you wouldn’t need to take out any loans. You’d be able to cover the entire cost of your college education from savings, grants and scholarships. But this isn’t an ideal world for most Americans, and educational loans are a reality that’s here to stay. That said, Federal loans for students — meaning Stafford and Perkins loans — are far.better.deals than private loans.
Unsubsidized Stafford loans are capped at a 6.8 percent interest rate; subsidized Staffords do even (in 2012, they’ll be capped at 3.4 percent). Private student loans, on the other hand, can reach more than 12% APR: That’s approaching credit card territory.
7. Living Like You Already Have a Fat Paycheck
Even if you have a part-time job — heck, even if you have a full-time one — you should not be living large while you’re in college. Now is the time for frugality. If you must take out student loans, do so extremely prudently. You don’t want to owe Sallie Mae a penny more than you have to, and certainly not because you coveted a nicer off-campus apartment. If you actually live like a starving college student while you’re in college, then maybe — just maybe — you won’t have to when you graduate. If you don’t know what I’m talking about, check out this post on the Real Cost of Paying Back Your Student Loans.
Applying for and getting enough financial aid to cover your college costs isn’t rocket science. But it does require a better-than-average attention to detail, the ability to follow instructions , a keen desire to make it work, and some self-discipline. Do you have what it takes to make the grade?