Applying for college is an exciting, yet intimidating experience for millions of teenagers every year. The experience can be even more intimidating for parents, who are often responsible for shouldering the enormous cost of their child’s college education. Before applying, students and parents should take the time to learn everything they can about the world of financial aid.
Before you attempt to utilize any hacks or strategies, you should understand the difference between grants and loans. Loans are offered by both the federal government and private financial institutions, and they must be paid back. Private loans charge interest that accrues over time if a student fails to make payments in the future. Grants are only offered by colleges and the federal government, and they do not have to be repaid. Grants are dispersed according to financial need, and they are usually given more freely to freshmen.
With this in mind, if you or your child wants to save money, try taking advantage of the six time-tested hacks below.
The FAFSA form, which decides how much financial aid you are entitled to each year, is made available each year at the beginning of February. To expedite the process and get the most money possible, you should complete and submit your form immediately. Experts state that more aid is available at the start of each year, and as time goes by, federal and state funds begin to dwindle. Fill out your FAFSA once it becomes available, and avoid falling victim to procrastination.
Knowing what to expect in terms of expenses can be extremely helpful when applying for financial aid. Many experts suggest students and parents consider the net cost of a college education. This involves subtracting the amount of financial aid from the school’s cost of attendance. When forced to do this, many people realize that their financial aid package is not sufficient. You also need to factor in other costs such as living expenses, transportation, lab fees, books, etc. Once you have a realistic and accurate financial picture, you can plan your financial strategy more effectively.
When you or your child finally receives the financial aid package, be sure that you understand which loans are private and which ones are federal. Federal loans are generally more favorable than private ones, because they tend to offer more flexible payment terms, which can be beneficial if a student drops out or is having difficulty finding employment after graduation. Unlike private loans, federal loans can be discharged during bankruptcy, and they usually do not require co-signers. Since college students usually lack an established credit history, parents usually end up becoming co-signers for private loans. If the student defaults on the private loan for any reason, the credit score of the co-signer will be damaged as well.
This hack is not really discussed, as many students and parents do not know that financial aid packages are negotiable. Colleges, especially elite, competitive ones, want to enroll the best students possible. High-achieving students make the school look good, and when they graduate, they are more likely to have the funds to donate to their school. Once you receive your financial aid package, you may be able to speak with the financial aid office at the school of your choice about getting more funds. Students with impressive academic credentials will certainly want to consider this hack.
If your family leans towards the higher end of the income scale, you will still want to apply for financial aid. The fact that lower-income families tend to get more aid is generally true, but funds are still available to students from affluent backgrounds. Many colleges will also give money to students with outstanding academic records. When the time to apply for college comes around, avoid giving in to old financial aid urban legends – students with high-earning parents can get aid for their education.
Scholarships are the unsung heroes of financial aid, and many people think that they are only available to students with extraordinarily high grades. This is true in many cases, but there are also scholarships that take other factors into consideration. Scholarships are often offered to students because of their:
Some scholarships are also open to students who attend certain colleges. When the time to consider paying for college arrives, try researching scholarships – there are more available than you think. And if you do not qualify, begin searching for grants that you may be eligible for. As a student, any deals that do not require you to pay the money back are preferred, and there are plenty of grants available for you to consider.
Health Insurance: Healthcare petitioners who turn out to be ineligible for Medicaid or Medicare will still need to obtain health insurance. Fortunately, there are low-cost health insurance options available for low-income consumers.
The Individual Mandate: Some may choose to go without health insurance in order to save money. However, the Affordable Care Act’s “individual mandate” penalizes those who choose to go without health coverage. U.S. taxpayers who do not have qualifying health coverage will have to pay the “individual shared responsibility payment,” a tax penalty. The penalty for not having insurance will be equal to 2.5 percent of the household income or a fee that will be calculated based on the makeup of the household (with each adult costing the household $695 and each minor costing the household $347.50). The taxpayer will have to pay whichever one of these costs is greater.
Costs of Health Insurance: Fortunately, the Affordable Care Act has made health insurance more affordable than it was in previous years. Still, paying a health insurance premium can be a burden for low-income families who do not qualify for Medicaid or Medicare assistance. To make things easier, these families can spend time comparing some of the surprisingly affordable plans available. There is a plan available for every family’s medical needs and budget.
Applicants who do not qualify for Medicare or Medicaid can learn more about other helpful assistance programs, such as SNAP and Section 8 housing, through unemploymentclaimsinfo.com. You’ll be amazed to see how much you can save by enrolling in a low-cost private insurance plan and participating in one or more federal benefits programs.
If you are a formerly employed US citizens that is recently unemployed through no fault of your own, you may be eligible to receive benefits through your state’s Unemployment Insurance, or UI program. UI programs across the nation are run through a joint effort between federal and state governments to provide temporary benefits to jobless individuals while they search for a new career.
While UI benefits are not meant to be a long-term solution for your financial matters, they are meant to supplement lost wages until you secure a new job. For this reason, each individual UI benefit case is different, based on the applicant’s state of residence and his or her salary prior to losing a previous job.
Benefit amounts typically range between half of your previous earnings and half of the state average salary earnings. Each state has specific caps on the amount of UI benefits that can be paid per week. The following is a list of the maximum weekly payments allowed for UI benefits by state (rates current as of September 2014):
Each state has a separate UI benefits program that is regulated by the federal Department of Labor, but run by the state itself. To find out more about potential unemployment benefits and filing an unemployment claim, contact the Unemployment Insurance agency of the former employee’s state. The UI agency can also help residents check their continued eligibility, inquire about incorrect payments or get more information on an eligibility disqualification. Claimants should make sure they meet the minimum requirements for both wages earned and length of time worked (your base period) before filing a UI benefit claim.
U.S. states draw funding for Unemployment Insurance from taxes imposed on employers. Currently, a majority of states have an unemployment benefit payment maximum time limit of 26 weeks. Weeks may be added to the overall benefit time limit during times of high unemployment through the government’s extended UI benefits program. Contact a local state Unemployment Insurance office for more details.