7 Fast Facts About FAFSA and Financial Aid
As the summer days start fading into memory, many families turn to back-to-school thoughts. For some, this is simply a matter of shopping for school supplies, but for parents of high school juniors and seniors, it can bring a whole new world of worrying about college. Most importantly, they are concerned about being able to pay for it all. If you are the parent of an eager high schooler who wants to attend college, here are seven fast facts you need to know about financial aid.
Types of Financial Aid
Financial aid is usually broken down into grants, scholarships, loans, and work-study programs. Help can be available from the federal and state government, the college where your student is applying, or private businesses and philanthropic organizations. For the most part, you want to maximize the amount of money you don’t have to pay back and minimize the amount of money you borrow.
The FAFSA opens on October 1, which is an earlier deadline that debuted in 2016. The Department of Education has coined the term “Early FAFSA” for this change. You will need to be prepared to complete a FAFSA much earlier than ever before.
Get Familiar With the Early FAFSA
The income used on the FAFSA will be from two years prior to the application year (referred to as Early FAFSA), rather than only one year prior to the application year as was previously the case. Instead of estimating information, you should have access to the IRS Date Retrieval Tool (DRT) if those returns have already been submitted.
Student Loan Interest Rates Have Dropped
New federal student loans issued after July 1, 2016, will be roughly half a percentage point lower than loans issued the year before. Interest rates for direct subsidized and unsubsidized loans for undergraduate students will carry a rate of 3.76%. Direct subsidized loan rates for graduate students and professional students will be 5.31%. Direct PLUS loans rates for parents and graduate or professional students will be 6.31%. This year it is more important than ever to compare student loan interest rates before borrowing any money for college.
Federal Pell Grant
These are usually awarded only to undergraduate students, but there are some cases in which a student enrolled in a post-baccalaureate teacher certification program might receive a federal Pell Grant. For the 2016–17 award year (July 1, 2016, to June 30, 2017), the maximum award is $5,815, but the amount you might receive depends on financial need, cost of attendance, status as a full-time or part-time student, and plans to attend school for a full academic year or less. The Department of Education also recently announced that approximately 12,000 incarcerated students will now be eligible for federal Pell Grants under a Second Chance Pilot Program.
Students With Exceptional Financial Need
A Federal Supplemental Educational Opportunity Grant (FSEOG) is a grant for undergraduate students with exceptional financial need. Students can receive between $100 and $4,000 a year, depending on financial need and other factors, but funding is limited and all schools do not participate in this program. If you have exceptional financial need check with the financial aid office at the school where you are applying to be sure they offer FSEOGs and make sure to submit your FAFSA as early as possible.
Grants Available for Future Teachers
A TEACH Grant can help you pay for college if you plan to become a teacher in a high-need field in a low-income area. You’ll be required to take certain kinds of classes in order to get the grant and to teach for a certain length of time in a low-income area. Make sure you understand your obligations completely, as students who do not meet these requirements could see their grant turn into a loan.