If you’re registering for college for the first time, you probably have a lot of questions – particularly about the financial aspects of it all. Should you apply for financial aid? Should you apply for a student loan? How soon should this be done, and how will you know when your application has been processed?
The best place to start is by filling out a Free Application for Federal Student Aid (also known as the FAFSA). After you submit the FAFSA (need help filling it out? Check out our FAFSA guide), you’ll eventually receive financial award letters from the individual colleges where you applied and were accepted.
Here’s what you need to know about college financial aid award letters:
1. What happens between filing the FAFSA and getting your award letter.
The U.S. Department of Education will need to process your FAFSA application, which can take anywhere from a few days to a few weeks. For faster processing, you’ll want to file your FAFSA online as soon as it’s available for your academic year. Once your FAFSA is processed, your information is automatically sent to the school(s) you listed on the FAFSA in the form of an Institutional Student Information Record (ISIR). At the same time, you’ll also receive a Student Aid Report (SAR), which summarizes the information you provided on your FAFSA and confirms what was sent to the schools in the ISIR (note – the SAR isn’t your award letter). As soon as you receive it, make sure the information on your SAR is accurate. If it’s not, follow the steps at studentaid.ed.gov to correct the problem right away. If it is correct, just save the SAR for your records.
The individual award letter from each school with your specific financial aid offer will be sent after the school receives your ISIR from the U.S. Department of Education and your entrance application from you. The exact timing varies, but award letters usually start arriving anywhere from mid-January to early April.
2. Reading and comparing award letters.
College award letters aren’t all the same, so you may be left with a lot of questions when you try to make sense of your financial aid letters. For instance, they often use symbols (such as L or LN), rather than spelling out the word “loan.” You might also see things like “net price” and “net cost.” When you’re evaluating the school’s calculations, pay attention to how any loans are handled in the math. Some schools will subtract loan amounts from the cost of attendance – in other words, it may appear on paper as if the loans are reducing the net cost or net price. While loans can provide a way to pay the up-front bills for college and spread that cost over time, any loan (federal or private) generally has to be paid back. It’s not “free money” like scholarships or grants, so you should factor loans in as expenses.
3. Scholarships and their effect.
If a student is awarded a private scholarship, it can influence the amount of money they are offered in the award letter because their financial need is no longer as great. This could impact the loan amount you’re offered, the financial aid, or both. That’s not to say that students shouldn’t apply for scholarships when they’re eligible, it’s just important to know that any amount received can have an effect on your overall award package.
When you filled out your FAFSA application, you may have indicated you were interested in a work-study job as another way to help pay for school. You may be approved for an on-campus or off-campus job that provides a paycheck and works around your class schedule. The money you receive typically goes towards your financial aid package, and your college financial aid award letter will include more information about your work-study options if it was something you indicated you’d like to consider.
5. Federal loan limits.
Federal loans do have restrictions and you may find yourself limited to the amount you can borrow. You’ll have to re-apply each year by completing the FAFSA. Some of the factors that are taken into consideration each time you apply include how far along you are in your college career, whether you’re an undergraduate student or graduate student, if you’re independent or dependent (for tax purposes), and how much you’ve already borrowed through the federal loan program.
For example, the typical undergraduate freshman who is still claimed as a dependent on their parents’ taxes usually can’t borrow more than $5,500 to help pay for their first year in school. If that same student continues after freshman year though, s/he would typically be eligible to borrow up to $6,500 to help cover the second year. For more information on federal loan limits, visit studentaid.ed.gov.
6. Cutting costs
After comparing your college financial aid award letters from various institutions, a big part of your decision may come down to what saves you the most money. Even with financial aid, some students find themselves in a bind and looking for other ways to cut costs. If you’re going for your undergraduate degree, one way this can be done is by attending community college for the first two years of college. If you haven’t already, consider applying for community college, and then compare the costs to the other schools you were looking at, and you’ll likely see a big difference. Many community colleges have transfer agreements in place, which allow students to transfer to nearby universities once they complete their associate degree. You may still be able to spend the second half of your college career at the school you wanted to attend from the beginning, and this will still be the school you technically get your bachelor’s degree from – but at a fraction of the cost. Just do your homework first to make sure that all of your credits will transfer, and that the school has your desired major.
7. Ask questions.
If you’re still unclear about the terms and conditions of any college financial aid award letter, it’s always important to reach out to the school and ask for clarification. For example, if you’re not sure whether a particular amount of money is being offered as aid that you don’t have to pay back or if it’s a loan, you’ll want to confirm. It’s also good to discuss whether you can expect to receive a similar financial aid package in future years, if there are any academic performance requirements related to the aid, and how the cost of attendance is expected to change in future years.
8. Exploring your other options.
It can be disappointing if the amount of financial aid you’re provided isn’t enough, and it can also be frustrating when you aren’t offered a federal loan that is large enough to cover the remainder of your expenses. While you might receive some help, you may not receive all of the financial assistance you need in your award letter, and that’s when College Ave Student Loans can help. We provide private student loans that are customized to meet your individual needs and financial situation. Compare our different loan options and begin an application today.