Every Parent's Guide to Student Grants, Loans and Financial Aid

Parents who have a high school student planning on going to college should bookmark the College Board web page because it provides useful preliminary information that I will summarize, providing tips on student grants, loans and financial aid. Founded in 1900, the College Board is a not-for-profit membership association whose business is to connect students to college success and opportunity. I bought several of their books at my local Barnes and Nobel bookstore, which also had a variety of similar resources for sale.

Parents and students should understand that need is only a partial consideration in providing college funding, They should also understand that applying for financial aid is only the first step in a long series of steps to obtain the needed funds for a student to attend college. They should also understand that this is a process that must be performed for every year of college or if there are changes to your income.

Before Filing for Student Grants, Loans and Financial Aid

Before filing for student grants, loans and financial aid, parents and their student should visit the College Board web page and research colleges. Students should narrow down the colleges they are interested in applying for and find the associated College Codes.

Parents can also use the online worksheet to find out what their expected family contribution to costs will be. The expected family contribution or EFC is a working number that in actuality may change from college to college and it denotes an amount required for self-funding by the parent and student, either through private loans or scholarships or savings or by a modified college attendance plan that allows for part time, summer work or internships and advanced placement classes.

Filing for Student Grants, Loans and Financial Aid

In general, colleges expect financial statements in three forms, the FAFSA, PROFILE, or college specific financial aid form.

The FAFSA should be filed between Jan 1 of the college year and Jun 30. The sooner this is filed, the better, in fact, by February is highly recommended.

The PROFILE can be filed as much as a year in advance.

Check the college catalog or descriptions on the College Board web pages for where to pick up the financial aid form and what the due date is for filing it.

Understanding Who is Responsible for Expected Family Contributions

Students may declare parental independence if they are older than 24, married, enrolled in a graduate program for the year they are applying, have children for whom they pay at least half the support, have dependents other than their children or spouse, are an orphan or ward of the state, or currently serving or a veteran of the active-duty U.S. armed forces.

Independent students do not require their parents to fill out parental sections of financial aid. Parents may still aid independent students by co-signing loans or providing gifts.

Parents may declare students as dependents on their taxes. Dependent students often are allowed to continue to receive health care benefits.

Despite all of these things, ultimately the costs of a college education is the responsibility of the student. Any contributions by the family is voluntary. Students should be aware of what their family plans to provide in terms of financing their college education.

Managing Expected Family Contributions by Using a Savings Plan

Families can plan ahead to provide family contributions by using one of the following savings plans:

529 Qualified College Savings plan : these are state sponsored tax advantaged accounts, many have high limits and allow deductions on state income taxes for donations and donations by grandparents, aunts and uncles.

Coverdell Education Savings account: these are similar to the 529 accounts but are sponsored by banks and brokerage houses.

529 Prepaid Tuition Plan : state sponsored plans similar to the savings plans but they lock in current tuition prices, but are restricted to payment of tuition and fees.

US Savings Bonds : interest earned is tax-exempt under certain conditions.

Uniform Gifts to Minors Act, or Uniform Transfers to Minors Act account : allows parents to put money in minors name

Individual Retirement Accounts : allows use of IRA funds for college expenses without the 10% penalty.

Managing Expected Family Contributions by Filing for a College Loan

Some loans are subsidized and offered based on need, but others are based on credit and other terms. Types of loans include Federal Loans, Parent Loans (PLUS) where parents borrow the money through the school or third party lender, State Loans, Private Loans, try the Student Loan Network or talk to locals banks and Home Equity Loans - if loan isn't repaid, the bank can foreclose your home.

Check for the interest rate, when the interest is charged, and the monthly payment during and after college.

Managing Expected Family Contributions by Applying for Internships

See scholarship books such as the College Board Scholarship Handbook to research and apply for internships.

Managing Expected Family Contributions by Filing for Summer Work

See scholarship books such as the College Board Scholarship Handbook to research and apply for internships. Also check large companies that the student might have an interest in working for after graduation.

Managing Expected Family Contributions by Applying for Scholarships

There are many resources that supply scholarship information, one book is the College Board. Some offer CDs that you can search. Most scholarships must be applied for individually and many use the same information as supplied in your financial statement, along with an essay, letters of recommendations, transcripts and test scores.

[1] Getting Financial Aid, College Board

[2] Scholarship Handbook, College Board