Financial First Aid: Paying for College Painlessly

By New Year's Day, the dust has settled on the mad rush of test taking, essay proofing, and recommendation-letter gathering necessary to the college application process. Yet the savviest students are still at work, attending info sessions, collecting financial documents, and meeting with financial aid counselors to qualify for aid that could give them thousands of dollars to help pay for college.

Are you one of these students? Don't worry if you're not. Just read on.

Consider the following fact: college costs have consistently outpaced inflation and family income growth heading into the 21st century and continue to rise every year. This year, the cost of college tuition rose more than six percent, with tuition and living expenses averaging about $13,589 at public universities and $32,307 at private universities, according to the College Board. The Project on Student Debt, an advocacy group, reports that by the time they graduate, nearly two-thirds of students at four-year colleges and universities have student loan debt.

Surprisingly, a large percentage of college students don't apply for aid and miss an opportunity for crucial financial assistance. According to a 2006 report by the American Council on Education, almost 41 percent of all undergraduate college students do not take advantage of financial aid programs by filling out the Free Application for Federal Student Aid (FAFSA). What's more, many of these students come from low- and moderate-income families that would likely qualify for financial assistance if they applied.

No matter what your background is, you should fill out a FAFSA and apply for aid. Not doing so could result in losing thousands of dollars in educational grants provided by government and educational programs - money you don't have to pay back. At the very least, you can qualify for low-interest loans, which is a much better option than having to take out a higher-interest private loan later.

Ronald Johnson, the Director of Financial Aid at the University of California, Los Angeles says that not applying for financial aid is the biggest mistake a student can make. "Students read about the high cost of education and about the difficulty in meeting those costs, as well as students borrowing excessively to cover their education who land in debt, and these negatives discourage them [from applying for aid]," Johnson said. "This is not really the true story."

If students and their parents want to get the true story about financial aid, Johnson recommends that they meet with a financial aid counselor or attend a free financial aid workshop sponsored by states and colleges. The State of Virginia sponsors free financial aid workshops at county high schools through the Virginia Association of Student Financial Aid Administrators (VASFAA), an organization comprised of individuals in an active financial aid-related profession. Arizona, Florida, Georgia, and several other states sponsor similar workshops, which can be found by checking with high school counselors and reading announcements in local papers.

Another workshop sponsored by the state of California is called "California Cash for College," and is held for free every January and February. Its mission is to help low-income and first-generation college-goers complete the FAFSA's application process so they can access financial aid for education and career training beyond high school. There are also a number of bilingual workshops available for families who are intimidated by the financial aid process and face a language barrier.

Although not applying for financial aid is the number one mistake a student can make, there are also some common mistakes that financial aid officials see students make every year. The most common among these is being unprepared to fill out the application. "Accuracy is important," said Henry Urick, Assistant Director of Student Financial services at the University of Texas, Austin. "Students and parents should have updated income tax information and have those numbers reflected on their application."

UCLA's Johnson said not gathering the information needed to fill out the application is not the only mistake he sees. "Not reading the instructions carefully can result in a number of errors," he said. "I also see a lot of students not using the correct social security number, which creates a number of issues and causes great delay to the student's application."

There are three ways to maximize your financial aid package," Johnson said. "First, read the application instructions. Second, make us aware if your circumstances change so we take the appropriate measures to get your application accurate. Third, apply on time."

Students can begin applying for financial aid starting on January 1st, but every school has different deadlines for the financial aid application. Whether you choose to apply right away or not, missing the deadline entirely can be quite costly. Those who miss the deadline can still apply up to the end of the academic school year but they are unlikely to be considered for attractive grants, work-study, or even low-interest loans.

Some students choose to apply as early as January 1st, and will update their information according to income tax returns later. Others choose to take their time filling out the application as bills are paid off to ensure their FAFSA is filled in as accurately as possible the first time around. Johnson says that as long as students apply by the deadline they will be considered for financial aid, with the caveat that every school is not the same and is not entitled to the same amount of resources. The bottom line is to read the instructions and know the institution to which you are applying.

The financial aid office is also available to help work out unfortunate worst case scenarios that may affect your financial standing: a looming divorce, a death in the family, a sudden job loss - financial aid officers can help students and their families experiencing financial hardships find a solution.

"There are situations where the student might be required to do a reevaluation and we have forms for them and different vehicles students can use to disclose to us any information and document their extenuating circumstances," Johnson said. "I will be the first to say that there are a myriad of rules and regulations that we have to follow and also a terms of agreement we signed with the federal government that we have to administer in adherence. However, there are circumstances that do come to pass for families and we do have latitude to make adjustments and will execute our own professional judgment. We consider ourselves advocates, not adversaries."

As an advocate, Johnson hopes all students will get informed and apply for aid.

"Every year, a new generation of students is not aware of the different avenues of assistance available to them," he said. "Each generation always has questions and something needs to be done to get them informed."

Part of being prepared means keeping up with changes to the financial aid process. Every year, the financial aid policies change as new grants become available and new laws get passed. One grant that recently became available is the Academic Competitiveness Grant (ACG), which rewards first- and second-year undergraduate students with awards ranging up to $1,300 for completing rigorous academic programs. Another new grant is the National Science and Mathematics Access to Retain Talent (SMART) grant, which rewards third- and fourth-year undergrads who are pursuing a major in physical, life or computer sciences, mathematics, technology, engineering, or a critical foreign language with up to $4,000 each year.

"You can keep abreast of information by reading the Web sites and attending the financial aid and college nights around the country," Johnson said. "There are also a number of publications through the state available to families that are very comprehensive with the most recent updates."

Unigo.com