When Do You Receive Financial Aid Money - It can be overwhelming, especially for high school seniors who only have a few weeks to compare offers and decide where to enroll.
Instead of a direct bill, colleges send what's known as a financial aid award letter. The structure varies from school to school, but the amount you have to pay is usually missing information about various fees, scholarships and loans.
When Do You Receive Financial Aid Money
One of the most common mistakes is not realizing the loan (you have to borrow and pay it back, with interest) is calculated in the cost estimate. Gullible. Award letters often do not distinguish between loans and scholarships (you don't have to pay).
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A senior entering college receives the following degrees. It combines loans and grants to get a "Total Estimated Financial Aid" figure, without showing how much you'll have to pay for the aid (we've done that for you).
"Expecting an 18-year-old to fully understand some of these aid letters is unreasonable. It can be misleading and, as a result, some students do not understand the debt burden they are registered for," said Kelly Peeler. , whose company NextGenVest advises high school students to get into college and pay for it.
NextGenVest communicates with students and parents mostly via text, and sometimes Snapchat. One of the most common questions that the hotline receives is: "How do I read this letter and find out what I have to pay?"
Hopefully, it will be easy to find the part of the letter detailing the total cost - before taking discounts such as scholarships. Be sure to list ALL costs including, tuition, room and board, any fees, and meal plans. If unclear, contact the financial aid office to ask.
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Your financial aid letter can be the first sign that you have been offered a scholarship or aid in college. This can be based on financial need or based on merit, and is determined by things like high school GPA, SAT and ACT scores, or interest in a particular subject. You can also get a Pell Grant from the federal government, based on family income.
You may have won other scholarships that are not listed on your financial aid letter. Subtract the amount calculated in Step 2. If there are any remaining expenses, you or your parents will have to do it - or you will have to take out a loan.
The amount your family can pay is actually calculated by the college, based on information such as income submitted on the FAFSA form. This may be noted on your financial aid letter and is referred to as an "Estimated Financial Contribution" and is used to determine the amount of need-based financial aid you have received. But that's not what your family should pay for.
You can take out a loan to cover the remaining costs. The amount you can borrow from the federal government, which often has lower interest rates than private loans, should be mentioned in your letter. There are three different types of federal loans you can get:
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Subsidized loans don't earn interest while you're in school, but unsubsidized loans do. Parent PLUS loans are also from the federal government, but they have a higher interest rate and your parents are responsible for repayment. Interest starts immediately, just like an unsecured loan.
Hopefully, the amount you are allowed to borrow from your federal loan is enough to cover these costs. But sometimes it doesn't. If so, you may need to take out a personal loan from the bank. Those usually require a cosigner with good credit, and have higher interest rates than federal loans so you'll want to use them as a last resort.
But you don't have to borrow the full amount allocated for your financial aid package. The amount listed for each loan is maximum.
However, you will still owe more than the loan amount you see after you qualify because of the interest.
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Note that this is an estimate of one year of college and you will be attending for four years. Looking at the larger four-year costs can help you determine whether you should attend a more expensive college.
And make sure there's a letter saying your grants and aid are guaranteed for four years — or call your college financial aid office and ask.
Have you gotten into your dream college and don't know how much it will cost? Share your story with CNN by emailing [email protected] and you could be featured in future stories, with words to let you know how. the money you earn from college.
Once you are accepted to college, you will receive a financial aid package. This will tell you how much support you receive from the college and the state to support your college education. It will also tell you how much you have to pay out of pocket.
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We have highlighted some key words here. Scholarships and Grants are highlighted in green because this is the best type of grant - it's free and you don't have to pay. Work Study isn't the worst thing either - college will give you the opportunity to work and earn money to pay for your education. Pro-tip, get a job in the library - you can relax and do your homework 👌🏿👌🏽👌🏻.
Debts are highlighted in orange and yellow because you have to pay them. Let's talk about different types of loans. When you take out a loan, you lend money to someone, in this case, the government.
Because you're borrowing, you'll have to pay it back at some point — usually, after you graduate from college. And, until you pay it all off, you have to give more money as loan payments. We call this money profit.
So, if you borrow $1000, and the interest rate is 1%, you have to pay $1000 times 1% = $10 every year until you start paying it off. Once you start paying, you'll take interest on whatever you owe.
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If you get a subsidized loan, you won't have to pay interest while you're in college. If you get a free loan, then you will have to pay the interest while you are in college.
In the example above, we will borrow $4,500 with a secured loan. This means we don't have to worry about paying our fees while in college. We will also borrow $2,730 with an unsecured loan, which means we will have to pay interest every year. The interest rate is usually around 2-5%, so we will be paying $100 a year for this loan.
After graduation, you will start repaying the amount borrowed in two loans. This tool can help you determine how much you will pay each month.
We got $15,810 for the year in free money (green), $1,000 in work-study (blue), and $7,230 in loans (yellow and orange). This is a total of $24,040 in assistance for one year.
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Next, the letter should provide details of tuition fees. You are looking for a Cost of Occupancy or COA. This includes tuition fees and the cost of living in college. For this college, Georgia Tech, the COA is $29,048. (If you are a guest student, you may only pay tuition, but confirm this with your college.)
Cost of attendance minus Aid is how much you still have to pay in college. In this case, it would be $29,048-$24,040 = $5,008.
At first glance, it may seem like you're getting a lot of help from College 2 and paying less after the help. However, College 2 requires you to take out a lot of money for loans. This is money you have to pay later, so in reality, College 1 is a good deal. You have to pay more than before, but you take out less money for the loan.
Read the letter carefully, look at those four important numbers, and you'll be fine. Bring your acceptance letter and financial aid award - get this! Along with the acceptance letter from the college you chose above, you should expect a financial aid award letter - a document that tells you how much the school will pay you to attend (out of total fees), depending on the financial aid you receive.
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Students (and parents) can find financial aid award letters confusing because — believe it or not — they're not common. There is no template that all universities and colleges adhere to. So, an acceptance letter from UC Berkeley may be very different from Berklee College of Music. And after all the stress of studying hard, take the SAT and
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