College is expensive, and it gets pricier every year. A recent
report has found that members of the class of 2012 graduated with
an average student loan debt of $29,400. That's a lot of money,
especially when you consider that students usually accrue debt
after families have drained their savings accounts to contribute
to tuition. High school seniors receiving a "thick envelope" this
month must carefully weigh the pros and cons of attending their
dream school, because getting the best financial aid package can
save years of student loan repayments.
Here are five things every family should know to maximize
their financial aid.
1. Fill out the
Administered by the U.S. Department of Education, the Free
Application for Federal Student Aid is the first step in applying
for government funding and financial aid at most universities.
FAFSA is a springboard to nearly $150 billion in federal and
state government aid, along with billions more in university
funding. It gauges your family's financial situation and
determines an "expected family contribution" that will dictate
the sticker price of your education. State and university funding
is generally allocated on a first come first serve basis, so file
your FAFSA as soon as possible. The priority deadline for the
2014-2015 school year has passed, so file your FAFSA as soon as
possible, because state and university funding is generally
allocated on a "first come, first serve" basis. You can find your
state's deadline here.
2. Call the financial aid office
After earning an acceptance letter, you should call the
university's financial aid office to inquire about every
available funding opportunity, because many scholarships and
grants that are available to admits go unadvertised. On the call,
you should say, "I plan to apply for every scholarship I'm
eligible for. Can you please send more information on these
funding opportunities?" A helpful financial aid officer can point
you toward a treasure trove of university and private resources.
Be sure to note the financial aid officer's name, email, and
direct line so you have a consistent point of contact in the
financial aid office. A brief application process is usually
required for each scholarship, including a resume and
financial-need statement describing your planned
3. Max out on subsidized federal loans
The federal government provided student loans totaling $107
billion in fiscal year 2013, but not all loans are created equal.
The Perkins Loan is the most borrower-friendly available; funding
is interest-free while the student is enrolled full-time and only
5% thereafter with a 10-year repayment window. Students are
eligible for up to $5,500 in Perkins Loans per year and apply
through the campus financial aid office.
The subsidized Stafford Loan is the next-best choice for
borrowers. Those qualifying can receive $3,500 toward college
expenses in their freshman year, along with additional sums in
their sophomore and junior years. Once the subsidized loans have
been exhausted, students can also apply for unsubsidized Stafford
loans. The only difference is that with unsubsidized loans, the
6.8% interest continues to accumulate while you're in school,
though payments do not begin until six months after graduation.
One can borrow up to $27,000 over four years from the Stafford
program by combining subsidized and unsubsidized loans. This was
the strategy I used to lighten the load of private university
expenses. Only after maxing out the Perkins and Stafford federal
loans should students look to private lenders, which generally
charge higher interest rates and employ less forgiving repayment
4. Build experience with Work-Study
A federally subsidized job program, Work-Study enables qualifying
students to earn a portion of their university expenses, rather
than take on additional debt. On many campuses, students can use
an online job board to apply for Work-Study employment. It is
wise to align your search with your career goals to begin
building relevant experience and skills. Qualified applicants may
be eligible to serve as, for example, teaching assistants,
laboratory researchers, and other professionally enriching
positions. Unlike other income sources, Work-Study employment
will not diminish eligibility for future financial aid.
5. Appeal your financial aid offer
The most compelling method to appeal your initial offer is to
share your financial aid package from a rival school. Remember,
you have maximum leverage over a university after you've been
accepted but before you submit your enrollment deposit; play this
card while you still have it.
I was initially offered scant financial aid from the
University of Chicago, but that changed when I emailed the
university to show my full scholarship to the U.S. Military
Academy at West Point. Almost immediately, $15,000 in grant money
was offered to me. Why does this work? Universities want to
maximize their "yield," or the percentage of accepted students
who matriculate, as that number is factored into their
U.S. News & World Report
rankings. As such, they are willing to invest more aid dollars if
it means luring talented students.
College can be a transformative experience, but don't mortgage
the future to pay for it. Use these five tactics to help finance
the education of your dreams without breaking the bank.
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Greg Nance is the Co-Founder and CEO of
, the world's fastest-growing admissions consulting
platform that has helped thousands of students earn university
admission and financial aid. A Gates Scholar at the University
of Cambridge and Harry S Truman Scholar at the University of
Chicago, Greg was named one of the "Top 99 Foreign Policy
Leaders Under 33" by the Diplomatic Courier.
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