STUDENT LOAN FAQ’s

Who should apply for financial aid?

Everyone should apply for financial aid. Do not assume you are ineligible to receive aid.

What is financial aid?

Financial aid is money that is given or lent to you to help finance your education when your family and personal resources are not adequate to meet the total cost of attendance. The single largest source of financial aid is the federal government, followed by state governments, colleges, and private organizations.

Who is eligible for federal financial aid?

In order to qualify for federal financial aid, a student must:

  • Be a U.S. citizen or eligible non-citizen
  • Have a valid Social Security Number
  • Be registered with the selective service (if required)
  • Be enrolled at a school which is eligible to participate in federal financial aid programs
  • Be enrolled in a degree or certificate program
  • Demonstrate financial need (except for some loan programs)
  • Not owe a refund on a federal grant or be in default on any federal educational loan

What is the first step in applying for financial aid?

You must complete the Free Application for Federal Student Aid (FAFSA). You may complete either a paper FAFSA, file electronically through the school’s financial aid office, or complete a FAFSA on the web at www.fafsa.gov.

What information is needed to complete the FAFSA?

You will need records of income earned in the year prior to when you will start school. You may also need records of your spouse’s (if married) or your parent’s income information if you are a dependent student. For the 2013-2014 school year, you will need financial information from 2012. You will need---

  • Your Social Security Number
  • Your driver’s license (if any)
  • Your (and your spouse’s, if you are married) W-2 form(s) and other records of money earned
  • Your (and your spouse’s, if you are married) 2012 Federal Income Tax Return
    • IRS Form 1040, 1040A, 1040EZ
    • Foreign tax return, or
    • Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia or Palau
    • Your parent’s 2012 Federal Income Tax Return and W-2’s (if you are a dependent student)
    • Your (and your spouse’s or parent’s, (if applicable) 2012 untaxed income records
    • Social Security, SSI
    • Temporary Assistance to Needy Families
    • Welfare, or
    • Veterans benefits records
    • Your current bank statements
    • Your current business and investment mortgage information, business and farm records, stocks, bonds, and other investment records
    • Your alien registration or permanent residence card (if you are not a U.S. citizen)

If parent’s are separated or divorced, which parent is responsible for filling out the FAFSA?

The custodial parent, or the one you lived with the most during the past 12 months, is responsible for completing the FAFSA. This is not necessarily the same as the parent who has legal custody of you. If you didn’t live with the one parent more than the other, the parent who provided you with the most financial support should fill out the FAFSA.

How does the application process work?

Your application is sent to the U.S. Department of Education’s designated processor. The processor uses the application for a need analysis. This analysis determines your Expected Family Contribution (the amount your family and/or you are expected to contribute toward the cost of your education) and eligibility for a Federal Pell Grant. The results are sent to you and up to six colleges of your choice. The college uses the results to assemble a financial aid package to help you meet your financial need.

What is financial need?

Financial need is the difference between your Expected Family Contribution (EFC) and your school’s cost of attendance, as determined by each school.

Does the student apply for all types of aid by using the FAFSA?

Yes, by completing the FAFSA, you are applying for the federal student financial aid, including grants, loans, and work-study. The information on the FAFSA is also used by most states and schools to award non-federal (i.e., state grants, scholarships, etc.) student financial aid.

Is it necessary for students to reapply for aid every year they attend college?

Yes!! You need to apply for aid every year as soon after January 1st as possible.

What happens when a student’s true financial situation is not reflected in the need analysis?

A college financial aid officer can take special circumstances such as serious illness, recent death or disability, or other situations causing loss of income into consideration. This is done on an individual case basis; documentation of the circumstances will be required. Contact the financial aid office at your school for more information if you think this situation pertains to you.

What is the difference between a grant and a loan?

Grants are “gift aid”- funds that do not have to be repaid. The federal government funds two of the largest education grant programs- the Pell Grant and the Federal Supplemental Educational Opportunity Grant (FSEOG); these grants are reserved for the neediest students.  

Educational loans are made to students and/or parents and must be repaid. The single largest source of education loans is the federal loan programs.  The Federal Direct Stafford Program  loans are available through the Department of Education.

Are student loans a good way to finance my education?

Student loans are the key to higher education for many students (unless you are independently wealthy or recently received an inheritance from great aunt Daisy) . If you borrow sensibly (no more than 50% of the cost of attendance) and understand the obligation to repay the loan, you shouldn’t be afraid to use a student loan to pay for your education (your investment in yourself and your future). Helpful hint: Keep in mind that a student loan is a debt and must be repaid; only borrow the minimum amount needed to pay for your education.

What role do my parents play in financial aid?

The student and family have the responsibility to pay education costs. Your parents may qualify for a PLUS (Parent Loan for Undergraduate Students) Loan. The PLUS loan is not a need based loan but your parents must be credit-worthy. PLUS loans may be used to meet the “expected family contribution”. Parents may borrow the remaining need of dependent students (the cost of attendance minus other financial aid). Note: If parents are denied a PLUS loan, the student may borrow an additional “unsubsidized” Stafford loan to meet their remaining need.

Are my parents responsible for repayment of my student loans?

No. Stafford loans are the student’s responsibility. Only the Federal PLUS loans your parent’s responsibility.

How much money will I be able to borrow?

The amount of loan assistance a student may receive is determined by subtracting the amount of other financial assistance (grants, etc.) that the student will receive from the total cost of attendance. The amount you borrow is determined by your grade level and dependency status. Dependent and independent undergraduate students are eligible for subsidized loans, not to exceed the following amounts:

  • $3,500.00- first year undergraduate
  • $4,500.00- second year undergraduate

Also, independent undergraduate students and dependent students whose parents have been denied a PLUS loan may be eligible to borrow an additional amount of unsubsidized loan funds up to:

  • $6,000.00- first and second year undergraduate

What is the difference between a subsidized and unsubsidized Stafford loan?

A Subsidized loan is a need-based loan eligible for payment of interest by the federal government during the student’s in-school, grace period, and authorized deferment periods.

An unsubsidized loan is a non-need based loan. The borrower is responsible for paying the interest on an unsubsidized loan for the life of the loan. Borrowers may choose to pay the accrued interest while in school or allow the interest charges to be capitalized (added to the principal balance, increasing the loan balance and the total amount of interest costs incurred).

When do I start repaying my student loan?

Students enter their grace period after dropping below at least half-time enrollment status, they graduate, or they stop attending school for any reason. Repayment begins at the end of the six (6) month grace period.

Am I obligated to repay my student loans?

Yes. When you borrow money for your education, you sign a promissory note (READ!! It carefully) legally obligating you to repay the loan according to stated terms and conditions. You must repay your student loan(s), EVEN IF:

  • You do not graduate or otherwise complete your education,
  • You cannot find a job after graduation,
  • You are not satisfied with the education you received, or
  • You did not receive a statement or payment booklet

What happens if I do not repay my loan(s)?

Repaying your student loans is an important responsibility. Most borrowers repay their student loans on time, but some do fall behind for a variety of reasons. Lenders and servicers realize that there can be a legitimate reason for payment difficulties; keep them informed of circumstances that may affect your ability to make your student loan payment(s).

There are many ways they may be able to help including temporary postponement of payments (deferment or forbearance), reduction of payments , or changing your payment due date or repayment options.