5 Steps to Financial Aid

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Step 1. Look for "free" money first.

Try to get "free" financial aid first. Free financial aid is the type of aid that you do not need to repay.

Unfortunately, free financial aid usually doesn't cover 100% of your costs. And you may need to find other ways to pay for college, including taking out low-cost loans and using any money you may have saved. Alternative sources are also an option but use them only as a last resort. Take time to understand all the ways you can pay for college.

If you include more than one college on your FAFSA (Free Application for Federal Student Aid), you will receive one financial aid award letter (award offer) from each of those schools. These offers will likely contain a combination of free aid and low-cost loans. Evaluate each school's financial aid offer carefully.

Ways to Pay for College
Free aid
  • You do not need to repay free aid, as long as you meet all of the obligations.
  • Free aid includes scholarships and grants.
  • Sources of free aid include the federal government, your state, your school, your employer, your community, religious organizations, and others.

Note: Be aware that in some cases, a grant may convert to a loan if certain obligations are not met.
Work-study or other employment
  • You can help pay for your education by working part- or full-time while you attend school.
  • Some employers offer tuition reimbursement programs in which they give money toward your education.
Low-cost loans
  • These loans offer reduced interest rates, various repayment options, and no prepayment penalties.
  • The primary source is the federal government, which offers loans for undergraduates, graduates, and parents.
  • Your school may offer institutional loans and flexible tuition payment plans.
Savings
  • You can always use money you already have to pay for school.
  • Sources include savings accounts, 529 plans, pre-paid tuition plans, or other savings programs.
Alternative sources
  • Private education loans can fill any gaps in funding after you have exhausted other aid types.
  • You may be able to use home equity loans and lines of credit depending on your situation.
  • Avoid cashing out insurance policies or retirement funds or using high-interest advances on credit cards. These sources are almost NEVER a good idea.

Take Action

Did You Know?

Step 2

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Step 2. Know your specific deadlines.

Financial aid deadlines are specific to your situation—your school, where you live, what you study.

  • January 1—the FAFSA (Free Application for Federal Student Aid) deadline—is the most important deadline you should know. Submit your FAFSA as soon as you can after January 1.
  • Deadlines for aid from your state, school, and private sources tend to be earlier than those for federal aid.

Make sure you have some way to keep track of all of your deadlines. For example, write important dates on a chalkboard, track them using a paper calendar, or set up electronic reminders through the College Calendar.

Important Deadlines
School-based aid Varies by school
Carefully read any school information you receive and check each school's financial aid website for application deadlines.
The Pennsylvania State Grant Program May 1
You must complete the FAFSA to be considered for a Pennsylvania State Grant.
PHEAA-administered work-study May 31—Summer term
October 1—Academic year or fall term
January 15—Spring term
Federal student aid After January 1 and before June 30
Complete the FAFSA as soon as you can after January 1 of the calendar year in which you plan to attend school and need aid.

Take Action

Did You Know?

  • Deadlines for school-based aid can be as early as January or February.
  • You DO NOT need to complete your taxes to submit the FAFSA. Just use estimated income and tax data and make any changes after you (or your parents) file your tax return. You may need to supply actual tax returns later to verify accuracy of the information submitted on your FAFSA.

Step 3

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Step 3. Fill out the FAFSA.

You must complete the FAFSA (Free Application for Federal Student Aid) to qualify for:

  • Federal and most state grants, scholarships, low-cost student loans, and work-study programs
  • The Pennsylvania State Grant Program and other state programs
  • Many school-based financial aid programs

The FAFSA is your ticket to financial aid.

FAFSA Deadlines

  • January 1—Complete the FAFSA as soon as you can after January 1.
  • May 1—You must complete the FAFSA to be considered for a Pennsylvania State Grant.
The FAFSA Process
Prepare
Apply
  • The best way to apply is online at FAFSA on the Web.
  • More than 94% of students apply online. If you cannot apply online, you can submit a paper application.
  • Applying online saves you time, prevents errors, and has a faster turnaround time than a paper application does.
After You Apply
  • After your FAFSA is processed, you will receive a Student Aid Report (SAR). Review your SAR carefully.
  • The schools that you identify on your FAFSA will use the information on your FAFSA to determine your financial need.
  • Each school will create a financial aid package and send you an award letter (a financial aid offer).

Take Action

  • Use the FAFSA4caster if you want to start the FAFSA before January 1. You can then transfer your FAFSA4caster data when it's time to apply online.
  • Learn more about filling out the FAFSA.

Did You Know?

  • You DO NOT need to complete your taxes to submit the FAFSA. Just use estimated income and tax data and make any changes after you (or your parents) file your tax return. You may need to supply actual tax returns later to verify accuracy of the information submitted on your FAFSA.
  • Be wary of organizations that charge a fee to assist you with the FAFSA. Much of the same help is available for free from your school, the U.S. Department of Education, and PHEAA.

Step 4

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Step 4. Compare schools' financial aid offers carefully.

How Schools Determine Your Financial Aid

The schools that you list on your FAFSA (Free Application for Federal Student Aid) receive a Student Aid Report (SAR), which details your FAFSA results. The SAR reports your Expected Family Contribution (EFC).

Here's how it works:

  • Each school uses your EFC to calculate your financial need. This determines your eligibility for financial aid.
  • Then each school creates your financial aid offer, which can contain federal, state, and institutional grants, scholarships, work-study, low-cost loans, and other aid.
  • You receive the financial aid offer in a package, often referred to as an award letter.

Understand What You Have Received

Your financial aid offers will differ from school to school based on differences in the cost of attendance, available aid, and school-specific criteria for awarding certain types of aid.

When comparing your financial aid offers, consider the following:

  • Calculate the percentage of the award that is "free" money. You do not have to repay free money as long as you continue to meet all of the obligations. So the more free money you get the better.
  • Compare apples to apples when it comes to the actual cost of attending each school. The actual cost encompasses more than just tuition… it includes books, meals, housing, and more.
  • Make sure you understand the long-term responsibilities associated with each financial aid offer and choose the most appropriate offer for your situation:
    • Does your financial aid offer contain any grants that may become loans and require repayment?
    • Will you have time for a work-study job?
    • Are you prepared to pay back any educational loans?

Take Action

Did You Know?

  • You need to update the information on your original FAFSA whenever you re-apply for aid. Even if you did not qualify for much aid this year, changes in family income and the number of children in your household attending college can affect your eligibility next year.

Step 5

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Step 5. Be sure you have the money you need.

Once you have received your financial aid award, you need to make sure you have enough money to cover all of your education costs.

Know Your Education Costs

  • Direct costs—Costs associated with attending school that are included in your award letter:
    • Tuition/fees
    • Room/board (institutionally owned housing)
    • Meal plan
    • Books and supplies
    • Miscellaneous personal expenses, as determined by the school
    • Transportation
  • Indirect costs—Additional costs that may require money beyond what is allotted in your award letter:
    • Off-campus housing
    • Food not purchased through a meal plan
    • Medical coverage

Be Smart About Borrowing

What should you do if you have exhausted all sources of funding, including scholarships, grants, and low-cost federal loans, and you still have college costs to cover?

First contact your school's Financial Aid Office. Your school may offer payment plans that let you distribute your payments throughout the year.

Consider private education loans only as a last resort. Private education loans often have higher interest rates, more fees, and less flexible repayment options than federal loans do.

  • We can't say it enough: Be sure you have exhausted all other financial aid options before applying for a private education loan.
  • Borrow only what you need to cover your costs, not what you are eligible to receive.
  • Understand the terms of the loan before you agree to (and sign) anything.
  • Find out if you can defer payments while in school or get a lower interest rate with a co-signer.

Take Action

  • Visit YouCanDealWithIt.com to find out more about private education loans and how they compare with federal loans.

Did You Know?

  • Beware of educational loan offers that seem "too good to be true." While you may get the funds easily, you may pay more later because of high interest rates and prepayment penalties.

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