Archive for February, 2010

What’s one of the best ways to qualify for financial aid? Fill out the FAFSA.

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Sallie Mae’s study, How America Pays for College 2009, found that nearly one in four families didn’t qualify for financial aid (federal grants or student loans) because they didn’t complete the FAFSA. They disqualified themselves solely on assumption! 30% of lower-income families did not fill out the FAFSA because they didn’t think that their family would qualify for aid. There is no excuse this year – the FAFSA has been simplified, the Department of Education has increased federal financial aid amounts, and the process is free. You have nothing to lose.

Edit 04/07/10: The San Francisco Chronicle recently reported that community college students in California are leaving up to $500 MILLION in federal financial aid on the table because they simply having applied for it.

Lauren Asher, associate director for the Project on Student Debt, recently told the LA Times, “…the people who are most likely to underestimate their ability to qualify for aid are the people who are most likely to qualify.”

The LA Times also reports that many low-income students limit their college search to community colleges and in-state colleges and universities, rather than high-priced private schools, because they assume they can’t afford it. The thing is, many distinguished (and high-priced) private schools often provide much more aid than less prestigious colleges, making them more affordable to lower-income families.

Zac Bissonnette of WalletPop (one of my favorite personal finance websites), offers caution:

That’s true for a very small number of schools: If your student is smart enough to get into Harvard, Yale, Princeton, etc., and you have a low expected family contribution, you will, in all probability, get something close to a free ride.

But after that, there’s a steep, steep drop-off. New York University graduates, for instance, leave college with an average debt load of $34,850, compared with just $14,541 for SUNY Binghamton grads.

What’s worse, over-reliance on financial aid can make students vulnerable to cuts, and, because of the complex way financial eligibility is calculated, options like working part-time or selling stock that has appreciated are often not practical because they decrease financial aid eligibility… If you pick a school with a low sticker price, your options for covering the cost are much less restricted.

At any rate, you won’t know what your options are unless you fill out the FAFSA. We’ll give you an update tomorrow on the FAFSA deadlines to be aware of.

Top 10 Scholarship Scams

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Top 10 Scholarship Scams

Don’t be a victim of a scholarship scams! Applying for college scholarships may be time-consuming, but researching available scholarships that meet your needs will provide you with a better chance of receiving money towards your college education.

Protect your time, money, and information while applying for college scholarships – avoid these popular scholarship scams:

  1. Unsolicited or random emails offering scholarship assistance
  2. If the scholarship requires you to send money upfront, but you see nothing in return – scholarships don’t ask students for money, they are supposed to give students money!
  3. You’re told that you’ve won a scholarship, but it requires you to pay taxes or fees before you can receive it. You have to apply to scholarships in order to receive them, so if you don’t remember doing so, it is a scam.
  4. If you receive a check in the mail for a scholarship, but are required to send a different check back paying for taxes or fees.
  5. If a scholarship search service or database charges you to register to look through their information. Scholarship information is free to the public.
  6. Companies that claim to fill out scholarship applications for you, if you pay them a fee. Applying for scholarships requires lots of time, work, personal information, and writing samples that outsiders cannot do thoroughly. Most likely they will pocket the cash, and never fill out any applications for you.
  7. Scholarship matching services that claim you’ll win a scholarship, or they will refund your money. These scholarship matching services do not have anything to do with, or have a final say in which students receive scholarships by the sponsored organizations.
  8. Some scholarship scams try to copy legit education, government, and grant-giving foundations by using official-sounding names. Look out for those that include national, administration, federal, or foundation – just because it is in their name, doesn’t mean they are official organizations!
  9. If you are requested to attend a free seminar for financial aid advice or assistance, watch out! These are usually sales pitches for financial aid consulting services, pricey student loans, or scholarship matching services.
  10. Some education loan scams will offer you a low-interest loan, but require that you must pay a fee before receiving it. Real loans are issued by banks or recognized lenders, and do not require a payment upfront.

Scholarships are intended to give students money toward their schooling, and are usually provided by the government or non-profit organizations. Check out more information on scholarship scams.

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