Yes, you read that right. If you believe you’ll be going to college there are things you should do beginning your sophomore or at the very least your junior year of high school. We know this sounds a bit early but as the saying goes, “the early bird gets the worm.” If you want to get in and then out of college with the least amount of student loan debt, you need to start by beginning a search for scholarships. There are some very good databases of college scholarships you should explore including Collegeboard.org, Collegenet.com and Fastweb.com.
Does your Mom or Dad work for a good-sized company? If so, have him or her ask if it has scholarships for the children of its employees. There are also social organizations such as the Elks, IOOF and Moose that provide scholarships to the children of their members. If your parent does belong to one of these fraternal organizations be sure to check into this.
As you find scholarships you think you might qualify for, create a spreadsheet with the dates that applications become available and when they are due.
Next, draft a list of schools that you think you would like to visit. Use a net-price calculator tool such as the one available on Collegeboard.org on each of the school’s websites to get an idea of what each school might cost your family per year. Don’t forget to make sure that your travel plans fit your budget. For example, if you live in California but would like to attend school on the East Coast you will need to check out travel costs and whether or not your family’s budget could handle them.
Your senior year
In September of your senior year you will need to make a timeline of admission application deadlines and financial aid deadlines. Be sure to include all early-decision or early-action dates. Bear down now and concentrate on researching the college-specific scholarships available for the schools on your list. You also need to begin putting together documents such as bank statements, tax returns, your Social Security card and income tax forms including W-2s and 1099s that you will need when it comes time to fill out the dreaded FAFSA or Free Application for Federal Student Aid.
Depending on which schools you would like to attend, you may need to fill out the CSS profile that becomes available October 1 on the Collegeboard.com website. This is the form used by almost 400 private schools throughout the US. It’s a much lengthier document then the FAFSA and will take you more time and effort to complete.
In December you’ll need to complete your applications and apply for your FAFSA PIN (personal identification number) at fafsa.gov. You and your parents will need to have separate PINs in order to complete the form. You should have your tax return information ready as early in February as possible. This is because some schools require you to submit your tax forms very early. Be sure to check each school’s due dates.
Note: If you are interested in federal student aid you must complete a FAFSA form. The deadline for submitting this form online is June of next year. However, each college and each state may have different deadlines. Be sure to check with the colleges on your list and go to https://fafsa.ed.gov/fotw1415/pdf/Deadlines.pdf for your state’s deadline.
If you complete and submit your FAFSA form in January, you should receive your Student Aid Report in March from the Department of Education. This will summarize your eligibility for federal aid.
Then, hold your breath, in April the admissions notifications will begin to roll in. Be sure to check for “unofficial” financial-aid awards in the student portals on the websites of the colleges you’ve chosen. You may also need to submit additional documents requested by a school such as tax returns.
When you have selected a school, be sure to keep submitting signed and dated documents and forms for financial-aid verification. Then check back for your official award letter.
The deadline for committing to a school is generally May 1. Make sure you notify any school where you’re declining an offer.
Finally, comes graduation and summer. In August you will probably receive your bill and this is when you’ll complete any loan documents required.
When you compare the financial aid award letter you received against your estimated out-of-pocket costs you may find a shortfall or that amount of money you or your parents will need to come up with to pay for a year of school. Depending on your family’s financial circumstances this may not be a problem. Maybe your parents will be able to just write checks to make up the difference. However, if you’re like the 50% to 60% of students that don’t have parents this well off, you may have to borrow the money in the form of student loans. This is an area where less is definitely more. The less money you have to borrow the more better off you will be. Student debt has become a huge problem here in the US as outstanding loans now total more than $1 trillion. Seven in 10 college seniors or 71% that graduated this past year had student loan debts and they averaged $29,400 per borrower.
Too easy to get
One of the biggest problems with student loans is that they are just so easy to get. In most cases all you have to do is sign a promissory note and off you go. It’s sort of like writing a check that you may not have to cash for two or even three years. But the day will come when you will have to start repaying those loans, which can be a big drag on your life – especially when you’re just starting out in your career. Of course, this assumes you will be able to start out in your career, as according to one study, some 47% of recent college graduates were unable to find their first jobs in fields related to their majors. This could at least partially explain why about one in seven people default on their student loans within three years after graduation.
Fortunately there are things you can do to either avoid having to take out student loans or at least minimize the amount of money you have to borrow. What many students now do is go to a community college for the first two years and then transfer to a more prestigious school. Regardless of where you go to school, you will probably be required to take about the same basic courses those first two years so you basically have nothing to lose except maybe $40,000. This is the difference between going to a community school for two years and then our state university for two years vs. going to that same state university for four years.
A second alternative is to choose a cheaper school. If you shop around you might find a school in your state that would be cheaper to attend then either your state’s university or a private college. As an example of this, it costs $26,933 for an in-state student to attend our state university but only $18,743 a year to attend a smaller university located in the western part of our state. For that matter, you could attend that school for two years and then transfer to our state university, graduate with a degree from it and save some money in the bargain.
Third, you could live at home – assuming you choose a college or university in your city or town. This might not sound like much fun but it would slash your college costs dramatically. As you have read, it costs $26,933 for an in-state student to attend our state university, which of course includes room and board and incidentals. If you were to live at home you would pay only the cost of tuition, which is $10,240 a year. Even when you add incidentals and textbooks to this, you’d be cutting the cost of your education by nearly 50%.
Finally, work part-time. Almost all college and university towns have an ongoing need for part-time workers. If you land the right kind of job you might earn enough to make up the gap between your financial aid and you’re out-of-pocket costs to graduate debt-free. And as Martha Stewart would say, “it’s a good thing”.