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8 Things You Should Know If Your Child’s Applying To Colleges

family with teenage daughterIf your child’s a high school senior we probably don’t have to tell you what an exciting but confusing time this can be. There are difficult decisions to be made, confusing applications to be completed and critical tests to be taken. There’s so much information that must be taken in and considered it could make both you and your child’s heads spin.

If you’re typical, you want your child to attend the best and most prestigious school possible. However, given the price of a college education today – especially at top-level schools – this could mean years and years or debt for your child. It’s important that you don’t get all excited and end up making a choice that costs your child dearly.

If you’re not aware of this, students are now graduating with an average of $33,000 in student debts, which can put a strain on a person’s life for many years to come. If you don’t want this to happen to your kid the best way to handle things is to approach choosing a college as a business decision. Given this, here are at eight things you need to know or do.

You need to have a budget

Determine the amount of money you could contribute to your child’s education and then be honest about this. He or she can then decide in advance how much they’re willing to borrow to get a degree. You might have them check out the starting salaries she or he could expect to earn after graduation and then compare this to the student loan payments they would probably be required to make monthly.

The school may not be as important as you imagine

Does how prestigious the school is play a big part in your child having a great career? Maybe not as much as you might think. If your child is applying for colleges in the top 10 or 20 of schools this might open the door to opportunities that wouldn’t be available otherwise. But there is actually not much of a disparity between the potential earnings of a student from one of these schools vs. other 4-year schools. The Department of Education did a study that found the prestige of a school made only a 2% to 3% difference in the earnings of men and 4% to 6% among women. Compare this with the difference in cost between, say, your state university and an Ivy League school. When you take this into consideration you might decide that a less expensive school that has a good reputation and offers a quality education would be a much better option.

Learn the actual cost

If you’ve ever bought a car you know there’s the sticker price and the real cost. The same is true for colleges and universities. The tuition price that you see listed for a school is hardly ever what it actually costs to attend it. In fact, most students at most schools pay a lot less than the “sticker price.” So when you’re checking out a school, don’t look just at the tuition price but also at its average package of financial assistance. You will then have a clearer idea of what it will actually cost your child to attend it. In some cases a school that looks awfully expensive might cost less than a school that appears to be cheap.

money and graduation cap in chainsThink carefully before borrowing money

We know you want to do everything you can for your child so you’re going to want to help with their college education as much as possible. The issue is that you may not be financially able to do this. If you don’t have the cash available to help out with your kid’s education there are loans available such as the federal PLUS loan for parents or a bank loan. However, it’s not a good idea to take out one of these loans. If you don’t have the cash to help your child it might be because you can’t afford to help. If you have to have a loan to finance your child’s schooling this could wreck your budget or even screw up your retirement. Your house could even be at risk.

Know that living at home is best

In 2013-2014 the cost of room and board at a public university averaged $9498 a year and for a private non-profit 4-year school the average was $10,823. Multiply this by four years of school and you’d be looking at around $38,000, which is a lot of money. If you live close to a good college or university you need to seriously consider having your child go there and live at home. If your child really wants to go away to school a good compromise might be for her or him to go to a local community college or university for two years and then go away for the last two.

Be aware that debt could have a considerable impact on your child’s life

As you have read students now graduate from college owing an average of $33,000. Of course, depending on your child’s school it could be much more than this. Studies have shown that a significant amount of debt is keeping many young people from taking critical steps in life such as attending graduate school, getting married, purchasing a home or even having kids. What this means is that it’s best to keep debt at the minimum by selecting a cheaper college and stressing to your child the importance of living frugally and finding part-time work if possible.

Scholarships and grants can make a considerable differenceOne of the most prevalent myths is that only top students get scholarships. Your child should be applying for scholarships even if he or she isn’t in the top 5% of their class. These can be a great source of extra money for your child’s schooling. Be sure to check out sites such as and search through their databases. Your employer, union or fraternal organization might even have scholarships for the children of their members or employees. There is actually a scholarship for golf caddies where we live.

Be sure to teach your child the important skills

You may have spent the last 17 or 18 years doing everything for your kid. In this case it’s time to begin teaching them some life skills. They’ll have a hard time adjusting to life on their own unless you teach them to do laundry, cook, change a flat tire, take a bus, grocery shop or bank for themselves. You also should have the “money talk.” This is where you discuss budgets and frugal living. You need to teach them about credit and debit cards, good money management, debt and why it’s important to have good credit. You might do what some parents have done and give your child a monthly allowance to cover the necessities so they can learn good money management. Almost everyone makes a few financial blunders before learning how to handle money responsibly. It’s much better that your child does this with an allowance than with their student loans that could amount to thousands of dollars.

Headed For College? Here’s What You Need To Do Beginning Your Sophomore Year Of High School

woman looking at billsYes, 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, and

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 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 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 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 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.

Financing college

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.

graduate chained to student debtHow to avoid student loan debt

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”.

4 Tips If You Need To Pay For College Yourself

young woman looking frustratedAre you prepared for the school year 2014-2015 college costs? Or are you floundering around because you do not know where you will get the money to pay for college yourself?

It may seem like a lack of parental responsibility but the law does not stop some parents from refusing to pay for their kid’s higher education. Heartless? It goes both ways. If you think about it, you cannot really blame them. There are horror stories of parents having to withdraw all of their retirement money because they co-signed their children’s college loans. When it turned out that their kids were not responsible and even dropped out of school, they were left with the burden of paying the debts that they have not benefited from in any way.

Even if you both shoulder 50% of the college expenses (you and your parents), they have more to lose because retirement is nearer for them. They only have a much shorter time to prepare for it and it does not seem fair to make them shoulder your education. But then again, they are the ones with the income or the credit history to borrow money. You would think it should be them who should shoulder your studies.

Apparently, the majority of parents are still willing to help pay for college. According to a study done and published on, 77% of parents still plan on helping their children shoulder their college expenses. But here’s the thing: times are tough and the 77% used to be 81% in 2013. While the majority want to help, the numbers are falling. More and more students are forced to fend off for themselves and put themselves through college.

4 options to finance your college education

If you are part of the group that was left to pay for college themselves, then do not feel so bad. That does not mean your parents do not love. It may just be that they are in more of a financial problem than you thought. After all, if they lose their retirement money to help you pay for your schooling, can you promise them that you will financially be responsible for them when they retire? Probably not.

Instead of feeling wounded, look at this as a challenge. You will be learning a lot by relying on your own resources to go through college compared to those who has mom and dad’s wallet to support them. And to make you feel a lot better, there are ways for you to pay for college on your own.

You also have to know that getting a college loan is not your only option. It is the most common financial path for students but it is not the only one out there. Here are 4 tips for you to get through college without the help of you parents.

Apply for scholarships and grants

There are so many scholarships and grants being offered by organizations, the government, schools and even private companies. You just have to search them out to find where you can qualify. These scholarship programs are usually merit-based so you should have very good grades. Even if you are an athlete, you still need to have good grades. This is one of the best ways to go through college at a very low cost. In some cases, the school might even waive the whole tuition fee and give you some allowance for your living expenses.

Of course, there are also scholarship programs that will depend on your family’s income and even where you came from. Since it will help you go to college at a low cost and you do not have to pay back anything, you can expect that the competition to qualify will be very fierce. So before you submit your application, make sure you fit the qualifications and you can meet the requirements of the program.

Go to a low cost college

Not everyone will go to community colleges enthusiastically but if the Ivy League schools are beyond your financial reach, then do not force it. You will be better off to go to a community college and be debt free than to go to an Ivy League university and be under hundreds of thousands of debt when you graduate. What some student do is to go to a community college for the first two years and save as much money as they can. Then, they shift institutions in their third year. This saves them a huge amount in the first two years and helps them lower any possibility of debt for the remaining years in college.

Work while in college

Your third option to pay for college on your own is to work while you are studying. The amount of time that you will spend  in a classroom is only between 15-20 hours a week. Even if you spend the same amount of time to do homeworks and study, you still have a lot of time in your hands. A person has 168 hours a week (including weekends). If you get 8 hours of sleep a day, 3 hours a day doing personal stuff and errands, and 2 hours a day relaxing or going out with friends, that will still leave you with around 37 hours of free time. What can you do with that? Add it to your entertainment time? That may be tempting but you should know that more time for entertainment means you will be spending more. So the best way to spend all those free time is to go to work. It will help you pay for college and give you some work experience that can help you in the long run.

Get a student loan

This is still part of your options but you are encouraged to put this option last. If none of the other three will work for you, then go ahead and get a student loan. The American Student Assistance published some statistics on that revealed how 60% of college students borrow money to cover the costs of going to college. If this is the option that you will pursue, make sure that you will only borrow what you need. And work while you are in college so you can limit the amount that you have to borrow for the next term.

Know your college expenses

If you will pay for college on your own, you also need to understand the different costs that you will encounter in college. According to the, your school expenses will be summed into five categories.

  • Tuition fees. These include the actual amount that you have to pay the school for credit hours. These are for your classes. Take note that the number of credit hours and the course you are taking will affect how much you will pay in tuition and fees.
  • Room and board. Some universities and college separate the board and lodging while others group them together. If it is separate, you need to consider the inclusions in the room and board. Will it include your meals?
  • Books and supplies. This will have to be considered as a separate expense since it varies every term and course. But according to the site, the average estimate for this is $1,200 – for a four year course.
  • Personal expenses. These are everything that you need to spend on to live comfortably. Your phone, laundry and meal expenses fall under this category. Include here your clothing and entertainment expenses too.
  • Transportation. This is an expense category for both car owners or those who use the public transportation. Factor in these costs before you go to college.

All of these should be considered if you are going to pay for college. Do not concentrate too much on the tuition fees. Your college expenses will be a lot more than that. At this point, creating a frugal budget will be really helpful to maximize your limited resources and lower your debt amount.

Parents and kids should join forces to go through college without debt

In the end, while parents are not obliged to pay for their kid’s college tuition, it is important for both the parents and the student to work together. That way, the latter will not have to be buried in debt and at the same time, the parents does not have to compromise their retirement money.

Here is a video about a young man named Brandon and how he is trying to go through college without any debt.

There are two important factors that allowed Brandon to attend college without having to rely on student loans.

  • His parents saved for college shortly after he and his siblings were born. The saving started really early so the parents did not have to shell out any money by the time Brandon had to go to college.
  • Brandon worked part time jobs and during school breaks to make more money. This young man worked hard so he can finance his own needs without relying on his parents. Not only that, he also knows that the experience he will get while working through college will help him when he goes out to the corporate world after graduation.

This is a formula that can really work well for any type of family.

How To Calculate The Money Factor When Choosing A College

Man having financial problemsIf you or your child is headed towards the senior year of high school, congratulations! The majority of high school is now behind you. But there’s something big coming your way and it’s called choosing a college. So, where do you think you would you like to be – near the ocean, close to great skiing, in a small town or living the urban life?

Questions to ask yourself

While an important question when choosing a college is where would you like to live for the next four or five years an equally important one is which school or schools offer an education that would fit best with your career plans. In other words, if you believe that you seriously want to be a veterinarian, you’d probably be better off not going to a school that offers only a liberal arts education. Conversely, if your dream were to teach history at the college level, a school with a strong liberal arts bias would be a much better choice than one that includes the word Technology in its title. Of course, you cannot separate any of this from the fact that some schools may accept you and others may not. If you or your child is carrying a straight 4.0 average, has been active in extracurricular activities and a student athlete, the odds are that he or she will be accepted by most schools. But if he or she has been carrying a B average and not an athlete, some of those letters may be ones of rejection.

The money factor

Finally, there is the inescapable fact that college costs money. While it’s hard to figure this all out, a good way to start is by creating a spreadsheet using information from the financial aid offices of the schools you or your child is considering. This should include a column for tuition, room and board, books and fees, transportation, cell phone fees and miscellaneous expenses. Of course, your vertical column will consist of the various schools being considered. Once you’ve filled in this information you should have at least a rough idea of what a year at each of the schools will cost.

Half the equation

Determining what a year of college will likely cost you is only half the equation. The other half is calculating how you will pay for it. This typically will begin in January of next year when you fill out the Free Application For Federal Student Aid (FAFSA). You will need to complete this form even if you don’t think you’ll be applying for federal student aid because virtually every college in the nation uses it to determine what if any aid it will offer you or your child. As an example of this, you will need to have the following documents or information available in order to fill out your FAFSA. • Your Social Security number (it’s important that you enter it correctly on the FAFSA!) • Your parents’ Social Security numbers if you are a dependent student • Your driver’s license number if you have one • Your Alien Registration Number if you are not a U.S. citizen • Federal tax information or tax returns including IRS W-2 information, for you (and your spouse, if you are married), and for your parents if you are a dependent student: o IRS 1040, 1040A, 1040EZ o Foreign tax return and/or o Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau • Records of your untaxed income, such as child support received, interest income, and veterans non-education benefits, for you, and for your parents if you are a dependent student • Information on cash; savings and checking account balances; investments, including stocks and bonds and real estate but not including the home in which you live; and business and farm assets for you, and for your parents if you are a dependent student Finally, here courtesy of National Debt Relief, is an overview of the FAFSA and information as to why it’s critical you and your parents complete one.

 Before you take out a loan

One staggering statistic we read recently is that the average college student graduates owing around $30,000 in student loan debts. If you would like to keep your child from graduating this much in debt, be sure to ask the schools that he or she is considering for their Financial Aid Shopping Sheets. This is a form developed by the Consumer Financial Protection Bureau (CFPB). It’s now being used by more than 2,000 schools and is designed to provide parents and students with good information and a clear set of facts before they sign up for any student loans.

A helpful website

The CFPB has a section on its website titled “Paying for College.” You might take the numbers from the spreadsheet you developed on college costs and plug the information into this website to see comparisons of first-year college costs – three schools at a time. This will also show what you might owe in student loan debts when you graduate. Even if you have not yet received any financial aid offers from any schools, you should be able to use it to at least make estimates. You can also tweak the numbers by changing factors such as living in off-campus housing rather than in a dormitory and then how that choice would affect how much you might need to borrow in student loans.

What kind of aid might you receive?

Naturally, the best kind of aid to receive is the kind you don’t have to pay back. If you or your child is a stellar athlete, he or she might qualify for an athletic scholarship. And while academic scholarships are difficult to obtain, there is always that possibility. Beyond this most schools offer other aid in the form of work grants, grants-in-aid and what’s called work-study programs. In addition, the US Department of Education (ED) offers free financial aid in the form of Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Federal Work-Study Programs, and Teacher Education Assistance for College and Higher Education (TEACH) Grants. It’s also possible that your state offers some forms of financial aid. Where we live there are Denver Foundation Scholarships and Boettcher Scholarships that cover the full costs of a four-year education. There are more than 30 other scholarships available to students in our state including one for young men and women who were golf caddies

A one-word recommendation

When it comes to borrowing money to pay for college, we have a one-word recommendation: Don’t – unless there are simply no other viable alternatives. Beginning life after college owing $20,000, $30,000 or more is sort of like having a millstone around your neck. It will limit many of your financial choices for at least the first three to five years after you graduate. You might find you have to take a job you don’t like very much just so you can pay on your student loan debts. And if you’re in a field where you will need a graduate degree, you would likely end up piling more debts on top of those debts.

The one word to avoid at all costs

If you are forced to take out student loans there is one word you want to avoid at all costs and it is the word default. You are considered to be in default on a student loan the day after you miss a payment. Yes, just one day and one payment. Ninety days after this, your lender will report your default to all three credit bureaus, which will have a dramatically negative affect on your credit score. It’s even possible that your debt will be turned over to a collection agency and trust us when we say this is something you just don’t want to see happen. Debt collectors have a reputation that’s well earned for being totally pitiless when it comes to collecting a debt. In addition, if you have a default on your record within the past three years you could find it impossible to buy a house using a FHA (Federal Housing Administration) guaranteed loan.

Not an easy decision

As you have read, there are a number of different factors that go into choosing a college or university, not the least of which is money. Many students today are electing to spend their first two years at a community college and then transfer to a four-year private or public school. This is a way to cut college costs considerably and yet still graduate from a “name” school. For that matter, many other students are choosing to get their undergraduate degrees from middle-of-the-road state schools and then use the money they saved to get their graduate degrees from more prestigious colleges or universities.

If student loan debt is already a problem

National Debt Relief recently launched a program that will help borrowers find a debt relief program for their student debt. It provides a consultation service that will match your specific student loan situation, employment conditions and financial capabilities with the right debt elimination program. It will also help with the paperwork that will allow you to enter into such a program. National Debt Relief charges only a one-time time flat fee that will be placed in an escrow account. There is no maintenance fee or additional charges. They will only withdraw your payment once you’re satisfied with the paperwork and the debt relief program you were recommended.

Determining How To Pay For A College Education Isn’t Rocket Science. Or Is It?

books with a mouseIf your child is a high school junior this year and intends to go to college, you’re about to embark on what could be your most confusing year ever, which is determining where you child will go to school and how you’re going to pay for his or her college education.


If you will need financial aid, the whole process begins with filling out the FAFSA or Free Application for Federal Student Aid. This is such a complicated document that many parents actually break down and hire a professional to help them complete it. For example, here is some of the information or documents you will need to complete your FAFSA.

• Your Social Security number (it’s important that you enter it correctly on the FAFSA!)
• Your parents’ Social Security numbers if you are a dependent student
• Your driver’s license number if you have one
• Your Alien Registration Number if you are not a U.S. citizen
• Federal tax information or tax returns including IRS W-2 information, for you (and your spouse, if you are married), and for your parents if you are a dependent student:
• IRS 1040, 1040A, 1040EZ
• Foreign tax return and/or
• Tax return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federal States of Micronesia, or Palau
• Records of your untaxed income, such as child support received, interest income, and veterans non-education benefits, for you, and for your parents if you are a dependent student
• Information on cash; savings and checking account balances; investments, including stocks and bonds and real estate but not including the home in which you live; and business and farm assets for you, and for your parents if you are a dependent student

Where you will need to submit the FAFSA

Here comes the dicey part. You need to submit the FAFSA to that school or schools your child would like to attend while your child may not have yet chosen them. And while the FAFSA must be submitted to the US Department of Education by June 30 of next year, most colleges require that you submit it much earlier. So if your child has not yet selected a school or schools it’s time to get started on this.

Here’s a short video courtesy of National Debt Relief with some good tips about filling out the FAFSA to get the most financial aid.

Guesstimating the costs

After your child has chosen some schools, you to next sit down and to try and figure out how much each school will cost. Be sure to take into consideration not just tuition and room and board but other factors such as cell phone costs, books, entertainment, travel and anything else that would be related to his or her education. You will probably have to just guesstimate these costs at this point.

Check out the Consumer Financial Protection Bureau website

To get some extra help, the Consumer Financial Protection Bureau website has a section called “Paying for College” where you can plug-in numbers from various schools three at a time and then compare their first-year costs.

What’s next?

Once your child has chosen a school or schools, you will need to submit application forms and FAFSAs to each one of them. In some cases you may also have to fill out and submit a CSS/Financial Aid PROFILE Form. And if your child is intent on attending a really elite private school, you may have to fill out it’s own specific financial aid form.

In the meantime if you can afford it you and your child should be visiting the schools. When you do, check out the dorm rooms, the dining rooms or cafeterias, some of the classrooms and have a chat with someone in the school’s financial aid office.

The acceptance and award letters

The school or schools that accept your child will send you a letter of acceptance and an award letter. The award letter is where you will first see exactly what that higher education is going to cost. The reason for this is because it will be based on your “need,” which is the difference between what the school costs and what you will be required to pay. To put this another way, each school will calculate how much financial aid your child is eligible for and then subtract this from its “gross” cost. As an example of this, suppose the school charges $20,000 a year for room and board, tuition, books and incidentals. If it determines that your child is eligible for $10,000 in student aid, your need would be $10,000. You could think of this as the true price of a car versus its sticker price.

A simpler document

Many schools have now adopted what’s called the Financial Aid Shopping Sheet. If your child is considering one or more schools that use this Sheet, things will be much simpler. It’s a streamlined, easier-to-read template that will show what financial aid your child will receive along with details as to the school’s graduation rates, percentage of loan defaults and other important data.

What financial aid might your child receive?College student thinking while holding credit card

This will all be spelled out in your award letter but the kind of financial aid usually offered is scholarships, grants, work-study programs, loans and grants in aid. Of these five options, the best are grants and scholarships because they are basically free money. Your child would not have to do anything to earn the money nor would he or she have to pay it back.

Read the award letter carefully

It’s important that you read very carefully the award letters you receive. It might seem at first blush that it’s time co celebrate because of all of the financial aid your child will be receiving. However, a careful reading might reveal that a majority of that aid is in the form of a loan. We understand that your child may have to take out loans in order to finance his or her education but, of course, it’s much better if you can avoid this. Students today are graduating with an average of nearly $30,000 in student loan debts, which can haunt them for years.

Avoiding student loan debt

Of course, the best thing for your child would be to avoid student loan debt. Unfortunately, given the cost of some colleges, this is much easier said than done. One way to do this is to have a heart-to-heart talk with your child regarding schools that he or she would like to attend versus those that you could finance without having to go into debt. It used to be that attending an elite Ivy League school was worth the investment because it all but assured a very lucrative career. However, this is no longer as true as it was just a few years ago. For that matter, many parents today are sending their children first to two-year community colleges where they can get the basic courses out of the way before going on to more prestigious schools for their junior and senior years.

The two types of federal student loans

If there is just no way your child can get a college education without borrowing the money, you should know about the types of loans available. The ones your child could get would be a Federal Direct Loan or a Perkins loan. The major difference between the two is that the Federal Direct Loan comes from the US government, while a Perkins loan comes from your child’s college or university. Federal Direct Loans can be either subsidized or unsubsidized. The difference between the two is that subsidized loans are based on need – meaning that you and your child must be able to demonstrate a financial need. On the other hand, unsubsidized loans don’t require that you prove a need. But all Perkins loans do require this. It’s also important to understand the difference between subsidized and unsubsidized loans. Subsidized loans are those that don’t require your child to pay any interest while in school at least halftime. But unsubsidized loans do require that your child pay interest while in school.

The final choice

As you can see, there are many factors that go into making that final choice or the school that your child will attend. However, if you take your time, do your homework and sort through the various alternatives available, you should be able to make a final choice that will fit with both your child’s career plans and your ability to help finance his or her education.

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