 What are the Options for Students Looking
for Financial Aid for College?
By Jack Etzel
Even during good financial times, financing a college education can
be a complex and daunting task. Given a downturn in the economy,
there’s more reason than ever to become familiar with the options
available to students and parents alike. Linda Anderson is the
director of student financial aid at Carnegie Mellon University. She
holds a Bachelor of Science in Education, a Master of Arts in Student
Personnel Services, and has 31 years of experience in enrollment and
student financial assistance services. Anderson makes her home in
Wexford. North Hills Monthly Magazine: Are there more or less
options for financial aid for incoming students today compared to,
say, 10 years ago?
Linda Anderson: There are definitely more today. At the same time,
this is what makes financial aid even more complex. Each school, for
example, does things just a little bit differently. The evaluation of
eligibility and how they determine it will vary. It requires a more
complex investigation. NHMM: What, basically, should a family know
or do? Anderson: Because there is need-based aid and non-need-based
aid, families should first do what is referred to as a ‘needs
analysis,’ and understand the factors used in a need-based
calculation. NHMM: Can you elaborate on this? Anderson: You can
also refer to this aid as need-based, and merit or academic
scholarships. For need-based aid, it’s important to understand the
federal methodology and also any institutional methodology. In either
case, you have to carefully review all of the admissions information
and understand how you make application. As an incoming freshman, you
have to understand how eligibility is renewed annually. If, for
example, as a freshman you’re eligible for an institutional academic
scholarship, and the renewal GPA is 3.5, you may think that’s a little
high. It doesn’t mean that you shouldn’t pursue that college, but you
must understand that as a fact. NHMM: With more financial aid
options available from many different sources, isn’t it difficult for
most families to even imagine what’s out there? Anderson: That’s
absolutely right. Let’s talk a little bit about loans, for example.
With all of the regulatory changes and legislative changes that have
taken place, getting the right loan is more complex and more important
than ever. Among the best loans are federal loans, such as the Federal
Perkins loans. See if your school has those funds to offer. There also
are federally subsidized loans, called Stafford loans. NHMM: Any
news on interest rates? Anderson: On Stafford loans, the interest
rate will decrease from 6 percent to 5.6 percent for the 2009-2010
academic year. There is also the Federal Plus Loan program, which is
at 8.5 percent interest. Note that when I’m talking about the ‘best’
loans, this is aside from the fact that I do not know the entire
institutional loan program at every college because many of them do
offer their own loan programs. In brief, I would say that a student
should take advantage of every federally-based loan they can get their
hands on. NHMM: Where does a parent or student begin? Anderson:
The very first thing to do is to get their FICO score and credit
worthiness. The student or parent can go to www.annualcreditreport.com
to get a free credit report. If they want an actual credit score,
they’ll have to pay a minimal fee. That’s also an opportunity to
review your credit report to see if you have time to rehabilitate your
credit before applying to college. NHMM: At what point should a
parent begin saving or investing for college? Anderson: As early as
possible. While no two families are alike, I would suggest planning
and doing research as early as humanly possible. Families need to
understand their own financial strengths or weaknesses. There have
been a lot of investments and savings in those basic 529 Plans.
College saving plans are good because you can liquidate them tax-free.
One might not think they are right now, but the market, in my opinion,
will come back, and they’ll grow in value. NHMM: You sometimes have
to choose between cost and curriculum… Anderson: As families visit
colleges that they think their child would like to attend, they should
focus on aid and eligibility of each of those colleges, if possible.
And honestly, they should select a college on the basis of their
career path and the academic curriculum. I know it’s difficult to not
think about the expense, but the primary focus should be on the
college and the curriculum that they want. Find out which colleges
have early financial aid estimate calculators and processes. Many
schools have this now, and students don’t have to be seniors in high
school. The student can be any age when they submit their adjusted
gross income, taxes paid, and other factors including certain assets
information, and they’ll calculate the students eligibility for grants
and loans. NHMM: Higher education seems to come with higher costs
each year. Anderson: You have to ask whether the indebtedness is
worth the value of the educational investment. Compare that to the
purchase of a new car. The car will quickly depreciate. Your education
will continue to appreciate. Want more information? On the
Internet, do a Google search using any key word regarding the subject.
You can also enter Smart Saving for College and/or An Introduction to
529 Plans. Websites that may be helpful include www.fafsa.ed.gov,
where you can find a free application for federal student aid. A basic
primer to college financial aid is found at www.finaid.org/ |
