When it comes to paying for college, federal student loans are often one of the best ways to borrow money. With lower rates and better repayment options than most loans offered by banks, federal student loans are a financially smart move for those that need to take out loans to cover the cost of college.
But despite the many benefits of federal student loans, a recent report from the Department of Education showed that many students never bother to apply for financial aid. The study examined the reason why these students never applied for financial aid (including grants, loans, scholarships, tuition waivers, fellowships, veteran benefits and other sources of funding).
Many of the reasons why students did not apply for these benefits were because they believed financial aid myths, or because they had bad information about financial aid.
Far too many students do not take the time to apply for financial aid. 20 percent of college students did not apply for any aid, while a full 30 percent did not apply for federal student loans through the Free Application for Federal Student Aid, which is usually called FASFA. If you’re planning to attend a college, university or other type of higher education program, you need to know the facts about financial aid — so that you do not use any of these horrible excuses for not filling out the FASFA.
You Haven’t Filed Your Taxes Yet
Many Americans do not file their taxes in April, for a wide variety of reasons. By getting an extension, they can submit their taxes later in the year — typically in summer or fall. Tax information is required to complete the FASFA, so many students assume that if they have not filed their taxes yet, they cannot file their FASFA. This is untrue; even if you have not yet filed your most recent taxes, you can still complete and file your FASFA.
The federal student loan application allows students and their parents to estimate their required tax information — which means that you do not need your actual tax documents to file your FASFA. This allows students to submit their FASFA as early as possible so that they will know exactly how much federal student aid they qualify for based on their income.
If you plan to estimate your income and tax information on your FASFA, be aware that it is your responsibility to amend your FASFA if your actual income is higher than what you reported on the application. If you fail to amend your application, you could be investigated and prosecuted for student aid fraud. Penalties for lying on your FASFA can include five years of prison and a $20,000 fine for each offense.
But the issue of estimating taxes should be moot for the next crop of college students. The Department of Education has a new process for FASFA that will allow families to submit the form with tax information from two years prior. So for students applying for federal student loans for the semester beginning in fall 2017, they can submit tax information from 2015. The Department of Education will then be able to provide information on how much aid students are eligible for by October, rather than January or February. If the financial situation of the family changes significantly, they can file an appeal with the school and submit additional information to reflect their current status.
You Think That You Do Not Qualify
One of the most common reasons that students do not fill out their FASFA is because they do not think that they will qualify for financial aid. This myth can be costly for students, as the reality is that most students at institutes of higher education will qualify for some form of federal aid, such as unsubsidized loans.
This can come in the form of unsubsidized loans and federal loans intended for parents of college students (Parent PLUS loans) and graduate students (Graduate PLUS loans). While they may have a higher interest rate than subsidized loans, they can still be more advantageous than private student loans.
Beyond the FASFA, applying for financial aid makes sense because many schools, organizations and community groups offer aid that is based purely on merit. If you have achieved high grades or have excelled in a particular area, you may be eligible for scholarships or grants on that basis. Merit-based financial aid is available to students regardless of income.
You Think That You’re too Old for Financial Aid
No matter when you start college, if you are enrolled at least half-time at an institute of higher education, you are likely eligible for student aid. FASFA has no age requirements or limits. In many cases, non-traditional learners — those students who attend college past the typical window of 18 to 24 year olds — qualify for more aid than other students. That is because they are considered fully independent, and their parents’ income is not considered in the financial aid process. If their income is lower than their parents, or if they have dependents of their own, this could result in increased federal student aid. If you are a non-traditional student, be sure to fill out and file your FASFA.
You Think That Your Scores Aren’t High Enough
While many scholarships are based purely on a student’s academic achievements, federal student loans are not based on grades, SAT or ACT scores. When you first file your FASFA, there is no have a minimum grade point average or test score. Federal financial aid is based purely on financial need, not on your academic record. However, once you have applied for and received federal student loans, you will need to maintain a minimum grade point average and be enrolled for a certain number of credit hours in order to continue to receive aid.
Getting a college degree is expensive — but student loan programs and financial aid from the federal government can help. Whatever your financial or academic status is, if you are going to college, make sure that you take the time to fill out a FASFA. It is free to apply, and could end up saving you thousands of dollars with lower interest loans or grants.
Author: Jeff Gitlen
Join the LendEDU Newsletter
News, insights, & tips once a weekThanks for submittingPlease Enter a valid email
Student Loan Guides
Student Loan Reviews