A Quick Guide to Paying for College
You’ve received your college acceptance letters and narrowed your search down to a school or two; now you have to figure out how you’re going to pay for it all. Before you empty your savings account to pay your tuition bill it is important to understand financial aid and other options available to you. Whether you’re making the transition from high school to college, or working toward your master’s degree, this Quick Guide to Paying for College offers some helpful tips and resources for students and their families preparing to finance an education.
FAFSA and Scholarships
The first step in finding out what financial aid is available to you is to file the Free Application for Federal Student Aid or FAFSA. The application is available online from January 1 to June 30 each year and schools use the information to determine how much federal aid you are eligible to receive. When you are filling the FAFSA you will need the following information:
- Social security number.
- Your parents’ most recent tax returns (if you’re a dependent student).
- Your most recent tax returns (if you’re an independent student).
- Your FSA ID (formerly known as the Federal Student AID PIN).
- The Title IV institution code for your school.
Scholarships are great for many reasons, but the biggest benefit is you don’t have to pay them back like a student loan. Most scholarships require applications, so it is important to apply for them as early and often as possible to give yourself the best chance.
Review your award letter
After submitting the FAFSA, the school you listed on the application will send you a financial aid award letter with information about the grants, loans and other federal aid available to you. The letter will also indicate the costs of attending the school to help you plan to finance your education. With this information you can determine if there is enough aid to cover the cost of education, or if you will need to seek other sources to fill the gap between the total cost and financial aid received.
Accept and Apply for Student Loans
Once you determine how much you’ll need to finance for your education, you can begin comparing your student loan options. It’s a good idea to review both options before making a final decision to apply for private student loans or accept the federal student loans offered in your award letter. Ultimately, you may find a combination of the two is the right fit for you and your family, but it’s important to understand the benefits of each before making a decision. Below is a quick explanation of the key differences between these two options:
- Federal Student Loans: Available through the government, federal student loans are fixed-interest loans. Eligibility varies based on financial need and the details you need to know about your federal student loan options will be listed in your award letter. Federal loans can be repaid through standard and also have alternative repayment plans available, including income-based and graduated repayment plans.
- Private Student Loans: Available as fixed- or variable-interest rate loans through banks and credit unions: private student loan interest, terms and repayment plans vary based on the lender. For the most part, eligibility for private student loans is based on creditworthiness and affordability. Since most students heading off to college do not have an established credit profile, most lenders recommend students apply with a co-signer. Borrowers with good credit or those who apply with a creditworthy co-signer can often obtain the lowest rates. When shopping for private student loans, it is important to compare different rate, term, repayment options and benefits to find the loan that best suits your needs.
At Citizens Bank, borrowers have the choice of the Citizens Bank Student Loan™ and the Citizens Bank Student Loan™ for Parents. Both come with competitive rates, flexible terms and a variety of repayment options. Contact a Student Lending Specialist for more information on either option.
Keep Track of Student Loans and Disbursements
Once you have accepted and signed for your student loans, it is important to monitor the disbursement of your loans to ensure the college receives payment and you don’t encounter any billing issues when you arrive on campus. While each lender has their own process for setting up disbursement dates, lenders typically disburse the money from the loan directly to your school at the beginning of the semester. The student loan money is then applied to your tuition bill and any other related costs owed to the school. Once your student loans have been disbursed, it’s important to review your student account or contact the Bursar’s office at the school to ensure your tuition bill has been paid before arriving on campus or beginning your courses.
Schools also have their own policies for handling extra money received from student loans, but for more detail you can reach out to the Bursar’s Office at your school to understand their policies. Overages may be credited to your student account, returned to you in the form of a check to be used for other education-related costs, or returned to the lender as a refund. Creating and maintaining a spreadsheet of your student loans and the disbursements is a great way to manage debt and will be a helpful tool when it comes time to begin making payments to your student loans.