Many students are responsible responsible for helping pay for their own college education which can be daunting. You begin looking at tuition rates and start to wonder how you are going to be able to pay for all of this. Then you remember your advisor telling you to fill out the FAFSA, but you truly have no idea what that is or why you need to fill out yet another form. You also are starting to wonder once you fill the FAFSA out, what happens next? If I get offered multiple loans, which ones should I accept? How do I even accept them? I know there are a lot of questions running through your head at this time, but we are here to help and answer all of your questions here at Powercat Financial. Just follow these three simple steps:
- Fill out your FAFSA information ASAP:
FAFSA stands for “Free Application for Federal Student Aid”. The college you are attending will use this information to determine your federal aid eligibility. The amount of federal aid you receive is based on many factors such as your expected family contribution, year in school, enrollment status and the cost of attendance at the school you will be attending. This federal aid can come in many different forms such as grants, subsidized loans and unsubsidized loans. We will go over these in more detail here shortly, but for now, we’re going to focus on filling out your FAFSA. First of all, you need to go to www.studentaid.gov/fafsa to start the application process. I would advise sitting down with your parents or a trusted adult to help aid you through this process. It will first ask you three questions: If you are a student, if you are a parent filling out the form on behalf of the student or if you are a preparer helping a student fill out the form. Select whichever applies to you. If you have not created an account through studentaid.gov already, you will be required to do so at this time. You will then go through 6 different categories filling out information that pertains to you and your parents. These categories include things such as your demographics, school selection, dependency status, parent’s demographics, as well as you and your parent’s financials. This can be a lengthy process, but it is very important to do in order to be eligible to receive federal aid. Once you are finished filling out all of this information it is then processed by the US Department of Education and is sent to the schools you selected within the FAFSA. This can take anywhere from 3 days to 3 weeks, so be patient! You will also receive a Student Aid Report (SAR) typically within two weeks of filling out your FAFSA. Once the school has received your information they will then determine how much financial aid you are eligible to receive and prepare a financial aid award letter that will be sent to you or posted within the student information system (KSIS). This can vary from school to school but will usually arrive shortly after you have received your acceptance letter from them. Finally, you have received the federal aid that has been offered to you, now what? There are probably many different types of aid that you have been offered and this is where we move into step #2.
- What aid should I accept? Difference between a subsidized and unsubsidized loan?
This is the step of the process where many questions arise. If you are a student at or plan on attending Kansas State it would be a great idea to schedule an appointment with us at Powercat Financial so we can go over your financial aid with you in detail. The first and most important thing is to see if you have been offered any grants. Grants are FREE MONEY that the government gives you if you have demonstrated a need for financial aid. Free money is always the best, so make sure you accept any grants that are offered to you!
Next, you might see that you have been offered a “direct subsidized loan” or a “direct unsubsidized loan.” What is the difference in these two loans and which one should you accept first? The Direct Subsidized Loan is offered to students who demonstrate financial need. The federal government will pay the interest that grows on your subsidized loans while you are in college, so it does not accrue on your principal amount. A direct unsubsidized loan is offered to students and is NOT based on financial need, therefore almost everyone who applies for the FAFSA will be offered some amount of an unsubsidized loan. Unlike a subsidized loan, with the unsubsidized loan, the interest on your loan will grow and add on to your existing loan amount. An important thing to note is that all federal loans are currently on hold due to Covid, and no interest is being charged on any loans until May 1st, 2022. However, starting May 1st, 2022, your unsubsidized loans will start accruing interest.
So based on that information can you guess which loan you should accept first? Hopefully, you’ve figured out that the subsidized loan is a better option than the unsubsidized loan because it grows interest-free while you are in college. Both of these loans have a six-month “grace period”, which means once you graduate you have six months until you have to start making payments towards them. Also, after those six months have ended you will have to start paying the interest on your subsidized loans instead of the federal government paying it. You may also find out that you are eligible for federal work-study. Federal work-study provides part-time jobs for students with financial need, which allows them to earn money to help pay for their education. Kansas State participates in the federal work-study program. Being federal work-study eligible can be a very attractive asset to you and is important to tell employers when applying for jobs. This means that the employer isn’t paying all of your wag as the federal government is helping pay a portion of your wage. Which makes it easier for you to obtain a job from them. Also, you do not report work-study income on the following year’s FAFSA unlike other work income. Many on-campus jobs at Kansas State are eligible for work-study. To recap this section, accept financial aid in this order 1) Free money first! (grants/private scholarships) 2) earned money (work-study) and 3) borrowed money (remember to accept your subsidized loans first!).
- Accepting your Federal Student Aid:
So how do you go about accepting your financial aid? Your student aid offer letter will include directions on accepting aid. Follow these directions carefully. Here at Kansas State, you can do this by going to k-state.edu and logging into KSIS then navigating to the Financial Aid tile. Here you will see all of the financial aid that has been awarded to you. This will include any private scholarships, federal grants and federal subsidized and unsubsidized loans. It is a very simple process after this. First, go through and accept all of your scholarships and grants. Next, an important thing to remember is that you do not have to accept the FULL loan amount. You can type in the amount of loan that you would like to accept for the full year, but remember this loan is for the full school year (or both semesters). If you are unsure how much to accept or which loans to accept, schedule an appointment with us at Powercat Financial as we can help assist you on how much you will need to accept!
Applying for and accepting federal student aid can seem like a daunting task, but I hope this blog has helped you understand it in a simpler way. If you have any other questions please reach out to us at Powercat Financial, we would love to assist you!
Kolby Stein
Peer Financial Counselor I
Powercat Financial
www.k-state.edu/powercatfinancial
powercatfinancial@ksu.edu
