Understand the Types of Loans Available

Student loans come in two primary forms: federal loans and private loans. Federal loans, provided by the government, typically offer lower interest rates and more flexible repayment options than private loans. Private loans, offered by banks or other financial institutions, may have higher interest rates and less favorable terms.

Know the Difference Between Subsidized and Unsubsidized Loans

Federal student loans are further categorized as subsidized or unsubsidized. Subsidized loans are need-based, and the government pays the interest while in school and during certain deferment periods. Unsubsidized loans accrue interest from the time they’re disbursed, and you’re responsible for all interest payments.

Familiarize Yourself with Loan Terms and Conditions:

Before accepting any loan offer, carefully review the terms and conditions. Pay attention to the interest rate, repayment options, grace period, and any fees associated with the loan. Understanding these details will help you make informed decisions and avoid surprises down the road.

Estimate Future Loan Payments

Use loan calculators or online tools to estimate your student’s future loan payments based on the amount borrowed, interest rate, and repayment term. This exercise can give you a realistic picture of what your monthly payments will be after graduation and help you plan accordingly. With this knowledge, look at potential future paychecks and determine if that’s reasonable. 

Explore Federal Loan Benefits

Federal student loans offer various benefits that can ease the burden of repayment. These include income-driven repayment plans, loan forgiveness programs for eligible professions, deferment and forbearance options, and the possibility of loan consolidation. Understand how these benefits may apply to your situation.

Consider Future Earning Potential

Before taking on student loan debt, consider your student’s expected future earning potential in your chosen field of study. Will your projected income allow you to comfortably manage loan payments after graduation? Research salary data for your desired career path to gauge whether borrowing is a wise investment.

Borrow Responsibly

Only have your student borrow what they need to cover essential education expenses. Resist the temptation to borrow more than necessary, even if they’re offered additional loan funds. Remember that every dollar borrowed accrues interest, increasing the total amount you’ll need to repay over time.

Explore Alternative Funding Sources

 Exhaust all other financial aid options, such as scholarships, grants, work-study programs, and savings, before turning to student loans. Every dollar your student can secure through non-loan sources reduces their future debt burden. I recently shared 10 creative ways to fund college – check them out here! 

Stay Informed and Communicate with The Loan Servicer

Encourage your student to keep track of their loans, stay informed about changes in repayment terms or benefits, and communicate regularly with their loan servicer. If you or your student encounter financial difficulties, don’t hesitate to reach out and explore available options for managing your loans.

Borrowing student loans is a major decision that requires careful consideration and planning. By understanding the types of loans available, familiarizing yourself with loan terms and conditions, estimating future loan payments, exploring federal loan benefits, considering your future earning potential, borrowing responsibly, exploring alternative funding sources, and staying informed, you can make informed decisions about financing higher education while minimizing the long-term impact of student loan debt.

More about Jodi and College Financial Aid Advisors

Jodi is a FAFSA financial advisor who helps with the financial aid process to help families of college students maximize their financial aid. From completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options, Jodi is a fantastic resource when it comes to student financial aid. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.

Fall can be a challenging time for high school seniors with college applications, the Free Application for Federal Student Aid (otherwise known as FAFSA), and searching for scholarships. The 2024-2025 FAFSA will come online in December, which will condense this year’s application cycle, so it’s important to be on top of getting this task off your to-do list! Remember, every student should complete the FAFSA. Without it, colleges cannot provide financial aid offers or determine who is eligible for what amount of support. 

When you begin filing the 2024-2025 FAFSA,  here are some of the key steps you will need to make so you don’t miss out:

Get an FSA ID:

Both students and parents of dependent students need an FSA ID to log onto the FAFSA site and electronically sign the application.

Gather your information: 

Have materials you will need readily available before you start, so you won’t lose momentum each time you need a new piece of data. Gather Social Security numbers, driver’s license information, and income/investment information. FAFSA is using the Federal Tax Information tool to gather data this year – read up on that here. 

Complete parent and student information: 

Both the student and the parent or parents of dependent students must provide financial information. Be very sure you understand who can be listed as your parent for financial aid purposes. 

Supply college names: 

You will be asked which schools are to receive your FAFSA. Have your list of  colleges available, and determine whether your state requires them to be in any particular order. If you have more than twenty colleges, you can go back later and update your list.

Receive your financial aid award letters:

 Your FAFSA information is reported to the colleges on your list to be used in making their final aid determinations. You will be sent a separate award package from each college. 

Some common missteps could delay or impact the amount of financial aid you receive so be sure to take your time and avoid these common errors:

• Not completing an application at all: Don’t put yourself out of the running by not even applying. 
• Proofing errors: Check your application carefully before sending it in. The name you use must exactly match the one on file with the Social Security Administration.
• Missing a deadline: There are several types of financial aid deadlines. Miss one and you could miss out. 
• Paying a fee: Although you may want to pay someone to help you complete your application, there is no fee to file a FAFSA. 
• Failure to sign: Use your FSA ID to electronically sign your FAFSA before submitting it online. 

Break down each part of the FAFSA and other applications into manageable tasks. Don’t be afraid to ask for help – especially from us here at College Financial AId Advisors. Remember, to take your time, and make sure you get it right the first time. Delaying the process only adds more stress for everyone involved. Good luck! 

Want More Help?

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.

plan it

The fall is a wonderful and busy time of year – especially if you’re a student applying for college. All of a sudden, your calendar is filled with deadlines for school applications and financial aid applications. Almost all families will be completing the FAFSA this winter. Some families may also need to complete the CSS Profile. The schools that you’re applying to will tell you what you need to complete to be eligible for financial aid on their websites. Take time to check their lists carefully (and double check, while you’re at it!). The CSS Profile is similar to the FAFSA but a bit more in depth, so be prepared to show an in-depth picture of your current financial situation. If you need to file the CSS Profile this October,  we’ve got a few tips for you! 

What is the CSS Profile?

The CSS Profile is an online application from The College Board. It helps to determine your eligibility for non federal student financial aid. The CSS Profile is used by nearly 400 colleges, universities, professional schools, and scholarship programs to award more than $9 billion in grants, some of which might not be available through the FAFSA alone. Like the FAFSA, you should complete the CSS Profile as soon as you can. The sooner you submit your application, the better chance you have at some of the funds that may be more limited. 

You do not have to complete the CSS Profile in one sitting, but remember to finish and submit the application in time to meet your schools’ financial aid deadlines. 

What to Know About the CSS Profile: 

User Account: 

If you have a College Board account, sign in using the same credentials you created for the SAT, AP tests, and other purposes. Using the same account will save you time and help apply any fee waivers received to your CSS Profile application.

Documents: 

You will probably have most of your documents already available if you are also completing the FAFSA this year. The CSS Profile may ask you to provide information about your financial status in 2022 and anticipated income for 2023. This can be crucial if your family has experienced a dramatic change such as divorce, death, job loss, or natural disaster in the last year. 

Submission: 

The CSS Profile uses a dashboard to track progress. The dashboard offers an at-a-glance snapshot of your application status, payment information and important deadlines and messages. It is updated in real time as you progress through the application. The dashboard is also mobile-enabled, and can be viewed on a smart device, such as a smartphone or tablet. You can add a college or program from the dashboard, although a few new questions may be required if the selected school requires additional information.Make it a habit to check your dashboard frequently to look for messages from your colleges, including requests for additional documents. 

Non-Custodial Parents: 

One of the biggest differences from the FAFSA is that the CSS Profile may also require financial information from a non-custodial parent. You will be prompted to share your parent’s email address after you have selected your colleges. If you are not in contact with the non-custodial parent, a CSS Profile Waiver Request is available. This may or may not apply to your family’s situation, but be prepared if it does. 

Cerification: 

Prior to submitting your CSS Profile to the schools you have chosen, review your responses. If any section is incomplete, you will be prompted to complete it during this final review process. You must certify that your application is correct by clicking the check box in the application certification. When you’re ready to submit, click the “save and continue” box.

Fees: 

In contrast to the free FAFSA, you may be required to pay a fee for your CSS Profile submission. The fee for the initial application and one college or program report is $25. Additional reports are $16. Fee waivers may be available for low-income families. 

You may still be required to file the FAFSA if you want to participate in the Federal Work-Study Program, hope to qualify for federal student aid, or will need to borrow money through Federal Student Loans. Taking the time to review each college’s website is the best way to ensure that you’ve met all requirements they might have. 

Who We Are

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.

plan it

For many high school seniors, the reality about balancing school, life, and even work may be settling in as the first month of classes finishes up. Work, school, and a social life are all important uses of their time – especially during their “last” year of school. But, for many of these students, they’re about to enter a new realm of responsibilities: college applications. The next few months are crucial to determining where high school seniors will go to college next fall. Not only that, but they have to figure out how they’re going to pay for it all.  As families begin to work on financial aid applications, it’s easy to get caught up in the jargon you see. That’s why we’re talking about must know financial aid terms every high school senior (and their parents) should know.

When to Apply to College

In recent blogs, we’ve talked about how important it is to know your deadlines for college admissions and financial aid. While some students wait because it is still possible to get into a school in the spring, the reality is that the fall application cycle is the best bet. The earlier you apply, the better chance you have for entry and financial aid. Applications for early decision can be due as early as October or November. Regular admission applications are usually due by the end of the year. 

When to Apply for Financial Aid

As for financial aid, you can begin applying as early as October 1st with the CSS Profile. The FAFSA will come online in December for the 2024-2025 application cycle… Neither of which are that far off anymore. While you don’t have to apply that early, you want to make sure you are eligible to receive the maximum amount of financial aid. However, some programs might have a limited amount of funding. Or, you could miss a critical deadline if you wait too long to apply. 

Once you familiarize yourself with all the necessary deadlines, it is also helpful to have a good working knowledge of the applicable terminology. 

Here are the most important financial aid terms you should know:

• FAFSA: The Free Application for Federal Student Aid. Some colleges use The College Board’s CSS Profile, or their own financial aid application to gather information. For most schools and students, the FAFSA is the primary means of applying for federal and state aid, institutional aid, and even some college scholarships. You may decide to pay an advisor to help you with the FAFSA. But, remember: there is no fee to submit it and receive a determination about your eligibility for federal financial aid.
• COA: Cost of Attendance, or “sticker price,” is the amount a student might be expected to pay to attend a particular college, before financial aid.
• Net Cost: This is the amount most students pay after financial aid and other grants and scholarships.
• Student Aid Index (SAI) The Student Aid Index is a measure of the family’s financial strength, namely its ability to pay for college.
• Merit Aid: This is usually some type of grant or scholarship provided by the college based on a student’s abilities in academics, athletics, arts, or some other area.
• Need-Based Financial Aid: These are grants, scholarships, work-study opportunities and loans that are available to students based on their family’s demonstrated financial need.
• Need-Blind Admission: Some colleges make admissions decisions without looking at financial circumstances. 
• Verification: Colleges will often request additional documentation to verify information provided on the FAFSA or CSS Profile. If you are selected for verification, pay very close attention to deadlines.
• Student Loans: This is money which is borrowed for the purpose of attending college. It must be repaid after graduation. 

Completing college admissions forms and financial aid applications can be a challenge. With more knowledge of the financial aid terms and what to expect, you’ll complete them confidently in no time! 

Who We Are

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.

plan it

The FAFSA is coming. For the 2024-2025 application cycle, the FAFSA will be released in December. If you’re attending college in the fall of 2024, then you’ll likely need to complete the FAFSA this winter. Be sure to review your college’s website to make sure you don’t have any other components to file. Sometimes schools require the FAFSA as well as the CSS Profile or additional forms. If you’re a current student, make sure to file the FAFSA again this year. It’s not something you only do once! We’re reviewing everything you need to know to complete your 2024-2025 FAFSA correctly – and on time! 

What is the FAFSA again?

As a reminder, the Free Application for Federal Student Aid (FAFSA) is how schools determine your eligibility aid. This includes federal and student aid, and institutional support. Even some scholarships require you to file the FAFSA.  If you think you will qualify for the Federal Work-Study Program, or will need to borrow money through Federal Student Loans, the FAFSA is a must do application. It’s important to apply as soon as the application opens, as many programs have limited funding. The FAFSA usually opens in the fall. Because of massive overhauls made recently, the 2024-2025 application will open in December. This limited time table will impact how quickly aid packages are delivered. So, work hard to complete yours as quickly as possible. 

Here’s everything you need to complete your 2024-2025 FAFSA: 

Identification

• FSA ID: Each student and one parent of each dependent student will need an FSA ID, or username and password to log in to certain U.S. Department of Education (ED) websites and complete the FAFSA. You do not have to wait until December to obtain this information – apply for your FSA ID now.
• Social Security Number: If you do not yet have a Social Security number, get one now from the Social Security Administration. If you are not a U.S. citizen,  you will need an Alien Registration number.
• Driver’s License: This may be needed for identification purposes, but don’t worry if you don’t have one yet.

Income

• Tax Returns: You will need to use tax information from your 2022 federal income tax return, even though your financial situation may have changed in 2023. Starting with the new 2024-2025 application, information will be gathered from the IRS through the Federal Tax Information tool.
• Untaxed Income:  You may be asked to provide details on untaxed income such as child support received, interest income, and veterans non-education benefits. 
• Assets: You will be asked to provide information on available assets such as savings and checking account balances, as well as the value of investments such as stocks and bonds and real estate (but not the home in which your family lives). You will report the current amounts as of the date you sign the FAFSA form.

Other

• Prospective Colleges: Make a list of colleges you may apply to, so your FAFSA information can be forwarded to them, even if you have not yet applied or been accepted. You can list up to 20 schools at a time on your FAFSA form. If you aren’t sure about all the schools you want to send it to, you can add schools in later.

As soon as you are ready to apply in December, complete the FAFSA form online using the fafsa.gov website. A quick tip: if using the online version, enable your browser to allow pop-ups. There are several prompts and helpful information that appear along the way. Always make sure the name you use on your FAFSA exactly matches the one on file with Social Security, check your form for any errors before submitting, and be sure to sign your FAFSA. Once all that’s done, you’ll be ready to hit “submit” and the first step of your college financial journey has begun! 

Who We Are

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.

plan it

plan it

Before we know it, classes will begin for the fall semester nationwide on college campuses. Rising freshman and returning college students should already have their financial situation secure. By now, you will have received your financial aid package, know if you are eligible for the Federal Work-Study Program, and how much money you can anticipate in scholarships. If all of those numbers are still falling short, you may have to borrow money through student loans. Currently, you can borrow through  federal student loans, or private student loans which are offered by banks, credit unions and other organizations. While both accomplish the purpose of providing money to pay for college, be aware that there are some differences which could affect your future finances.

Here’s what you need to consider when deciding between federal and private student loans:

Interest Rates: 

Because they are offered through the federal government, iinterest rates on new federal student loans  are fixed and will remain the same for the life of your loan. Interest rates are currently the highest they’ve been in the past few years, post pandemic. Private loan lenders do not have the resources of the federal government. So they may have to charge higher interest than the government. If they do offer a lower variable rate for now, be aware that it could go up in the future.

Interest Subsidies: 

Students with financial need may qualify for Direct Subsidized Loans, which means that the government pays the interest for you while you are in school. In most cases, private student loans do not have subsidized interest, which means that you will be responsible for interest during your school years. This could add up to a substantial amount that will have to be repaid on top of your principal loan.

Deferred Payments:

Federal student loans allow you to wait until after graduation to begin repayment. While some private loans do this as well, there are others which expect you to make payments during your school years. Be sure to read the terms of any loan you’re considering carefully so you know what’s going on and when your payments are due. 

Credit Check: 

Most students do not have any credit history, so a big benefit of federal student loans is that they do not require a credit check or co-signer. Private lenders may require a credit check and co-signer if you do not have a credit background. This isn’t a huge deal, but definitely something to consider. If you’re a student reading this before college, consider working with your family to begin building a credit score for the future, too! 

Repayment and Postponement Options: 

Down the road, you might appreciate the wide array of repayment and postponement options that are available on federal student loans. They have a great deal of flexibility which allows you to work within your future budget parameters. You have to check with each private loan lender to determine their policies. 

Loan Forgiveness: 

There are several instances where you may be able to have your federal student loan debt forgiven. This is not usually the case with private loans. Obviously, this will continue to change in the next few years, so never plan to count on loan forgiveness but know that it can be possible with federal loans. 

Remember, you must first file the FAFSA to be eligible for federal student loans. The 2024-2025 FAFSA will open in December, so have everything ready to go. This year’s process will be accelerated because of the new simplifications and updates on the application. 

Who Are We?

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college.

Let’s be honest: in the summertime, no one wants to be reading up about interest rates or student loan options. But as parents of college students, we also all know that time flies by quickly. Pushing off research on loan options may seem like the best option while relaxing by the pool, but come the fall, that decision could prove to be costly for you and your family. If you put off researching student loan options, you might be losing out on thousands of dollars in the long run because of rushed decisions later on. Summer is actually the best time to research student loan options – there’s no pressure or looming deadlines to meet.   

The reality is that failing to learn about payment options can place a graduate into a loan program that causes financial hardship, and could even lead to missed payments and extra fees. All of this could be avoided by doing some basic research in advance.

There’s two main groups of people who should take the time to research student loan options:

Families currently borrowing for college: 

The best way to avoid problems down the road is to get the best possible student loan in the first place. To find the perfect loan, you and your student need to do some quality research on options available. The first place to seek information for the student and the parents is federal student loans. They usually offer the best interest rates and repayment terms. Some options, such as subsidized interest during the college years, are particularly helpful to  families. To qualify for these loans, though, you must complete the FAFSA, even if you think you won’t qualify for any other type of assistance. After exhausting the federal student loan options, then carefully study private student loan offerings to make sure you find the best options for your family. Remember, no matter if you think you qualify for money or not, fill out the FAFSA in the fall.   

Graduates with student loan payments ahead: 

Now that graduation has passed, you’re almost to the point that it will be too late to think about repayment options. Bills start arriving in just a few months! The summer is the best time to look at your income potential and the amount of debt you’ve accrued to this point. If you’re not earning enough money to make your monthly payments, then you have some work to do. Reach out to your loan provider and discuss your options, including extended term or income-based repayment. This paperwork can take some time to process, so now is the best time to do your research and complete whatever your loan office needs. 

While it’s tempting to blow off thoughts of interest rates and repayment options, summer is the best time to research your student loan options. Get ahead of the student loan clock and do your research now. You’ll thank yourself later!

Who We Are

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a 15 Minute Power Chat to learn more about finding ways to pay for college. 

plan it

College graduation season is here! Fresh graduates are heading out in the world to begin their careers and lives as adults. With all of that new freedom, responsibilities also begin kicking in… including repaying their student loans. At the same time, high school seniors are making decisions about which aid to accept. Perhaps the most important thing to consider when deciding which loans to accept is the student loan interest rate. Students (and families) should compare federal student loans and private student loans. It’s important to understand the lingo and the rates you’re looking at. Here’s a few tips to understand student loan interest rates. 

Fixed vs. Variable Interest 

Fixed Interest Rates:

These interest rates remain the same throughout the life of your student loan. This usually allows you to determine exactly how much you will be paying each month. The only  exception, however, is that the payment might change if you qualify for deferment, forbearance, or an interest rate reduction benefit. 

Variable Interest Rates:

Variable  interest rates are usually tied to some type of index, such as the Prime Index or the London Interbank Offered Rate (LIBOR) Index. This means they fluctuate  as the chosen index changes. This means your monthly payment can change based on interest rate fluctuations, and also if you qualify for deferment, forbearance, or an interest rate reduction.

When you compare federal and private student loans, look at the Annual Percentage Rate (APR) to make a fair comparison because it includes interest, fees, and other charges, and also takes into consideration whether payments have been deferred. The APR may actually be higher or lower than the stated interest rate. 

Interest Accrual 

It’s incredibly important to understand when interest starts accruing, or adding up, on your student loans. In most cases, interest is deferred while you’re in school and doesn’t start building until graduation. Some loans may start accruing interest while you are still in school, even though you are not yet making payments. Oftentimes, recent graduates will likely be entitled to a grace period of six months before they need to make any payments. However, interest may still accrue during this time. If your budget allows, it might make sense to start repaying your student loans as soon as possible to reduce the interest you’re paying on. 

What About Student Loans for 2023-2024?

The federal government usually sets the interest rate on federal student loans on July 1.  The Department of Education reported the following interest rates on student loans for the upcoming academic year:

• 5.50% – Federal Direct Stafford Loan (Subsidized and Unsubsidized) for undergraduate students
• 7.05% – Federal Direct Unsubsidized Stafford Loan for graduate or professional students
• 8.05% – Federal Direct PLUS Loan for parents and graduate or professional students.

If you need help understanding your federal and private college student loans, or would like more information on the college financial aid process, contact College Financial Aid Advisors (CFAA). We’re here to help you make sense of all of this information! 

Who We Are

CFAA helps with the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing the SAR, responding to requests for verification, comparing financial aid offers and understanding student loan options. Schedule a CFAA 15 Minute Power Chat to learn more about finding ways to pay for college. To get the latest financial aid information and college application to-do lists, look for my bi-weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.

plan it